Thursday, October 09, 2008

You Can’t Eat Symbolism

IBD Editorial: EU's Do-Nothings - European leaders have been so busy gloating over the U.S. money mess, they've failed to notice that their own overregulated banking system is in even worse shape. They need to get their act together.

French President Nicolas Sarkozy called an emergency meeting of European leaders last Saturday to address their fast-melting financial system. And what did they come up with? Nothing. No deal could be reached on how to address the Continent's ills — just a vague promise of "unity."

But even that lame rhetoric was tested a day later, when Germany's Angela Merkel unilaterally decided to guarantee $1.3 trillion in bank deposits — a move that caught other countries unawares and forced many to do the same thing or face a run on their banks.

How things have changed in just a couple of weeks. Just a month ago, EU officials were giddily ridiculing the "U.S. model." Said Sarkozy then, in an obvious reference to the U.S.: "A certain idea of globalization is drawing to a close with the end of a financial capitalism that imposed its logic on the whole economy."

Now, the panjandrums of the European Union are panicked, blaming the U.S., banks and greedy American homeowners — everyone but themselves — for their financial troubles. But the EU also had a housing boom, and they too gorged on debt, encouraged by their governments, and created a regulatory straitjacket that their banks can't escape.

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