Posted by: tristar3research | March 19, 2009

Post April Fools Day Finance Summit Already Looks Sunk

EU to Stand by Stimulus Measures in Face of Deepening Recession” is the Bloomberg headline about a two-day European Union summit in preparation for the upcoming G 20 summit scheduled for April 2.

Stimulate Banks, Dont Talk to us about Reregulation

Stimulate Banks, Don't Talk to us about Reregulation

European Union leaders are likely to decline to pump more money into the stricken economy at a two-day summit starting today, bucking evidence of a deepening worldwide recession. The bloc’s 27 chiefs gathering in Brussels are set to stand by a planned 400 billion-euro ($525 billion) stimulus package while haggling over which infrastructure projects are eligible for the final 5 billion euros. “Significant additional fiscal stimulus does not seem to be on the cards in Europe,” said Nick Kounis, chief European economist at Fortis Bank in Amsterdam. “Not many countries actually have much further room.” Two weeks before meeting President Barack Obama at a Group of 20 crisis summit, European leaders including German Chancellor Angela Merkel and French President Nicolas Sarkozy have faced criticism from some economists for underestimating the deterioration in the economy, set to shrink for the first time since World War II. Data in the past week showed industrial production in Germany, Europe’s largest economy, posting its largest recorded drop in January and unemployment in Britain jumping at the fastest pace since at least 1971 in February. Three times last week, Merkel rebuffed Obama’s March 11 call for “concerted action around the globe to jump-start the economy,” comments that were echoed by Lawrence Summers, his top economic adviser, and Treasury Secretary Timothy Geithner. The second nationwide strike in seven weeks is set in France today as a protest to what unions call Sarkozy’s “inadequate response.”

Note that the U.S., U.K. and Switzerland pursue massive stimulus by “quantitative easing” – that’s banker speak for money printing. But the effort to improve regulations of the financial services industry to prevent these massive bailouts again is being PUSHED ASIDE.

The EU will push for stricter oversight of the global financial industry, with a draft summit statement calling for the Group of 20 to commit to regulation of hedge funds and credit-rating companies. The EU will call for the monitoring of major banks by international regulatory “colleges” to be set up by the end of 2009, according to the document. That may signal a delay from the March 31 deadline the G-20 set in November.


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