The European and the American Way

A Swedish ministry of treasury remarked already in the 80-ties that the more we spent on health care the less we got. Bureacracy is in the European DNA since centuries.

Before the EMU (European Monetary Authority) we had 17 central banks managing 17 currencies and 17 interest rates. In EMU they all replaced their currencies to EUR but we now have 18 central banks. In Europe bureaucracy is constantly added and never questioned or forced to transparently present its value add to society. There seems to be a total lack of respect for the tax payers' money.

Au the contrary the actions to remedy the financial crisis in the US were swift and precise. On July 20, 2010 President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. The Act is comprised of 16 titles, more than 200 new rules, 60 to 70 studies and 22 periodic report. End of story.

In Europe we tried to increase the financial stability by adding several new authorities in the European Systemic Risk Board (ESRB) and three new European Supervisory Authorities (ESAs). The ESAs are comprised of the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA). These new authorities was added to the three bodies we already had, which wasn't regarded as powerful enough. In turn the ESAs shall work in a network with all the existing 27 national supervisory bodies. In addition the European Financial Stability Facility (EFSF) was introduced to supply financial support to ailing EU sovereigns. I stop the listing here despite it can be much longer...


It is obvious the European solution is never going to work and it won't be increasing neither financial stability nor transparency. As with most public authorities they will strive to restrict their responsibilities over time and the gaps between what they actually perform and what we expect from them will grow bigger and bigger. And it is impossible to see the big picture and how each authority fit in and what they actually are supposed to do. That is very convenient for the bureaucrats of course. There is actually something like a free lunch. The EU is sadly a perfect example of how bureaucracy is self feeding and performing less the bigger it gets. 

There is a huge difference between the European and the American way and I'm really concerned about Europe, there is not any leadership, just an enormous overhead. That was not what the EU intended to be and I feel betrayed.

We can now also see why it is so important for them to:

1. Implement a tax on financial transactions since they believe it will create more income to support and increase their numbers and sizes

2. Censor the rating agencies to decrease the transparency so no one really sees what has and is happening.

Corporates need to voice its opinion

Another sad effect is that the immense funding needs of this overhead is forcing Europe to pay extra high taxes and of course bureaucrats introduce bureaucracy forcing corporations doing lots of none value adding activities. It is no wonder Europe is lagging in growth and has high real unemployment since the corporate world is pragmatic. If Europe is not structured to promote, instead demote corporate activity it will decrease and since decades we have experienced a silent revolution where corporates have abandoned Europe and few new have appeared. Soon there will be an infliction point where it all has to be reversed. We are getting closer and closer to that point. I believe we must voice the corporate position more widely. CEO, CFO and Group Treasurer of companies say they are not paid for philosophical or even political discussions. That is correct. However we all have a responsibility to voice our concerns of the development of our homelands. Support this blog by becoming a "follower" and/or join the peer group so we can act.