A phone call to save the Euro?


                The Euro story is degenerating into farce. This week we were told the future of Greek debt and the wider European banking system was hanging by the thread of a phone call between the French, German and  Greek governments. Markets waited for these people to miraculously solve the problems of the Greek deficit, Italian borrowing, French banks and all the other issues that the Euro scheme has created.

                They were never going to do so. They could have found the answers to these problems at any point in the last decade if they had wanted to. Instead, in good times and bad, they chose to ignore the dangers and avoided  making decisions. They ducked the question of how they could stop countries free riding on the common currency and interest rate. They failed to discipline countries borrowing too much. They did not want to make the large cash transfers around the union in the way that is usual if you have a single currency. They did not even sort out what range of powers their Central Bank has, with German resignations over the policy of buying up bonds. Now they are torn over how many Euros to print, and how much money to tip into their damaged banks.

              The gap between what is needed for a successful single currency and what is offered is huge. The markets do not believe the EU political leaders. The people in the affected countries increasingly dislike the scheme. The weak countries are fed up with the austerity it delivers. The strong countries are fed up with the tax bills they will receive to pay for it. The Euro lacks economic credibilty and lacks democratic authority. It would be best to break it up before it does more damage.

            The phone call described the world as the leaders wish it to be – Greece in the Euro, Greece meeting all her obligations,  and the markets believing all is now right. Somoehow it does not feel like that. We still do not know how many sovereign bonds  the European Central Bank will be allowed to buy. We do not know how they will pay for all those bonds. We do not know how many new Euros they will be allowed to print. We do not know why the EU is demanding Eurobonds when Germany rules them out., We do not know how they intend to strengthen their commercial banks. We do not know how long it will take to implement all the July measures.

              In short, the single currency remains an orphan. There is no united single sovereign to love and protect it. There is no-one with enough power to make all the important decisions. The German government is at war with itself. Germany is in disagreement with other countries in the zone. The Commission is in disagreement with Germany.

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  1. lifelogic
    Posted September 15, 2011 at 6:32 am | Permalink

    The Euro lacks economic credibilty and lacks democratic authority. It would be best to break it up before it does more damage.

    Indeed it would and it probably will be. Clearly the Germans no longer have the political will to throw good money after bad. Turning round the many “group think” people who have all attached themselves and their credibility to this mad EURO plan will however take some time and cause much damage. Just like Major’s ERM farce that buried the party for 3 + elections – apology still awaited.

    They will all be thinking of a line to defend their absurd positions with minimum cost to their shattered reputations. Can Major and all the supporters and all the LibDems just remind us of why they supported the UK’s membership of this insanity.

    • A different Simon
      Posted September 15, 2011 at 8:11 am | Permalink

      “The Euro lacks economic credibilty and lacks democratic authority. It would be best to break it up before it does more damage. ”

      I don’t know .

      There is something attractive about keeping it on life support as long as possible so it does maximum damage to “the project” and the people who sponsored it .

      It needs to get unpleasant , really unpleasant , so people cannot forget it otherwise it will all just happen again .

      Let the German politicians continue to flush their peoples money down the toilet and the Greeks remind them about last war .

      The Germans and our elite have got what they’ve been angling for the past 140 years – total control (in theory) .

      How ironic that they are having difficulty making up their mind whether they like it or not .

      • lifelogic
        Posted September 15, 2011 at 5:43 pm | Permalink

        Major’s ERM was protracted, pointless and nasty but we still ended up with this parrallel EURO mess and not even a sorry form Major the BBC bizarely still use him as some sort of fount of wisdom.

        I see Cameron has gone to Libya as a distraction from this mess and his great growth policies.

        I also see John Lewis profits down18% for last six months. Clearly more government, more regulation, more EU, more government debt, more inflation, higher tax rates, more “equality”, no bank lending and more overpriced green energy are the answers Dave keep it up!

        • lifelogic
          Posted September 15, 2011 at 9:17 pm | Permalink

          Sorry “font”

  2. lojolondon
    Posted September 15, 2011 at 7:14 am | Permalink

    John, it is a beautiful thing. The EU is a total disaster, the Euro is the same. No matter how distasteful the medicine, WE DO HAVE TO TAKE THE MEDICINE. Sometime. Sooner rather than later. Praise Gordon Brown for the one, single, solitary good thing he ever did for our country, by keeping us out of the Euro. At least it is costing us nothing at the moment. I hope all the countries of Europe revert to their own currencies, and may the Pound Sterling with the Queen’s head be the best, most stable currency in Europe.

    • APL
      Posted September 15, 2011 at 10:24 am | Permalink

      lojolondon: “At least it is costing us nothing at the moment.”

      Ah if only that were true.

      All the loans [which we borrowed to pay] to Ireland, Portugal & the IMF are unlikely to be repaid.

      • lifelogic
        Posted September 15, 2011 at 5:46 pm | Permalink

        As was quite clear when the loans were made by Dave/Osbourne and they told us about the profit we would make.

        Meanwhile no sensible lending to sound UK businesses is available from most banks.

        • APL
          Posted September 16, 2011 at 10:10 pm | Permalink

          lifelogic: “Dave/Osbourne and they told us about the profit we would make.”

          Yep, but it’s not their money.

          Ireland can persuade no one else to lend them more money, not even their beloved ECB because no one believes they will get it back.

          Up pops Dave and George, between them they are becoming worse that Tony and … that fellow that represents Cowdenbeath but never turns up to his very well paid job in the Commons?

          And I don’t mean Sir Stuart Bell either.

      • zorro
        Posted September 15, 2011 at 5:57 pm | Permalink

        I am still waiting for Ken Clarke, Michael Heseltine, and Chris Patten to explain the benefits of the Euro to us on this blog. You should consider giving them a guest blog post here John….we’d be all ears.


        • Jon Burgess
          Posted September 15, 2011 at 10:46 pm | Permalink

          Don’t forget that treasonous …person (thankfully managed to self regulate myself at the last minute), Francis Maude.

        • lifelogic
          Posted September 16, 2011 at 5:46 am | Permalink

          They would just waffle on as Cameron does about up to 50% of our trade being with the EU (usually purchases and so what anyway) and needing to have influence and a seat at the table.

          They have no real arguments or logic to proffer.

        • sjb
          Posted September 16, 2011 at 10:10 pm | Permalink

          Zorro wrote: “You should consider giving them [Ken Clarke, Heseltine, and Chris Patten] a guest blog post here John […]”

          That is a great idea.

      • lojolondon
        Posted September 15, 2011 at 7:48 pm | Permalink

        You are absolutely correct, I should have been more specific – It has cost us a fortune so far that is never going to be repaid, but at least one small miracle – the Tories have at last stopped pouring pound notes down a bottomless pit, unlike the Germans who are hemorrhaging more every the day.

        I do like ‘a different Simon’ s point however, let the pain continue, so they never forget, and never forgive.

        As an aside, perhaps the MEP’s should be tried for treason in their respective countries, for the damage they have caused? (obviously Dan Hannan, UKIP and a few notables will be found innocent ;-))

        • APL
          Posted September 16, 2011 at 7:38 am | Permalink

          lojolondon: ” .. perhaps the MEP’s should be tried for treason .. ”

          I like the cut of your jib.

          But, the MEPs are nothing but window dressing, cobbled together by MPs and Bureaucrats from Brussels to hide the fact that the EU is a dictatorship.

          MEPs are nothing less than extremely highly paid muppets.

          They can just be fired.

          No, our actual MPs, they are a different story.

          It might be said those of the ‘tax and spend’ persuasion have engaged in actual financial terrorism, done more damage to the West than al Qaeda.

  3. Mike Stallard
    Posted September 15, 2011 at 7:17 am | Permalink

    “A fair few of the more senior sceptics are highly suspicious that this group (MS: the Eurorealist one that was mentioned on this blog a few days ago) has been put together to stop other more aggressive and louder blocs being formed. By maintaining an element of control over this new, large, awkward squad, the Prime Minister can ultimately ignore it.”
    I lifted this from Guido Fawkes’ blog this morning.

    The sums involved with Greece are tiny! On the BBC yesterday, we are just looking at some 2 billion bank involvement for France and just over one billion for all UK banks who have invested in any way in Greece. Can this be right?

    • Bob
      Posted September 15, 2011 at 9:45 am | Permalink

      “BNP, Société Générale and Crédit Agricole together hold nearly $57 billion in Greek sovereign and private debt, versus $34 billion held by the largest German banks and $14 billion at British banks.”

      • Javelin
        Posted September 15, 2011 at 2:02 pm | Permalink

        And eventually their accountants will have to mark them to markets – a 90% haircut.

        • Mike Stallard
          Posted September 15, 2011 at 2:32 pm | Permalink

          I thought so – rather different figures!
          Now, tell me please, which do I believe – yours or the BBC Economics correspondent?

          Thank you bot for sorting me out!

          • Mike Stallard
            Posted September 15, 2011 at 2:33 pm | Permalink


          • APL
            Posted September 16, 2011 at 7:47 am | Permalink

            Mike Stallard: ” .. which do I believe – yours or the BBC Economics correspondent?”

            I happened to watch the BBC 24 news item about the Euro yesterday. They really are suffering from severe cognitive dissonance on the Euro bailouts.

            The presenters were stuttering, pregnant pauses – they really didn’t know how to explain what was at stake nor what was actually going on.

            Other than one thing, the USA was going to step in and loan US$ to shore up European banks.

            Funny how the BBC can switch from rabid anti USA stance one second to the USA will save the world the next. Well have I got news for the BBC, even the US is in the crapper.

            They really are amateurs (in the American sense not the British sense of excellence), it must be the unique way the organisation is funded.

    • Kenneth
      Posted September 15, 2011 at 12:53 pm | Permalink

      We don’t know (well I don’t know) how much exposure UK companies and funds have to insurance policies against a Greek default.

      I don’t believe this has been triggered yet so policies have yet to pay out.

      • Mark
        Posted September 15, 2011 at 10:36 pm | Permalink

        Probably not a great deal in the scheme of things: Greek debt has been virtually uninsurable for some time. The global amount insured is reckoned to be about $5bn – some of which might be insurance taken out by UK lenders. That’s less than the damage caused by Hurricane Irene.

  4. norman
    Posted September 15, 2011 at 7:20 am | Permalink

    It must be a frustrating time for politicians. The ones in the so-far-not-basket-case economies know that they can’t come out and say that they need to subsidise the others or the voters won’t be happy and they know they can’t say they won’t subsidise them as otherwise the wheels will come off the Euro so they try and say something and nothing at the same time.

    If only we citizens / taxpayers / milch cows weren’t so stupid and backwards. Surely we can’t be so blind as to not see that our politicians know best and that if only we put our complete and unwavering trust in them everything will work out for the best and final victory will be ours?

    Forget the massed Chinese army at the border – our new wonder weapons of the printing press and bigger government will turn the tide!

  5. Mr. Green
    Posted September 15, 2011 at 7:20 am | Permalink

    If Greece leaves the Euro, what effect there be on the UK economy and why? (Discuss).

    I suppose there will be a difference between a ‘managed’ exit for Greece and a forced, messy exit. Either way, UK banks are massively exposed, especially the ones that have been bailed out by the taxpayer.

    I await with interest the upcoming tough BBC interviews of the UK bankers who ‘invested’ so heavily in Greece with the implicit backstop of a guarantee from the UK taxpayer.

    • Javelin
      Posted September 15, 2011 at 2:04 pm | Permalink

      Nationalisation of Euro banks – higher taxes in the Euro (£40billion ish) over 10 years and lower growth.

      • Single Acts
        Posted September 15, 2011 at 6:54 pm | Permalink

        Lower than 0.2% growth !

  6. JimF
    Posted September 15, 2011 at 7:45 am | Permalink

    To be fait, Major’s competing currencies idea would have been a good litmus test without doing the damage. The Euro would have been used mainly in larger scale commercial transactions until and unless well established, rather like a legalised dollar. No doubt the Treasury sniffed at the idea because people could’ve sheltered Capital gains behind it or manipulated tax bills.

    The real EU poodles are the LibDems, Mandelson and Blair, who would’ve pushed us in.

  7. Alan
    Posted September 15, 2011 at 8:11 am | Permalink

    No, it is not a farce; it is real life. A cold wind of reality is blowing across the Eurozone.

    Greece is learning that it cannot live well unless it also works hard. Ireland is learning that if you make rash promises to guarantee banks, you will have to meet the guarantee. Ireland, Portugal, and Spain are learning that if you make unwise investments you will lose money. Italy is learning that you have to balance your budget, pay your taxes, and do productive work. Germany and France are learning that if you lend money to people who are not able to pay it back, you won’t get it back. Everyone is learning that if you set up a currency union you have to work out how it will deal with emergencies; you can’t just rely on being able to cope when the emergency comes.

    Here in the UK we are learning that if you run your own currency you can devalue it so that people won’t notice that you are making a mess of things, and you don’t have to fix the underlying problems. To me the main difference seems to be that the Eurozone governments have nowhere to hide, whereas the UK government is able to give an impression that it is controlling events. We can escape reality and go on living, for a bit longer, in our dream world.

    I don’t know how the euro crisis will end. The frightening thing is that neither does anyone else.

    • Graham Cook
      Posted September 15, 2011 at 9:43 am | Permalink

      I agree with that sentiment.

    • A different Simon
      Posted September 15, 2011 at 10:50 am | Permalink

      Good post

    • oldtimer
      Posted September 15, 2011 at 1:03 pm | Permalink


      Just as the earlier crisis turned on sub prime mortgage debt, this one turns on sub prime sovereign debt. For the moment the UK government has only got away with it by QE, paid for by demanding higher equity:debt ratios for the banks and letting inflation rip. It cannot last.

      • zorro
        Posted September 15, 2011 at 6:08 pm | Permalink

        Being the devil’s advocate, I think the UK could string it out a bit longer, but only because we have the flexibility outside the Eurozone….


    • Jon Burgess
      Posted September 15, 2011 at 11:05 pm | Permalink

      I’m not sure that the leasons you eloquently set out will be learned until Germany and France say no to more cash transfers to the less ‘prudent’ Euro members. The problem is that to do this will hasten the collapse of the Euro, even though the current policy of propping up the Euro will also lead to the collapse of the Euro (albeit maybe a bit later down the road!).

      The right thing to do would be to let Greece default and leave the Euro, probably followed by Italy and maybe Spain. But the federalists in Europe would regard this as a surrender and would rather bankrupt Germany and France than accept this truth.

      By the grace of Go(r)d, the UK is in a position to avoid this train wreck, but I doubt cast iron Dave is canny enough to capitalise.

  8. A.Sedgwick
    Posted September 15, 2011 at 8:28 am | Permalink

    The defence of the Euro is similar to the three year battle by Wilson and Callaghan to maintain the £ at $2.80. Eventually they gave in to the inevitable and the Euro will go in its present form. Greece will return to the Drachma, huge devaluations and inflation will occur but the people will maintain the numbers on their payslips, they just won’t buy as much – the pound in your pocket … I know he didn’t say it.

  9. Brian Tomkinson
    Posted September 15, 2011 at 8:28 am | Permalink

    Another charade. Now we await Mr Geitner’s visit to tell them what to do. All the briefings seem to point towards forcing a political union on the peoples of the 17 Eurozone members. Just imagine the reaction of those same politicians to such a forced political union, without the consent of their people, on the countries involved in the so-called Arab spring? One day there will be a European uprising if this “solution” if forced on them and nobody could possibly want that to happen.

  10. Electro-Kevin
    Posted September 15, 2011 at 8:40 am | Permalink

    I do wonder if – on balance – Gordon Brown’s ill fated gold sell-off has been mitigated by his decision to keep us out of the Euro.

    The EU certainly is undemocratic and it seems to promote the Leftists’ agenda within Britain and the unravelling of our culture. Is that why we are not being distanced from this disaster ?

    • JimF
      Posted September 15, 2011 at 6:52 pm | Permalink

      You are being too kind to Brown.
      The decision to sell gold gave him more control and cash to p. up the wall, whereas moving into the Euro would have given him less.

  11. javelin
    Posted September 15, 2011 at 8:44 am | Permalink

    History will blame them …

    … 10 years of weak leaders dithering followed by 10 years of strong leaders recovering.

    • Mike Stallard
      Posted September 15, 2011 at 2:38 pm | Permalink

      There is nothing quite so scary as a strong leader – in German Ein Starke Fuhrer. (Or words to that effect). Hitler came from little Austria. I wonder where ours will come from? Albania perhaps?

      • JimF
        Posted September 15, 2011 at 6:53 pm | Permalink

        No, Buckingham 🙂

  12. Antisthenes
    Posted September 15, 2011 at 8:57 am | Permalink

    It appears that the BRIC countries are going to ride to the West’s rescue and buy up more of their debts. So the West can continue their wicked ways for another decade or so or until the BRIC countries wake up to the fact that the West are paying for their cheap goods with money that they have lent them. Lets hope some aliens from outer space turn up before then so we can con loans out of them as well.

    • norman
      Posted September 15, 2011 at 11:50 am | Permalink

      The little I’ve read on the subject seems to imply that China is willing to loan us money but not on blind faith. They are asking for concessions along the lines of favourable business options in the debtors country, petitioning for their WTO status to be relaxed to that of free market economy, buying assets in state owned industries, and doubtless other concessions.

      They’re not the stupid ones here.

      I fear it is us who will wake up in ten years (or more than likely our children in 25) and discover we’ve mortgaged our future and sold our inheirtance to try and maintain the illusion that our way of living needn’t change after our labour markets opened up to 2 billion+ more souls over the last generation while our governments did precious little to alter course to account for this differen global economic model.

      In fact everything our governments have done is in the opposite direction as though willingly impoverishing future generations.

      • A different Simon
        Posted September 15, 2011 at 8:30 pm | Permalink

        And all the while we continue to import tat from China and India .

        Everyone thinks the Chinese went into competition with us but it’s much more subtle than that .

        – persuaded Western companies to front the money to build manufacturing centres in China
        – utilised tax loopholes to allow those Western companies to bring Chinese goods into Western countries under favourable tariffs
        – effected a disintegration of the Western companies manufacturing facilities in the West .

        So at the end of the day we only have our leaders and Western big business to blame .

        • APL
          Posted September 16, 2011 at 7:52 am | Permalink

          A different Simon: “it’s much more subtle than that ”

          A deathly embrace, in fact.

          China depends on the West for its markets.

          The West is on the threshold of depression.

          China will loose a huge fraction of its market as demand from the West evaporates.

          Result: the much vaunted Chinese economic micracle hits the much denied Western depression.

  13. javelin
    Posted September 15, 2011 at 8:59 am | Permalink

    An excellent article on the damaged [corrupt] ECB.

    We have all discussed the lack of democracy in the UK and EU. But now I read even where there is an undemocratic body like the EU and inside that an undemocratic organ like the ECB there is not even any democracy inside the ECB comittee. Mr Trichet and a couple of mates make all the decisions in a private smokefilled room. Todays its not just interest rates they decide upon its the future of Europe. Things have clearly got completely out of control. There is clearly something very rotten at the heart of Europe, and that reflects something very rotten in the heart and mind of Mr Trichet and the other EU leaders.


    “The Treaty makes it clear that it was intended that members of the [ECB] Governing Council should vote [on interest rates] …. It turns out that votes on policy rates are never taken. Apparently, some small subset of the Governing Council decides, prior to the meeting, what the policy rate will be and this is then presented to the entire Governing Council, which we are to believe always or almost always unanimously approves. …

    That this extraordinary decision-making mechanism has gone on for so long with no formal explanation beggars belief. Who gets to make the decision? Why is it that no Governing Council member has ever insisted upon their legal right to a vote on monetary policy? Is there really never any dissent? How can that be? That we are able to ask these questions about an institution that is supposed to be one of the world’s two most important central banks is not good for its legitimacy.”

    • Mike Stallard
      Posted September 15, 2011 at 2:40 pm | Permalink

      Allow me to recommend Marta Andreasen who insisted on seeing the books before she signed them off as the official accountant.
      Neil Kinnoch’s disgusting behaviour when she was hauled before the Commissioners to explain herself was particularly noteworthy.
      She is now a UKIP MEP.

  14. Singl Acts
    Posted September 15, 2011 at 9:00 am | Permalink

    “We still do not know how many sovereign bonds the European Central Bank will be allowed to buy. We do not know how they will pay for all those bonds”

    Oh I think we can hazard a guess; If I may paraphrase Lady Macbeth

    “Is that a printing press I see before me”

  15. Gary
    Posted September 15, 2011 at 9:02 am | Permalink

    Italy alone us too big to bail. The EU has no chance.

  16. waramess
    Posted September 15, 2011 at 9:07 am | Permalink

    The Germans are being invited to hand over the stolen wealth that they have taken from the others (as a result of giving themselves a more favourable exchange rate than they would have enjoyed with the DM) since the beginning of the Euro project. Hardly surprising they resist and it would be very surprising if they were to do so since the whole point of the single currency would be lost to them.

    Maybe they might see some benefit in retaining the Euro in order to do a bit more stealing but, it must by now have become clear to the Germans that as they steal productivity from the others they also impoverish them.

    What a dilemma they now face: keep the loot and let the banks fail or hand it back to the Southern Europeans and make the whole exercise a pointless nonsense.

    Whatever they do we can be sure that it will be the best option for the Germans.

    • Viv Evans
      Posted September 15, 2011 at 11:43 am | Permalink

      So if people work harder and longer than others, they ‘steal productivity’ from them’?
      And if the things they make are of good quality and sell well because people want them – that is ‘stealing their wealth’?


      As for the exchange rate DM/€ – talk to German people about what they thought. Advantageous for them it certainly wasn’t.
      Also, let’s not overlook the small fact that Germany, thanks to re-unification, was obliged to deal with the broken down industries and the environmental disaster that was the former communist Germany. They are still paying for it, i.e. their tax payers are forking out, to the detriment of former West Germany.

      But to be sure, it is easier to use the old stereotypes of jackboots stomping all over the rest of Europe.

      • waramess
        Posted September 16, 2011 at 5:39 pm | Permalink

        @ Viv Evans.

        If by now it is not obvious to you then you join the vast gang of politicians who have also missed the point.

        Germany went to great lengths to include the weak Mediterranean countries into the Euro under the illusion their economies had converged with that of Germany. Anybody who had ever visited these countries would have known what a nonsense that was.

        The Germans prospered by having a weaker currency than the DM viz higher exports, stronger companies, lower unemployment whilst the opposite was the fate for the Greeks (and others).

        This is the theft and, if you like, economic jackboots trampling over Europe.

        Where it has all gone wrong it that the Germans and their poodle thought they would get gradually stronger whilst the rest would get gradually weaker and their banks would gradually withdraw from the weakening Mediterranean and Eastern European countries.

        Instead it all happened much more quickly and that is where we are now. Massive German and French bank malinvestment in weak economies where repayment of debts is looking precarious.

        We should not excuse the behaviour of the Greek and other politicians but we always knew that if you left the keys to the cash register in the hands of the Greek and other Finance Ministries it would always be empty, and the solution was always clear.

  17. APL
    Posted September 15, 2011 at 9:08 am | Permalink

    Has my biggest bestest friend Mr K. Clarke recanted yet?

  18. Gary
    Posted September 15, 2011 at 9:10 am | Permalink

    But we should not be smug. The banks are the root cause, and if we persist in bailing them out, they will also drag the UK down. We have a stark choice, it is the country or the banks.

  19. Amanda
    Posted September 15, 2011 at 9:25 am | Permalink

    Are they truly this arrogantly incompetent, or have ‘they’ brought this about deliberately?

    A good few years ago, I read something, cannot remember where, that said the UK would be forced into a United States of Europe, because ‘they’ would ruin our economy so much, that we would plead with Brussels to accept us, and look after us. At the time I though it a ‘little dramatic’, but as I’ve watched events unfold over the years, I have wondered more and more if there was some truth in this after all.

    I understand that the ECB are now threatening new regulations to make euro clearing houses reside physically in the euro zone ; something that is against all treaties. This, of course will damage our delicate economic stalemate as it will have an effect on our financial industry. I also presume it is a threat to keep us from renegotiating any change in relationship, and ensure that our economy is hurt as well.

    So, are ‘they’ bringing down Europe deliberately? Is this economic war, rather than a physical war?

    • Bob
      Posted September 15, 2011 at 9:31 am | Permalink


    • A different Simon
      Posted September 15, 2011 at 11:02 am | Permalink

      Whichever way you look at it destruction of the UK is a neccessary prerequisite for absorbtion into the EU .

      What more graphic example is there than administrative regions which countries have been split into and which wherever possible intentionally span borders .

      These regions will report directly towards Brussels for their funding and instructions , not Westminster .

      It’s always the same , gain control of the funding , pay the traitors through the nose and they will do anything to look after their own skins .

      We will be taxed without representation .

    • Electro-Kevin
      Posted September 15, 2011 at 12:45 pm | Permalink

      Peter Hitchens said that about ten years ago, Amanda.

      • Electro-Kevin
        Posted September 15, 2011 at 12:47 pm | Permalink

        And yes – Hitchens has been dismissed as being ‘too dramatic’ about things. However – excepting his belief in God and his mistaken stance on MMR – I think he’s been entirely correct and one of the few people talking sense.

        • Electro-Kevin
          Posted September 15, 2011 at 12:51 pm | Permalink

          I also find that people are afraid to admit liking him so effective has been the Left’s dismissal of him.

          Expect the same for Dan Hannan.

          • Electro-Kevin
            Posted September 15, 2011 at 1:13 pm | Permalink

            Oh. And I don’t think that even Hitchens could have predicted that the Chinese might end up owning us before the EU.

            What an utter disaster the EU has been.

            (Sorry for multiple postings)

  20. ian wragg
    Posted September 15, 2011 at 9:44 am | Permalink

    I think the phone call has already been made. Greece is busy printing Drachma’s ready for an orderly default in a week or so.
    The noises from Berlin and Vichy France are just to buy time.

  21. Bryan
    Posted September 15, 2011 at 10:05 am | Permalink

    Given what Mr Clegg is reported as saying today in The Times, it is time that Mr Cameron found those cajones he once implied he had and called an Election on the simple premise of seeking a mandate to renegotiate a favourable relationship with Europe , including if necessary reverting back to trading nation status.

    Unfortunately this will not happen and we shall continue to sink with the Euro ship.

  22. English Pensioner
    Posted September 15, 2011 at 10:16 am | Permalink

    It’s the smaller countries, such as the Holland and Finland, that I feel sorry for.
    They have reasonably stable economies and have kept their national borrowing under control. They are being dragged into the crisis and seem to have no say in the matter although they should be equal partners.
    If they have any sense they will start printing their own currency now so that they can pull out of the Euro if necessary before they are expected to pay any more of Greece’s debts.

    • norman
      Posted September 15, 2011 at 12:00 pm | Permalink

      Poor Estonia embarked on a programme of cuts (the likes of which everyone needs to including us) a few years back and suffered quite badly for it in order to meet the Euro entrance requirements. Salaries slashed by 30%, hiring freezes, really cutting back on the size of the state in a meaningful way.

      Now they see profligate countries standing with their hands out saying ‘please sir, may I have some more’.

      On the plus side for Estonia it took the medicine early and is now seeing, I believe, the highest growth rates in the Eurozone and its credit rating was upgrade a notch last month in stark contrast with every other Eurozone country.

      • Mike Stallard
        Posted September 15, 2011 at 2:44 pm | Permalink

        I wondered why we do not have any immigrants from Esthonia. thank you.

        • GJ Wyatt
          Posted September 15, 2011 at 8:47 pm | Permalink

          They go to Finland. It’s richer than UK and they can speak the language.

  23. Acorn
    Posted September 15, 2011 at 10:29 am | Permalink

    The EU party is over, now would be a good time for the UK to leave. I bet, with a little luck and judgement, we could re-ignite EFTA (European Free Trade Association). There are only four members left in it but a potential forty eight States could be!!! See the Venn diagram; time to brush up on your flag recognition ability. http://en.wikipedia.org/wiki/File:Supranational_European_Bodies.png

    BTW. As we are about to enter a winter of discontent – terms and conditions apply – nice to see the taxpayers fighting back in Florida USA. They have something called “A Public Referendum”, whatever that is.

    Public sector unions are killing small town America, much worse than in the UK. All caused by federal government laws – promoted by union lobbyists – via an out of control Congress and its National Labor Relations Board. See Miami Herald article:- http://www.miamiherald.com/2011/09/13/2404725/hollywood-voters-getting-say-on.html#ixzz1XwU2pfvO

    • oldtimer
      Posted September 15, 2011 at 1:12 pm | Permalink

      You will not get an in-out referendum from the Coalition or from Cameron. He believes (1) that the UK should remain within the EU and (2) that your opinion does not count – so he will not listen to it. That probably reflects the majority of UK political opinion – and on both counts. Moreover this contempt for public opinion applies to many issues besides Europe.

  24. Steve S
    Posted September 15, 2011 at 10:33 am | Permalink

    The Eurocrats still don’t get it – laughable that Barroso thinks it is appropriate to announce (again) that the Commission is putting forward its proposals on Eurobonds and that Germany would not instantly rule it our yet again, with the world looking on with the word “disfunctional” flashing up in their brains and their finger on the “sell” buttton.

    The world no longer believes anything the Eurocrats or the leading national politicians say, because their credibility is shot to pieces. They have said one thing, only to do another (or nothing at all) for far too long. This is going to crash and burn and the UK is going to get hurt badly, without the tools available to do anything at all to cushion the blow. Given that the German Constitutional court has ruled out any loss of fiscal control, and by definition a United States of Europe, the Euro cannot be saved in its current form with current members. The UK government is urging intergration, but this is impossible.

  25. Peter van Leeuwen
    Posted September 15, 2011 at 10:34 am | Permalink

    Interestingly the phonecall sparked a positive market reaction, even though the markets know full well that Greece will never be able to repay all its debts and that debt-restructuring will happen. The issue is to make it happen in an orderly way at some point in time.
    What we see is that 17 democratic processes take time and cannot work at the speed the markets would like. There are interesting debates taking place in parliaments on the continent between europhile and eurosceptic parties of various shades. These debates are necessary in order to reach some consensus about the path to integration path and the instruments to enforce stability and stimulate growth.

    • ian wragg
      Posted September 15, 2011 at 12:22 pm | Permalink

      You mean discussing the break up of the EUSSR currency zone??????

      • Peter van Leeuwen
        Posted September 15, 2011 at 12:32 pm | Permalink

        Since the Norway massacre I don’t discuss with “EUSSR” labelists anymore.

        • Mike Stallard
          Posted September 15, 2011 at 2:45 pm | Permalink

          Why? I don’t get the connection.
          PS I have never used the term myself.

          • Peter van Leeuwen
            Posted September 15, 2011 at 11:34 pm | Permalink

            “Norway” shows (if you study the man’s manifest) that it is only one step from verbal violence to real violence. We need to step away from hyperbole and exaggeration:
            1) labels don’t strengthen arguments
            2) apparently some people take these over the top exclamations seriously which as “Norway” proves can be dangerous.

          • forthurst
            Posted September 16, 2011 at 10:02 am | Permalink

            “Norway” shows (if you study the man’s manifest) that it is only one step from verbal violence to real violence.

            A Straw man argument. Stop using them.

        • forthurst
          Posted September 15, 2011 at 4:56 pm | Permalink

          Nor do I debate with people who use straw man arguments other than to express contempt for their intellectual dishonesty.

          • Peter van Leeuwen
            Posted September 16, 2011 at 3:25 pm | Permalink

            I consider “EUSSR” the language of extremists and a malicious misrepresentation of the EU. “Norway” has only strengthened me in that opinion.

          • forthurst
            Posted September 16, 2011 at 10:05 pm | Permalink

            Getting upset and attempting to smear by association those who don’t share your opinion as to the beneficence of the EUSSR and those wonderful people in Brussels who toil day and night to promote our welfare does not constitute an argumemt.

          • Peter van Leeuwen
            Posted September 16, 2011 at 11:39 pm | Permalink

            and all that time you fail to realise that “EUSSR” is smearing by association. End of discussion for me.

          • forthurst
            Posted September 17, 2011 at 2:30 pm | Permalink

            As far as I’m concerned the discussion does not end until you understand the distinction between using a logical fallacy to infer someone is a terrorist and using a pejorative term to describe an inanimate entity.

  26. Susan
    Posted September 15, 2011 at 11:08 am | Permalink

    It is very difficult to feel any sympathy for Greece as its problems are of its own making. Since being allowed into the EU they have helped themselves to cheap capital, ignored their mountain of debt and allowed tax evasion to go unchecked. Now they reach for their begging bowl when their Countries economy reaches crisis point. I too would feel reluctant to bail them out.

    More than the question of what is right or wrong with the Euro model, should be the question of why Countries do not have the discipline to live within their means, in or out of the Euro. Britain need not congratulate itself, it has lived beyond its means for years. The awful state of the UK economy is just less exposed than the Countries within the Euro. All the UK Government is doing is putting a sticking plaster on the economy, it is not actually solving the underlying problems.

    I do not believe it is right to thank Gordon Brown for keeping the UK out of the Euro.
    He did not do this out of any concern for the UK economy, he did this because joining the Euro, he thought, would bring an end to his spending. The EU had already warned Gordon Brown he was spending too much, the discipline of the Euro would have brought this to an end. As it turns out other Countries did not adhere to rules either.

    • GJ Wyatt
      Posted September 15, 2011 at 8:58 pm | Permalink

      GB had his golden rule to go with his moral compass, so he could square the circle anytime.

  27. Denis Cooper
    Posted September 15, 2011 at 11:54 am | Permalink



    “Croatia to sign accession treaty ‘in early December’”

    and no doubt the treaty text finalised yesterday, with the approval of Cameron, will also put Croatia on the conveyor belt to joining the euro as a condition for it joining the EU.

  28. Frank Salmon
    Posted September 15, 2011 at 11:57 am | Permalink

    Just a thought. Germany needs economically weak countries in order to trade at a devalued exchange rate. However, the PIIGS are too big. If Germany is lookng for something a bit smaller, that it could bail out if it had to, but is also economically responsible enough to enact the tough decisions needed for recovery, then what about the £?
    A DM£ would be perfect for both countries.

  29. Richard1
    Posted September 15, 2011 at 12:58 pm | Permalink

    Question: Could it work for just one country (eg Greece) to withdraw as you described in a recent post? Wouldn’t there be an immediate run on banks in other weak countries such as Portugal, Spain etc, making their subsequent withdrawal much more difficult? I would have thought the only solution to this is overnight withdrawal from the Euro of all the weaker countries, leaving a stronger-country rump with Germany at the core. I’d be interested in your view on this.

    Reply: Whether you draw the line at one country or several, you need at the same time to make your support for all remaining countries in the scheme credible. Otherwise as you say markets move on and unpick others.

    • Richard1
      Posted September 16, 2011 at 6:35 pm | Permalink

      Thanks I agree with that. It looks like the optimal ‘global’ solution would be: 1) Greece, Portugal, Spain, Ireland & maybe Italy withdraw over a weekend issuing their own new currencies in the way you outlined for Greece; 2) The remaining countries put in place a cross-guarantee on all sovereign debt (Eurobonds); 3) Depositors of all European banks are guaranteed by their govts, and central banks / the ECB supply liquidity agaist collateral; 4) the banks re-capitalise when losses are recognised (they will become clear quickly) by means of large, deep-discounted rights issues underwritten by their own bondholders. i.e. the required new equity – presumably some €100bns for the whole banking system – is provided by the shareholders and bondholders of the banks. Then we will avoid Japanese-style sclerosis. What do you think of that?

  30. Kenneth
    Posted September 15, 2011 at 1:31 pm | Permalink

    Those who rightly point to the fact the ‘Europe’ does not feature high on the UK public’s list of priorities should reflect that, at a time when things are falling apart in the Eurozone and a large country with a large army is facing bankruptcy the BBC has until today kept the story pretty much under wraps.

    I do not blame busy people for not noticing. It is a similar situation in Germany and other European countries. They all have their equivalent to the BBC problem.

    Even when the President talked of a Greek default, up until today German media were generally quite shy about tackling it.

    Today, as they cannot ignore it any more, it is on the front page. However, Der Spiegel is telling its readers why Greece should be bailed out and has lined up a long list of economist to back this argument up.

    There is a definite shift of opinion in Germany but still the left wing media dominates so nothing can be taken for granted.

    • Kenneth
      Posted September 15, 2011 at 4:15 pm | Permalink

      Another news story that is virtually invisible on the BBC is the fact that the UK is suing the ECB. Unfortunately the government is using a discredited ‘court’.

  31. MajorFrustration
    Posted September 15, 2011 at 1:54 pm | Permalink

    “They ducked the question..” rather like our political class. Surely the time has come for a more robust begger my neighbour attitude. As in NYPD Blues “Lets do it to them before they do it to us” Remember John you have voters and unless the Government starts thinking of them – and not by just talking big and acting small – you just aint going to be in government after 2015.
    With inflation now at 4.5%/ 5.5% – depending on which scale you use, one has to ask whether anybody is actually working in the BoE – do they, like The Lords, just sign on and then depart- whats the stratergy for getting back to 2% – hello. Anybody there? Input prices are shown at 16% so inflation is not going away and yet there is talk of another £50/100b being shelled out – why, what grounds and what has the previous £200b achieved. Come on John give us a clue.
    The UK ecomomy is about to hit the fan at the same time as the EU – and I get that sick feeling that its us taxpayer in one form or another that will take the hit. Whether it be in standard of living, savings returns or reduced services.
    Whilst I am a preferred Tory voter the prospect of seeing this lot swan off to the Lords eventually plus expenses having achieved nothing makes my blood boil.
    At least if we got out of the EU the country would support the Government and see it as an action that showed leadership and albeit, might carry some downside – standing around doing nothing and seeing events forced upon us and no room to move just loses you voters. Doing nothing and hoping is not an option.

    Reply: I have made my opposition to another round of QE clear, and have consistently urged the Bank to take action to curb inflation.

    • MajorFrustration
      Posted September 15, 2011 at 4:55 pm | Permalink

      Well fine – but to what effect?

      • MajorFrustration
        Posted September 15, 2011 at 5:06 pm | Permalink

        Hello – whats the answer John? Not trying to be difficult but those of us who pay taxes are getting pissed off with “all talk and no cattle” as they say in Texas. Will somebody plse grasp the nettle and take the hit – balls or no balls.

  32. javelin
    Posted September 15, 2011 at 2:01 pm | Permalink

    Here’s an amusing story …

    As I’ve been saying for months Italy is the new (European) Lehmans and by inference Berlusconi is the new Dick Fuld (the Gorilla of Wall Street). Fuld won few friends in his time at Lehmans and was left to go to the wall by the FED and other bankers who stepped in to save other casualties.

    It now looks like Berlusconi is trying to emulate his predecessor by being verbally abusive to Frau Merkel. I dont see her being invited to any of his bunga-bunga parties any time soon, or him to any rescue packages. See below …


    “The gaffe-prone tycoon has been overheard referring to the German leader (in very unflattering terms-ed), according to wiretaps reported by Italian newspapers. “

  33. forthurst
    Posted September 15, 2011 at 2:16 pm | Permalink

    Having consulted his political masters, the not the French people, Sarko the Sayan, Frontrunner for the NWO, hence his leading role in the invasion of Libya, will no doubt have instructed Mrs Merkel that there must be no backsliding on the onward march towards a EUSSR police state. They may not have pulled it off in the USSR due to incompetance and gratuitous nastiness but they are pre-programmed to try it on again, and again and again.

  34. sjb
    Posted September 15, 2011 at 2:38 pm | Permalink

    JR wrote: “We do not know why the EU is demanding Eurobonds when Germany rules them out.”

    Germany initially ruled out the Greek bailouts, too.

    • zorro
      Posted September 15, 2011 at 8:12 pm | Permalink

      It’s all part of the pantomime show….Germany will come to the rescue when they beg them on Germany’s terms. I do not believe that Germany will let its ready made export market and soon to be acquired assets escape its grasp.


  35. Bernard Otway
    Posted September 15, 2011 at 4:21 pm | Permalink

    When Harold Wilson uttered that statement about the pound in my pocked,even as a young
    23 year old I within 6 months upped sticks to Brisbane,where as a 24 yr old I bought a 3 bed 2 bath DETATCHED house in this country my money only afforded a flat at the most,as of today
    I am still grateful to him for making me leave.BUT of all my friends and family who stayed
    ask them BUT be prepared for VITRIOL.

    • Nicholas Cartwright
      Posted September 16, 2011 at 11:47 am | Permalink

      So 6 months after that speech it transpired that the pound in your pocket was worth quite a few Australian dollars.

  36. Quietzapple
    Posted September 15, 2011 at 4:58 pm | Permalink

    Looks like the Germans, French & co are sufficiently determined to retain the current Euro and its users, and Euro bonds will be part of the way.

    Those deciding are elected.

    The danger wasn’t just that Greece might drop out if the Euro nor that other countries might default or banks collapse into the arms of tax payers.

    The confidence of some non European countries in the current world order has been in question. If the EU cannot hold will rogue states like Iran pay any heed to the next round of threats as they’d be wise to do?

    • Denis Cooper
      Posted September 15, 2011 at 7:06 pm | Permalink

      Those “deciding” may be elected politicians, but nonetheless they have no lawful authority to make the necessary changes to EU treaties which have been approved by national parliaments across the EU.

  37. JohnOfEnfield
    Posted September 15, 2011 at 5:17 pm | Permalink

    ..and the British Government is at war with the ECB!

  38. Denis Cooper
    Posted September 15, 2011 at 7:04 pm | Permalink

    “Latvia aiming to join eurozone in 2014”


    Which is a bit strange, given that only a couple of days ago Latvia was included among the seven countries said to be wondering how they could wriggle out their legal obligation to join the euro:


    “Seven EU members which joined the European Union between 2004 and 2007 are concerned about an obligation to adopt the euro under the terms of their accession and could stage referenda to change their accession treaties, AFP reported, quoting diplomatic sources.

    Bulgaria, the Czech Republic, Hungary, Latvia, Lithuania, Poland and Romania said the euro zone they thought they were going to join, a monetary union, may very well end up being a very different union entailing much closer fiscal, economic and political convergence.”

  39. Alan Redford
    Posted September 15, 2011 at 8:49 pm | Permalink

    Every Greek is doing transactions in cash to avoid taxes, anyone who can is moving cash and assets out of the country. The man on the Athens omnibus knows it’s all over – the politicians are conducting a shadow play for the rest of us.

  40. Martin
    Posted September 15, 2011 at 9:17 pm | Permalink

    “degenerating into farce” – as the Pound has gone down against the Euro today what does this tell you about confidence in Sterling?

    • Iain Gill
      Posted September 15, 2011 at 11:10 pm | Permalink

      the UK government is actively devaluing the pound, this was demonstrated clearly by the removal of national savings index linked savings certificates from the market

      its got little to do with confidence when the government is actively engineering this situation

      • sjb
        Posted September 16, 2011 at 2:38 pm | Permalink

        One of the arguments advanced in favour of Greece leaving the euro is that the ‘new drachma’ would devalue quickly leading to economic growth (e.g. more tourists deciding to holiday in Greece because it is cheaper than, say, Spain). However, the pound has fallen by 25% since 2007/8 and I do not recall a surge in our exports.

  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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