	Generational Dynamics
	Forecasting America's Destiny ... and the World's

\| HOME \| WEB LOG \| COUNTRY WIKI \| COMMENT \| FORUM \| DOWNLOADS \| ABOUT \|

Generational Dynamics Web Log for 12-Oct-2008
European leaders race the clock, while G-7 leaders make reassuring pronouncements

Web Log - October, 2008

European leaders race the clock, while G-7 leaders make reassuring pronouncements

Once again, officials are attempting to take action before Asian markets open on Monday morning (Sunday evening ET). This follows a familiar pattern that's been going on for several weeks now, even though these weekend meetings never seem to prevent the markets from getting worse.

On Friday and Saturday, we had meetings of leaders of the G7 nations, "united in their resolve to avert a global financial meltdown." They didn't come up with any solutions, but they did issue statements designed to project the image that they were accomplishing something.

(The Group of Seven (G7) includes the United States, Japan, Germany, France, Italy, the United Kingdom and Canada. The European Union is also a participant. The G20 includes those eight and adds China, Brazil, Russia, India, Mexico, South Korea, Saudi Arabia, Argentina, Australia, Indonesia, South Africa and Turkey. Together, the G20 account for about 90% of global gross domestic product.)

President Bush made the following remarks on Saturday:

"[O]ur government will continue using all the tools at our disposal to resolve this crisis. At our meeting, Secretary Paulson and I described the bold actions the United States has taken over the past few weeks. ...

I'm pleased that other G7 countries are making strong -- are taking strong measures. Finance ministers and central bankers have acted to provide new liquidity to markets, strengthen financial institutions, protect citizens' savings, and ensure fairness and integrity in the financial markets. ...

As our nations carry out this plan, we must ensure the actions of one country do not contradict or undermine the actions of another. In our interconnected world, no nation will gain by driving down the fortunes of another. We're in this together. We will come through it together."

I think it's really interesting that the emphasis is not on finding a solution (there is none, anyway), but on avoiding the "every country for itself" trend that has been increasing, especially in Europe.

Exactly the same sentiments were expressed at a Sunday meeting in Paris of leaders of 15 euroland countries. French President Nicolas Sarkozy said, "I expect Europe to speak with a single voice."

And German Chancellor Angela Merkel said:

"The goal is to define a coordinated common procedure for the euro zone that enables us in the next few days to take national steps to stabilize the financial market, but measures that do not discriminate against individual member states. ...

I think that the meeting today will send a very important signal to the markets."

Germany is planning its own €400 billion bailout of its banking system. The UK is expected to announce on Monday a bailout of its banking system.

The Paris meeting of euroland countries did tentatively agree to guarantee interbank loans, in order to end the worldwide credit freeze caused by banks' fear of loaning money to one another.

However, the agreement is not certain, and is likely to falter on parochial grounds; for example, will an eastern European country be required to help bail out a German or French bank? The question will be decided at another meeting, scheduled for Wednesday.

The meetings of G-7 leaders and European leaders, in the end, didn't accomplish anything except provide an opportunity for photo ops and self-serving statements, just as is happening in the US political campaign.

Listening to the Sunday morning news shows today gave me a headache. I don't believe I heard anyone make any sense whatsoever. Pretty much everyone took an ideological position, with the Republicans on the defensive. Several people blamed Ronald Reagan and George Bush for the current situation, but no one blamed Bill Clinton for the dot-com bubble.

Of those who said things that weren't purely ideological, they all followed the Nouriel Roubini formula: "Do exactly what I tell you to do, or we'll have a major worldwide crisis." That way, even though they have absolutely no idea what's going on, they've covered their asses no matter what happens, and if there's a crisis, they can blame it on the fact that no one listened to them.

What's really sickening is that no one gives a f--k what happens to anyone else, as long as they're protected. "It's everyone's fault but mine."

As always, there were the usual soothing words that people were saying in 1929: "The fundamentals are sound." "This will pass soon." "We've had recessions before."

The most amazing time in my life, and also the most sickening.

(Comments: For reader comments, as well as more frequent updates on this subject, see the Financial Topics thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) (12-Oct-2008) Permanent Link
Receive daily World View columns by e-mail
Donate to Generational Dynamics via PayPal

Web Log Pages

Current Web Log

Generational Dynamics Web Log for 12-Oct-2008 European leaders race the clock, while G-7 leaders make reassuring pronouncements

Web Log Pages

Generational Dynamics Web Log for 12-Oct-2008
European leaders race the clock, while G-7 leaders make reassuring pronouncements