Europe says no to US bailout approach

[malaise]

http://news.bbc.co.uk/2/hi/business/7665729.stm

Ahead of Sunday's eurozone meeting, French President Nicolas Sarkozy and German Chancellor Angela Merkel said they would present a number of proposals to ease the credit freeze that has caused the collapse of several leading international banks.

But after meeting in Paris on Saturday, the two leaders said the summit would not result in a joint financial rescue fund for Europe, along the lines of a recent $700bn rescue by the US government.

Adios Friedman, adios neo-liberals, adios Paulsen.

I'm only sorry Thatcher's dementia prevents her from reading the death column and attending the funeral.

[Sarah Ibarruri]

1. HEY, I thought Adam Smith said capitalism had an invisible capitalist god hand that would fix this?

Where is that hand when we need it? Could we have been LIED TO again?

[malaise]

5. You'd love Michael Yates' 2003 book

Naming the System: Inequality and Work in the Global Economy.
The capitalist system has persisted through world wars and severe depressions. It has accounted for the most tremendous leaps in the productive capacity of human beings and has stimulated unimaginable new vistas in creativity, science, and technological growth. Moreover, it is a system that has managed to convince many of those who benefit least from it that it is the only natural order. But, as Yates moves on to discuss, capitalism is riddled with unsolvable contradictions, built-in structural tensions that can't be wiggled out of. Of these "chinks in the god's armor", the most inescapable is the contradiction between the freedom of the market and the "unfreedom" of work. While workers are free to sell their labor power to whom they wish, they must nevertheless sell it to survive. In doing so, they enter into a relationship where they have no freedom over their time, what they do with it, and what is produced from it.
------------
The above is a quote taken from Derek Seidman's review of the book. Looks like gawd is no longer a neoliberal or American.

[Sarah Ibarruri]

6. Wow thanks. Sounds like an excellent book! I think I'll read it. nt

[FarCenter]

7. Adam Smith dealt with economics and businessmen, he never imagined lawyers and financiers

The current financial system does not resemble the economic systems of Adam Smith's day.

First, we have a $500 trillion system of derivative financial instruments which bear scant relationship to the underlying economy of capital, goods, services and trade.

Second, it might be lower now, but monetary transactions were running about $5 trillion/day or so, which is orders of magnitude greater than the underlying economy.

Third, computers and data networking allow changes in the financial system balances faster than economists can measure them and far faster than regulators can respond.

[Robbien]

2. One thing we know for sure is Paulson's plan will insure the return

of only two classes, the rich and the rest of us poor suckers.

Don't know if the EU plan is much better but at least it is an alternative.

[stillcool]

3. Haven't the Brits, and others already bailed out their banks?

[marmar]

4. But they've taken them over, and thrown out all the detritus that got them into such bad shape....

..... not given a bunch of money to the same people who created the mess, ala Paulson & Helicopter Ben.

[lovuian]

8. looks like the Central bank of the world idea just got smoked

this is about America and how they are going to get out of this mess

[muriel_volestrangler]

9. But this doesn't mean 'no money spent in intervention'

The BBC has updated the story at the link; it now includes:

According to a draft statement seen by the AFP news agency, the leaders plan to guarantee loans between banks.
...
Money lent for up to five years would be guaranteed but the banks would be charged at commercial rates for the service.

The draft statement also says that the eurozone leaders are determined not to let any major financial institutions fail and will step in to provide extra capital to failing banks if necessary.

A member of the French government has already said that the French cabinet will hold a special session on Monday to approve a bill offering state guarantees and recapitalisation to banks in trouble.