Europe dithers, while its banks collapse

[financeguy]

European Union Leaders Stop Short of Regional Plan on Bailouts

By Sandrine Rastello

Oct. 5 (Bloomberg) -- European leaders pledged to bail out their own nations' banks while stopping short of a regional rescue effort to deal with the global credit crisis.

At a summit in Paris yesterday, leaders of France, Germany, Britain, Italy, Luxembourg, the European Central Bank and the European Commission agreed to ease accounting rules, seek tougher financial regulations and weaken enforcement of competition and budget laws.

``Each government will act according to its own methods and its own means but in a coordinated manner with the other European states,'' French President Nicolas Sarkozy, who called the meeting, told reporters.

The gathering came a day after U.S. lawmakers approved a $700 billion bank-rescue package and as Europe's own initial bailout efforts began to unravel. Germany's Hypo Real Estate Holding AG said a government-backed 35 billion-euro ($49 billion) deal collapsed yesterday when banks withdrew their support. Belgian authorities worked to shore up Fortis after the lender received an 11.2 billion-euro lifeline on Sept. 28.

Europe ``is still a dwarf compared to the U.S.'' in terms of willingness to spend, said Laurence Boone, an economist at Barclays Capital in Paris. The statement on supporting banks ``is not a progress. It's the same as before the summit.''

The failure to forge a consensus approach to shore up banks roiled by soaring borrowing costs reflects the divisions in the 27-nation bloc. Germany criticized a plan floated by French Finance Minister Christine Lagarde to set up a rescue fund. A chorus of opposition greeted Ireland's decision to guarantee its banks' deposits and debts.

These Eurofederalists are even stupider than I thought.

[Vincent Vega]

It shows once again how far the way is we have to go, and how little it is what we've already gotten behind us. And they want to push through a European constitution...

[financeguy]

Originally Posted by Vincent Vega

It shows once again how far the way is we have to go, and how little it is what we've already gotten behind us. And they want to push through a European constitution...

Indeed.

[bonoman]

Is it ironic to anyone that the US passed 700B$ bailout of its so called free market captialist system while the "socialist" countries of Europe have turned it down?

[ntalwar]

ft.com

Germany prepares banking guarantee plan

By Bertrand Benoit in Berlin

Published: October 5 2008 16:45 | Last updated: October 5 2008 16:45

Germany is preparing to offer a blanket government guarantee covering all German cash and savings bank accounts held by individuals in a move to pre-empt panic withdrawals by customers in the coming days.

In a move broadly similar to the controversial action by Ireland last week, German finance ministry officials said on Sunday the government would abolish the current legal limit that guarantees 90 per cent of all bank deposits up to €20,000 per account.