Friday, August 24, 2007

The Beneficial Crisis Returns

Christine Lagarde
Christine Lagarde
The use of the 'Beneficial Crisis' in EU circles is well documented. So quickly do suggestions for further EU integration follow any disaster, be it an act of man or God, that it is hard not to suspect that there must be some unit buried deep in the bowels of the Commission dedicated to scanning the media for opportunities for the EU to extend its powers. Floods? even more centralised control in the name of climate change, which may or may not have been involved. Terrorist incident? Harmonise the criminal justice systems, that will strike fear into the heart of every terrorist. Mrs Miggin's cat gets stuck up a tree? Harmonise pet welfare laws.

The French are the past masters at this technique, and now seem poised to chance their arm at using the same methods at the Autumn meeting of G7 finance ministers.

According to the International Herald Tribune:
France said Wednesday that the recent turmoil in credit markets had strengthened its case for tougher regulation of global financial markets and that it would press ahead with proposals at a fall meeting of Group of 7 finance ministers.

...[Christine Lagarde, French finance minister] said that France and Germany, two countries she described as being "at the heart" of the initiative, were determined to use the current crisis as a catalyst for a stricter global rule book.

Source: International Herald Tribune

Now, I don't think that Gordon Brown has the same pretensions to be a fluent French speaker as his predecessor, however in this case he should only need a limited range of vocabulary; "Non" should suffice.

Much of my work takes me to the fringes of the finance industry, and opinion on recent rounds of regulation, much of it EU inspired, is unanimous. It is costly, bureaucratic and ineffective. As the IHT points out, Economists and investors are skeptical, and the recent market shocks are much more effective in making banks and investors reassess how they manage the risks in their portfolios.

I suspect the Franco-German axis will be thwarted when the meeting come around. For all his many faults, the Prime Minister has been pretty consistent in his opposition to most additional regulation in the financial markets, even when Blair may have been swayed by his obsession with being 'a good European'.

M Lagarde continues with her typical Gallic line:
"There is a growing case for better state involvement on a coordinated basis in various areas, one of which is stock markets and financial markets."

Source: International Herald Tribune

I think we can safely read 'more' for 'better' as that generally tends to be the French approach on most things, because 'better' might imply getting rid of ineffective and pointless existing measures which is something that is very unlikely to happen.

When I started this blog, one of my earliest posting was one about hope for a new dawn in French politics with Sarko. I think even then that I knew from a British perspective, that what we would get would be a bit of a mixed bag. It has certainly proved to be the case. In many ways Sarko has represented a break from the past, and has certainly vastly improved the international image of France.

In other ways it was always going to be a case of plus ça change, plus c'est la meme chose.

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