A important article by former British PM Gordon Brown, focusing on recent crisis in Europe
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For months we have been told that Europe’s salvation lies in austerity, Germany’s prescription of fiscal discipline to its deficits. But when Chancellor Merkel of Germany and President Sarkozy of France meet they will find evidence of what they did not expect — failing banks, waning growth and capital flight.
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I was present at the eurozone meeting in the immediate wake of the Lehman Brothers crash. I remember the sceptical looks when I explained that European banks were in fact more vulnerable than US banks, that they were far more highly leveraged and far more dependent on short-term wholesale funding.
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In fact, half of America’s toxic sub-prime assets had been bought by reckless institutions in Europe
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Europe’s difficulties are indicative of deep structural defects — its declining competitiveness, ageing population and persistently high unemployment.
.
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A stabilisation fund of some 2 trillion euros could have convinced the markets that Europe meant business wherever it was confronted with problems. But Europe has flinched at every turn from showing the decisiveness that its problems require
.
.
For months we have been told that Europe’s salvation lies in austerity, Germany’s prescription of fiscal discipline to its deficits. But when Chancellor Merkel of Germany and President Sarkozy of France meet they will find evidence of what they did not expect — failing banks, waning growth and capital flight.
.
.
I was present at the eurozone meeting in the immediate wake of the Lehman Brothers crash. I remember the sceptical looks when I explained that European banks were in fact more vulnerable than US banks, that they were far more highly leveraged and far more dependent on short-term wholesale funding.
.
In fact, half of America’s toxic sub-prime assets had been bought by reckless institutions in Europe
.
.
Europe’s difficulties are indicative of deep structural defects — its declining competitiveness, ageing population and persistently high unemployment.
.
.
A stabilisation fund of some 2 trillion euros could have convinced the markets that Europe meant business wherever it was confronted with problems. But Europe has flinched at every turn from showing the decisiveness that its problems require
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