Thursday, October 9, 2008

No Help From Europe

As written yesterday, the help the US (and the world) needs will not be coming from Europe. Quite frankly, they are not in a position to help, as there crisis is just as bad and possibly worse than ours. In fact, the Economist last week reported that for every dollar of deposits, US banks have lent 92 cents while for every euro of deposits, European banks have lent 1 euro 40. France, arguably the best off (thereby, with the most to lose) of the significant players in this mess just nixed the UK's plan to offer medium-term interbank lending:

French officials on Thursday said Paris would not follow a British proposal to provide medium-term guarantees for interbank lending, casting fresh doubts on the ability of the world’s seven richest nations to present a common front when their finance ministers meet in Washington on Friday.

The Group of Seven finance ministers are keen to correct the impression of ­disarray caused by unco­-ordinated government action to tackle the international financial crisis. However, both a persistent transatlantic rift and continued inter-European squabbling on how to forge ahead are threatening to undermine their efforts.


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