Unreality characterizes the EU in the run up to this weekend's Washington DC summit. To wit, three comments on Sarkozy and the EU approach.
1. "Mr Sarkozy ... signalled a growing assertiveness by Europe in its dealings with Washington. The French leader, holder of the rotating EU presidency, suggested that the US had a special obligation when he told a European summit on Friday: “This is a global crisis and we have to remember where it started.”
"France believes that Washington’s decision to let Lehman Brothers fail aggravated the global crisis and that Europe, following Britain’s lead in recapitalising its banks, had shown leadership in preventing a meltdown."
Talk about short-term memory loss.
2. Mr Sarkozy told the Brussels summit: “The time when we had a single currency [the dollar], one line to be followed, that era is over and came to an end on September 18 when responsibility was taken, without our opinion being asked, with the failure of a major banking institution and the consequences that followed.”
Parsed, this means: we are unhappy to have been forced to bear some of the negative consequences arising from the US-generated financial crisis. Yet, the fact that they are forced to bear these costs and now want the US to accept big regulatory changes refutes the claim advanced.
3. "The EU [seeks a number of] reforms, including “supervisory colleges” to regulate the 30 biggest banks and rules on the operation of credit rating agencies. It also wants to strengthen the International Monetary Fund’s role in monitoring cross-border risk and issuing early warnings as well as new accounting standards and increased transparency."
We have not posted much about the regulatory changes needed; but the primary question is, what does the EU do if the US refuses to play along? (See point 2 above).
Thus, the whole affair has a certain "Gulliver in Lilliput" quality. Sure, the rest of the world fears unfettered US finance and wants to tie it down. But what do they do when they realize the US won't let them? Just hope the giant has a gentle disposition?