EU unveils plan to clamp down on shadow banking

Associated Press ^ | Sep 4, 2013 8:57 AM EDT | Juergen Baetz

[Olog-hai]

The European Union is pushing for a more stable financial system by clamping down on “shadow banking”—the high-finance sector that handles trillions of dollars but isn’t bound by the same rules as banks.

The Commission, the EU’s executive arm, said Wednesday that while investment vehicles such as money market funds or hedge funds are welcome because they provide extra sources of financing for companies and the economy, they can also pose serious threats to long-term financial stability.

Analysts and economists have argued that the lack of oversight in the shadow banking sector played a major role in the global financial crisis of 2008. …

[Olog-hai]

No; it was the European Central Bank playing with interest rates that was the major cause of the 2008 crisis.

[1rudeboy]

...it was the European Central Bank playing with interest rates that was the major cause of the 2008 crisis.

Really? Who's been arguing this?

[IbJensen]

EU recently and arbitrarily outlawed olive oil served in cruets in European restaurants.

See what these so-called leaders are leading us to? First the entire hemisphere under one EU-style government, then being folded into the EU and, voila!, we are part and parcel of world socialism.

Keep an eye on these trade treaties and see what they’ll bring us. Probably more prosperity and freedom as did NAFTA and WTO and the others waiting to be rolled out for American suckers.

America doesn’t even manufacturer widgets. Government Motors is moving most of its manufacturing abroad to join all our other sources for stuff.

[Olog-hai]

These people.

Following the European Union’s adoption of the euro, the European Central Bank kept its interest rates at 2 percent to help reunified Germany. Money poured into Britain and America, distorting money markets. After December 2005, the ECB inched up interest rates seven times. In January 2007, Germany raised VAT by 3 percent and the German unions asked for increased wages in compensation. German Bundesbank President Axel Weber sought and secured another ECB interest rate rise to curb German wage inflation. Higher interest rates then caused funds to sweep back to Europe, and soon the US and UK financial systems began to crack. After a further ECB interest rate rise in July 2008, stock markets round the world collapsed.

— European Journal, January 2009

Note that I didn’t claim it was the sole cause, here. And if the EU is going after shadow banking merely to regulate it, then they see it as a tool and not inherently dangerous; they just want a piece of the estimated $67 trillion.