The global financial storm has been sweeping Europe with an exceedingly fast speed after having hit the Wall Street in the United States. From Britain, Germany, France and Italy to the far-off Iceland, European banking giants, each owning tens of billions of US dollars, have been mired in a dilemma one after another, and are facing the danger of bankruptcy. Governments of European countries have gone all out to "inject or enrich blood" at this critical moment in an attempt to turn the tide.
People worldwide alike, however, have come to recognize that the European Union (EU) banking sector seems very hard to escape its misfortune with the punching of current global financial crisis.
The U.S. government has offered a US$700 billion bailout plan to address the grim financial crisis, whereas the EU countries, each doing things in its own way, fail to act in unison and make a "great bailout scheme" by their concerted actions.
Leaders of France, Germany, Britain and Italy met for an emergency summit in Paris to coordinate the response of EU on Sunday or October 4th, which, nevertheless, only sent an vague, empty message that "action must betaken quickly and in a concerted manner."
Two days later, on October 6th, known as "Black Monday", stock markets in Europe plunged with a "foul of wind and rain of blood", and economic stock market collapse hit Britain and the panic wiped around 93 billion British pound from the value of London's leading shares. So, bankers in Europe claimed that it was high time for EU to take courageous, concerted central bank action!
Nevertheless, EU has difficulty on its part as the organization is made up of 27 member states, and the Eurozone has 15 members, whose banking systems are not the same or identical. Even the European Central Bank (ECB), which is at the heart of the Eurosystem and the European system of Central banks, is incapable of intervene in the financial market. Even the four leading EU member nations, Britain, France, Germany and Italy, are preoccupied with their own desires or wishes, and they are differing widely on how to inject funds, raise additional capital and to share risks involved with an endeavor to deal with the financial crisis.
Moreover, British Prime Minister Gordon Brown, French President Nicolas Sarkozy, German Chancellor Angela Merkel and other European leaders have limited prestige or public trust in EU and even in their own countries. Hence, it is difficult for them to draw wide, instant and enthusiastic responses and still less to offer an EU-wide bailout fund of several hundred billion euros for a rescue plan.
With an aggravating, treacherous outcome of the ongoing financial crisis, not only a large number of banks have closed down, and businesses, big or small, across Europe been affected, but also entity economies of various EU nations been seriously implicated. In the case of Britain, its housing market has been slack, inflation soaring, consumption decreasing, and the rate of unemployment rising with only few economic indexes inspiring, since the US sub-prime mortgage crisis erupted in August last year.
"The UK economy is already in recession and may be facing a prolonged downturn," says the British Chamber of Commerce (BCC) in a report it released on August 7th or Tuesday, and most of other EU nations, too, hobbled along with their stagnant economy.
European economy is currently at crossroads, with its banking industry gripped by a worsening crisis. This stark reality requires joint resolute, immediate actions from the governments of EU member states.
Peter Mandelson, who had been appointed Business Secretary a few days ago, said: "Our economy, like every other, is facing a very hard challenge as a result of the global financial crisis." Citing an analogue between the financial crisis and a "dying patient", he said three steps are needed to cure his "illness": To tackle the present financial market turmoil, he elaborated, the first step is to enhance fund raising to restore the market confidence, the second to resolve problems in the course of tackling the crisis and, thirdly, to improve the banking setup so as to steer clear of the same old beaten tracks. And any of these steps are inseparable from joint actions of the EU peers, he acknowledged.
The next meeting of G7 finance ministers would occur this weekend in Washington D.C., which will focus discussions on the current financial market turmoil and its impact on global economic growth. And further measures are expected to be taken to cope with tough financial issues.
The current "financial hurricane" has been exerting a far-reaching impact on world economy, infiltrating more or less into all corners of the globe. People worldwide are looking forward to see as soon as possible the splendid "rainbows" for economic recovery with viable joint efforts of the international community.
By People's Daily Online, and its author is PD resident report in UK Wang Rujun