E.U. does what other countries do
The E.U. is responding to the financial crisis by going the route of guaranteeing bank accounts -- soon after criticizing other countries for the same move. Renita Jablonski mulls over the move with Stephen Beard
Sign on the London Stock Exchange building (Shaun Curry/AFP/Getty Images)
More on International, Europe, America's Financial Crisis
TEXT OF INTERVIEW
Renita Jablonski: Markets around the world don't seem too impressed with Washington's passage of a $700 billion bailout plan. Good to have you along this morning as we continue with Fallout, our coverage of America's Financial Crisis. Here's how one financial expert puts it -- Europe, quote, "is feeling the wind of default blowing from the other side of the Atlantic."
Joining us now from the other side of the Atlantic is Marketplace European Correspondent Stephen Beard. Stephen, European markets are down 3 to 5 percent right now after a tumultuous weekend. What happened?
Stephen Beard: Well, we had an emergency summit on Saturday between the big four economies of the E.U., Germany, France, Britain and Italy, and they agreed to coordinate their response to the financial crisis. And then the next day, we had the German government going it alone, apparently guaranteeing 100 percent of all private German bank accounts. And that's caused a lot of consternation and dismay in the E.U. today.
Jablonski: So why all of these flared emotions because of this?
Beard: Well because this move potentially it could upset the apple cart, it could suck the deposits out of countries with lower levels of deposit protection like the U.K. But it's the fact that the E.U.'s largest economy apparently is going at a loan just one day after they criticized the Irish and the Greeks for doing the same thing.
Jablonski: And days after criticizing the United States as well.
Beard: Yes indeed, and suggesting that the United States was responsible for this crisis and that its days as a financial superpower were numbered. The crisis clearly has arrived with a vengeance in Europe this week, and certainly in Germany. Germany this weekend was rerescuing the giant property lender Hypo, which is helped rescue last week. So there's no doubt the crisis is intensifying, and here in Europe.
Jablonski: So coming off of this weekend, oil prices are at an eight-month low. What's the connection here?
Beard: That really does suggest that investors feel all this crisis and chaos in the banking sector will lead inevitably to quite a sharp downturn in the real economy, and that will mean significantly lower demand for oil.
Jablonski: All right, our European correspondent, Stephen Beard. Thanks so much.
Beard: OK, Renita.
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