It was like watching Alice in Wonderland last night….as CNN carried the magnificent coverage of President Obama arriving in the UK, and how the wonderful G20 conference was proceeding. The nifty Ipod that the President gave the Queen….barely mentioned….again….this great gift ability of the current administration.
At some point, CNN decided that it would kinda mention that President Sarkozy of France and PM Merkel of Germany had very strong and stringent plans for bank rules that they wanted to press for. The Brits were keeping quiet….because they just didn’t want to go this distance. Then the CNN analyst kinda said….ever so briefly….that the President had “downplayed” this stringent rules idea. The two CNN experts who were on and talking about the entire wonderful G20 event….avoided any further discussion over this.
The amusing thing….as you went to other European news outlets….both Sarkozy and Merkel are talking tough on this issue. Sarkozy is willing to just walk out, and has actually said that he is capable of doing so….with Germany very likely to follow.
What is developing here….is this gameplan….either the US and the UK sign up and endorse this stringent plan….or Sarkozy does his walk. For CNN, it’ll be hard to explain why the G20 conference was a four-star success….if France isn’t a part of the deal. It’ll complicate matters even more….if Merkel walks out.
Why stringent rules? Basically, the French and German banking sector were stupid in buying into the hedge fund business of the US…..and they were stupid in allowing the depth of bad investments to continue. Then there is the issue of people getting massive loans….which they are clearly unable to pay back. So the two countries are prepared now to toss the banks over a notch….and make life a bit more miserable as a banker. You as the consumer? You might find that big loans which were usually easy to make in the past….are gone.
Why does the US administration continue to the light-hands approach over the bankers? This is the one thing that isn’t clear. They were readily to strike down AIG. They had all kinds of ideas of controlling banks….but just not by stringent rules….which is puzzling.