During the Plenary Session of the European Parliament in Strasbourg last week, there was much talk of financial governance.

Measures were tabled which are supposed to put in place a better supervision of the major financial institutions in the light of the world crisis. A proposal was adopted to control bonus payments to senior bankers supposedly to discourage them from the kind of reckless gambling that was evident on the international financial markets leading up to the crash in 2007. The other proposals for banking supervision have been postponed for ratification until the Autumn.

What was striking though in the contributions of the most senior political figures in the EU was the apparent absence of any real sense of the depth of the crisis facing several countries in the Union and the implications for the European Union as a whole. “We faced a real risk and successfully resisted it,” said EU Commission President Barosso as if the crisis was now a thing of the past, while his Commissioner colleague Olli Rehn barely acknowledged the existence of a crisis when he moved discussion on the new banking measures.

In summing up the six months Spanish presidency of the EU, Spain’s Prime Minister Zapatero took the opportunity to lay the blame for the financial crisis on far off players. “We know that the crisis had a financial origin, not within our borders but in the United States,” he said. However, that is a view hotly contested by others, as, by coincidence, the seriousness of the crisis in Europe and where to place responsibility for it, is the focus this week of two of the world’s most read magazines, Time and Newsweek, both of which have striking cover stories.

Time’s headline is “Why Europe can’t get off the ground”, with a sub head which says, “It will take more than budget cuts to fix some of the continents’ economies.”

“Worse than Wall St.” declared the banner headline on Newsweek’s cover, with a subheading, “How Europe’s huge losses are killing the economy.” Inside, writer Stefan Theil states baldly, “Europe’s dirty secret is that its banking system is sicker than Wall St”, going on to point out that European banks were just as guilty as their American counterparts of reckless gambling with toxic assets.

The EU establishment would like to minimise the European contribution to the world financial crisis just as Fianna Fail did in relation to the Irish disaster until the banking reports caught up with them. The truth of course is that the political establishment in the EU carries a major responsibility for the current mess. For decades, it pushed the kind of deregulation and liberalisation that created the context for the speculators and predatory banks to be allowed to create a pyramid of debt that inevitably came crashing down. Many of Europe’s banks revelled in this climate every bit as much as those in the US, a fact testified to by the massive loans they now have outstanding.

“Never waste a good crisis” is the cynical motto of many right wing commentators referring to economic measures which can be imposed on society in the interest of the establishment that wouldn’t be accepted in normal times. There’s no doubt but that EU Commission President Barosso believes strongly in this motto also as he used the current crisis to insist on strict adherence by Member States to the targets for borrowing and deficits laid down in the Lisbon Treaty. He wants all governments to be obliged to submit their proposed budgets for EU approval and strong punishments for those who refuse to follow the EU line.

However, as Times magazine points out it will take more than budget cuts to turn the economies around in many European countries and indeed there is evidence that the savage programme of cuts in living standards, pensions and public services is having a catastrophic effect on the lives of tens of millions of European citizens. In Spain, unemployment is now over 20% including a shameful 40% youth unemployment.

The stark fact is that nothing that happened in Strasbourg last week changes any of this. Nothing that was proposed by Mr Barosso or Commissioner Rehn challenges in any real way the kind of economic dictatorship that is currently being exercised by the billionaire gamblers in the world financial markets. They are still allowed to dictate that interest rates for hard hit countries like Greece and Ireland are far higher than those for Germany for example. This translates into masssive profits for the bondholders at the expense of public services and the living standards of ordinary people. This is a system that needs to be overthrown rather than tinkering around its edges which is what the EU measures do.

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