At the end of last week a wide ranging discussion about how to tackle the Greek debt crisis again led to German speculation that Greece was about to leave the Euro zone. The EU authorities moved quickly to deny that strongly.
Given that leaving the Euro and devaluing is not an option contemplated in EU circles, they are left with two other options. The first is to give or lend more money to Greece, in the hope that this will allow Greece to sort out her finances so that in due course she can carry on without access to extra EU money. The second is to find a way of allowing Greece to renege on part of her debt or to delay its repayment. The first route entails EU taxpayers paying more to keep Greece going. The second course involves bondholders, savers and banks who have lent Greece money, giving her relief at their expense.
Both of these approaches are based on a heroic assumpiton that this time round tiding Greece over for a bit longer would make all the difference, and she will then miraculously sort out her deficit after a long period when it simply got worse. It was this assumption that was behind the Spring 2010 EU loans to Greece.They were you may remember going to draw a line under the Euro debt crisis and solve the problems. This assumption was beind the agreement to extend the length of the loans in the autumn of 2010 when the package was renegotiated for the first time. Now it falls to be renegotiated yet again.
The truth is this model of financing a country and keeping it tied into the Euro system does not work. It threatens losses for the banking system of the whole Euro area, as European banks have been told by regulators to own more sovereign debt of Euroland countries. It is this very debt, thought to be a high class safe asset, that now is being buffetted by the markets and may not be repaid in full on time in the case of the weakest countries.
The UK should make it clear that any new Greek package is a matter for the Euroland zone alone, and should not allow general EU money to be used to perpetuate a myth that fiddling around with the terms and size of the borrowing is the answer to this problem. The answer for Greece is an economic policy that delivers growth, and more realistic levels of state spending.
We read that France is not keen to be more generous on the loans, whilet Germany seems to think tougher conditions on the very loans Greece wishes to relax would do the job for the third time of asking. There are limits to how long they can carry on trying to muddle through. The markets are not impressed, because they know the weaker countries of Euroland have to grow faster, generate more tax revenue, and cut spending sensibly. These countries need a work out, not a bail out. Being in the Euro makes their recovery more difficult. Having weak players in the Euro also makes the position of the stronger members of the Euro weaker. The richer countries will have to pay more of the bills of the weaker members if they are to keep everyone in the currency.
May 10, 2011
Not much to add. The soon we (and others) cut free from this EU dead weight and the “All Sink Together, so called strategy” the better for everyone concerned.
Perhaps Clegg will finally give us the EU referendum he promised or has he forgotten or perhaps just fallen out with the public’s views?
May 10, 2011
It is reported that there is a proposal to allow universities to charge willing British students the same full–price fees as overseas undergraduates to ensure them a place and then they would not be allowed to take the cheap loans.
The only question seems to be why on earth can they not allowed to do this already? Clearly the money covers the cost of the courses so they can just get a few more lecturers and a bit more space and create some new places. Are these Universities in business or not?
The restriction is like telling Jaguar they can only sell cars if buyers are government approved and fully subsidised by the state – never at true full price. Just patent nonsense.
May 10, 2011
The BBC say “Critics will say it allows people to buy a place at University” well yes but so what. They already can if they have the good fortune to live outside the EU. They can also buy houses, cars, boats, servants, books, food, operations, private jets, a private personal academic tutor and almost anything else they want. I assume it is the new government gods of “fairness” and “equality” getting in the way of sense yet again.
May 10, 2011
David Willetts on the University above University issue radio 4 “any proposal would have to show it improved “social mobility” not diminished it and should have the same academic ability standards (or similar wording)”.
Why on earth should it need to do that! Only a socialist could think that way? Entrants would be paying in full for their places, the Universities can thus generate more places and use the money to expand and improve. Let them come, even with lower grades, if they can cope with the course what is on earth is the problem.
Do socialists now want all dimmer people excluded from education or only the rich dimmer people?
May 10, 2011
“…Only a socialist could think that way…”
You’ve hit the nail on the head there!
The tried and tested route to social mobility was the grammar school system, but that doesn’t fit with the government’s equality principles. So now everyone is equally uneducated:
1. Kids Being Failed by Comprehensive Education
2. Poor language skills ‘leave Britons out of EU jobs’
3. School leavers lacking basic skills, bosses group says
May 10, 2011
Now David Willetts says there is no question of the rich being able to buy a place at University. Why on earth not? Are we going to stop the rich buying academic books, piano lessons, accounting courses and the like too – lest they gain an unfair advantage?
Needless to say the BBC wheeled out Poly Toynbee to describe the idea as outrageous. Saying the rich kid next door will leapfrog over someone to a place at University. Well he probably will anyway to a bigger house, a posher car and a perhaps prettier wife.
The University would, with the higher fees, anyway have enough funds to educate both students or perhaps even three or four students with the higher fees and some economies of scale.
Why should someone from Peru be able to buy a place at say Oxford when someone in Birmingham cannot. Does the world not need more doctors, teachers, engineers and accountant regardless and perhaps even experts in Beowulf or similar.
What is amazing is that so many, indoctrinated by BBC Guardian “think”, public seem to swallow the mad Toynbee line hook line and sinker.
Can this government, for once, not do something sensible without backtracking on it. They nearly got rid of HIP packs (but not quite fully) after all.
May 10, 2011
The BBC started with the headline:
“Extra England university places for wealthy considered”
This was sheer propaganda. It may turn out that charities etc may buy the places for poorer students which would be the opposite of the BBC’s opinion. In truth, of course we don’t know.
It is so sad that this biased headline has already been Tweeted around the internet so that the myth has now been propagated too widely to correct. We are now heading for yet more opposition marshalled by the media. (Luckily – for my own piece of mind – I saved a small screen print of the original.
NB The BBC has now changed the headline to:
University minister denies ‘buy a place’ accusation
….but the damage is already done.
May 10, 2011
The approach of a sensible government would be to explain clearly that if people pay full fees and can do the course they should all be admitted to university to the benefit of the university, the student and society in general what is the problem.
Did Cameron and Clegg’s parents not, in effect, buy their places at Oxford by paying fees for top private schools. Would they have got in from a bog standard comp rather unlikely.
They might however have learned more common sense.
May 10, 2011
Kenneth: “The BBC has now changed the headline to..”
That is part of the ploy, the BBC floats a story, then waits for a minister to deny it then BINGO! the story is the Ministerial denial.
The Tories have been in power for a year, yet have done nothing about the BBC. Who is to blame for that?
May 10, 2011
I understand your free maket views here, LL. But I don’t thnk that you can be aware of the crash in science standards at university level that has been driven by the need not to fail foreign fee-paying students. Foreign students can effectively buy degrees, inclusive of Ph.Ds. at quite respectable universities and have been able to for some time. And, yes, I’m saying that with the full knowledge of the level of home-grown down-dumbing that has taken place in education.
May 10, 2011
Clearly the universities need to avoid lowering their standards too much or they will devalue the brands of their University too much. But does it really matter if the student pays their full way spends money in the UK, helps university funds and hopefully gets something out of the experience. Perhaps they just need to offer them some remedial courses at yet extra cost. If they have rich families maybe they will network and invest in the UK too later.
May 11, 2011
Clearly universities have to be careful not to devalue their brands by dumbing down too much. But does it really matter if some of the students are a bit dim so long as they can cope, are more than fully paying their way and hopefully getting something from the experience.
Would you rather they just played poker or golf all day instead?
May 12, 2011
LL. They can’t cope, but are still passed. And you can’t then fail those of the UK students who are equally bad. You may not appreciate nhow far this has gone. Let me spell it out – you can now get a UK Ph.D. in a “hard science” subject while having no functional competence in that subject what so ever.
May 12, 2011
So, yes – it woud be much better all round if they stayed on the golf course.
May 10, 2011
Now it seems “two brains” has back tracked and only companies and charities can purchase a university education at full price. So I assume it will now cost you £50 (to form a company) as well as the full fees. Unless you sensibly leave the EU anyway and send you children to better universities elsewhere.
Can we assume that these restrictions, on free trade and people buying things, will become a new Tory policy. So for example as everyone cannot afford Bentleys or champagne and lobster we clearly we need regulation and a new department to prevent the rich jumping past the poor and taking all the Bentleys, lobster and champagne unfairly at full price. Thus upsetting Polly Toynbee and the BBC.
Why do they not regulate, while they are at it, that all UK university businesses should work with one hand tied behind their backs and fully blindfolded too.
May 12, 2011
That already happens with housing, doesn’t it? Housing benefit to fund rents in millionaire mansions.
May 10, 2011
There is a simple solution to this that the politicians won’t allow. A referendum on in or out of the EU. Then the British public will get us out of this awful undemacratic organisation that has NO benefit to the UK taxpayer. We pay the EU £10 billion net before any bailouts. Our increase in contributions will exceed all the cuts we’ve made. It’s madness by our politicians.
May 10, 2011
they can keep pushing
May 10, 2011
George has probably got the proverbial cheque book out already with Dave ready to sign.
May 10, 2011
Your Headline is “Euro Crisis”. Oh I thought to myself a buying opportunity for the holiday cash! I checked the exchange rates. GROAN. No such luck!
So either there is no Euro crisis or the Pound is also in a mess. (Maybe that is what is meant by “We are all in it together”!)
Then again maybe your headline should be Greek crisis!
If say a near bankrupt American State was struggling would your headline be Dollar crisis?
Reply: It is a Euro crisis as we can see from hastily arranged meetings to discuss how to get Greece through in the common currency. Some of the strains on the Greek economy come from her membership of the Euro.
May 11, 2011
Actually, the pound is also in a mess, because we are committed to help Europe with their financial problems, even though we are outside the Euro. I should say that even though the bailouts are specifically illegal, our foolish leaders feel not legally, but morally bound to help out with our money.
The market knows that and that all these loans will be defaulted, so the free market is voting with their feet – would you invest in a company that was going to waste billions of pounds on nothing productive for years to come?
For proof, just watch how the pound will strengthen when we have a referendum and leave the EU!!
May 10, 2011
This is the stuff of nightmares.
You may as well just pour money down the drain, as to continue with the present policy of bailing out bankrupt organisations or countries with no idea as to when you will get any money back.
Will Cameron have the courage to say no and stick to it ?
If we are forced, or agree to loan/underwrite any more bailouts, then it is absolutely pointless us tying to work to policies to try and live within our means in this Country when so much of the so called savings, are just being squandered abroad.
Why should we suffer pain again and again for European countries who cannot/will not, look after their own affairs by taking action themselves.
Perhaps we are getting close to reaching a point where even Euro supporters will say enough is enough, and simply resign from this organisation.
May 10, 2011
The Daily Mail reports: “[t]he German and French economies are growing strongly.”
http://www.dailymail.co.uk/news/article-1385230/Germany-brink-golden-decade-countrys-exports-surge-record-high.html#ixzz1LxHgfZaf
“For 2010, Germany is expected to contribute most to the financing of the EU general budget with approximately 19.6%, followed by France (18%), Italy (13.9%), the UK (10.4%) and Spain (9.6%). ”
http://www.europarl.europa.eu/en/headlines/content/20080605FCS31027/5/html/What-about-the-Net-Contributors%E2%80%9D
Gentlemen, I know this will be considered heresy but have you considered that our fortunes may improve if we were more like the French and Germans?
May 10, 2011
sjb
The problem is that when we negotiate anything in Europe we seem to play for the benefit of the whole team, no matter what the cost.
We should be a bit more like a Geoff Boycott wa in his glory days, and go in and bat for ourselves first, with a dogged defence of our position, giving little away, and staying at the crease until we are satisfied with our performance, and our lot.
Sadly our team lack the skill or courage.
May 10, 2011
sjb: “our fortunes may improve if we were more like the French and Germans?”
The Germans yes, but we don’t need to be governed by the Germans.
May 10, 2011
The Germans are pragmatic and logical are they not?
May 10, 2011
One point where this could affect the UK is if restructuring the loans causes UK banks to return to the UK taxpayer and ask for more money. That is not out of the question if there is a default.
According to the Financial Times, UK banks have loaned about £200 billion to Greece, Portugal, Spain, and (about half of this total) to Ireland. If Greece restructures its loans then Ireland may have to do so as well. If that brings about another financial crisis we may not be as insulated from the Eurozone as we like to think.
In these circumstances delaying any default or restructuring in the Eurozone seems to me to be to the UK’s advantage. There is something to be said for being willing to contribute relatively small amounts to avoid Ireland getting into more difficulties (although “a billion here, a billion there, before you know where you are you are talking real money”). But I agree there is more to be said for letting Germany and France pay if they are willing to do it, and no point at all in us trying to do it if Germany and France are not willing.
Whether Greece, Ireland, Portugal, and Spain recover quickly from the crisis is for us a secondary consideration. Obviously we would prefer them to be prosperous but they have to find their own ways of bringing this about.
Reply: If the countries at risk do not grow fatser and curb spending better lending them more money will not help.
May 10, 2011
If UK banks have been dumb enough to lend to bad debtors then why the hell should I as a taxpayer, again bail them out?
May 11, 2011
Lending often lending without security either and when business in the UK cannot now even borrow even with good security.
May 11, 2011
Because the banks are “too big to fail”.
I used to think the bankers were stupid because they made loans that seemed foolish, but in fact they were making big profits by doing so and they realised, which I did not, that if things went badly the taxpayers would bail them out. It is they who are laughing all the way to the bank, whereas it is people like me, who thought we were clever enough to see the errors the banks were making, that have had our money taken away. I’m not laughing at the bankers’ stupidity now.
However I do want more regulation so that they can’t do this again.
And I’ll support Mr Osborne if he thinks the best way to avoid another crisis is to make some payments or loans to Eurozone governments (although I am thinking more about Ireland than Greece). In the long run these countries will probably default on their loans in one way or another but in our own interests we want that to be at a time when we can absorb the effects.
May 10, 2011
Makes you why on earth our banks lent money to countries which were such a bad risk .
Was anyone looking at the exposure or were they just looking at the short term upside and next round of bonuses .
There is no incentive for this behaviour to change whilst the banks remain too big to fail .
May 10, 2011
Simon: “Makes you why on earth our banks lent money to countries which were such a bad risk”
It is a straightforward bet, will the EU let Greece, Ireland, Portugal, go bankrupt? If it won’t then, it’s a moneyspinner for the banks.
May 10, 2011
What is key here is not the size of the deficit – but the ratio of GDP to debt. It’s become clear from Greece that as GDP falls as a consequence of Govenment spending by 3% they cannot afford their debts – despite the good fiscal austerity measures they have implemented. The worrying point is that the UK has a very high GDP/debt ratio of between 80-200% depending which figures you believe. As the cuts haven’t started yet in the uk I think we have to worry. Just before the election a 2.5% rise in Government spending kept our growth positive. The country is dependent on Government spending and it looks like we will have to go cold turkey. I don’t believe there will be a soft landing to get out of this mess.
May 10, 2011
More or less anyone sane or financially literate realises what is in plane view. The Greeks are either unable or unwilling to take action to balance their budget. Consequently, we face bi-annual Greek requests for money. Thus we either pay them or not.
I would suggest not, but it seems that all of the major parties are bailout-happy at the moment and no alternative is on offer to UK voters. Typically when all the front benches agree on something it is a really, really stupid idea bound to end in disaster and price over-runs (ie the ERM, Afghan war, Iraq war, Olympics, Dome etc etc).
Now taxation is simply coercive force leading to imprisonment for non-payment. It’s bad enough having our money seized to pay for lunatic programs in the UK, but now we are threatened with jail if we don’t help out the profligate Greeks repeatedly to no end? Can anyone seriously think this is a vote winner?
May 10, 2011
Doh, plain view!
May 10, 2011
Difficult to argue with any of that. How could anyone logical disagree?
May 10, 2011
If the Greeks et al don’t pay our government on time perhaps the government could do what it does to it’s own citizens, send in the heavies and lock up Greek politicians? The odious EAW may be good for something after all!
Maybe the forces in Afghanistan could stop by Athens on their way home (now that we’ve ‘won’)?
May 10, 2011
Yes, well said. S & P currently rate Greece BB- along with countries such as Bangladesh, Mongolia, Papua New Guinea, Gabon, Suriname and the Cook Islands. So I have to ask, can money be loaned with the realistic expectation of repayment? If so, let Greece borrow directly, if not ,why are we making any loan?
May 10, 2011
If it was only Greece then a proper solution could be reached which would no doubt require restructuring of loans , default or debt forgiveness .
I don’t think Cameron , Osborne , Clegg or Milliband have any concept of what life is like for the majority of British Citizens .
People aren’t even getting by during working life and are reaching the end of it with no savings .
Even if most public sector pensions are kept on a defined benefits basis (which I don’t agree with) , MP’s should be moved to a money purchase scheme like the majority of the electorate so they can get a glimpse of stark reality .
How the heck have we got into this situation , do we really deserve the Govt we get ?
May 10, 2011
I think UKIP have the right idea with regard to the EU!
(and they want a return to the grammar school system).
If fact I can’t find anything that I disagree with in their policies.
May 11, 2011
Well, I respect your right to hold these opinions, but I have to say that to me, staying out of the EU and keeping grammar schools sound like ideas from the 60s. We have to move on.
May 11, 2011
If an idea from the ’60s still works, why change it??
just because an idea/system is old, does not mean it needs to be changed.
May 11, 2011
Some would argue, however, that pretending that all students are equally able and to dumb down the whole system in an attempt to disguise this essential fallacy, is an important component of the Cultual Marxist project; some would argue, also, that the ever creeping and encrouching EU ihas no logical end-point before the total abolition of the nation state not only in Europe. but even beyond; will your vote count for very much, then?
May 10, 2011
If I was running a business which had borrowed up to the hilt and where the income from my goods or services was not meeting my business expenditure, and had not been doing so for quite a few years, is it likely that any bank would lend me more money in the belief that given time all will be well?
Of course not, but this seems to be the view taken by the EU, not only in respect of Greece, but also Portugal and Ireland.
And in the meanwhile, the EU is tightening up on banks to discourage them from giving unrealistic loans. As my mother used to say, “Don’t do what I do, do what I say”.
I just wish I’d emigrated to Australia some 40 years ago when I had the opportunity, at least they keep themselves to themselves and look after their own interests first.
May 10, 2011
Completely agree.
It is farcical that the likes of Cable & Osborne who castigate Northern Rock for giving out generous mortgages, or RBS for buying AAA rated US mortgage derivatives, are getting ready to send billions of our money (yet again) to bankrupt countries with no hope of paying it back.
Duplicitous politicians, who’d’ve thunk it!
May 10, 2011
And isn’t this so true. Many banks in the Eu are unstable, huge long sided interest rate swaps, hugely fragile large soverign bond portfolios and hugely overvalued housing portfolios which mean a rise in interest rates will cripple the Eu economy – but a rise in inflation will cripple it too by devaluing it. Money is like water it will devalue one way of another – you can slow it down but you cant block it from finding its own level. The BofE and Eu are flailing around trying to sustain the economies in Europe by passing the costs of failed borrowers and lenders onto the taxpayer. But then the taxpayer will cause the next crisis – and all the time costing more money – simply so delays can save political skins.
May 11, 2011
Good post. Wall st and the City have 10 ways of describing the same thing that underpins almost all their dealings :to make their book look more robust than it really is. And after a cycle of falling rates for the past 30 years, the odds do not favour these rate suppression “insurance”schemes from NOT blowing up spectacularly and because of the size of the bet, we will probably all go down with it, when it does blow up.
May 10, 2011
North European countries only care about a PIG when their Banks will potentially go bankrupt. German banks stuffed their face on Greek bonds. French banks stuffed their face on Italian bonds. Spanish banks stuffed their face on Portugese bonds. Finally, the UK banks stuffed their face on Irish bonds. Each conutry believed a ‘miracle’ was happening and of course it never was. When you read the news it makes you understand why each country steps forward to bail out another. On top of that the majority of banks have potentially crippling long positions on interest rate swaps (hence the low interest rates) – but that’s another story – which makes the banks super sensitive to rate rises.
Chief shareholders can get together and sack the chairman – chief bondholders cannot sack the Chancellor. The power bond buyers have is to stop lending Governments money.
I get the feeling that Government’s believe that fund managers believe that Governments current spending reductions are sufficient is a fixed view and is unlikely to change. I think chancellors believe that fund managers have all done their maths and know what is going on and that the state of the EU is well understood and some kind of implicit agreement has been reached between fund managers and Governments. Well that’s not the experience I have. I meet fund managers who have all recently been downwardly revising their view of Government debt. Figures of between £3-5 trillion are being mentioned and these figures contrast to the official £1 trillion behind the UK debt. I see reality slowly coming back to the bond markets.
May 10, 2011
I do not always agree with JR on various issues, I do believe that the current front bench of HM Govt is so appallingly bad, and totally clueless in much more.
That a situation will occur in the next six months where the search for a proper Conservative to lead the party will occur, there are only two options, David Davis, and John Redwood, and even then, the damage done by Cameron may be to much to overcome.
May 10, 2011
Daniel Hannon has a good blog post on this same topic, quoting Timo Soini the leader of the Eurosceptic True Finns who did so well at the last elections:
http://blogs.telegraph.co.uk/news/danielhannan/100087143/will-the-true-finns-break-hannans-first-law/
Equally worrying is the UK`s failure to perform according to the Coalition script. As you have pointed out, frequently, government spending is in overrun mode while economic growth is flagging below the budget forecasts. There is trouble ahead for the UK too.
May 10, 2011
“At present, many parts of the NHS are subject to competitive tendering on cost and volume. Mental health, for example, is contracted in this way. Our plans to extend the use of fixed-price tariffs to more areas of healthcare will end competition on price, replacing it with competition on quality. Increasingly under our plans, no provider – public, voluntary or private – will be able to offer a service unless it meets NHS quality standards and works at NHS prices.” (Paul Burstow: Liberal Democrat MP, minister of state for care services).
I can’t wait to see how Burstow is going to make this new form of economics work! But I will try it out on our local Jaguar dealer. ” I want an XKR but I am only going to pay XF price”.
“If Europe is to remain relevant as an innovative economy, people need to be more positive and entrepreneurial and not let themselves be depressed by the economic crisis and subsequent austerity measures, EU council chairman Herman Van Rompuy has said. “Innovation has a lot to do with behaviour, risk taking, motivation and education. You can’t have a society of very creative people only based on financial stimulus,” the former Belgian premier said Wednesday”
You start to understand why Belgium still hasn’t got a government yet, since last June’s election. How can any country possibly keep operating, without politicians for so long!!!
May 10, 2011
Moronic idea based on wishful thinking by an idealist with no experience of the real world is how it reads to me.
‘Quality’ as measured by a central bureaucracy is completely, well, it simply can’t be measured by a central bureaucracy, so instead what we’ll get are companies trying their best to scrape in above the ‘quality standard’ (no doubt by a multitude of tricks we’ll be reading about in Private Eye for years to come) at the lowest possible price.
What he’s proposing is nothing short of communism. If this the thinking that is going to replace Lansleys plans then God help us all – the NHS won’t be!
How well are our schools doing since the introduction of ‘measuring quality’? We may be getting record passes at whatever but apart from central bureaucrats who can say it’s improving education children get?
May 10, 2011
Countries keep running despite politicians !!
May 10, 2011
“I want an XKR but I am only going to pay XF price”. If you have sufficient purchasing power you can do precisely that.
May 10, 2011
I am advised . “Even if you were a fleet buyer, wanting a hundred XKRs to put on retail lease contracts; you would be pushing your luck. There is a waiting list for those babies, world wide”.
May 11, 2011
“pushing your luck” – i.e. drving the supplier to their lower price limit is exactly what should be done. And If they don’t lay ball, their are other suppliers who will and produce something close enough to an XKR that it will have to do.
Seriously – I’m not unfamiliar with these processes technological cotext. Inclusive, amusingly, of the ins-and-outs of how a well know multinational structures its fleet buying. Trust me, public sector procurement does not even scratch the surface of what should be done.
May 11, 2011
if. there. etc.
May 10, 2011
“How can any country possibly keep operating, without politicians for so long!!!”
Extremely successfully , if only we could .
Operating without a Government is another matter though .
May 10, 2011
Acorn , sorry the irony of what you said flew over my head .
May 10, 2011
Apologies Simon, there is a paragraph missing from the post. Fortunately a colleague spotted it pasted in a bit I did elsewhere, on the energy content per kilogram of batteries compared to petrol and LPG. That will be a subject for another day; electric cars. All the best Acorn.
PS. I am watching Huhne talking up his Energy Bill on the Parliament Channel … Oh dear. I can see another feed-in-tariff **** up coming.
May 11, 2011
Yep , it’s a lot of weight to accelerate and carry up hill . I don’t suppose much can be recovered when decelerating .
Have you come accross any way that power or motive force can be supplied to the cars externally to reduce the need for such independent storage devices ? For instance by electrical induction or even conduction ?
We waste far too much energy in the UK but Huhne isn’t the chap to address that problem .
I bet Clegg would ditch Huhne if he could .
May 10, 2011
As with ourselves, Greece et al, have experienced years of debt fueled growth. Consequently, we (and they) enjoy a standard of living not within our means. Individuals in the same situation are faced with two prospects, continue living the high life until bankruptcy or scale down expenditure and enjoy a reduced standard of living. Unfortunately, too many people – mostly State employees and beneficiaries, which includes our monopolistic broadcaster, the BBC – steadfastly refuse to accept that lower standard of living. Subsequently, our left-leaning political elite will not enact sufficient measures to reduce our liabilities, thus delaying the bad news for future generations. Both left-leaning politicians and their client State are purely motivated by self-interest. They don’t care about the long-term interests of the nation. Its amusing that real conservatives are still perceived to be selfish. The opposite is true.
May 10, 2011
An awful lot of people in the UK have scales their lifestyle back as much as they can and still cannot afford afford the transport to work and accomodation .
My Sister’s family could not afford new pairs of shoes for their children . He is self employed and the benefits offices won’t accept self employed statement of accounts as evidence of low income , only PAYE payslips .
Needless to say I help them , to an extent to which I think I should be getting some tax relief by doing so – does anyone know if that is possible ?
The crux of the issue is concentration of wealth and debt slavery .
Unless the pot is several orders of magnitude greater than it actually is there is no way whereby such concentration of wealth as exists today will leave the rest of us with enough money to survive .
How would you compare the burded the economic rent collectors and largely parasitic financial services industry heap on us in comparison with our fat public sector ?
May 10, 2011
Sorry about the typos .
My Sister’s town is mentioned in the Domesday book for making wool garments .
When a certain well known highstreet store known by a two letter accronym separated by an amperaand with TV adverts of models of disparate age decided to source garments overseas the town went into a death spiral .
Makes you wonder why the honours system conveys honours on the heads of such retailers .
May 10, 2011
In whose interest is it to keep the debtors in perpetual debt serfdom? and ditto the banks dependent on various in/direct state supports?
It seems to allow the taxpayer to replace other investors over a time period to what end?
The debtor nations need to reset on a sustainable basis :- the local governments may need a central team parachuted in to ensure fiscal (tax raising) and monetary policy support this. If the debtors don’t want this the answer is obvious.
Kicking the can down the road benefits who? Ever closer union?
Meanwhile the distribution of wealth seems to be skewing further how is this?
S0 further tax rises to fund ; eurocrats, eurobailouts, continuing banking subsidies, universal benefits to all who manage to get to the UK (and some) without end legal or not.
Something internal needs to change and please no more expensive wars particularly those which are likely to destabilize our long term defence particularly where we seem to be overextending our frontline armed forces, the only ones really paying the price.
May 10, 2011
It is obvious that the Greek bailout didn’t work last time because the gods on Mt Olympus had been insufficiently propitiated. Will it work next time? This again is a mater for the gods not mortal men, particularly politicians, whose ability to anticipate the decisions from on high is often woeful. In particlar, they believe that by slamming shut all the doors that offer an exit from a distressing situation (not for them of course, but rather for those that have to pick up the tabs for their grandiose schemes), the gods will miraculously open a door to their own magic heaven of a NWO.
May 10, 2011
My observation about this whole bailout nonsense is that it was established to prevent mass haircuts hitting the banks specifically the French and German (and UK) banks. They would be massively hit requiring massive government bailouts (sound familiar) but also affecting their trading capability, credit rating etc.
So the ECB has effectively said better for the people to take the haircut (just like the US government vis-a-vis AIG et al.)
The prooblem is the people will be bludgeoned for generations.
This is especially apt for the Irish.
Read Professor Morgan Kelly’s article – he, correctly in my opinion, states the only future for the Irish is outsider the bailout conditions and by extension outside the Euro.
http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html
No wonder the ECB and the EU politicians are fighting like rats in a sack to prevent it…
May 10, 2011
– https://www.cia.gov/library/publications/the-world-factbook/geos/gr.html
“The Greek economy grew by nearly 4.0% per year between 2003 and 2007, due partly to infrastructural spending related to the 2004 Athens Olympic Games, and in part to an increased availability of credit, which has sustained record levels of consumer spending. But the economy went into recession in 2009 as a result of the world financial crisis, tightening credit conditions, and Athens’ failure to address a growing budget deficit, which was triggered by falling state revenues, and increased government expenditures.”
The UK suffered from enormous credit expansion but has not yet born the cost of the impending Olympic Games.
Is the 2012 Olympic Games going to trigger an economic collapse in the UK too?
Or, aren’t we going to spend anything extra on Infrastructure?
May 10, 2011
John,
is it possible that any direct or indirect UK financial contributions to this mess are a form of insurance? Will they provide the UK /Sterling with some form of recourse to the various EU/ECB pots in the event of disaster ahead even though we are not Eurozone members?If we simply said ‘no more!’ would the the markets put the UK /Sterling under pressure given the potential threats to UK banks and a clear message from Brussels that the UK is now on it’s own? After all, I should have thought a ‘no’ from the UK on this point would be seen as striking at the very heart of the EU project.
May 10, 2011
-https://www.cia.gov/library/publications/the-world-factbook/geos/gr.html
“Budget:
revenues: $114.5 billion
expenditures: $142.9 billion (2010 est.)”
Deficit of only $28.4 billion.
“Stock of direct foreign investment – abroad:
$38.66 billion (31 December 2010 est.)
country comparison to the world: 35 ”
– http://www.reuters.com/article/2010/04/28/greece-waste-idUSLDE63R0QZ20100428
“COSTLY ARMS
Tensions with arch-rival Turkey have kept Greek military spending well above that of other EU members, reaching 14 billion euros, or 6 percent of GDP, in 2007 and 2009.”
Couldn’t they solve their deficit simply by halfing their Military and Foreign Investment budgets?
There biggest problem is Public Debt:
144% of GDP (2010 est.)
May 10, 2011
A most realistic approach. Greece was allowed to build up such a debt that it simply can not service. Over 25% of its GDP is used for interest repayments alone. Tax avoidance is out of contrl to all but those on PAYE and growth is negative. An imposwsible situation. Recovery will have to include growth , reduction in expenditure, tax collection from those who can (aqs opposed to the old age pensioners cureently targeted !) and above all else german like discipline.
Thank you, John Mantikas
PS. Addressing the huge levels of corruption as all levels might help too!
May 10, 2011
What would be the effect of all of the 40 rebels in the HoC and anyone else who feels strongly enough, including yourself and your colleagues in Europe, threatening to vote against the government on any bill, if they do not give us the referendum that the British people are desperate for ? Threatening to resign may be good as well, so do you and your colleagues feel strongly enough, or is it all posturing and actually staying in work is more important than any guilt you may feel about ignoring this potential action ?
Reply: We have already voted against the government on certain EU matters, but they win.
May 12, 2011
No John you miss the point, if all the 40 and a few Nationalists, and other parties, and some Lib dems were to vote down ANY government bill not necessarily a EU bill. You have to fight dirty, you are up against a very dirty opposition in Europe.
You have to do it on bills you know you can vote the government down, there’s no rules here, it’s our survival as a nation we cannot afford to “play the game”.
May 10, 2011
“The answer for Greece is an economic policy that delivers growth, and more realistic levels of state spending.”
Why is there an obsession with Economic Growth all the time.
As economic growth is influenced by Government Spending – isn’t it contradictory to be criticising Government spending on one hand and at the same time demanding that Greece should grow it’s economy. How can it grow it’s economy without increasing it’s money supply. How can it increase its money supply without borrowing money?
May 10, 2011
Greece should be punished for mishandling it’s credit.
The answer, therefore is to restrict future credit by banning any credit creation for Greece as a whole.
Banks should therefore only lend money they have and not create new credit.
The Greek Government should be allowed to create money themselves and not issue Government Bonds which are bought by Banks with money they create.
The money supply will be maintained – initially – through Government Spending using money they create. Private sector borrowing is supplied by money that already exists and is replenished with money created by the Greek Government.
This will slash the deficit and allow Greece to pay off it’s debt.
The quantity of money that the Greek Government is permitted to produce should be restricted by the current money supply. As loans are paid off, the Government will be allowed to replenish the money stock.
With Banks in Greece restricted to only lend money they actually have, this will naturally restrict malinvestment.
This will stabilise Greece, and therefore , the EURO. There will be no resentment on the part of Germans, who might feel that their hard earned EUROS are being taken by insolvent Greece.
The problem was caused by increasing credit availability, it can therefore NOT be solved by continuing that credit availability.
People, Governments and Businesses must be encouraged to realise that easy credit is not the answer, if the money is not available, then they cannot have it.
Reply: The money supply is falling in Greece, reinforcing the recession and making it more difficult to cut the deficit.
May 11, 2011
Very good point.
My proposal could be a temporary situation, or if proved successful at reducing Greece’s debt, more permanent.
And that is why my suggestion will work as the Greek Government will replensih that money supply with money it creates, rather than the Markets.
The Banks would normally create money through credit creation, if they are prevented from credit creation, they therefore cannot help increase the Greek debt – public or provate.
The Greek government could then fall into the inflationary trap of creating all the money they need, so restricting Government money creation based on a specific money supply level should be enforced. Possibly through an independent body at Greece’s central Bank, like the MPC at the Bank of England.
When the Government create the money (debt free) they can use some of it to pay off their debt and the rest to pay for exisitng public services and projects. This money will filter through to the rest of the economy without causing inflation as it is merely replacing money which is extinguished by loan repayments.
It solves the deficit immediately and starts to reduce Greece’s debt. The only stumbling block will be the Banks who will lose their right to create currency through issuing loans. The Banks can still issue loans but only with money deposited with them. It would be a 100% reserve system.
Public spending excesses will have to be tackled but with the right to create money – the government will be firmly back in the driving seat of the Greek economy. Private Businesses should greatly benefit from this stable form of money supply. Direct Taxation will have to fund future public spending alone.
It has the disadvantage of strenghenening the EURO for those who wish to see it fail. I’m no fan of the EURO but I would like to see Greece recover from this crisis.
May 10, 2011
Perhaps China will buy up all the Greek debt and Greece can become a Chinese colony.
May 10, 2011
As a private individual when you take out a large loan there are usually guarantees put in place to stop people reneging on them. Don’t Greece have any national treasures to put up as collateral.
What’s truly sad is that Greece used to be an Empire of magnificent proportion, this is surely the best sign ever of what happens if you continue to live on past glories and well beyond your means.
May 11, 2011
a-tracy: “Don’t Greece have any national treasures to put up as collateral.”
The Elgin marbles?
Oops, we already have those. Perhaps when Greece defaults and we loose our shirt we can as a quid pro quo claim the marbles as now purchased.
May 10, 2011
An easy way out of the crisis – send in a German “Management Team”. Ditto for Ireland and Portugal. And, if necessary, Spain, Italy and any other malingerers.
The European project is still on track.
May 10, 2011
Very perceptive .
May 10, 2011
I am utterly fed up with the greedy government stripping us of our own money and then wasting it.
They also assume the moral high ground.
How?
Robbery is robbery. Robbery is taking things from other people without their consent and then spending it yourself.
Please would someone – anyone – be kind enough to tell me how I have an obligation to pay any Greeks for their profligacy?
May 10, 2011
Solving a Sovereign Debt problem……..with more debt !
Whose idea was that ?
On what basis is the Euro Zone economically sustainable in it’s current form ?
The preservation of the Euro Zone by Germany & France so far only exists to serve their interests – the banks of both countries are heavily exposed to Club-Med debt.
Corruption & disfunctional govt in Greece & slow/non-growth in Portugal suggest the growth solution is a pipe dream.
So what next ?
Greece & Portugal (& possibly others) leave the Euro Zone when France & Germany realise their retention outways any benefits or perhaps a two or three – tier Euro Zone ?
May 10, 2011
The backstop is always higher taxes in richer EU member countries, including the UK. The only thing which will stop politicians feeding the black hole of debt is a taxpayers’ revolt. Where this happens forst is anybody’s guess, but by staying in the EU and cowtowing to this level of trans-EU funding the Government here in the UK, and in Germany and France is playing with fire.
May 10, 2011
Isn’t Greece up there with Bulgaria on these corruption indices? If you believe what you read, a lot of Greek tax collectors are rolling in it, even if the coffers are bare.
May 11, 2011
StevenL: “a lot of Greek tax collectors are rolling in it,”
Let he who is without sin cast the first stone.
It would take a brave MP to jump on an anti corruption bandwaggon.
May 10, 2011
Hopefully the euro zone will collapse. Just a wish befor UKIP can get us out of the lunatic asylum.
May 10, 2011
Witgh luck the whole mess will collapse. Soon hopefully, meanwhile vote UKIP.
May 10, 2011
Sorry, I missed the allocation.
May 11, 2011
I can’t even bear to watch another E60bn loan- when the Greeks need a E60bn gift. a 50% haircut has been on the card for 6 months. All the Eu can do is kick the can down the road till 2013 – when nobody in the private sector will buy Greek bonds – because the Eu will have preference bonds. Its all about the Eu trying to take over Greece in a war of stamina. Greece cant afford it, either can the other PIGs. The Eu are making a bad situation worse and costing the Eu tax payers dear – what a mess.
May 11, 2011
I’ve been posting on this site now for months – that the Italian banks will be the cause of the Eu failing. The Italian banks have been buying around 60% of all the bonds issued over the past year. They are in a volatile position there had been a steady outflow of money from Italian institutional depositors. The Italian GDP/debt ratio is one of the largest in Europe and any downturn in southern Europe will render them exposed, they will regin in lending and this will lead to a downward cycle in tax repayments and further debt.
I see a fund manager is starting to sound the warning bells about the Italian dark horse.
http://www.cnbc.com/id/42954173
May 12, 2011
What on earth is wrong with Greece, Ireland and Portugal leaving the Euro, reinstating their national currencies, generating a bit of inflation and repaying their debts in full but in clipped coinage? It’s the least of the available evils by a very long way.
May 12, 2011
Fluctuating currencies swimming around each other with no solid reference point – unfortunately.
I think the idea – sold to the public; was that a common currency would make trade between European nations easier and more straight forward.
Wouldn’t a Gold Standard have done that? Shame Nixon took the World off the Gold Standard in 1971. Something to do with not being able to print “loads of money” to fight Wars, if I remember rightly.
There’s been a lot of blame thrown at the “selfish public sector” insurgents in Greece, stealing all Greece’s money – but hardly any mention of the amount spent on Military Expenditure and Interest Payments on past debts – like the Olympics.
In order to pass this out as the cause there has to be some truth to it but there is always a blind eye cast at the Military Expenditure.
France has now used up it’s Military spending for the year so I guess will now have to start borrowing “credit” from Banks – who no doubt, will love to oblige them.
Spain has a gigantic debt bubble – waiting to pop.
There seems to be only two winners in Europe at the moment: Banks and Military Manufacturers. With Oil & Gas following closely behind.
May 12, 2011
The way the Greek debt problem is being solved by increasing their debt, … didn’t the IMF come up with that solution – sounds awfully familiar?
Afterall, solving debt, with more debt, has been a big success in the Third World … or has it?