Canada's Flaherty on BNN: Europe Not in Full Blown Crisis Yet

By Joshua Michelson OTTAWA (MNI) - Canada Finance Minister Jim

Flaherty said Friday "Europe is not in full blown crisis" as yet

but urged major European countries to respond massively to the

banking and sovereign debt situation in Greece and other indebted

countries. A reporter for the national BNN-Business News Network

asked Flaherty in Toronto, on a scale of 1-10, between stable and

unstable, where he would place Europe. Flaherty responded,

"Somewhere around five. We're not in a full blown crisis in

Europe, but we've seen this movie before." He repeated criticisms

he has made often in recent weeks, that major European countries

should come together with massive loans of liquidity rather than

taking the incremental approach. He noted the United States

overwhelmed its problem in 2008-2009 with trillions of taxpayer

dollars but said "the Europeans haven't chosen to do this yet and

the problems continue to fester." Flaherty said he does not

approve of further IMF assistance using "non-European dollars, as

there are wealthy countries in Europe that are fully capable,

fiscally, of handling the situation." Following the forthcoming

elections in Greece, Flaherty said the new government will need

to implement the austerity package agreed to by their

predecessors albeit, "it doesn't look like there's a will to do

that," and that "a sorting out of differences will have to

occur." It is up to the Germans and others to decide how much

they value the euro zone, he said. Asked if Greek problems could

cause a shock in Canada, Flaherty repeated what he has said

previously, that Canadian banks have only modest exposure to

Europe and that "Canadian banks are solvent with no liquidity

problems." However, European banks' stress testing needs to be

stricter, he said --Joshua Michelson is a reporter for Need to

Know News in Ottawa ** MNI - Ottawa **