euro|topics - The search for financial alternatives

Main focus of Wednesday, October 1, 2008

The search for financial alternatives

After the US House of Representatives' unexpected rejection of a 700 billion dollar bailout plan, Europe is reappraising the balance of power on the international financial market. Until now Europe has been too reliant on American economic competence, commentators say. Talk now focuses on structural change, new regulatory systems and even a UK accession to the Eurozone.

Diário Económico - Portugal

For Pedro Marques Pereira, chief editor of the Diário Económico, the rejection of the 700 billion dollar bailout represents a financial 9/11: "The world changed seven years ago on September 11. At that time many people prophesied the US would turn inward on itself. The opposite happened, and the country even strengthened its role as the sole global power. I will leave the mistakes it made for another discussion. But can one deny the world would be better without its leadership, that is to say with no leadership at all? The fact is that when something goes wrong, the world continues to pin its hopes on the US, as we have seen with the Paulson bailout plan. This would be a good time for others to take the baton. ... The fact that Uncle Sam is not going to go on writing blank checks could lead to greater changes in global power structures than we saw with September 11." (30/09/2008)

El País - Spain

The US economist Joseph E. Stiglitz stresses the need for a new regulatory system: "There is a growing consensus among economists that any bailout based on Paulson's plan won't work. If so, the huge increase in the national debt and the realization that even $700 billion is not enough to rescue the US economy will erode confidence further and aggravate its weakness. But it is impossible for politicians to do nothing in such a crisis. So we may have to pray that an agreement crafted with the toxic mix of special interests, misguided economics, and right-wing ideologies that produced the crisis can somehow produce a rescue plan that works. ... Getting things right – including a new regulatory system that reduces the likelihood that such a crisis will recur – is one of the many tasks to be left to the next administration." (01/10/2008)

De Volkskrant - Netherlands

According to the daily newspaper De Volkskrant, the US Congress needs to reach an agreement: "Even if the opposition is understandable and the rescue plan leaves much to be desired, it cannot be denied that the 'no' of the US Congress is sad testimony to Washington's incapacity to act quickly in a serious, acute crisis and thus hold back the tidal wave that threatens to wash out the entire economy. ... To simply let events take their course is not an option. There must be a new - and swift - attempt to reach an agreement in Congress. The best scenario would be for Obama and McCain to adopt a joint stance on this issue so that at least one bone of contention is banished to the background in party political relations. But even then Congress must be made to realise that some things are more important than being re-elected." (01/10/2008)

The Guardian - United Kingdom

Columnist Will Hutton argues in The Guardian that only the euro can save the UK from financial crisis: "International investors will single out Britain's banks as the weakest in the international system with only a medium-sized country behind them. Britain will need its own Paulson plan to respond, but has not got the financial firepower. ... [Opposition leader David] Cameron and [Prime Minister Gordon] Brown are united in saying they will do what is needed and not allow political differences to get in the way of financial stability. Good, but do either realise what may be needed in a worst case? The only viable British Paulson plan - bar a £500bn-plus international loan - may require us to join the euro to win the support of the whole of the European economy and European Central Bank as part of a pan-EU initiative to create 'good banks' for Europe." (01/10/2008)

» To the complete press review of Wednesday, October 1, 2008

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