Wednesday, 24th September 2008
'Old Europe' sees hope for new order in capitalism
Viewed from the capitals of continental Europe, the financial market mayhem of the past week was an accident begging to happen ever since the US and Britain rejected calls for stronger regulation.
Now, as Washington resorts to unprecedented levels of state intervention to salvage an industry from its worst crisis since the Great Depression, the message from Old Europe is that the Anglo-American doctrine of freewheeling, self-regulating markets has passed its sell-by date. German Chancellor Angela Merkel, whose country tried in vain to win US and British backing for greater market supervision at international level last year, believes a change of heart is already taking place.
"For a long time the saying went, 'Let the markets take care of themselves'. Today we have moved on because even America and Britain are now saying, 'Yes, we need more transparency'," the centre-right leader said on a visit to Austria on Saturday. French President Nicolas Sarkozy, due to meet New York Federal Reserve chief Timothy Geithner during a US trip on Monday, is expected to speak out on the issue. Several members of his government have already weighed in.
"What's clear is the capitalist system was inherently flawed and those involved didn't fix it early enough," French European Affairs Minister Jean-Pierre Jouyet, former head of the French Treasury, said in an article in Le Monde newspaper.
"The international financial crisis caused by the disorders in American financial markets will slow and is already slowing the economy of the entire planet," Economy Minister Christine Lagarde told French Europe 1 radio on Saturday.
Right now, the focus is on saving the house rather than rewiring it from top to bottom though. US authorities scrambled at the weekend to assemble a rescue plan in which the "toxic assets" behind the chaos - mostly mortgage-linked derivatives - will be bought out of private sector hands at a cost of up to €474 billion.