Many commentators have criticised the refusal by the UK government to agree to European Union treaty changes that would have ceded control of the UK financial markets. France in particular maintained the position that these changes, allowing the introduction of an EU-wide transaction tax, were necessary to prevent a repetition of the current crisis. A transaction tax won't solve the current crisis - it will be a case of shutting the stable door after the horse has gone..
The big half-truth, bordering on a big lie, is the assertion by politicians throughout the EU that the crisis was caused largely by the banks. Yes, they were part of it, but most European governments have been surviving on budget deficits, with the gap closed by growing levels of borrowing, ever since the introduction of the Euro. This money was lent by the banks and low rates were underpinned by the assumption that European sovereign lending was all as safe as German debt.
What has really rocked the banks is the discovery (surprise, surprise) that some governments couldn't close their deficits, and at that point, the assumption of safe sovereign lending was blown out of the water. The governments have caused the banks to lose stability due to their own inability to address their budget deficits. Politicians keep blaming the banks to shift attention from their own failures. They don't want to adopt the debt brake (Schuldenbremsen) proposed by Germany, or they're frightened that their electorates won't stomach it. There's a good article from The Economist
here.
The big truth that electorates throughout the EU should remember when they next have a chance to vote is that debt must be repaid, sooner or later. If it doesn't look as though debt will be repaid, the lenders will keep raising rates or bond yields to take into account the risk of default. That's reality.
