TW: A rather foreboding piece from the Charlemagne blogger at Economist. The piece focuses on European governments seeking consensus in dealing with the current crises, such consensus appears lacking. Again one does not read it often amidst the U.S. MSM but internationally there is A) tremendous resentment against Anglo-American freewheeling capitalism, B) VERY weak economic numbers and C) much finger pointing amongst themselves overlaid with much protectionist sentiment especially in Europe and particularly France.
The piece speaks of the some Europeans being focused on a new regulatory structure for international finance rather than stimulus. One barely even hears of this in the States. We are almost totally focused on getting through the current crisis rather than creating structures to avoid future ones. This dissonance speaks not to the veracity of one or the other but the lack of consensus upon what to even focus international attention.
The G20 summit on April 2nd is shaping up as a potential big inflection point for the markets. One assumes they know the obvious which is that they better leave the meeting with a useful, substantive consensus to address the crises but one does not get warm and fuzzies two weeks out.
From Economist:
"A WHIFF of a phoney war hangs over Brussels..ahead of the G20 leaders’ meeting in London on April 2nd. You would not know this was a crisis summit, is all I can say. The mood is listless, and the draft summit conclusions in circulation thoroughly uninspiring. The usual statements from leaders as they arrived have mostly been defensive and repetitious: the refrain from EU bosses this evening is that Europe has done quite enough when it comes to fiscal stimulus for the moment, and they will not be bounced into doing more (translation: back off, Timothy Geithner).
...Catastrophic economic news keeps arriving from every corner of Europe, on a daily basis. Everyone agrees the need for co-ordinated action by European governments. And here in Brussels, we now have the heads of all 27 national governments of the EU, ready to talk about how to respond to the crisis. And then? Not much. Just a bit of uneasy circling and empty rhetoric
...I think that behind this time of phony war there lurks the prospect of a proper policy fight. Not about stimulus plans, but about future regulation of the financial sector. And, to simplify things, what is really, really going on is that the camp led by France and Germany are determined that Europe’s common position, going into the G20 summit, should be to bang the table and demand an end to light-touch regulation, of the sort that flourished for so long on Wall Street and in the City of London, and which they see as more or less the sole cause of the current mess. But the French and Germans do not trust the British to support that common position. Once the Americans are in the room in London, they fear the British will scuttle away from the European position, side with the Americans, and seek to defend the wheeler-dealers of the City.
...But I have spent the week talking to officials and senior politicians from other European governments, and my sense is they do not trust the British.
...But deep down, the British do not really trust the French and Germans, or regulation of finance that comes out of Paris or Berlin. That is not just because of fundamental differences of belief about how to run financial capitalism. It is also because the French and Germans are the proud owners of two financial centres, namely Paris and Frankfurt, that would love to topple the City of London as a centre for European trading.
Talk to those familiar with thinking in London, and you will hear something a lot like exasperation with the French and German rhetoric about the "top priority" being regulating hedge funds, private equity and the like. That is a priority, they grumble, but surely the top priority is unblocking credit flows, and generally rescuing the world economic system. And yes, some parts of the system were insufficiently regulated, but let us not forget that the crisis did not start in hedge funds, but in regulated banks.
A big fight is brewing. This is the calm before the storm"
http://www.economist.com/blogs/charlemagne/2009/03/do_not_believe_this_talk_of_eu.cfm
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