EU-DIGEST

EUROPEAN ECONOMY - EU ON THE RIGHT COURSE - FOLLOWING US STYLE ECONOMIC REMEDIES NOT APPLICABLE

While EU Finance ministers are presently in Luxembourg hashing out a common economic policy encompassing the 27 member European Union, a potentially dangerous Global financial sector drama continues to unfold around the world.

The US financial sector supported in the US press mainly by the Wall Street Journal, CNBC, and Fox News, with hyped up, over-active, "testosterone induced" writers, commentators, and anchors, is not only very critical of the EU, but also keeps hammering on the fact that Europe is suffering the same financial problems as the US and should also use the same remedies. This basically is not correct. One can not compare the US financial problems with those of the EU. The US, apart from its collapsing financial market, also has a huge 13 trillion budget deficit, which if we ad to that the nebulous military budget and other hidden budget items it would probably come closer to 18 trillion. In comparison, the EU's deficit by agreement among the member states is not allowed to go beyond 3% of GDP. Another factor is that US financial sector is far more deregulated than Europe's. This fact, without a doubt, has proven to be one of the major causes of the present US economic meltdown. It comes therefore as no surprise that in the EU, most of the problematic banks and financial institutions are shown to be closely linked to the US sub-prime lending disaster.

Some of the EU countries presently experiencing financial problems, even though they are EU members, are not part of the euro zone - the 15 members and nine states and territories using the euro as their sole currency within the 27 member EU. Britain is one of those countries. The British mainly follow American style banking practices, with all the dire consequences this has recently brought with it.

Dealing with what can only be seen as a US imported problem, the overriding factor to guide EU politicians is to follow instructions spelled out in the EU Treaty of Rome (the basic and original EU governing guideline), which categorically states that "interests of the EU citizens override any other prerogative, including those of an economic nature". In other words, no EU blank check should be made available to the EU financial sector.

Some European politicians seem to have understood. Contrary to what the US is doing in trying to solve its financial crises, most EURO zone countries, rather than bailing out the whole financial system, have individually focused on saving those troubled banks which are still manageable and guaranteeing private citizens savings.

Looking towards the future, it is crucial for Europe to start plotting its own independent financial course if the US continues to put the interest of its financial sector above those of its citizens and seeks to shove this policy down its global partners throat. Once the US presidential election is behind us, Europe's first step should be to start negotiations with the new US Administration on these and other economic issues of vital importance, not only to the EU, but also for the restoration of a badly bruised Atlantic Alliance and the financially intertwined Global community.

Labels: Atlantic Alliance, EU, EU Economy, Financial Crises, NATO. US