Sarkozy wants a 300 billion euro bailout plan

[Andrew87]

BRUSSELS (Reuters) - France and Germany were at loggerheads on Wednesday over the idea of a U.S.-style financial rescue fund for Europe as EU governments went their separate ways in response to the global credit crisis.

The European Commission appealed for more consistency in deposit guarantee schemes and stronger pan-European financial supervision, but the apparent discord between Paris and Berlin underlined the difficulty of finding a common approach.

French Finance Minister Christine Lagarde said in a German newspaper interview that a "European safety net" could be needed to prevent a bank in a smaller EU country from going bankrupt.

But Chancellor Angela Merkel said Germany "cannot and will not issue a blank cheque for all banks, regardless of whether they behave in a responsible manner or not."

A European government source said Paris had floated the idea of a 300 billion euro (237.2 billion pounds) EU rescue fund ahead of a meeting of leaders of the four big European powers and top EU officials tentatively set for Saturday in Paris.

European Commission President Jose Manuel Barroso said he was working closely with French President Nicolas Sarkozy to present proposals to the leaders in Paris.

But British Prime Minister Gordon Brown's office would not confirm he would attend, and France said no firm date had been set for the meeting, which officials said would only go ahead if there was sufficient consensus to achieve a result.

"It's not just a problem of injecting liquidity," Barroso told a news conference. "We also need to inject credibility in the European response. That's why we are urging member states for closer cooperation."

Ireland's decision to guarantee all deposits in Irish banks infuriated Britain, sucking money away from British banks where the guarantee is more limited, and drew fire from Brussels.... continued:http://uk.reuters.com/article/wtMost...BrandChannel=0

What do you think of it?

[Caelius]

So much for the schadenfreude non-Americans (Europeans in particular) are jumping up and down over as a result of the financial troubles over the last week is what I think......

This thing is global.

[Erebus Pasha]

So much for the schadenfreude non-Americans (Europeans in particular) are jumping up and down over as a result of the financial troubles over the last week is what I think......

This thing is global.

Only a small number on this forum - the usual crowd. Most intelligent people know this thing is global so there is no need to be smug about it.

[Viking Prince]

They do have central banks that already perform this function don't they? Not to mention the European Central Bank. What are these guys doing? Bureaucrats without responsibilities?

Edit: I take it back -- they have no ECB support for liquidity

Use of the standing facilities (Figures as at 01/10/2008, EUR millions)
Use of the marginal lending facility:15,348
Use of the deposit facility:48,473

[Gumpfendorfer]

So much for the schadenfreude non-Americans (Europeans in particular) are jumping up and down over as a result of the financial troubles over the last week is what I think......

This thing is global.

Actually the Uk is in a far worse state than the US, the Guardian describes the UK economy as one huge hedgefund -the average Brit has more debts than average American. Industrial production is shrinking, service sector has come to a standstill. The Brits better brace themselves for a steep but hopefully short recession.

[Viking Prince]

Actually the Uk is in a far worse state than the US, the Guardian describes the UK economy as one huge hedgefund -the average Brit has more debts than average American. Industrial production is shrinking, service sector has come to a standstill. The Brits better brace themselves for a steep but hopefully short recession.

From Blomberg.com

Northern Rock Turns Away Savers After Deposits Surge (Update2)

By Jon Menon

Spoiler Alert, click show to read: 

Oct. 2 (Bloomberg) -- Northern Rock Plc, taken over by the government in February, turned away savers after cash flooded into the only U.K. bank to offer complete protection of deposits.
The state-owned bank's decision will ensure its share of consumer deposits doesn't exceed 1.5 percent of the U.K. retail savings market and that the company doesn't take ``unfair advantage of government support,'' the Newcastle, England-based bank said today in an e-mailed statement.
``Recent turbulence in financial markets has led to a sizeable inflow of retail deposits, particularly in recent days, and Northern Rock is therefore taking further action to moderate its product range and product pricing, to uphold its competitive commitments,'' the company said in the statement.
Northern Rock benefits from an unlimited state guarantee on deposits, while customers of other British banks have savings protected only up to 35,000 pounds ($62,000). Bradford & Bingley was partially nationalized on Sept. 29 and the government brokered a takeover of HBOS Plc by Lloyds TSB Group Plc on Sept. 17.
Northern Rock is withdrawing four products to new customers, including its fixed-rate access bond. The Internet- based E-Saver product offered rates of 5.75 percent on deposits of up to 250,000 pounds.
Competition for deposits has increased in the past year, as banks have become more dependent on consumers' cash following the seizure of credit markets.
`Completely Irrational'
British banks yesterday expressed concern about Ireland's decision to offer unlimited guarantees to its bank deposit accounts. The European Union is to study the plan, which was passed by the Irish parliament today.
``I believe there is a reasonably meaningful move of deposits from U.K. banks into Irish banks and Northern Rock,'' said Simon Willis, an analyst at NCB Stockbrokers Ltd. in London.
The Bank of Ireland has said it has seen a steady increase in people contacting its call-centers, the British Broadcasting Corporation reported. Britain's Post Office, whose savings products are backed by the Bank of Ireland, has also reported a rise in the number of customers seeking to invest, the BBC said.
``People are being completely irrational by fleeing in this way,'' Vince Cable, the British Liberal Democrat finance spokesman, told Irish state broadcaster RTE. Cable said 98 percent of all U.K. deposit accounts are covered by existing protection.
Northern Rock came under government control after it was bailed out by the central bank in September 2007 when it experienced the first run on a British bank in more than a century.
To contact the reporter on this story: Jon Menon in London at jmenon1@bloomberg.net
Last Updated: October 2, 2008 04:53 EDT

The problem with complete lack of risk is that there is a temptation to flee volatile markets. All of the UK seems to fit. Ireland has had to pass a complete guarantee. Maybe the $700 billion bailout might be cheap -- no, I did not say that.

[Osceola]

Thats cute. We started a trend. ;o

[Sphere]

One of the big arguments for this plan is that currently EU nations are doing bailouts and nationalizations individually and thus in a very non-uniform way.

Thus you get voliatile results like Northern Rock and that Irish bank getting government deposit gaurantee's giving them an unfair advantage that is sucking in deposits. And there are many banks that cross EU borders so one nations bailout may hurt other nations banks by giving unfair advantages.

All these individual ad hoc bailouts will probably end up being more expensive, and will add volitility to the markets rather than calming them. A more comprehensive, uniform system would be better in my opinion.

[Каие]

What's with all the golden parachutes, have they gone into mass production? This is sending out the wrong messages...you can steal everyone's money, do risky deals, sneaky manoeuvres, and don't worry just in case you fail, we'll rob the taxpayer blind and help you out.

I heard the American bailout would cost the taxpayer $2,000 each, absurd. Let the banks be taken over...or their assets bought out by others...they need to be taught lessons,and then introduce high regulation to make sure they don;t up again.

[The Noble Lord]

Because Europeans are copying Americans, now some Asian countries want to implement their own version of bailout plan. Really, where its gonna end??

[Mikelus Trento]

Really, where its gonna end??

The Somalia Bailout Plan.

[eddy_purpus]

The Somalia Bailout Plan.

what about the NK nuke plan ?

[Gelgoog]

What's with all the golden parachutes, have they gone into mass production? This is sending out the wrong messages...you can steal everyone's money, do risky deals, sneaky manoeuvres, and don't worry just in case you fail, we'll rob the taxpayer blind and help you out.

I heard the American bailout would cost the taxpayer $2,000 each, absurd. Let the banks be taken over...or their assets bought out by others...they need to be taught lessons,and then introduce high regulation to make sure they don;t up again.

thats what they are doing. alot of banks are being sold off to other companies very cheaply. The bailout isnt simply, ok you let your company ruin america, so heres money. its your fired and were taking you over and using our money to fix the problem. golden parachutes are going to quickly become a thing of the pass as legislation going right now will limit the amount CEOs can take.

[Thanatos]

What's with all the golden parachutes, have they gone into mass production? This is sending out the wrong messages...you can steal everyone's money, do risky deals, sneaky manoeuvres, and don't worry just in case you fail, we'll rob the taxpayer blind and help you out.

I heard the American bailout would cost the taxpayer $2,000 each, absurd. Let the banks be taken over...or their assets bought out by others...they need to be taught lessons,and then introduce high regulation to make sure they don;t up again.

I heard more, around $17,000. Either way, it's quite ridiculous.

[Каие]

I heard more, around $17,000. Either way, it's quite ridiculous.

$17,000? That is just nonsense, and one of those things that the 2nd amendment is for I hear. That's daylight robbery.

[Perkele]

Sarkozy can go himself. The whole idea of bail out is idiotic. First they loan us money and take the profits, then we 'bail them out' so that they can take more profitst from us.

It's like giving steroids to a leech so it can suck more blood from you.

[Panzerbear]

can somebody please bail me out as well? 1 million Euro will be suffecient .

and then I promise we will be friends. yeah. hell, I'd take even $100,000 .

[Erik]

[rant]
WHAT?????
Pardon my French but no ing way!

I am NOT going to pay for the failing French and British banks.
It's just not going to happen.
off!
[/rant]

In my country we have very strict banking rules exactly to prevent such a crisis.
But this didn't come cheap: it's much tougher to get a mortgage in the Netherlands than it is in Britain or France.
For decades we lived conservatively, we didn't squander our money on luxuries and we payed loads of taxes to pay off our WWII debts.
Meanwhile people in other countries, who lived the easy life on borrowed money and didn't worry about the next day.

And now they want us to use OUR saving accounts to save THEIR economy?
What on earth makes them think we would ever agree to that?

[Boyar Son]

And now they want us to use OUR saving accounts to save THEIR economy?
What on earth makes them think we would ever agree to that?

theres no "I" in team.

j/k

[Thanatos]

It's not so ridiculous when you think about it. For example, people are all totally ok with bonds, bonds, everloving ing BONDS, never mind that you'll have to pay it off later, plus a lot more...

People are stupid already, they turn downright moronic in desperate times.