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Europe to U.S.: You messed up the rescue, too

PARIS (Fortune) -- First you mess up the world's financial system. Then you blow the rescue of it. Now let's show you how to do it properly.

That, in a nutshell, is the less-than-flattering message European governments are sending to the U.S. as they mount their own gigantic bank bailout. The plans, announced Monday after two weeks of dithering, involve Britain, Germany, France and some others recapitalizing national banks that require help, and providing state guarantees and other measures to kick-start the stalled credit market. The details are strikingly different from the U.S. approach adopted by U.S. Treasury Secretary Hank Paulson and the Federal Reserve Board. And there's a big reason for that: The Europeans think Paulson got it badly wrong, and have watched aghast as he failed to restore confidence in the world's financial system.

Sadly, that article also has this rewriting of history:


Stock markets for the moment are applauding the concerted European response. Only time will tell whether they're getting it right. It puts a huge onus on governments to fix the system, and the track record there is mixed. France nationalized its banks in the 1980s under President Francois Mitterrand for ideological reasons, but made such a mess of the job that it privatized them again.

French banks were nationalised (those that were not already public then) because, just like a number of the other companies that were nationalised, they were severely undercapitalised. They were sold off in much better shape than they were when bought, and for a substantial profit, not because they were "such a mess."

But of course writing such lies is part of the propaganda war being waged right now.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Oct 14th, 2008 at 07:37:17 AM EST

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