EU To Eastern Europe: Look For Help Elsewhere

Led by Germany, the EU turned its back on Eastern Europe today. European Union leaders rejected pleas for a 180 billion euro loan facility saying that the aid should properly come from international agencies like the IMF.

So faced with the largest crisis in its history, the EU has come up wanting. Smaller members of its confederation are hemorrhaging badly and it is no secret that the banks of the larger members as well as the Swiss banks are faced with insolvency should those countries begin mass defaults. Yet that eventuality was not enough to trump the parochialism that is written into the EU’s charter.

Perhaps the strangest statement to come out of the meeting today was the call by Germany for EU countries to return to solid fiscal management. Germany was decrying the budget deficits that some of the member countries are running. At a time when you need to worry only about throwing every thing you have into stimulating economies this seems to be about as wrong-headed a statement as is possible.

The EU leaders also rejected any aid to foreign auto makers saying that their national governments should provide any bailouts. This dashes the hope that GM had of securing a 3.3 billion euro facility.

Seperately, luxury automobiles in Berlin have become the target of social rage. Police report that a number of Porsches, BMW’s and Mercedes have been destroyed in arson attacks. This is just another example of the strains that the crisis is inflicting on the social compact of a number of European countries.

I keep harping on this but I do believe that the U.S. can muddle through the current recession so long as external events don’t throw us any curve balls. Unfortunately, it looks like there are some coming from Europe.

more: here and here

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