The European Union received two items of bad news: The first was the return from the cold of former IMF chief Dominique Strauss-Kahn who has been on ice since he was implicated - and cleared - in a sex scandal; the second was a failure by the EU to come up with €200 billion in pledges to the IMF to provide that organization with additional firepower in providing bailouts to indebted European countries.
Strauss Kahn chose to make his reappearance in China, where the political culture undoubtedly scoffs at troubling statesmen over the issues that sidetracked Strauss-Kahn from the French presidential palace.
Strauss Kahn accused the EU's political leaders of draining confidence in their ability to handle the financial crisis "the problem is that they are still in denial." He reprised the position of his Socialist Party and its candidate Francois Hollande that the European debt crisis was essentially a growth crisis and unless the European leadership realized this, the continent was in line for 7 lean years. The EU had only weeks to get its house in order, he said.
The one comforting remark Strauss-Kahn made was that he did not foresee a breakup of the European Union. He derided the "Merkozy" partnership between Nicolas Sarkozy and Angela Merkel by stating that the two leaders who were expected to provide leadership did not understand one another.
Although the EU is convinced that it will raise the promised €200 billion, it has come up €50 billion short. The main reason for the shortfall is Britain's refusal to contribute €30 billion to the total. Britain fears that such a contribution would be interpreted as acknowledgment that Britain, although outside the euro, has a responsibility to prop up debt ridden countries within the euro zone. Britain will contribute the money to the IMF without specifically linking it to helping euro zone countries and let the IMF call the tune.