Earlier this week the spin coming out of the EU was simple. The banking problem is a US one, and the US has to find a solution. The implication was there are no problems in Europe, other than some infection at the margins from their US operations.
Now we learn that there are problems which the French President thinks the leaders of European countries ought to discuss at a special crisis meeting. It’s a bit difficult to sustain the spin line that this is just a US matter if they are going to do that.
Meanwhile in the real world, a special credit guarantee of 35 billion Euros has been made available to Hypo Real estate, Bradford and Bingley is being dismembered and partly nationalised, Glitnir the Icelandic bank has been nationalised, Fortis has had an injection of money, Dexia has received special treatment and the Irish government has offered guarantees on all Irish bank deposits. For all that to happen in a week – and it’s still only Wednesday -you have to conclude the the EU has a banking problem as well as the US, and much of this problem revolves around excess European lending under the eagle eye of EU Regulators.