Further to Ruth Lea's excellent post, two speeches from European politicians in the last 48 hours on the credit crisis are worthy of note. Gordon Brown's speech in New York yesterday, as noted by Simon Chapman, called for an end to the "Era of Irresponsibility" - a strange way of describing the ten years when Brown was in charge of this country's public finances and was personally instrumental in setting up the "tripartite" regulatory regime of our banks.
Equally outrageous was the speech on Thursday by the German Finance Minister Peer Steinbrück of the Leftist SPD. Germany has had some banking failures of its own, and Steinbrück put the blame squarely on the US.
This certainly surprised me, as there is something in common between most of the German banks which have been in trouble over the last year or so - such as the Kreditanstalt für Wiederaufbau (set up after World War Two to make loans to German industry and infrastructure), Bayern LB (which acts as an in-house bank to state institutions in Bavaria, and to local authorities) and the IKB Deutsche Industriebank (which makes long-term loans to medium-to-large companies) amongst others.
The first thing they have in common was that all invested heavily in US sub-Prime mortgage securities. The second is that they are all partly or fully state-owned. None of them had a business remit seemingly anywhere close to the U.S. mortgage market (in fact, I remember doing business with all of them in the 1990s in very ordinary Deutschemark interest rate swaps, and all were then very conservative institutions, known for being risk-averse, so what has happened since?).
So how exactly is the US Government to blame for this, if German state-owned banks decide to take a flyer on risky US mortgage securities? And who exactly has been in charge of banking regulation and public finances in Germany the last 10 years - well, the SPD, of course.
How many more European politicians will join Brown and Steinbrück in blaming the US for their own failings? Steinbrück has even called for the US to lose its leading role in world financial oversight - let us just hope that he isn't the man to take it over.
