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EU leaders tear up rules of eurozone - Europe, World - The Independent

Public spending curbs and rules against state subsidies will be thrown - temporarily - out of the window to rescue European banks from the abyss of the global financial crisis, EU leaders agreed at the weekend. Leaders of the four largest European Union economies - Britain, France, Germany and Italy - came up with no EU-wide magic formula, or rescue package, to defend the buckling European financial system.

They did agree, however, that national governments should be at liberty to take drastic action to shore up their own financial institutions, busting EU limits on national budgets and flouting European rules against public subsidies if necessary. Meeting in Paris, the Big Four insisted that national governments must "consult" their European partners before taking action which could harm rival banks in other countries. This was a rebuke to Ireland's decision last week to guarantee all bank savings for two years but also, implicitly, a recognition that other nations may have to take similar action.

But they accepted that the rules of the Stability and Growth Pact - the eurozone rules requiring that national budget deficits should be progressively reduced to zero - should be relaxed. This was a silver lining in the crisis for the French government. Even before the financial meltdown, Paris had been struggling to meet its commitment to balance its budget by 2012.

by Fran on Mon Oct 6th, 2008 at 02:46:56 PM EST
[ Parent ]
Well that's a relief, we wouldn't want the French Government to have to renounce its tax breaks for the rich, which as we all know are the seeds of a vibrant trickle-down economy and budget surplus.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Mon Oct 6th, 2008 at 04:11:39 PM EST
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"Paris had been struggling to meet its commitment to balance its budget by 2012"

That's a misleading statement.

"Paris had not been trying in the least to meet its commitment to balance its budget by 2012"

There, I fixed it.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Oct 6th, 2008 at 04:13:42 PM EST
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This is not a breach of the Growth and Stability Pact, which does include the possibility to relax criterai in times of crisis - it is the invokation of that clause which happened yesterday, ie fully within the rules of the GSP

But that's too complicated to explain and goes against flahy headlines, right?

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

by Jerome a Paris (etg@eurotrib.com) on Tue Oct 7th, 2008 at 04:25:42 AM EST
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Particularly by British foreign correspondents in Paris, in this case John Lichfield.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Oct 7th, 2008 at 08:45:28 AM EST
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