One Small (But Important) View Of ‘Dollars’ From Europe

Nothing says “fixed” quite like bureaucrats responding to a past crisis they did not foresee (and in the case of European bureaucrats, actively denied while it was happening) by establishing more layers of bureaucracies to “prevent” it from happening again. It is the most predictable result in all of finance and money as the government acting so busily to assure the public by creating rules and shifting power, always to their own advantage. Never mind that no crisis ever repeats, there will always be rules aplenty for the “last” one though never for the next one.

In 2009, European Union officials tasked a High Level Group (that’s the official classification; nothing displays the self-importance and credentialed “acumen” quite like High Level Group) chaired by Jacques de Larosière to come up with ways of protecting Europe’s “citizens” from really matters to that point unknown. De Larosière was a French bureaucrat who was probably the prefect representation of the effort. He had been appointed Managing Director of the IMF in 1978 after spending a decade and a half in French Treasury Department. There, de Larosière had even been a member of the French delegation to the Smithsonian Agreement, meaning that he had no shortage of experience in crafting government solutions that would ultimately accomplish little to nothing of value.

The work of the High Level Group centered around all the usual stuff, the limited hindsight provided by orthodox economists who themselves had very little idea what had happened. As is usual in these cases, they end up throwing a bunch of impressive (sounding) numbers together and stress how these numbers will be useful in the foreseeable future. The result in late 2009 was an unimpressive report that became the framework by late 2010 for the European Systemic Risk Board (ESRB). Almost immediately, the European system plunged into renewed crisis that, of course, the ESRB had no idea was coming.

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