Last night Parliament voted by 274 to 246 votes in favour of increasing the UK’s contribution to the IMF by £9.3 billion.  That implies more than 80 Conservatives were unavailable, abstained or voted against the government. Many Labour MPs were also unavailable or abstained, when their party recommended voting against. I will check the voting lists later today.

     Some of us want the UK government to use the influence it says it has at the IMF to halt the futile bail outs of Eurozone members. The debt markets show the markets do not believe that Greece can repay all its debts in full and on time. Yesterday was a day when market worries spread beyond Greece, Ireland and Portugal to Italy. Those in  charge of the Euro scheme need to get a grip. It is doing a great deal of financial and economic damage, and they no longer seem to be in control of their project. The IMF should decline to bail out rich countries that have shackled themselves to a currency scheme that was badly put together and needs a thorough re think.


  1. lifelogic
    July 12, 2011

    A totally predictable and widely predicted EURO crash, doing huge harm to very many people and with no sensible solution being offered beyond lend and pretend.

    Meanwhile as we see the Lobby fodder continue to do as bidden. But what is Cameron/Osbourne’s strategy – do they have one beyond chucking yet more of our taxes down the PIGIS drain?

    How do they ever expect growth to come with this insane tax and waste in place?

    1. APL
      July 12, 2011

      lifelogic: “A totally predictable and widely predicted EURO crash, ”

      And the politicians ( if such exist in the European union, being either highly paid sock puppets, or authoritarian international socialists ) will say ‘Oh my gosh, we never saw that coming, what a surprise, lets ban short sellers and speculators, blah blah blah.’

  2. Mike Stallard
    July 12, 2011

    I am sure I can speak for a lot of us when I say thank you for trying.
    At the beginning of the Blair regime in 1997, the whole of the education and defence budgets were just about £30 billion each. That shows how very far inflation has gone since then. £9 billion odd is a lot of money.
    It is a shame your common sense did not prevail. But I have an intuition that one day people from all sides will see that something has to be done. Then they will come together and, with great difficulty, do it.
    And the longer it gets left, the worse the task will seem.

    1. Robert K
      July 12, 2011


  3. norman
    July 12, 2011

    Easy come, easy go.

    I don’t know how Conservative MP’s can vote for this with a clear conscience. I like to think I’d find it a little more difficult to waste so freely the money earned by the labour of other people.

  4. Richard Roney
    July 12, 2011

    You’re right but it’s never going to happen, at least not until so much damage has been done that a re think on the euro becomes inevitable. Surely we should be doing all we can to protect ourselves against the coming damage – it is a failure of government not to.

    1. Scottspeig
      July 12, 2011

      Indeed, when it gets so bad that fiscal union is looked favourably upon?!?

      That is where its going and I wouldn’t be at all surprised if Cameron tried to join!!! It would be political suicide I think, but it still wouldn’t surprise me!

  5. Chris Rose
    July 12, 2011

    The European elites are abusing the IMF for their own purposes. It is very sad that so many MPs aren’t alive to the problem. With their attention focused on their expenses and on News International, MPs seem to have no idea where the interests and welfare of their constituents lie.

    I am also surprised that the Americans haven’t taken a firmer stand on the proper use of IMF funds. Why should they prop up the Euro?

  6. Javelin
    July 12, 2011

    I was going to post this in the Growth thread but this seems more appropriate.

    Watching Italy get pulled into the debt crisis was interesting – especially as it was entirely predictable. But predictions require assumptions and I think it’s those that are interesting.

    The key assumption behind Italy (and the other PIGS) is productivity in the face of global competition. The “process at risk” here is Government borrowing, productivity and taxation. It is that process that is now being eroded by productivty gains in China and the far east. The weakness is the size of the Government debt, the taxation needed to pay that Government debt and the demand from the public for the Government to go into debt. All European countries and the US have a problem with the break down of this cycle of economic activity.

    Importantly this is only a cyclical issue because it will probably first appear at the bottom of a growth cycle when taxes are low. This is a much bigger structural problem. Productivity is key. I agree with Trichet on that. But the tide of globalism is only just starting to lap at our feet.

  7. alan jutson
    July 12, 2011

    I echo Mike Stallards comments, thanks for trying.

    I see from reports in the telegraph this morning, that the Germans say they are not going to support bailouts for Italy or Spain if they are required.

    Have they at last realised that enough is enough ?.

    Shame that 130 MPs felt they could not vote one way or another last night, or perhaps that £9 billion was perhaps not a large enough incentive.

    How sad that so many MPs are so blind in this country. Do the lobby fodder eat a different food source from the rest of us, or is it something in the water at Westminster that causes this lack of commonsense.

    Also reported today that the UK finances are going to be listed and set out as if they were Company accounts, and all off balance sheet borrowing (PFI contracts, pension liabilities) will be included in the liabilities.

    This new method it is suggested, will show that we are infact in debt to the tune of more than £2 trillion, more than double present suggested debt estimates.

    How long before we perhaps need to go cap in hand to the IMF ?

    Do you ever see us getting our finances under control John, it looks increasingly unlikely from out here.

  8. Sophie
    July 12, 2011

    Greetings John,

    Many thanks for trying – real Conservatives are with you.

    I say that, but this vote last night was the final straw for me. I cannot vote Conservative in future, & now fully understand why many of my Tory friends were so sceptical about David Cameron that they voted UKIP.

    I will be joining them now at every opportunity until David Cameron & his cabal of Heathite Europhiles are purged from the party.

    Sad day for the party , the country & the beleagured British taxpayer – no one in the Coalition is listening to us.

  9. GJ Wyatt
    July 12, 2011

    “The IMF should decline to bail out rich countries that have shackled themselves to a currency scheme that was badly put together and needs a thorough re think.”
    Quite so!

    Greece, Ireland and Portugal should leave the Euro, perhaps temporarily, have a step devaluation to realign their relative competitiveness and then depreciate their currencies in a steady and controlled manner – e.g. by 5% p.a. against the Euro to reflect inflation differentials vis a vis the Euro. Such a controlled and predictable depreciation would ease any support from the ECB and the IMF (and the BoE) for the new currencies. Eventually the new currencies, having thus remained within the “Euro sphere”, could even return to the Euro, after a full monetary and fiscal union had been established.

    All the loans in the world can only buy time for a root and branch reconfiguration of the exchange rate regime such as the above.

  10. TheHutt
    July 12, 2011

    I’m so impressed with your restraint… if I were you I’d be going around wearing a t-shirt with I TOLD YOU SO in huge letters.

  11. Chris
    July 12, 2011

    £9.3 billion……..paid out, while our own people lose their jobs, homes and end up living on the streets without a bean in their pocket.
    It won’t stop until all our money is in the hands of a controlling few; and so far it’s all going to plan.

  12. libertarian
    July 12, 2011

    Totally agree John, spot on.

  13. Lee Matthews
    July 12, 2011

    We were offered a referendum on Europe by both Labour and Conservatives and both parties managed to come up with an excuse not to give it to us. Many countries who are not in the Eurozone manage to trade happily with Europe (far east electronics etc) so could we. The money given to europe is just payment for a place on the gravy train when they leave political office. How many failed MP’s and members of their families have already riden the train.

  14. EJT
    July 12, 2011

    “Those in charge of the Euro scheme …no longer seem to be in control of their project”

    Dunno about that. What does the EU look like after a systemic financial crisis in the PIGS ?

    1. A big shift of power to the centre ( see Greece loss of sovereignty )

    2. The banking system brought under (EU) state control, as it goes bust and requires bailout.

    What is there for Brussels not to like ?

  15. yaosxx
    July 12, 2011

    What a travesty of a government we have that this vote has been allowed to go through! I have no real interest in the NOTW scandal – as far as I’m concerned it is masking the real crimes currently going on in this country right now!!

  16. Duyfken
    July 12, 2011

    I know you will keep at it, and your “doggedness”, with others, is providing signs of success. Thanks.

  17. Bob
    July 12, 2011

    If it had been put to the people who our government are supposed to represent, I believe the vote would have been the other way by a very large margin.

  18. Jeremy Poynton
    July 12, 2011

    I am getting very used to the fact that the transfer of “wealth” from the poor to the rich is now entrenched in the various political systems now lording it over us. From subsidies for renewable energy to the vast debts occasioned by venal politicians and bankers, there seems to be but one answer – raid the poor to protect the rich.

    If we are, as we are often told, governed by consent, I hereby withdraw my consent. Sod the lot of you.

  19. Richard
    July 12, 2011

    Thank you again Mr Redwood, for your efforts to stop the waste of our money.
    It amazes me how the media do not seem to find this story to be of any importance.

    Apart from needing more people in Parliament who have actually worked in the real world of commerce, we could do with some historians, because our current leaders seem to be unable to recall the failures of the past.

    The disaster that was the ERM is being replayed on a much grander scale, only this time we are wasting even larger sums of money.

    If this £9.3 billion was money we “own” then it should have been used to reduce our debts but if it was borrowed money then it should never have been re-lent.

  20. forthurst
    July 12, 2011

    So the Opposition ‘oppose’ the motion in favour of the decision of their own minister, but not too much: not enough to defeat a motion which would further their own agenda of promoting the Euro whilst inflicting harm on the government

  21. Javelin
    July 12, 2011

    As I said many months ago the EU Elite are taking this crisis as an opportunity to increase fiscal union. The bigger the crisis the more likely fiscal union is to occur. This now appears the theme in messages from Europe looking for a “European Solution” and not a “national solution”. As I said before the ERM has no intention of solving this crisis they plan an all or nothing play. They are prepared to destroy the European economy in order to bring the opportunity into play. That sound dramatic and nobody would ever say it but European leader, Buffet and many traders and economists are now begining to realse the EU leadership have no solution other than a fiscal union.

    The mind state is essentially “no to a national solution” and this has an extremely strong “yes to fiscal integration” – because it is the only viable option other than break up. It will come down to the wire – will the Germans blink.

    1. Ian Harris
      July 16, 2011

      Could this be Bilderberg at work here? George Osborne M.P (Chancellor) was invited/summoned to Zurich and the normally very secret meetings. Mr. Osborne was there four days you will remember, & on arrival home he makes economic statement. I don’t believe our elected members of parliament thought up the various elements of G.Osbornes’ economic speech, but was designed by the secret Bilderberg members. Of whom far too many members of parliament belong to such a group of indivduals. irra

  22. Javelin
    July 12, 2011

    Just wanted to point out that EU banks deposited Eu60 billion in the EU Central Bank last night – credit tightening has begun – again.

  23. dan
    July 12, 2011

    Yet, Redwood remains in the Conservative Party, as do the rest of them.
    What will it take……

  24. Tim
    July 12, 2011

    I agree Mr Redwood but you do not possess any strategic patriots in your current leadership. It appears that the markets will now consider the Italian and Spanish sovereign debts. There must be a total debt for each country where it goes beyond any possibility that it can repay its debts? I think we are at that point for the PIIGS and no kind or specious words will help them. On current form our leaders will simply throw our good borrowed money after bad. Totally incompetent.

  25. Vishal
    July 12, 2011

    [@Norman – MPs, not MP’s – I despair at the widespread abuse of the apostrophe these days.]

    Please correct me if I am wrong – we loaned the money to the IMF and we will get interest on the loan. We have not lent it directly to Greece, so there is no danger of us losing the money?

    1. EJT
      July 12, 2011

      Any money that would have been loaned via the ECB would have been at risk – the size of defaults that are being predicted puts the ECB’s finances in question. How long before the same applies to the IMF . Which, after all, now seems to be a French sinecure.

    2. alan jutson
      July 12, 2011


      You can guarantee its absolutely safe then can you ?

      If Greece does not pay back the IMF, the IMF comes cap in hand to its members (including us I assume) again.

      I mentioned in previous bloggs, if the IMF were such a successful bank, why does it need extra funds, why can it not survive on the interest (profit) it has made on past and existing loans.

    3. norman
      July 12, 2011

      Thanks for the heads up. TO be honest, when composing replies to forum threads, etc. I don’t worry too much about spelling or grammar. I never read over anything I write (although I probably should) but just ‘ave at it, as it were.

      If I’m composing an email or any business corrospondence I will make an effort to check grammar and spelling.

      That’s why I’ll also never correct other people’s grammar on these threads but appreciate the time you took to point out my error.

      And I imagine you are wrong, who will pay us the interest, and capital, of that loan back? IMF members? That’ll be us then.

      1. Paul from MK UK
        July 12, 2011

        You are forgetting where the money comes from … It’s borrowed from the banks and there’s interest to pay!

  26. RichYork
    July 12, 2011

    I am finding it increasingly difficult to comprehend the strategy here. We are spending ever increasing amounts of taxpayer money, whilst cash strapped at home, on maintaining short term cash flow which can only bring a larger and more damaging default.

    Is the strategy to bring about a lethal level of contagion for all banks? Is the strategy some form of ‘bankruptcy for all means bankruptcy for none’? It cannot be that EU economists believe that Greece will turn around its economy, that would be extremely foolish and would require a massive blind spot about the way the Greek economy is actually run. Genuinely confused!

    1. EJT
      July 12, 2011

      You’re not confused. Your 2nd. para is correct, except that it will apply to the “nations” within the EU as well as the banks. It “kicks the can down the road”, at the cost of eventual “bankruptcy for all”. Remember Keynes definition of A Sound Banker ?

  27. Slim Jim
    July 12, 2011

    Once again, the political class in this country has let us down badly. How much more of our money are we going to pour down the drain, trying to bail out our profligate neighbours? Whatever ‘big picture’ the PM and his inner circle are working towards, it is beyond most of the rest of us. It is time for some serious re-appraisal of our relationships with such institutions like the EU, ECHR and the IMF. When you add in the ridiculous policy of increasing overseas aid, I wonder where this downward spiral is leading us? I have been seriously thinking of joining the Conservative Party. John, can you give me any reason why I should now? We really are doomed!

    1. norman
      July 12, 2011

      If Cameron contrives to lose the next election (he has the advantage of the most insipid opponent in my lifetime so it would take some doing) you can vote in the next leadership election for a conservative. If you’re so inclined (and your local party isn’t hamstrung from central office) you can also have a say in who the candidate for your area will be next time.

      If neither of those things interest you, and you’ve no desire to tramp round in the rain delivering leaflets, then you’re probably better off using your twenty quid elsewhere.

    2. Scottspeig
      July 14, 2011

      I’d join UKIP instead personally.

  28. stred
    July 12, 2011

    Is this money we are lending to the PIGS borrowed from our banks or national savings or who? How long before we have to go to the IMF to borrow it back?

  29. sm
    July 12, 2011

    And then we will still have the pantomine show about the depth of the cuts and why it is needed to cut this or that?

    Reading a US blog the best stimulus in terms of multiplier were 1) food stamps and 2) unemployment benefits 3) construction of infrastructure, roads.

    £9bn that could be used to insulate a lot of homes in time for winter, it could build a few strategic barrages,dams, gas/oil/water/power storage. That way it would easy to monitor the major cost inputs of gas imports over a year, this could also brake the speculation by paper traders as the reserve could be managed to smooth spot prices to annual rises. Why not make all utilities submit increases at the same time once a year?

    More borrowing:with no direct stimulus to the UK?
    This looks like a backdoor subsidy for the euro via the IMF given the size of the contribution. We really need out of the EU. We are too big to be bailed out by them and for the benefit of both we should not be linked into the Euro, but we seem chained by dark hidden forces.

  30. James Barnett
    July 12, 2011

    Your right Norman.

    It always amazes me how easily the political class can spend other peoples money, to prop up their pet projects.

    The euro was always was going to end in tears. Sadly none in the EU wants to admit that the experiment has failed.

    We seem to be sleep walking into a crash

  31. Alison Granger
    July 12, 2011

    So once again the British taxpayer is shafted for the benefit of the Euro elites. Why are we not surprised? Dave is cuddling up to the EU so that when he gets kicked out of office here he can get a cushy little part time job paying a few hundred thousand a year for 4 hours work a week. Does he not realise that if he stood up to them he’d be so popular here he’d win a landslide next election?

    1. Kenneth
      July 13, 2011

      He may start to realise when (if) the Labour Party pledge a eu membership referendum

  32. bloke in spain
    July 12, 2011

    Welcome to the rabbit in the headlights school of politics.

  33. Will Podmore
    July 12, 2011

    The EU stops countries devaluing. It forces on them bailouts that don’t work, it drives them deeper into debt holes, then tells them to carry on digging.

    Last year’s bailout of Greece cost 110 billion euros. It failed. This year’s will cost another 120 billion euros. One definition of insanity is to do the same thing and expect a different result. Default is not if but when, and the Greek people have to choose to get out of the euro.

    The government doubles our payments to the International Monetary Fund to £20 billion, not to save Portugal, Greece and Ireland but to save the euro, to save the EU. Excessive loans at low interest rates in a currency you do not control lead inevitably to defaults. Don’t pay the debts; don’t enrich the bankers.

    Argentina’s default in 2001 was the biggest in history. “So successful did its default prove (economic growth has since surged …) that many economists were left to ponder why any sovereign debtor ever honours its commitments to foreign bondholders.” Who says? Would you believe, Thatcherite Niall Ferguson, of all people. Default is good for us.

    Again, the City of London’s tame journal City A.M. says, “the Icelandics couldn’t afford to bail out their bondholders – so they put their taxpayers first, only guaranteed the deposits of their own citizens and allowed everything else to go bust in 2008. It was painful – especially for foreign customers of their banks, including in the UK – … but in the end it has worked for Iceland. Sometimes it makes sense to give up and move on.” Of course, at the time, City A.M. screamed that it was the end of civilisation as we know it.

  34. Bazman
    July 12, 2011

    Unavailable? Abstained? Remind me again what we pay them for?

  35. Conrad Jones (Cheam)
    July 12, 2011

    Totally agree.

    How those MPs can sleep at night, knowing that they have supported this profligate organisation, is beyond me. They just voted to spend my money on an organisation that I believe only serves itself.

    We should also keep a close eye on ratings agencies (such as Moody’s, Fitch and S&P) as they rate investments based on whether the firm that provides those investments can give them a job or not.

    Just like IFAs, they are not independent.

    Icelandic debt was rated as A2 prior to the collpase. Iceland is now on the road to recovery despite rating agencies and the IMF.

  36. Kenneth
    July 12, 2011

    Surely the majority of those working in the ECB and, for that matter, Eurozone finance ministries already know that the game is up.

    This is beyond worrying about letting the cat out of the bag. Of course there is a plan B (or C). I mean there simply must be! Surely now is the time to get everything out into the open and let the bond holders take the hit sooner rather than later.

    Anybody who is still clinging onto the survival of the Euro in its current form is deluding himself since hardly anybody else is deluded about it.

  37. Denis Cooper
    July 13, 2011

    I regret that no MP questioned whether it was even legally valid to authorise this payment by an Order, secondary legislation, when we all know that at least some of the money will help fund eurozone bailouts which are illegal under the EU treaties as duly approved by Acts of Parliament, primary legislation.

    It would have made no difference to the outcome if one of the Tory MPs had raised this before the Committee last Tuesday, and argued that if the government insisted on doing this then it should at least show respect for Parliament and proceed through a Bill rather than an Order – the coalition’s 10 slave MPs would still have voted as they did – but it would have been good to have the protest on record.

    It seems that basically most MPs don’t much care whether or not the government treats Parliament with respect, they’re only there to do as they’re told by their party whips.

    Reply: The Order was endorsed by the whole Parliament.

    1. Denis Cooper
      July 13, 2011

      No, just by the Commons, one of three parts of the Crown in Parliament.

  38. Stuart Buckthorp
    July 13, 2011

    It isn’t just a PIGS problem, eventually it will become an acid debt alphabet soup.


    If an MP’s first priority is to the protection of the nation, then they should be discussing what to do when the whole Euro Parliament fails. Surely this melt down is the largest current danger to the UK’s general population.

    (Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain)

  39. Mark
    July 13, 2011

    I note that the UK has ceased providing data to the Bank for International Settlements on its external debt position. What are we hiding?

    Reply; The new government has provided more comprehensive information about public debt, including state bank debt and pension deficits.

  40. lojolondon
    July 13, 2011

    I think that the criminal acts here are twofold –
    1. Taking UK taxpayers money and wasting it on a pointless ponzi scheme that benefits only the EU MP’s and bureaucrats
    2. The resounding, deafening silence in the press.

    Last night on BBC1, there was no mention of Italy being bankrupt, riots in Spain, the total standstill in Athens, and the fact that the IMF are going to suck out more money than the UK managed to ‘save’ in a year of cut budgets.

    Instead the first 15 minutes of the news on BBC1 was all about Rupert Murdoch. Robert Preston, Nick Robinson and every politician who-used-to-benefit-from-the-Murdoch-empire-but-no-longer-does, was wheeled out in a spittle flooded outpouring of anger against an octogenarian who wants to buy BSKYB.

    I know the BBC is terrified by Murdoch and together with the Guardian, they want to torpedo the BSKYB deal, but the BBC is paid for by us, the UK taxpayer, and they should produce NEWS, not propaganda.

  41. APL
    July 13, 2011


    Not in my name!

    The assumption is that I agree to being governed by the Westminster Parliament.
    By what means can I officially withdraw my agreement?

    1. Conrad Jones (Cheam)
      July 13, 2011

      By not voting.

      What would Politicians do if nobody voted for them?

      Labour 0%
      Conservatives 4% (A few Conservatives do deserve our vote)
      Liberal Democrats 0%

      Probably be one of the most dramatic Election Nights ever.

      1. Scottspeig
        July 14, 2011

        Probably still run the country as if the entire populace had voted. And there are plenty of incentives for folk to vote Labour… Even though it would cauise brankruptcy.

  42. Anne Palmer
    July 16, 2011

    Surely, whether there is a vote in the British Parliament or not, the “Bail out” re the Euro are is not only wrong, it is contrary to the Treaty of Lisbon, and therefore illegal. The whole point of a Treaty is to hold all Countries that debate, agree and eventually ratify EU Treaties that are lodged with the Vienna Convention on the law of Treaties. There are certain rules on altering treaties and when it comes to increasing money to one area but upon which all residents in each Country have to contribute to, all those people should be given a CHANCE TO SEE IF THEY AGREE? THE PEOPLE HAVE-TO THE BEST OF MY KNOWLEDGE, HAVE BEEN ASKED.

    Baring in mind that all MP’s are aware of the people’s deep anger at paying through their taxes and taking the trouble of turning out and electing MP’s to actually Govern this country according to this Country’s own Common Law Constitution which none can obviously do any more, what is the point in paying them any longer? The people certainly cannot continue or obeying foreign Laws for much longer can they, because that is strictly contrary to their constitution too.
    The Act of Supremacy 1559. It included the words: … all usurped and foreign power and authority … may forever be clearly extinguished, and never used or obeyed in this realm. … no foreign prince, person, prelate, state, or potentate … shall at any time after the last day of this session of Parliament, use, enjoy or exercise any manner of power, jurisdiction, superiority, authority, preeminence or privilege … within this realm, but that henceforth the same shall be clearly abolished out of this realm, for ever.
    The Act of Supremacy is now largely repealed, but its central intentions live on through the use of almost identical words 129 years later, when The Declaration of Rights of 1688 was written. This, too, is a settlement treaty, and not an Act of Parliament. It too, therefore, cannot be repealed by parliament.
    The Bill of Rights, December 1689, incorporated all the essential clauses of the Declaration of the previous February, and may be argued to form an entrenchment of the Declaration, severely limiting parliament’s ability to make changes. Indeed, it could be held to be doubly entrenched. The people will not be ignored for much longer.

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