United States: a boy is a boy

Relative to the 2008 subprime crisis, the United States, the euro zone was dragging its feet, passing the buck. After the outbreak of the subprime mortgage crisis, the Fed continuous, substantially lowered the federal funds rate, reducing the discount rate, conventional monetary policy instruments used in the extreme. At the same time, the Fed implemented deposit-taking financial institutions, innovative financing mechanisms (TAF), a securities dealer based investment bank has implemented innovative Securities Lending Facility (TSLF), and enable a dealer credit instruments ( PDCF), money market mutual fund liquidity tool (AMLF), the Commercial Paper Funding Facility (CPFF), a variety of unconventional measures. By financial institutions with direct or indirect assistance, to increase market liquidity supply, and expand the scale of domestic credit, as much as possible in a relatively short period of time to restore market confidence. In addition, the Fed announced a temporary increase with the European Central Bank, Bank of England, Swiss Bank and the Bank of Japan's dollar swap lines to the ceiling, and the European Central Bank, Bank of England, Bank of Canada, the Swedish Riksbank and the Swiss National Bank jointly announced to cut interest rates, active mediation between the international financial organizations, with large-scale joint rescue operations.

The U.S. Treasury also issued a series of unconventional policy, including the implementation of the $ 150 billion fiscal stimulus packages; aid jointly with the Federal Reserve and take over America's largest home mortgage lenders Fannie Mae and Freddie Mac; then U.S. President George W. Bush approved Emergency Economic Stabilization Act of 2008 authorized the U.S. Treasury to establish the largest ever of $ 700 billion of impaired assets disposal plan (TARP), to allow the U.S. Federal Deposit Insurance Corporation to guarantee the deposits from the public; the U.S. Congress also passed the 789 billion the dollar's 2009 fiscal stimulus plan. This series of initiatives in order to illustrate a problem: the U.S. government announced to the world, the U.S. Treasury and the Fed is the lender of last resort for the financial crisis. This will restore market confidence has played a great soothing. At the same time, to safeguard the U.S. financial market stability, protection of consumer interests, the U.S. government launched the biggest ever reform of the financial regulatory system, merged savings institutions Regulatory Agency (OTS) and the Comptroller of the Currency (OCC), and the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), the establishment of a new financial regulatory system. Although today there are still many problems such as the face of the financial crisis of 2008, the U.S. government "a boy is a boy to eat", to force the role of monetary policy, fiscal policy, regulatory policy, a variety of measures, directly to avoid a possible Great Depression.

EU: three monks no water

The European debt crisis, the euro area of ??17 members of 17 different government interests, the potential 17 kinds of responses, especially in highly indebted countries and between the core countries, due to the common interests of the fit, it is difficult to alleviate the debt crisis reach a consensus. EU decision-makers shot a relief measures, was dragging its feet, passing the buck to rescue a government debt crisis and banking finance crisis, can not find the U.S. government response to the 2008 financial crisis, the U.S. Treasury and the Fed as lender of last resort . From the current situation, in addition to the International Monetary Fund (IMF) to ease the debt crisis in Europe "emergency" funds can only come from the European Financial Stability Fund (EFSF) and European stability mechanism (ESM), but from the address fundamentally debt crisis in Europe, promoting the economic integration process in Europe, to establish a unified fiscal union, is still far from enough.

An attempt to set up a road map for a closer fiscal union, may require the transferring national sovereignty of member governments on budget issues, as well as the more Member States to amend the constitution or even a referendum. In addition, the EU member states must be signed in basically the same fiscal union within the framework of the new covenant, approval of new financial laws. It seems that the full implementation of the proposition of a fiscal union, it may take several years or even longer suffering. The current situation is the staggered urgent banking crises and sovereign debt crises to be seizing the day.

Establish a deeper fiscal union

So, as part of the establishment of the grand scheme of fiscal union in advance of introduction of the euro area financial markets, Union, namely to issue common euro zone bonds or the establishment of the EU deposit insurance system may be easier to implement than the eurozone as a whole structural reforms. But the question is, if it involves bank debt "sharing" will certainly lead to the controversy of the various stakeholders. For example, France, Fran?ois Hollande, the government recently the national retirement age lowered to 60 years old, the Dutch government fiscal austerity initiatives, raise the retirement age to 67 years, Member States social security system is not uniform, will obstruct those lower welfare standards countries to participate in the euro zone common bond or the EU deposit insurance system, but can not expect them to promote the establishment of the euro area banking sector alliance. Harmonization of Member States of the social security system, will have a far-reaching impact on the sovereignty of member states.

This is technically relatively perfect ease the debt crisis in Europe initiative, there must be a deeper level of financial alliances as the basis. Moreover, even the establishment of the euro area financial markets League in Britain does not join the case, some large financial institutions in order to avoid the euro area more stringent regulatory rules does not exclude the transfer of funds to the UK may, capital flight will make the euro area under greater crack down.

The EU so far has failed to establish a close financial and economic alliance consensus. The economic strength of the current EU member states, Germany, the most have the ability to play a role to save the debt crisis in Europe, but Merkel consider the economic interests of Germany and the German people's sentiments against it, refused to do so, and avoid as much as possible in the euro District economic imbalances, possible liability, resulting in the euro area real economy is now increasingly recession, Germany's economic situation is still good, high debt countries with the core countries of the difference of bond yields are growing wider.

Another can play a role to save the debt crisis in Europe is the European Central Bank, but lack the courage to resolve the crisis due to the forces of the parties about its own does not solve the crisis in the sense of urgency. European Central Bank Governor Mario Draghi recently said, "I do not think the approach is to use monetary policy to compensate for the negligence of other institutions."

Cyprus, the 17 member countries in the euro area, there are Greece, Spain, Italy, Finland officially apply to EFSF Assistance (CSSA), with possible assistance in the near future there will be more than a quarter of member governments or banks into crisis, unable to extricate themselves. With the crisis to the depth of progress, the EU has been to split the two camps for the creditor and debtor countries, due to differences in economic conditions, between the conflict of interest not act adjustable and. In addition, the euro area political forces and social situation are moving in the direction of the split, which led to the turmoil, the original intention of the establishment of the euro - to maintain more stability. "Very different, and the viability of the European Union has begun to attract questioned in the market.

The immediate priority, the EU decision-makers should provide adequate crisis management tool to address short-term problems, develop a clear long-term crisis solutions, while alleviating the banking crisis and sovereign debt crises. At the same time, as much as possible in the interests of the euro area as a whole, the core countries, "alienation" part of the economic interests, inhibit the competitiveness of the region growing trend of differentiation; highly indebted countries, "transferring" parts of sovereignty, signed "Chengxiazhimeng" reduce the heavily indebted poor countries increasing financing costs. After all, maintain the integrity of the euro area is in the interest of all Member States, but also a European interest lies, so that the interests of all parties rivers to the sea, and working towards the forward direction of the financial and economic union is the key to the past and in the process of European economic integration step.


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