European Leaders ‘Don’t Grasp the Scale of the Abyss Facing EU’
The European Union’s failure to come up with a unified approach to tackling the financial crisis at Saturday’s summit meeting of the EU’s four biggest economies shows that European politicians haven’t yet realized the dimension of the risks facing the financial system, write German media commentators.
Governments effectively agreed to go it alone in shoring up troubled financial institutions in their countries — the wrong response given how interwoven Europe’s financial markets are.
The divisions were highlighted on Sunday when Germany became the latest country to give a state guarantee for bank deposits in a move that has put other countries like the United Kingdom under pressure to follow suit.
Now Germany, Ireland, Greece, Denmark and Austria have given such guarantees, reflecting concern that the crisis could cause a disastrous rush to withdraw cash from banks, media commentators write.
German editorial page writers say it’s no longer enough for politicians to point the finger of blame for the crisis at bank managers. The current escalation of the problem isn’t due to reckless speculation and poor risk management, they argue, but rather the threat of a systemic crisis that is undermining confidence in the entire banking system and preventing banks from lending each other money.
At this point, commentators write, it’s only the governments that can stop the crisis spreading.
