‘Fair enough’ one might say. After all, the US’s staunchest and most compliant ally, Britain, actively colluded in the build-up of these massive, and now unpayable, Wall St. debts, and British banks will likely benefit from the bail-out.
European politicians, with the exception of Spain, declined to party at the Anglo-American-sponsored Credit Bubble saloon. It was Anglo-American financiers cheered on by politicians and regulators, that dined out on a ‘punch-bowl’ of de-regulatory excess. Europeans individuals and households are on the whole, far less indebted than than those in economies that emulated the Anglo-American model. Now that the party is well and truly over, there are pleas for help from Washington.
Hank Paulson on Sunday signalled the need for a multilateral approach to the crisis, which thanks to a highly integrated, international financial system – threatens to become a global systemic crisis.
But in one week the world has changed. The same politicians that Donald Rumsfeld mocked as ‘old Europe’ because they opposed the invasion of Iraq, are now refusing to play ball. The New York Times reports today that German Chancellor Mrs Angela Merkel “took the opportunity to criticize the United States and Britain for opposing German efforts to put greater regulation, or at least reviews, of the financial sector on the international agenda last year, when she was chairwoman of the Group of 7 industrialized nations.”
We can be pretty certain that Britain’s Labour government, led by Gordon Brown as Chancellor, stoutly represented the reckless gambling interests of the City of London, and lodged the loudest objections to a discussion of ‘greater regulation’ at the G8 Summit in 2007. Unfortunately James Naughtie in this morning’s interview with the Prime Minister, failed to challenge him sufficiently strongly as the Prime Minister spun his way out of the ‘light touch regulation’ attack, insisting that it had never been ‘soft touch’ regulation.
You could have fooled me.
But while plans and policies for the de-regulatory party were hatched in Britain by Messrs Hayek and Friedman and their Conservative friends – ranging from Heath to Thatcher to Blair and Brown – Britain’s new Chancellor, Alastair Darling, is refusing to rush to Mr. Paulson’s aid. Subdued, he addressed the Labour Party Conference yesterday on his “belief in the role of Government” and suggested very gently, that we may need to “strengthen global supervision” of the finance sector – after a galloping herd of horses has bolted, to quote Robert Peston.
Mr Paulson must feel pretty miffed at the disloyalty of a fair-weather friend. It seems times they are a’changin’ and the old trans-Atlantic alliance just ain’t what it used to be.