Europe's Enron moment has arrived - by Doug Saunders
As Nicolas Sarkozy and Gordon Brown met for dinner in London last night, there was a distinct sense that both leaders were having an Enron moment: The sudden realization that the country's most-respected industries are going to need more government oversight. Both the French President and the British Prime Minister, who met to discuss the rattling economy and banking crises in an emergency summit with other European leaders, have discovered that their governments will need to take an active role - either in regulation or bailouts, or both - after recent disasters that have afflicted some major financial institutions.The Labour Prime Minister will certainly agree with Mr. Sarkozy about the need for more regulation, more supervision and a more active role for international agencies in keeping balance sheets clean.So far, so typical: Britain is sticking to its hands-off, ask-no-questions approach to industry, allowing mergers to occur as they may and paying no interest in the nationality of a company's investors. That hands-off approach, in contrast with the American post-Enron mood of regulation, has helped make London the world's main financial centre. And France appears to be pursuing a state-heavy, managed approach based on economic nationalism and expensive protection of venerable national institutions, a tactic that has kept its large companies in French hands.
But beneath the surface, seismic shifts are visible in the approaches taken by both countries. The financial meltdown of 2008 may well be remembered as the turning point for Britain and France, when both countries began to switch places.
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