Word: european
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...scary conditions elsewhere hardly drew attention away from the underlying weakness in Europe's own supervision of its financial institutions. Most of the continent is conjoined into a political union of 27 countries, 15 of which use the euro under the monetary authority of the European Central Bank. But as the recent days' fraught activity has proved, coordination between governments on fiscal and supervisory measures remains strictly voluntary...
...European governments can certainly talk the talk of coordination. Following a meeting with Italian Prime Minister Silvio Berlusconi in Berlin yesterday, German Chancellor Angela Merkel said, "We both agree that Europeans of course need to display a coherent course of action." President Nicolas Sarkozy of France, which currently holds the rotating E.U. presidency, read on television a common statement from all 27 members pledging to adopt "all necessary measures to protect the stability of the financial system...
...those words have been notably lacking in any concrete policy to back them up, particularly with the crisis moving so rapidly. "Uncoordinated rescue operations, far from restoring confidence, are further fueling fears among savers and investors," said Daniel Gros, director of the Center for European Studies in Brussels. Such actions are pushing Europe "toward a full-fledged banking crisis," he said, with the "likelihood of a serious economic downturn [looming] ever larger...
...appeared little movement toward international coordination. On Monday Germany reaffirmed its determination not to participate in France's plan for a Europe-wide bank bailout plan, modeled on the U.S.'s $700 billion effort. Without Germany's participation, no such plan can proceed. "The Chancellor and I reject a European shield," German Social Democrat Finance Minister Peer Steinbruck told German radio on Monday in reference to the plan, "because we as Germans do not want to pay into a big pot where we do not have control and where we do not know where German money might be used...
...refusal to sign on to a Continent-wide bailout plan was no less necessary, says Schmidt. Such a plan would have triggered a backlash in Germany against the E.U., egged on by the ready arguments of the anti-Europe German press that Germans were paying to bail out other Europeans, he says. "It would have destroyed the idea of European integration," he says...