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BRUSSELS -- European countries have narrowed their differences over new rules on bank capital ahead of a key meeting of finance ministers, but European officials say a big gap remains over whether member states should be allowed to impose higher requirements on their own banks. The ministers meet Wednesday in a gathering called specifically to pin down rules over how much capital banks in the bloc should be forced to hold on their balance sheets. Also in dispute is whether banks should be able to count capital held in insurance subsidiaries a Vítor Constâncio, ECB vice president, last week said member states should be able to impose stricter rules. The original proposals were put forward last July by the European Commission, based on agreements reached by the Basel Committee of international banking regulators, which is named after the Swiss city where they meet. Member states, the Commission and the European Parliament must reach agreement on the new rules, to be phased in from the start of next year, and the Commission had hoped for a decision this summer. Some EU member states, led by the U.K., are urging a strict interpretation of the Basel proposals, saying failure to follow through could risk a repeat of the 2008 financial crisis. Others warn that with Europe's economy sinking back into recession, a rigid interpretation of capital and liquidity requirements could further crimp lending and damage the recovery....I recently spoke to a friend who told me the following : "I currently live and work in Spain and it feels very odd. It doesn't feel like a country in recession with 25% unemployment. I remember the UK recessions of the 80s and 90s and they felt a lot worse. I don't know if the spanish are in denial. The spaniards I work with still enjoy the 2 hr lunches, 2 coffee breaks and great social lives. The shops are full as are the bars and cafes. The spanish are not very productive and they don't seem to care. I have my colleagues what recessions usually feel like and they look horrified. It won't hit home until a large bank goes bust or one of the overspending regions goes cap in hand to Madrid, until then, the Spanish will not worry as it is only teenagers and young people who are out of work and most of the middle aged, middle class workers don't care."
ELSEWHERE IN EUROPE -  The French-led counter-attack and rumblings of revolt through every branch of the EU institutions last week have brought this aberrant phase of the eurozone crisis to an abrupt end. "It’s not for Germany to decide for the rest of Europe," said François Hollande, soon to be French leader, unless he trips horribly next week. Strong words even for the hustings. "If I am elected president, there will be a change in Europe's construction. We’re not just any country: we can change the situation," he said.  European allies are flocking to his cause from left and right, he claims. Not even Austria supports Germany’s austerity drive any longer.