Britannia Radio

It is salutary to remember that other countries have been caught up 
in the crisis and here the Eurozone's response is clear and decisive.

Ambrose Evans-Pritchard has been warning - as readers may have 
noticed! - that indecision in the eurozone could lead to an early 
collapse of the Euro itself.  He now thinks that this decisive action 
has removed that possibility for now.  What the coming recession will 
do to it is another matter!

He fails to mention the word "Brown"   Mmm?    Sarkozy gets top 
billing as saviour in Europe, it seems.   Here Brown's crisis seems 
to be turning into Brown's triumph!   This is largely because Cameron 
appears to have lost his voice to protest, not about the rescue 
package but about Brown's responsibility for causing the mess.  His 
incompetence as Chancellor and failure to ensure proper regulation as 
well as his loss of control of credit, has led us to this pass.

The lead letter writer in today's Telegraph, David Spencer from 
Epsom, makes a start when he says - -
" Who was it that, as Chancellor, reigned over 10 years of unbridled 
boom? Who single-handedly ruined the British pension industry? Who 
flogged off half our gold reserves at a rock-bottom price? Who was it 
that relentlessly increased taxation and then squandered the 
proceeds? And who was it that ran up a massive Budget deficit?"

I could add to that - - - but then so could most readers!

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The move - unveiled simultaneously in the six states to maximise the 
show of unity - throws the full weight of the eurozone behind global 
efforts to stem the crisis.

The move gave a tremendous boost to bourses across Europe, lifting 
the Euro Stoxx index by 9.53pc in the biggest one-day rally ever.

The pan-European plan - totalling over $2 trillion, or £1.17 trillion 
- completes the third leg of a dramatic restructuring of finance 
across the Western world. Sovereign states have now absorbed the 
brunt of the credit risk in half the global economy.

"The greatest risk is inertia," said French President Nicolas 
Sarkozy, now basking in glory as the man who refused to give up after 
the first emergency summit of EU leaders ended in discord.

"The French state will not let a single bank fail. We have to unblock 
the interbank market because money has stopped circulating, but it is 
a reasonable bet that by offering this guarantee, it won't actually 
be needed,"
  he said, unveiling a French package worth ?320bn in guarantees for 
fresh interbank loans and a ?40bn bank rescue fund.

Sarkozy has emerged as the statesman of the hour, shaping events as 
others dithered. He appears to have understood intuitively that 
credit paralysis would set off a dangerous downward spiral.

Germany's rescue package totals ?500bn, far bigger in per capita 
terms than America's scheme. The bulk is to guarantee interbank 
lending, while ?100bn is for a stabilisation fund to recapitalise 
banks and cover losses - with strict pay limits for executives.

"We have placed the first foundation stone of a new financial order," 
said chancellor Angela Merkel, underlining that nothing would ever be 
the same again in banking.

She also warned that the US government's "massive support" for the 
Detroit car industry would create a major headache for Germany's 
producers, who are already struggling. BMW said yesterday that it 
would idle plants in Leipzig, Regensburg and Munich as demand fell.

Italy's finance minister Giulio Tremonti said Rome would provide as 
much money "as necessary" to stabilise credit markets. Italy's plan 
includes the injection of up to ?40bn in fresh capital into the banks 
on a "case by case" basis, through preference shares.

The Netherlands is offering a ?200bn guarantee; Austria is putting up 
?100bn, as is Spain - as a "preventive measure". Debts issued before 
the end of next year will be guaranteed for five years under all the 
national plans.

Diplomats say the world owes a great deal to France's finance 
minister, Christine Lagarde. A former chair of the US law firm Baker 
McKenzie and a friend of US Treasury Secretary Hank Paulson, she has 
been a bridge between the EU and Washington, helping to end the 
transatlantic sniping that has damaged market confidence over the 
past year. The close co-operation is in stark contrast to the 
catastrophic rift in October 1931, when France set off a wave of US 
bank defaults by pulling its gold out of New York.

The Sarkozy accord was not enough to shield Société Générale 
yesterday, as reports circulated that it might be the first to tap 
into the French bank rescue fund, perhaps needing as much as ?10bn. 
The share price collapsed 17pc at one point on fears of losses in its 
structured credit unit. Investors are concerned that it may suffer 
from exposure to Eastern Europe, where it has played a role in 
providing foreign currency mortgages. The shares ended down 2pc in 
Paris.

This week's dramatic action by the eurozone states has gone a long 
way to reassure investors that EMU can weather a severe crisis, even 
though it lacks an EU treasury or fully fledged lender-of-last 
resort. The EU Stability Pact rules on budget deficits have been 
shunted aside by invoking the "special circumstances" clause of the 
Maastricht treaty, opening the way for fiscal stimulus. The Dutch-
Belgian rescue of Fortis and the French-Belgian rescue of Dexia were 
not without friction, but at the end of the day the system was able 
to come up with creative solutions.

IMF chair Dominique Strauss-Kahn said the monetary union had faced 
its "ordeal by fire" this week. With French leadership, it survived.