Thread: European bank rescue plan in tatters amid savings stampede

From The Times
October 3, 2008

European bank rescue plan in tatters amid savings stampede



Plans for a pan-European response to the global financial crisis lay in tatters last night as Greece followed Ireland in unilaterally guaranteeing all bank deposits.

Amid reports that Greek depositors were rushing to withdraw their savings, Greece's Cabinet agreed to protect all deposits whatever their size. Previously the maximum guaranteed was €20,000 (£15,600).

A proposal by President Sarkozy of France to create a European €300 billion bailout fund also collapsed, leaving attempts on this side of the Atlantic to calm investor panic and lubricate the money markets in chaos.

America's rejigged $700billion bank bailout still hangs in the balance, awaiting the approval of Congress today. But after days in which the surprises sprung by European governments had succeeded only in angering each other, the chances of a parallel joint plan from EU nations are, for now, slim to non-existent.

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The latest chapter in the story of this piecemeal approach to stabilising the banking system began on Monday evening, when a group of Ireland's most senior bankers trooped into Government Buildings in Dublin.

It had been a terrible day in markets worldwide and a catastrophic one locally. One bank, Anglo Irish, had seen its shares plummet by 46 per cent. There were rumours of large depositors demanding their money, including one German customer wanting an immediate €1.5billion. Then came the horrendous news that Congress had rejected the US bailout plan.

The shaken Irish bankers were grave as they poured out their story to the Taoiseach, Brian Cowen, and the Finance Minister, Brian Lenihan. Liquidity was drying up, they said, other banks were refusing to lend to them except for the shortest periods. According to one source: “They basically said, ‘Look, tomorrow two of our banks won't survive'.â€

But after days in which the surprises sprung by European governments had succeeded only in angering each other, the chances of a parallel joint plan from EU nations are, for now, slim to non-existent.

This is sadly funny. The EU is supposed to be an entity, but now the many members are ticked off at each other, and of course it will always be the fault of the US, with the dreams of taking over the whole world.
I can just imagine the wonderful fights between the three nations of the NAU: the Canadians will get ticked that the US uses so much of its natural resources for fluffy things like SUVs and the Mexicans ticked that the illegals that worked here for years are not eligible for social security for the rest of their lives, even though they were paid under the table or with fake IDs.