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Main focus of Thursday, October 6, 2011


Merkel for European bank bailouts


After the fall of Dexia banking group German Chancellor Angela Merkel called on Wednesday in Brussels for backing for Europe's ailing big banks. The chancellor is on the right track with her new Europe-friendly stance, commentators write, because only united can the EU overcome the crisis.


Il Sole 24 Ore - Italy

Berlin talks European again

With her decision to approve financial aid for ailing banks German Chancellor Angela Merkel has rediscovered her European language, the business paper Il Sole 24 Ore comments in delight: "Angela Merkel's decision to recapitalise German banks with state money should they need it represents a double U-turn. On the one hand it acknowledges that the crisis is escalating as a result of the interaction between sovereign debt and bank balance sheets and is therefore not just a problem for undisciplined countries. On the other it is an open admission that Berlin's 'policy of uncertainty' was counter-productive. It consisted in leaving a question mark over whether financial aid would be given and therefore enabled the financial markets to put the debt-stricken countries under pressure. ... The only alternative to the strategy of uncertainty is joint administration of the budgets and economies of those countries that are bailed out by the EU." (06/10/2011)


Lidové noviny - Czech Republic

Bail out banks, not states

The willingness that the EU has so far signalled  to support big banks if necessary is a step in the right direction, the conservative daily Lidové noviny comments: "Certainly, this means yet another wave of socialism, nevertheless it is the only possible intervention that can calm the jittery financial markets and ease the economic crisis. The International Monetary Fund has tellingly pointed out that it is necessary to tackle the true problems, that is to restructure not the states but the banks that carelessly got into debt and are now facing huge losses. The second sign of realism is the insight that Greece's bankruptcy is unavoidable. Paris, too, has got used to the idea of major losses for private investors. The parallel between the two decisions is no coincidence. An orderly state bankruptcy with no clear rules on what will happen to the endangered banks is a no go." (06/10/2011)


Wiener Zeitung - Austria

Nationalise the banks

The only way to prevent a new bank crisis is to nationalise struggling financial institutions, writes the state-run liberal newspaper Wiener Zeitung: "The debt crisis has lowered the countries' credit standing and the banks' creditworthiness along with it. Now they need capital - and plenty of it. Since private investors are barely interested in financial institutions, in many European countries there will be no alternative but to nationalise banks. ... And once state capital is in play in the next round it can only go into ordinary shares. This is the only chance to ensure that the sale of shares also generates a profit for the state. So the banks are facing hard times. ... And the policymakers face the tremendous challenge of implementing the necessary measures in such a way that they don't trigger panic reactions. Only coordinated European action can achieve this." (05/10/2011)


Le Monde - France

Europe must strengthen itself

In order to stop a second banking crisis, Europe must speak as one and take decisive action, writes economist Julia Cagé in the left-liberal daily Le Monde: "In the throes of the crisis it makes no sense to deplore the omnipotence of the financial markets or the powerlessness of politics trembling under the rating agencies' Sword of Damocles. What is needed are concrete, effective solutions that can be easily implemented within the European framework in its current form. And the first of these solutions is the consolidation of Europe. Because if the crisis means that the states are too weak in relation to the markets, the only way to tackle the crisis is to strengthen the states. And the only way to do that is to reinforce the European Union and the Eurozone. Today strengthening the states of Europe means uniting them vis-à-vis the markets, instead of what we have seen in the past months, namely futile action, sluggish implementation of decisions and only agreeing to the most timid of measures." (06/10/2011)


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