Word: merkel
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...assistance, Tuesday's repeat came as those measures were backed up by actual figures in both Europe and the U.S. In Paris on Monday, French President Nicolas Sarkozy pledged $488 billion to underwrite loans between banks and inject capital into troubled banks and financial groups. Similarly, German Chancellor Angela Merkel said up to $651 billion would be used for similar uses - though primarily limited to underwriting lending between banks. Austria, Spain and the Netherlands weighed in with similar plans under a coordinated euro-zone strategy that some analysts have pegged as adding up to as much as $2 trillion...
This institutional problem pales beside the political one: when crisis strikes, Europe almost never acts like a true union. After French President Nicolas Sarkozy summoned the leaders of Britain, Germany and Italy to Paris on Oct. 4, German Chancellor Angela Merkel coolly torpedoed his proposed $409 billion Europe-wide financial rescue plan. No money for the greedy fools of other lands, she seemed to say, only to then guarantee German private bank accounts and save Hypo Real Estate. That followed similar moves by Ireland and Greece. And Britain's Gordon Brown will always be loath to see Brussels...
...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...
...comments came a day after Merkel befuddled her neighbors by announcing a guarantee on 100% of all private deposits - the largest such guarantee in history, according to one leading banking expert. The fact that Ireland had previously issued an even more sweeping guarantee hardly shielded Germany from criticism: as Europe's biggest economy, it sets a massive precedent. Indeed, since Merkel's announcement, Denmark, Sweden and Austria have taken steps to offer stronger guarantees to their depositors. Spain is reportedly considering a move to follow suit, and British politicians were in talks with banks on Monday night about a stopgap...
...That narrow scope for united action was duly noted during Saturday's minisummit in Paris. "Each government will operate with its own methods and means but in a coordinated manner," Sarkozy said of European reaction to the crisis. In saying that, he clearly didn't suspect that Merkel would issue a unilateral savings guarantee the next day. Still, Sarkozy and his fellow E.U. leaders also made it clear that it may now be too late to do much else but limit the extent of the damage in the current drama and await new global rules on finance and business ethics...