April 15, 2009 / 3:23 PM / 10 years ago

UPDATE 1-Eurogroup's Juncker: no clear way out of crisis

* Juncker: EU fiscal stimulus good for now, may need rethink

* Says Anglo-Saxon financial model dead, regulation needed

* Debt spiral should be avoided to control inflation

* Says forex, stocks tax possible, but only globally (Updates with details, quotes, background)

By Marcin Grajewski and Huw Jones

BRUSSELS, April 15 (Reuters) - Measures taken by the European Union to fight the economic crisis may need a rethink if they fail to bring results by 2010, Eurogroup Chairman Jean-Claude Juncker said on Wednesday. Speaking at a conference organised by European trade unions, Juncker predicted huge lay-offs this year in the EU and urged world leaders to implement quickly recent decisions by the G20 group of nations to battle the worst downturn in decades.

He said all financial instruments should be regulated and minimum wages introduced across the EU as the crisis showed what he called the failure of the Anglo-Saxon free market model.

“How we will get out of this economic crisis is something I am not clear in my mind about. How we will emerge from this crisis I don’t know,” said Juncker, who chairs monthly meetings of finance ministers from the 16 countries using the euro.

“What we are experiencing is the end of Anglo-Saxon laissez faire, which we paid far too much attention to. I believe we need more regulation of the financial markets,” he added.

Juncker said hundreds of billions of euros pledged in fiscal stimuli by many European governments were sufficient for now.

“If by 2010 we see this is not enough, we will have to reconsider. Now to simply pour more resources in would be premature,” he said.

Juncker also said all 27 EU countries should have minimum wages, though not necessarily at the same level.

He reiterated EU nations should end at some point huge fiscal outlays aimed at boosting their economies as these were bound to fuel inflation and burden future generations with higher taxes.

“We are in the process of getting into a spiral of debt ... Let’s not destroy what we have achieved in ten years. Inflation is a true danger,” he said. “We don’t have the right to pay off the debt on the shoulders of future generations.”


He expressed support for a so-called Tobin tax on speculative money flows, or on stock market transactions if a global agreement to implement it were reached — an unlikely prospect, analysts say.

“I am in favour of a Tobin tax in the case it’s introduced worldwide. I am in favour of a stock exchange sales tax in the case it should be introduced worldwide,” he said.

“Now we are in a situation where the banking sector is reshaping itself and I do believe at this point this (Tobin) tax might create additional burdens. I do believe a tax on stock exchanges might be a better idea.”

Rapid flows of capital coupled with easy investment in questionable instruments have been partly blamed for the crisis, which started in 2007 on the U.S. subprime mortgage market.

Juncker said the problem of toxic assets at banks should be resolved quickly to restore credit flows in financial markets, without which the crisis would not be overcome.

Uncertainty about banks’ exposure to troubled assets is hindering credit.

“I think these ... banks should be sat in darkened rooms and tell each other the truth. No capitalist is trusting another,” Juncker said. (Editing by Dale Hudson)

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