The restoration of Glass-Steagall in the United States would have an immediate world-wide impact, because the U.S. Federal Reserve — meaning, actually, U.S. taxpayers — is now the only source of last resort for the huge bailouts being demanded by the world's bankrupt speculative banks, a City of London analyst told EIR today. Restoring Glass-Steagall standards in the United States, would cut off that source, and leave investment banks stranded, not only in the U.S., but also in the EU and UK, whether or not those countries had their own Glass-Steagall standards.
As the ongoing antics in continental Europe show, the EU cannot pull together the funds to bail out Greece, to say nothing of Italy, France, or the UK. In Britain, the decision to carry out the ring-fencing policy, actually means that the government can deny bailouts to the bankrupt investment arms of major banks, while supporting the essential high street banks [retail sector banks-ed.], he said. Ring- fencing has no power to alter the way banks behave, but it would let the U.K. government opt out and abandon the investment bankers to their fate.
The analyst also said that the strong political opposition to EU membership in Britain is very real, and growing. The current coalition government of David Cameron will not do anything to pull out of the EU, since the Liberal Democrats want to stay in Europe, and Cameron does not have the support to form a government on his own. Getting out of the EU is not going to happen tomorrow, but Britain is certainly heading that way, he said.