EUOBSERVER / WEEKLY AGENDA (5 – 12 October) – This week will start with a meeting of the EU’s economy and finance ministers (ECOFIN) in Luxembourg on the need for a European response to the international financial crisis, just a day after the bloc’s four biggest states - Germany, France, Britain and Italy – hold emergency talks on the subject in Paris.

The ECOFIN meeting on Tuesday (7 October) is expected to highlight the need for co-operation and cohesion among EU states on the issue, as well as the necessity of constructing a “structural response” to the crisis, rather than taking ad hoc actions.

The ministers will also underline the need to respect the so-called Stability and Growth Pact (SGP) – the rules underpinning the euro, following comments coming from some EU capitals that tackling the crisis should take priority over keeping budget deficits in line with EU rules.

“[The SGP rules] are temporarily not the priority of priorities. The priority is to save the global banking system and the savings of citizens. There is no other choice,” Henri Guaino, a close adviser of French President Nicolas Sarkozy told French television channel Canal Plus on Thursday.

The meeting – which will be preceded on Monday by a meeting of the economy and finance ministers from EU countries using the euro – will also assess the impact of the crisis on banks and insurance companies, as well as on small and medium-sized enterprises.

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France believes EU-level measures may have to be cobbled together to aid banks in smaller member states, while denying rumours of a €300 billion package. But Germany has indicated it would not support any European “big-bang” deal.

“What happens if a smaller EU state is hit by a looming bank collapse? Maybe this country does not have the means to save the bank,” French finance minister Christine Lagarde told the Handelsblatt in an interview published on Thursday (2 October). “Therefore the question of a European safety net solution comes up.”

The safety package may be presented by French President Nicholas Sarkozy at a 4 October meeting between himself, the prime ministers of Germany, Italy and the UK, as well as Eurogroup chief Jean-Claude Juncker and European Central Bank president Jean-Claude Trichet.

Reports have it that the Netherlands is the source of the €300 billion proposal. The country quickly denied this was the case.

But any suggestion of a European version of US treasury secretary Henry Paulson’s $700 billion bail-out plan for Wall Street is being stiffly resisted by Berlin. In an interview with German daily Bild, Chancellor Angela Merkel said she opposed writing “blank cheques” for banks.

“The idea of applying one solution, one big bang … is not practicable and would create new, enormous problems,” German finance ministry spokesperson Torsten Albig told reporters yesterday in Berlin. “Germany does not think much of such a plan,” he said, according to AFP.

European Commission president Jose Manuel Barroso on Thursday welcomed the approval of the package by the American Senate, which had enabled another attempt to hammer out the bill in the House of Representatives and described it as “a good step forward in the right direction.”

But after receiving negative signals from both Berlin and London on the idea of a similar emergency fund worth €300 billion for Europe’s banking sector, French president Nicolas Sarkozy distanced himself from the proposal.

A day later Sarkozy said: “I deny the sum and the principle,” according to media reports. And from Christine Lagarde’s office:  “there was an exchange of ideas but no French proposals. There was no French plan,” AFP says.

Asked by journalists about a possible EU version of the US banking rescue scheme on Thursday, the European Central Bank (ECB) president Jean-Claude Trichet - also to attend the Paris mini-summit together with commission chief Barroso - openly said it would not work for Europe. “We do not have a federal budget, so the idea that we could do the same as what is done on the other side of the Atlantic doesn’t fit with the political structure of Europe.”

Britain has suggested that solutions to the financial crisis need to be primarily sought by national authorities. “It is right that individual countries would want to take their own decisions, particularly when national taxpayers’ money is potentially at risk,” said spokesman of Gordon Brown, UK’s prime minister: “The purpose of the [Paris] meeting will be to discuss how each of the four major economies in Europe are responding to the global financial crisis,” he added, according to the BBC.

The Irish parliament on Thursday passed a bill fully guaranteeing all bank deposits, which has sparked a controversy in other European capitals about unfair advantage for Irish banks over foreign competitors.

British media reported a rising interest among Brits to switch from the UK’s to Ireland’s banks in a bid to secure their savings in a rising atmosphere of insecurity. Minister Lagarde said in a BBC live interview that better European co-ordination could prevent such cases, arguing that “a measure decided in one [EU] member state has to be shared in advance with other member states.”

EU competition spokesman Jonathan Todd said his department still hadn’t received any formal explanation from Ireland about how its bank insurance programme would work, meaning it was still uncertain whether or not the EU will even clear the Irish move as legal.

The Guardian says that Greece has followed Ireland in offering a guarantee on deposits in all banks operating in the country, after it says savers were getting restless. The paper goes on to say that it puts EU leaders in a difficult position ahead of an emergency summit in Paris on Saturday to find a common response to the crisis.

Meanwhile, Deutsche Welle says that on Thursday the European commission gave the go-ahead to Germany for a €35bn deal to bail out mortgage lender Hypo Real Estate.

And El País says that the EU is struggling to come up with a common response to the financial crisis, with individual member states taking unilateral action to save their own banks: the UK (Bradford and Bingley and Northern Rock), France and Belgium (Dexia), and Belgium, the Netherlands and Luxembourg (Fortis).

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France and Germany at odds over EU ‘Paulson Plan’ - 02.10.2008

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France believes EU-level measures may have to be cobbled together to aid
banks in smaller member states, while denying rumours of a €300 billion
package. But Germany has indicated it would not support any European
“big-bang” deal.

 http://euobserver.com/9/26851/?rk=1

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EU big four gather for financial crisis talks - 03.10.2008

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The leaders of the EU’s four biggest states - Germany, France, Britain and
Italy - are gathering for emergency talks on the financial crisis in Paris
on Saturday, one day after US lawmakers are expected to vote on an amended
bail-out plan. But France says there will be no US-type rescue package for
the EU.

 http://euobserver.com/9/26857/?rk=1

Recapitalise the banking system - By George Soros
Published: October 1 2008, Financial Times online.

The emergency legislation currently before Congress was ill-conceived – or more accurately, not conceived at all.

As Congress tried to improve what Treasury originally requested, an amalgam plan has emerged that consists of Treasury’s original Troubled Asset Relief Programme (Tarp) and a quite different capital infusion programme in which the government invests and stabilises weakened banks and profits from the economy’s eventual improvement.

The capital infusion approach will cost tax payers less in future years, and may even make money for them.

***

Two weeks ago the Treasury did not have a plan ready – that is why it had to ask for total discretion in spending the money. But the general idea was to bring relief to the banking system by relieving banks of their toxic securities and parking them in a government-owned fund so that they would not be dumped on the market at distressed prices. With the value of their investments stabilised, banks would then be able to raise equity capital.

The idea was fraught with difficulties. The toxic securities in question are not homogenous and in any auction process the sellers are liable to dump the dregs on to the government fund. Moreover, the scheme addresses only one half of the underlying problem – the lack of credit availability. It does very little to enable house owners to meet their mortgage obligations and it does not address the foreclosure problem. With house prices not yet at the bottom, if the government bids up the price of mortgage backed securities, the taxpayers are liable to loose; but if the government does not pay up, the banking system does not experience much relief and cannot attract equity capital from the private sector.

{We called this naturally the Capitalistic Socialism approach were the Government Nationalizes the loses and is happy privatizing to the cronies the profits.}

A scheme so heavily favouring Wall Street over Main Street was politically unacceptable. It was tweaked by the Democrats, who hold the upper hand, so that it penalises the financial institutions that seek to take advantage of it.

The Republicans did not want to be left behind and imposed a requirement that the tendered securities should be insured against loss at the expense of the tendering institution.

The rescue package as it is now constituted is an amalgam of multiple approaches.

There is now a real danger that the asset purchase programme will not be fully utilised because of the onerous conditions attached to it.

***

Different focus:

‘Tarp’s adverse consequences could be mitigated by using taxpayers’ funds more effectively.

If Tarp invested in preference shares with warrants attached, private investors, including me, would jump at the opportunity.’

***

Nevertheless, a rescue package was desperately needed and, in spite of its shortcomings, it would change the course of events. As late as last Monday, September 22, Treasury secretary Hank Paulson hoped to avoid using taxpayers’ money; that is why he allowed Lehman Brothers to fail.

Tarp establishes the principle that public funds are needed and if the present programme does not work, other programmes will be instituted. We will have crossed the Rubicon.

Since Tarp was ill-conceived, it is liable to arouse a negative response from America’s creditors. They would see it as an attempt to inflate away the debt. The dollar is liable to come under renewed pressure and the government will have to pay more for its debt, especially at the long end. These adverse consequences could be mitigated by using taxpayers’ funds more effectively.

Instead of just purchasing troubled assets the bulk of the funds ought to be used to recapitalise the banking system. Funds injected at the equity level are more high-powered than funds used at the balance sheet level by a minimal factor of twelve - effectively giving the government $8,400bn to re-ignite the flow of credit. In practice, the effect would be even greater because the injection of government funds would also attract private capital. The result would be more economic recovery and the chance for taxpayers to profit from the recovery.

This is how it would work:

The Treasury secretary would rely on bank examiners rather than delegate implementation of Tarp to Wall Street firms. The bank examiners would establish how much additional equity capital each bank needs in order to be properly capitalised according to existing capital requirements. If managements could not raise equity from the private sector they could turn to Tarp.

A revised emergency legislation could also provide more help to homeowners.

It could require the Treasury to provide cheap financing for mortgage securities whose terms have been renegotiated, based on the Treasury’s cost of borrowing. Mortgage service companies could be prohibited from charging fees on foreclosures, but they could expect the owners of the securities to provide incentives for renegotiation as Fannie Mae and Freddie Mac are already doing.

Banks deemed to be insolvent would not be eligible for recapitalization by the capital infusion programme, but would be taken over by the Federal Deposit Insurance Corporation. The FDIC would be recapitalised by $200bn as a temporary measure. FDIC, in turn could remove the $100,000 limit on insured deposits. A revision of the emergency legislation along these lines would be more equitable, have a better chance of success, and cost taxpayers less in the long run.

The writer is chairman of Soros Fund Management

The plenitude of materials that show how much this calamity, started in the US, affects now Europe and the rest of the world, boils down to serious criticism of America Administration’s views on the essence of government.
And further - the proposed bail-out program did not make sense anywhere - but save-your-souls programs are very seriously needed - that is said by everybody.

What the Bush/Paulson effort was all about is the clear concept that the White House Knows Best - so the present White House will create a situation that binds the hands of the next Administration also. Just give away 1.5 trillion dollars to the cronies that managed a deregulated economy for their own benefit, and they will continue this mirage of government for their own benefit in the future as well - there will be no abrupt change amounting to  no upheaval - and as long as they will stay happy - so will the rest of the people have to stay quiet. The government is not there to help the people, but to help the system from needed change. in the end the tax-payer will be left to hold the bag while the former insider helps the present insider manage the huge puddle he left behind.

Europe is different. All of Europe seems to believe in much more government then the White House in Washington DC. Europe ranges from the Russian closing of the Stock Exchange so no impulsive reaction is possible, to plain Nationalization of Banks in Ireland - a great move that reassures the people and the businesses and removes the bankers - like one removes cancer. This latter treatment looked too radical to the folks in Brussels - but they also can do little more then say - each government is on its own - but we will all together back France and Germany in their call to view the crisis for what it is - the end of US hegemony on world economy and the establishment of a super structure that will share the responsibility that the US Superpower said it had for the world.

The best suggestions deal thus with the need of a global bail-out rather then again a US inside - job. Further, money is not dished out to the “IS” but governments take equity stakes in the fallen giants - this translating to the right to clean the houses from their rotten managers - as the saying goes - “the fish stinks from his head.”  With government ownership, comes now government responsibility that might indeed call for changes in accounting rules and in taxation laws - all so there is a new stimulus that moves the economy from the dead points it is stuck now.

Above all, the US cannot be allowed to get itself in a state of continuous disrepair with projected shadows to its business partners overseas. They want part of the action here because it is their money that is invested here.

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Scotland to build world’s first ‘wind farms under the sea.’

 http://news.scotsman.com/scotland/Scotla…

By Jenny Haworth, Environment Correspondent, The New Scotsman, September 29, 2oo8.

SCOTLAND has taken a major step towards leading the way in marine renewable energy with the announcement that the world’s first tidal farms could be built within three years.

Two tidal projects, each with up to 20 turbines, could be installed on the seabed in the Pentland Firth and the Sound of Islay. A third is planned off the North Antrim coast in Northern Ireland. The aim is that all the underwater turbines would be constructed in Scotland, kickstarting the renewables industry in this country.

ScottishPower Renewables will apply for planning permission for the three tidal projects next summer. If permission is granted, they would be the first commercial underwater tidal turbine farms built anywhere in the world.

The structures stand 30 metres tall and can work as deep as 100 metres. The 20-metre blades would turn at least 10 metres below the surface to avoid shipping, developers said, and the zones would be off-limits to trawlers for safety reasons.

ScottishPower said tests in Norway proved the blades moved slowly enough for marine life to avoid them.

Scotland, which aims to reduce its greenhouse gas emissions by 80 per cent by 2050, has the best tidal resources in Europe and it has been calculated that at least a third of Scotland’s energy demand could be met by tidal renewables.

The tidal farm sites would have a combined output of 60 megawatts, enough to power 40,000 homes in Scotland and Northern Ireland. If planning approval is granted, ScottishPower Renewables says the projects could be operational by 2011.

The company is also hoping to build a factory in the north-east of Scotland where all the turbines will be constructed, and the projects would be expected to bring hundreds of jobs.

Keith Anderson, the director of ScottishPower Renewables, said this was Scotland’s chance to become the global leader in a new renewable energy industry.

He said Scotland has the best tidal resources in Europe, with the Pentland Firth alone containing enough energy to meet a third of Scotland’s power requirements. “The rapid technological advance of tidal power has been startling and is now allowing us to progress plans for substantial projects delivering major environmental and economic benefits,” he said.

“Tidal power is completely renewable, being driven by the gravity of the sun and moon, with no carbon dioxide emissions, plus the added benefit of being entirely predictable.”

First Minister Alex Salmond, who will visit Caithness, near the potential site of the tidal farms, described the announcement as “significant”. He said: “We have an estimated 25 per cent of Europe’s tidal resource and 10 per cent of its wave potential. That is why this announcement is so significant.”

Before it can be deployed, a £6 million prototype will have to be tested for about a year in Scottish waters, probably off Orkney.

Engineers rising to the challenge of harnessing tidal power:

THE tidal farms will use a machine known as the Lànstrøm device, which was invented in Norway and has already gone through four years of successful testing.

Even though the devices seem likely to be the first to be used in a large-scale commercial tidal farm, many other machines are in development in what is set to become a very competitive market.

Marine Current Turbines, based in Bristol, installed a 300kw tidal turbine called Seaflow off Lynmouth, Devon, in 2003.

It’s a two-bladed rotor connected to an electrical generator mounted on a single steel tower drilled into the seabed.

Irish firm OpenHydro Group has developed the Open-Centre Turbine, which has a single rotor. A single prototype turbine was installed at the European Marine Energy Centre in Orkney in 2006. In May 2008 it became the first tidal device to export power on to the UK grid.

The Engineering Business, based in Newcastle, is developing the Stingray tidal generator, which uses the flow of the tide over a hydroplane, similar to an aeroplane wing, to generate electricity. In 2002 the 180-tonne, 150kw machine was tested in the Yell Sound, Shetland.

SMD Hydrovision, based in Tyne and Wear, has developed the TidEL concept, which consists of a pair of contra-rotating 500kw turbines, mounted together on a single crossbeam.

The unit is buoyant and tethered to the seabed, allowing it freedom of movement. The turbines can automatically align themselves downstream of the tidal flow as it changes during the day.

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IN NUMBERS:

40 - Turbines that could be built in Scottish waters by 2011.

40,000 - Homes that could be powered by the three turbine farms.

80 - The percentage of the UK’s potential tidal power in Scottish waters.

Charles A. Hall writes that he wants to give us his “simplistic take” on the Wall Street mess (not to exclude greed, idiocy and so on):

Using what he is best at - Charlie suggests - Draw a Hubbert curve.  Then make an “Economic growth curve” in a different color that follows along the left hand (growth) side of the Hubbert curve .  As the Hubbert curve bends over  (Peak oil was more or less in 2005) everyone in Wall Street etc., believed that growth was continuing “as it always has”, so they kept their “assets”  “growing” with speculation.

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Now economic reality is catching up with biophysical reality, which has not been growing.  This is called a financial “adjustment” to reality.  We have seen it every day for the last 10 days.  I think that this shows the power of a biophysical approach to economics to at least give us options as to how we should think about economics!

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Charles A. Hall continues by suggesting we read the attached material by Gvail Tverborg, A Swedish economist:

Banks (enclosed), a Swedish economist, may be saying the same thing in a lot more words (attached).  I have just skimmed it - says Charlie.

Gail Tverborg’s take on gasoline shortages (they are serious!) :  http://www.theoildrum.com/node/4585 - see last paragraph there.

***

Further:
The Congressional switchboard is jammed. You can get through, but it takes a dedicated finger on the redial button of your phone. Operators at the Capitol say it’s been that way for a week now, as Americans across the country have been flooding their Congressional delegations with phone calls (and emails) urging them to vote “No” on the Bush/Paulson Wall Street bailout.

That today is no exception, after Democratic Party leaders (and both major party presidential candidates, John McCain and Barack Obama) bought into the plan after adding some window-dressing measures designed to make it look more palatable. This shows that ***the public is not fooled (calls are reportedly running better than 9:1 against a bailout, perhaps more like 99:1).

***

People see clearly that this is a trillion-dollar giveaway to the very people who have been hollowing out and destroying the US economy for over a decade or more by convincing both parties to let them do whatever they want to get rich, free of any kind of significant oversight or regulation.

***

As Nobelist economist Joseph Stiglitz has written of this outrageous rip-off, there are four problems facing the financial system, and the bailout proposal only addresses one–getting the toxic mortgages off the banks’ books and onto taxpayers’ hands. Left unsolved is the gaping hole in banks’ balance sheets in the form of loans made to people and companies which cannot be repaid, which will mean they still won’t start lending money again. Left unaddressed too is the continuing collapse of housing prices, which will inevitably lead to more bank collapses even after the bailout. Finally, Stiglitz says there is the general loss of faith in the financial system–a major crisis which the bailout will also not solve.

***

Stiglitz doesn’t even address a fifth problem which is that [with] this trillion-plus-dollar boondoggle (and when you add in the bailouts of Fannie Mae, Freddie Mac, AIG, Bear Stearns, the multiple mega-bank failures and the pending auto-industry bailout, you’re already talking $1.5 trillion and counting), all of it with borrowed money - the stage is being set for a collapse in the US dollar, with consequences that will reverberate through the economy.

Consider: if the dollar collapses, as many experts say is almost inevitable with this kind of huge addition to the national debt, oil prices (which are set in dollars) will soar to compensate, the price of all the other goods that Americans import–more than half of everything we use in daily life thanks to the decimation of American manufacturing–will rise dramatically, and ultimately, in an effort to stem the bleeding, interest rates will have to be raised, thus bringing what’s left of the economy to a grinding halt.

Download the Word document: banks_spec.doc

From:    cbsdpconsultant-climatechange at yahoo.c…
Subject: Fw: Now online: FMR31 Climate change and displacement issue
Date: September 28, 2008
The FMR journal on CC & displacement can now be downloaded below.

James S. Pender
Development & Natural Resource Management Advisor
(with Church of Bangladesh Social Development Programme)

Forced Migration Review issue on Climate change and displacement.

This 80-page issue of Forced Migration Review (FMR), published by the Refugee Studies Centre of Oxford University, includes a major focus on climate change and displacement and is now online at: http://www.fmreview.org/climatechange.ht… (We’ve just revamped our website - you may need to click ‘refresh’.)

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In response to growing pressures on landscapes and livelihoods, people are moving, communities are adapting. This issue of FMR debates the numbers, the definitions and the modalities – and the tension between the need for research and the need to act. Thirty-eight articles by UN, academic, international and local actors explore the extent of the potential displacement crisis, community adaptation and coping strategies, and the search for solutions.

***

We would like to thank the following for their generous funding and support of this issue: UNEP, the Swiss Federal Department of Foreign Affairs, GTZ/the German Federal Ministry for Economic Co-operation and Development, UNOCHA and the International Centre for Migration, Health and Development.

This issue will be published in English, French, Spanish and Arabic. The English print edition will be mailed out to you in early October.

FMR would appreciate your help to maximise the impact of this issue. We would be grateful if you would forward this message to anyone you know who may be interested, add links on your website and/or list it in your updates and resources. Thank you.

Two other resources just launched which may be of interest to you are:
- Forced Migration Online Resource Summary on climate change and displacement, online at http://www.forcedmigration.org/browse/th…
- transcript of April 2008 ippr conference on climate change and displacement, online at http://www.ippr.org/migration

With best wishes

Marion Couldrey & Maurice Herson

– —- –
Marion Couldrey & Maurice Herson, Editors
Heidi El-Megrisi, Coordinator

Refugee Studies Centre, Department of International Development,
University of Oxford, 3 Mansfield Road, Oxford OX1 3TB, UK
 fmr at qeh.ox.ac.uk   href=”http://www.fmreview.org” title=”http://www.fmreview. ” target=”_blank”>www.fmreview.org Skype: fmreview
Tel: +44 1865 280700 Fax: +44 1865 270721

Paulson cannot be allowed a blank cheque.
By George Soros, The Financial Times, September 24 2008 20:28.
Hank Paulson’s $700bn rescue package has run into difficulty on Capitol Hill. Rightly so: it was ill-conceived. Congress would be abdicating its responsibility if it gave the Treasury secretary a blank cheque. The bill submitted to Congress even had language in it that would exempt the secretary’s decisions from review by any court or administrative agency – the ultimate fulfillment of the Bush administration’s dream of a unitary executive.

Mr Paulson’s record does not inspire the confidence necessary to give him discretion over $700bn. His actions last week brought on the crisis that makes rescue necessary. On Monday he allowed Lehman Brothers to fail and refused to make government funds available to save AIG. By Tuesday he had to reverse himself and provide an $85bn loan to AIG on punitive terms. The demise of Lehman disrupted the commercial paper market. A large money market fund “broke the buck” and investment banks that relied on the commercial paper market had difficulty financing their operations. By Thursday a run on money market funds was in full swing and we came as close to a meltdown as at any time since the 1930s. Mr Paulson reversed again and proposed a systemic rescue.

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Mr Paulson had got a blank cheque from Congress once before. That was to deal with Fannie Mae and Freddie Mac. His solution landed the housing market in the worst of all worlds: their managements knew that if the blank cheques were filled out they would lose their jobs, so they retrenched and made mortgages more expensive and less available. Within a few weeks the market forced Mr Paulson’s hand and he had to take them over.

***

Economists’ Forum - Top economists critique US Treasury’s $700bn plan to bail out the banking sector and offer their solutions to the crisis:

Mr Paulson’s proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information. The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up with the dregs. The proposal is also rife with latent conflict of interest issues. Unless the Treasury overpays for the securities, the scheme would not bring relief. But if the scheme is used to bail out insolvent banks, what will the taxpayers get in return?

Barack Obama has outlined four conditions that ought to be imposed:

- an upside for the taxpayers as well as a downside;

- a bipartisan board to oversee the process;

- help for the homeowners as well as the holders of the mortgages;

- and some limits on the compensation of those who benefit from taxpayers’ money. These are the right principles.

They could be applied more effectively by capitalising the institutions that are burdened by distressed securities directly rather than by relieving them of the distressed securities.

The injection of government funds would be much less problematic if it were applied to the equity rather than the balance sheet.

$700bn in preferred stock with warrants may be sufficient to make up the hole created by the bursting of the housing bubble.

By contrast, the addition of $700bn on the demand side of an $11,000bn market may not be sufficient to arrest the decline of housing prices.

Something also needs to be done on the supply side. To prevent housing prices from overshooting on the downside, the number of foreclosures has to be kept to a minimum. The terms of mortgages need to be adjusted to the homeowners’ ability to pay.

The rescue package leaves this task undone. Making the necessary modifications is a delicate task rendered more difficult by the fact that many mortgages have been sliced up and repackaged in the form of collateralised debt obligations.

The holders of the various slices have conflicting interests. It would take too long to work out the conflicts to include a mortgage modification scheme in the rescue package.

The package can, however, prepare the ground by modifying bankruptcy law as it relates to principal residences.

Now that the crisis has been unleashed a large-scale rescue package is probably indispensable to bring it under control.

Rebuilding the depleted balance sheets of the banking system is the right way to go.

Not every bank deserves to be saved, but the experts at the Federal Reserve, with proper supervision, can be counted on to make the right judgments.

Managements that are reluctant to accept the consequences of past mistakes could be penalised by depriving them of the Fed’s credit facilities. Making government funds available should also encourage the private sector to participate in recapitalising the banking sector and bringing the financial crisis to a close.

The writer is chairman of Soros Fund Management