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Tuesday, October 07, 2008

The Disunited States of Europe

True to form the governments of Europe have shown their true colours and acted in their own self interests, wrt the ongoing banking crisis, rather than in a unified Europe wide manner.

Ireland, Germany and Denmark have guaranteed bank deposits and others (such as Spain and Greece) look likely to follow.

Had the EU acted in unison, it may have lessened the panic. Unfortunately the scramble to protect self interest has done nothing to assuage the market.

The UK now needs to take the following actions, without any further dithering:

1 Guarantee all bank deposits

2 Cut interest rates aggressively

Failure to do so will worsen this crisis.

Now is the time for our political masters to show leadership and courage; dithering and "moral hazard" are no longer acceptable excuses.

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