Visit to Brussels

Last week, I was in  Brussels for a few days. I was there on other business but my visit coincided with the meeting that selected  the new President of the European Council.  This is a job for which I had put my own name forward  for consideration by the  27 Governments  represented in the Council.

I believe Herman Van Rompuy will be a very good President. He has a  detailed grasp of economics having  written several books on the  subject.  He was Belgian  Budget Minister  during the  build up to the  launch of the  euro and  understands the dynamics  of the European Union. He also  was economical in the  spending of  public money, a characteristic that is vitally necessary if European  states are  to  survive the  twin long term challenges of  economic restructuring and  ageing.

The current economic crisis has  laid bare  certain structural weaknesses in the European economy.  Essentially we are overcommitted in  some industries, finance, construction and motor cars.  Employment will fall in those industries and  new employments will have  to be found elsewhere.  Restructurings of that  kind  do not  occur  quickly or easily.  It took Germany  ten years to  create the  export  oriented economy it has  today. It is good that  the EU’s President  is  someone that understands  economic processes.

While in Brussels, I  had a  very useful  briefing  fro  officials of the  European Commission on the large package of  reforms of the  financial system that  the  are  piloting through the  Council of Ministers and the European Parliament at the moment.  It is important that  whatever is  done in Europe be equivalent in its effects  to  the legislation being advanced by  Senator Dodd and  Chairman Frank in the United  States.  If the legislation is equivalent in the sense  that  it  achieves the  same results, even if by different means, then   financial businesses will be  able to  operate on both sides of the  Atlantic  without too much costly  duplication of  compliance  with  different sets of  rule because the authorities will mutually recognise one another’s permits.

I hope the package  will include a ban on  trading in  risky  securities by banks that take deposits from the  general public.  Deposit taking institutions are ultimately backed by the  taxpayer and they have no business  being  engaged in  gambling  with the  people’s money.  An  outright ban on  certain activities  would be  simpler and easier to  enforce than a  complex  system of supervision of  activities which  is  always, of necessity, taking place after someone has  done something.