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Barroso’s patience snaps.Currently, political Brussels is in deep turmoil. Once again, the reason is the financial crisis, which has long developed into an employment crisis. The Portuguese Commission President Barroso causes a stir by warning the member states against national solo attempts to tackle the crisis and threatens to enforce the rules of competition. It becomes increasingly clear that the Commission only inadequately fulfils its coordination and leadership role with regard to overcoming the crisis. It is obvious that it had been surprised by events and now only manages to follow rather than lead.
Bank rescue packages do not have the desired effect, Commission warns of the collapse of credit markets
Example: bank rescue packages. Following the fact that the Commission as a reaction to the first wave of national bank rescue plans in October only replied with a very generally worded communication (so-called “bank communication”), it has two months later been forced - under the pressure of the Ministers for Finance and Economic Affairs to come up with more detailed rules. But that is not all: the bank rescue packages of the member states have not had the desired impact. The banks are still reluctant to fulfil their actual task, i.e. granting loans to companies and households. They are regarding the tax-financed billions provided by the state as a welcome gift of the public sector to replenish their exhausted reserves. Reserves, which were plundered in the last boom of carelessness in order to participate in the bets of casino capitalism. The reluctance of the banks to grant loans has serious consequences for everyone: sound companies do not get the financial funds to finance their investment projects. As a result the economic downturn gains pace and the labour market crisis continues to come to a head. A dangerous situation, described by experts as “credit crunch”, which has compelled the Spanish Commissioner for Economic and Financial Affairs Joaquín Almunía to issue a historically unique worded warning of a collapse of the credit markets in Europe.

State landfills for bank waste
Hence, the member states have to start from scratch again. Currently, two options are under discussion. The first option sees a stronger involvement of the state, where the public sector provides companies with the loans they need. The second option involves the establishment of a so-called “Bad Bank”. A “Bad Bank” is often compared to a state landfill. According to this plan, all banks could deposit their “toxic assets”, i.e. those assets they have acquired during the period of deregulated finance euphoria, without subjecting them to a detailed risk assessment, and which today are virtually unsellable and worthless, in the “Bad Bank”. That means in concrete terms selling them to the taxpayer. That way, the banks would have rid themselves of their rubbish at one go and - that is at least the hope of politicians and experts - could start from scratch again. An idea, the implementation of which is just being debated in the USA and which in slightly modified form, is currently applied in Great Britain. The decisive disadvantage of this idea: how can politicians explain this to the public? Over decades, banks, the finance industry and their managers have raked in on occasions exorbitant profits, and now the public is expected to buy these unsellable ‘rubbish’ assets from them and everything starts all over again, whilst employees have to suffer the consequences of short-time work, unemployment and a decrease in spending power.

ECB assumes leadership instead of Commission
Apart from political problems there are also technical problems. Once again, there is no European ‘manual’ as to how such a “Bad Bank” could be configured, to ensure that one member state does not treat its bank better than another. In this case and for that purpose, there has been no delay in bringing the European monetary watchdogs into play, as the European Central Bank - in agreement with the European Union - is working on guidelines for “Bad Banks”, which should be applied Europe-wide.

Tohubohu in the car industry
Second example: the crisis in the car industry. Mid January, Industry Commissioner Günter Verheugen invited the Trade and Industry Ministers to come to Brussels to discuss national and European reaction possibilities. The results of this meeting, however, were not concrete. Verheugen promised on behalf of the Commission that one wanted to support national measures, such as scrapping premiums, but that there were no European rules, what these measures had to look like in order not to infringe against the rules of the internal market. And once again reality has caught up with the European Commission. Various member states have - similar to the bank rescue packets - issued different packages of measures to help their car and supplier industry. The Czech EU Presidency, however, has been wasting no time in asking the Commission to provide unified regulations for the automobile sector, in order to prevent a race of the member states against each other.
All in all probably no reason for the Commission to celebrate itself. A Commission, whose time in office until now has been characterised by the gullible credo of liberalisation, deregulation and competition at any price, has in contrast to the Commissions of the past, forfeited its leadership role in Europe.