The heads of the EU's four biggest economies - Britain, France, Germany and Italy - held a first crisis meeting last week but were split over the need for a common plan.It doesn't appear that unified solutions are going to happen quickly, in spite of the hopes of our president and our nation. The Europeans, when it comes down to the real issues--like their money and their long-entrenched banking institutions, won't be a union. They agree on ideology, however:
In the financial district of London, the pubs of Dublin, and on the campuses of Holland, people are citing reckless lending in the US mortgage market, unbridled American consumption, and a lack of government oversight for the financial meltdown that has engulfed Europe. Many dismiss the US bailout as an unwise and hypocritical move that rewards the greedy bankers who caused the crisis and breaches the ideals of the country that pioneered market-driven capitalism.And it isn't like the finance ministers who met today are doing nothing. Fox News reports this morning that there are some agreements in the works. The "fiddling and diddling," to quote the great Johnny Most, may not be bad thing. The US Fed's current solutions may be starting to kick into gear, as Friday's stock market performance appeared to exemplify. It threatened early in the day to blow downward through the 8000 mark, and did, but pulled up well above the 7000. It wobbled, teetered, steadied itself, and the buyers stepped in at the very end of the day. The pattern was a reverse image of the previous days of the week. One day does not a bottom make for the economy, but I think the weekend will allow a breather, allow folks to reassess, allow the credit markets to absorb the impacts of the Federal rescue plan, allow some of that money to start flowing, and allow some of the stalled businesses to resume operations.
Some problems remain:
- Folks have been saying for a long time that the housing, automobile and speculative financial markets and the trading economy have been overvalued. We don't know if all of the bad trading has washed out of the system. Folks won't invest until there is some assurance about that. Buyers won't buy until there is money available and they feel some confidence about the future (see next point).
- There are fears of hyperinflation. There need to be some answers about the real and hidden tax impacts of the rescue spending.
- It appears there are some corrupt financial barons (I'm shocked--shocked!) Some prophylactic prosecutions are in order. (Round up the usual suspects!) This would not be an empty gesture. There needs to be a statement by the country that more is expected from those who would be allowed to manage money for all of us.
- I know that many will say that this horse is long gone from the barn, but we still have to know where to stop the market involvement and regulation. There's now a real danger of "creeping socialism." The federal government should be careful. Having acted decisively, there is now a need for circumspection, restraint, and public education. (Let's be careful out there!)
- Neither of the presidential candidates knows what he is talking about. They're flailing around to see what voters will respond to. Give me the person who will actually tell the truth in a reasoned way and commit to market recovery. The more of this the markets do on their own steam, the sounder any recovery will be. (I have a feeling this narrows the possibilities....)