In a speech before the European Parliament on Tuesday, French President Nicolas Sarkozy suggested that European countries establish their own sovereign wealth funds to take ownership stakes in key industries. He went on to suggest that European states should coordinate their industrial policies with each other.
As the financial crisis morphs into a wider economic crisis, Sarkozy stressed the need for European states to sustain their coordinated approach. "The economic crisis is here," said the French president. Although Sarkozy argued strongly for a unified response to the problem, he stressed that this didn't mean that every country needed to pursue the same policy. "We don't all need to do the same thing, but we do need to coordinate amongst ourselves and come to an agreement on certain issues." Sarkozy underlined that it would require concerted action among EU countries to ensure that Europe is a place that continues to build "ships, planes and cars."
In his speech Sarkozy called upon European states to set up sovereign wealth funds to help prop up companies listed on European stock exchanges. Otherwise, he said, there is a danger that tanking stock prices will result in a massive sell-off of European assets to foreigners. "I don't want European citizens to wake up in a few months and discover that European businesses are now owned in capitals outside of Europe." He added that the state funds could later sell their stakes at a profit.
I guess the Washington Consensus has been poisoned, shot, stabbed, clubbed, and drowned.