It takes an American to save the Euro – for a few days

 

            The US Treasury Secretary is joining the EU Finance Ministers to tell them to sort out their ramshackle currency. He has bought his place at the table, by pledging Fed money to European banks in trouble. The dollar fix deals for the moment with the dollar liquidity problem. It does not resolve the sovereign and banking solvency problems in the weaker cases.

          I see the UK also has dollars to offer. I trust the Chancellor, having bought his place at the table today, will demand something for the UK in return. Getting us out of all the arrangements for economic and financial governance would be a good start, but I doubt this will be raised.

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53 Comments

  1. lifelogic
    Posted September 16, 2011 at 8:06 am | Permalink

    The Chancellor, having bought his place at the table today (with tax payers money) will demand something for the UK in return – well perhaps – it would make a nice change but I suspect he will just do something silly on the sound bite front. Like calling sensible business people “leeches” again (for making sensible decisions with their own money in order to avoid having him grab it and chuck it down the PIGS drain).

    • Single Acts
      Posted September 16, 2011 at 11:41 am | Permalink

      I question the Chancellor’s judgement and choice of friends (yes this is a current political reference, nothing more).

    • lifelogic
      Posted September 16, 2011 at 12:17 pm | Permalink

      I hear Ken Clark say that politicians are responsible for the EURO mess – might that perhaps be politicians with views rather like his were (are) when Major inflicted the ERM fiasco (and nearly the EURO) on the UK and buried the party for 3+ terms?

      How is he getting on with the rioters many with endless previous offences no doubt they were spurred on by the earlier lenient court treatment they had received. Is he still keen on lenient sentences and half off when court red handed?

      • APL
        Posted September 16, 2011 at 4:20 pm | Permalink

        lifelogic: “How is he getting on with the rioters .. ”

        Heard Kenny in the commons answering a question from some bod about letting people out before they had served their tariff.

        Ken: … some will go on to re-offend, waffle waffle … but that cannot be avoided … blather blather.

        I thought Kenny was supposed to be top notch intellectual material? But if he can’t even recognize that a man in prison is not going to re-offend then …..

  2. Mr. Green
    Posted September 16, 2011 at 8:16 am | Permalink

    Are they meeting for a spot of traditional KTCDTR? (Kicking The Can Down The Road – a standard cliché of our times).

    You’re right to stress the need to develop a solution beyond the end of the road, once all cans have been kicked as far as possible. The trouble is, the truth is so unpalatable, and personal survival of lavish EU salaries is at stake, so no-one wants to look too far down the road.

    I think all commentators on this subject should wear a badge stating how much money they receive from the EU (i.e. EU taxpayers).

  3. A.Sedgwick
    Posted September 16, 2011 at 8:25 am | Permalink

    More money down the drain – we seem to have hidden funding pockets to prop up the Euro, Foreign Banks and now a secret cache of dollars. No wonder the client state unions are winding up state employees when these funds materialise overnight – good PR PM?

  4. Harry Caine
    Posted September 16, 2011 at 8:54 am | Permalink

    Under any normal circumstances, when you ‘negotiate’ changed circumstances there is a quid pro quo….I give you something you want in return for something I want….How come our executive never seems to want anything in return for their agreement to change fundamentals? Do they all believe that they will be seen to be good EU citizens, are they really all feathering their own nests or are they just incredibly stupid and naive?

    • BobE
      Posted September 16, 2011 at 2:54 pm | Permalink

      They will be able to join the euro gravy train after they loose there seats in 3 years time. (Kinnock did it).

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

        Don’t mention the millionaire Kinnocks! How on earth can 2 ‘professional’ politicians end up this wealthy? Gravy trains for both of them!

        • lifelogic
          Posted September 16, 2011 at 8:37 pm | Permalink

          Should we really be paying for degrees in “industrial relations” at all I wonder. More to the point should the civil service be paying vast sums on wages to “civil servant union officials” doing union business for much of their working time. Doubtless creating more pointless work and trouble for all around.

          Perhaps JR could find out the true cost of this huge taxpayers subsidy to the state sector unions (who fund the Labour party and the dope Ed Milliband) so lavishly.

          Is this good use of tax payers money – take tax from the productive and give it to state sector unions who then have more to give to Labour.

          • Bazman
            Posted September 17, 2011 at 8:49 am | Permalink

            You continue your myth and fantasy that state sector workers such as those in the NHS and other parts of essential infrastructure of Britain are somehow engaged in worthless activities.
            Unions are needed as mediators. If it were left to employers and employees. The employers would threaten people like me and I would tell them to bring it on or just ram it and find someone more desperate. No good to either side or the user/customer. Have you any other ideas on industrial relations other than hire and fire at will, because if a company was run this way eventually the director would have to sack himself. Especially if it was a small company in an area with a limited amount of people with the right attitude and skills.

          • lifelogic
            Posted September 17, 2011 at 4:08 pm | Permalink

            Shareholder should sack directors when needed. Shareholder rights should be strengthened relative to directors.

        • lifelogic
          Posted September 17, 2011 at 10:44 am | Permalink

          May I not mention Kinnock’s third at Cardiff University in Industrial Relations as a possible reason for his great subsequent financial success? Certainly it was not people voting for him or his policies.

          Mind you a first in PPE at Oxford seems to be no better in general.

          Reply: I have been trying to check the fact. It is generally agreed he took a degree in industrial relations and history at Cardiff, but I have not seen confirmation of the class of degree.

          • lifelogic
            Posted September 17, 2011 at 4:03 pm | Permalink

            Sorry for my impatience – I got it off some press reports that came up on the internet.

            Of course the real reason he has done well is that he endlessly peddled the politics of envy and big government and has taken the EU money and dutifully pushed the EU message down the unwilling throats of the UK voters.

    • lifelogic
      Posted September 17, 2011 at 10:38 am | Permalink

      Bazman – you say the “essential infrastructure of Britain” does this include the EU, the PIGS subsidy, overseas AID, the Human rights and equality commission, much of the BBC, the political indoctrination at schools systems, the green energy nonsense and related quangos, the EU, much of OTT health and safety and all the rest of the pointless and damaging structures in place?

  5. Dawn Carpenter
    Posted September 16, 2011 at 8:56 am | Permalink

    If the Obama Administration thinks this is a good use of the money of American taxpayers, I hope the Tea Party raises unshirted hell over the issue.

  6. Gary
    Posted September 16, 2011 at 9:01 am | Permalink

    Yes, Geithner asked Europe to leverage their bailouts ! ie increase the debt of the bailout fund to bailout indebted banks. You cannot make it up.

    WROCLAW, Poland/FRANKFURT, Sept 16 (Reuters) – U.S. Treasury Secretary Timothy Geithner holds talks with European finance ministers on Friday on the possibility of leveraging the euro zone’s bailout fund to help resolve the debt crisis.

    The man is an utter fool.

    The Atlanticists are in for a massive shock, when the economy of their beloved USA goes belly up. They have hitched our wagon to that disaster. I sometimes think their criticism of the euro is a throwback to its former threat as a reserve currency. Now they want it buried. The threat to the reserve currency may come from China in the future. Stand by for increasing vilification of China.

  7. oldtimer
    Posted September 16, 2011 at 9:11 am | Permalink

    The other day I got a reply to my letter querying the UK government`s position on membership of the EU. Apart from the (expected) comment that cessation of membership of the EU would not be in the national interest, I was assured that the UK would not sign up to any commitments in terms of bale-outs which would be detrimental to the national interest…

    These sound like weasel words to me. On this basis, all the government has to do to justify any support is to declare it to be in the national interest. It looks as though this is exactly what will happen. Though quite how two countries, so heavily indebted as the UK and the USA, can be regarded as a reliable source of support for the Euro does stretch the imagination. It sounds to me like two drunks propping up a third drunk.

    • oldtimer
      Posted September 16, 2011 at 9:12 am | Permalink

      I sould clarify that the reply I received was from my MP.

  8. Brian Tomkinson
    Posted September 16, 2011 at 9:19 am | Permalink

    These events are becoming more frequent and yet no nearer to sorting out the nub of the problem. It is frankly tiresome to hear political leaders issuing their pronouncements which do not properly address the problems but they pretend they do. This is somehow swallowed by the markets for 24 hours or so until they realise it is all boloney and the real problem is still there. What comes across to me is that the PR men and women i.e. the politicians, are mere mouthpieces and don’t have a real grasp of the financial situation but cling desperately to their own political agendas which are not necessarily in the interests of those whom they are supposed to serve but now treat with contempt.

  9. Sue
    Posted September 16, 2011 at 9:37 am | Permalink

    ” I see the UK also has dollars to offer”.

    How can we can spare cash? We’re IN DEBT! We have no money.

    I know nothing of finance but doesn’t “leveraging” mean using money that doesn’t exist? (i.e. borrowed out of thin air).

    I don’t understand how governments are being allowed to continually use debt to prop up a currency system that is racking up huge EXTRA debt in interest every day.

    This has to stop somewhere. It’s totally insane. There will come a point where people will begin to refuse to pay tax (where it is not stolen at source).

    It’s so utterly immoral and unethical for a government to be using their taxpayers money in this way. You’ve lost all sense of logic and honour. Taxes aren’t meant to prop up banks and bureaucrats. They are paid in good faith as a contribution to running the country RESPONSIBLY, something which Labour and now you Conservatives seem totally incapable of doing.

    You need to do something NOW. My daughter is thinking of emigrating now and she’s an engineer. You are leaving our children NO FUTURES in this godforsaken “UNION OF HELL”…

    Are there any intelligent people left running this once great country of ours?

  10. English Pensioner
    Posted September 16, 2011 at 9:40 am | Permalink

    I hope that the Bank gets some good collateral for its dollars, although one suspects they will be repaid in Greek Drachmas.

  11. Peter van Leeuwen
    Posted September 16, 2011 at 10:06 am | Permalink

    Unless George Osborne has been expelled from ECOFIN, he doesn’t have to pay for his place at the table. He is, as always, very welcome I trust.

    Reply: He just did, with the promise of Bank of England money for hard pressed continental banks

    • APL
      Posted September 16, 2011 at 4:33 pm | Permalink

      Peter van Leeuwen: “he doesn’t have to pay for his place at the table”

      No but the poor British tax payer has paid though.

    • A different Simon
      Posted September 16, 2011 at 5:21 pm | Permalink

      John ,

      Osborne is unfit for office .

      His judgment makes John Profumo look like King Solomon .

      It seems that to get to a position of power you have to be manageable by the threat of black-mail .

      People are not going to distinguish between Cameron & Osborne and the Conservative party . They will perceive them to be the same thing .

    • lifelogic
      Posted September 16, 2011 at 8:40 pm | Permalink

      His own family money I think not? No our money yet again the word “leeches” come to mind for some reason or other.

  12. Patrick
    Posted September 16, 2011 at 10:09 am | Permalink

    We’ll all get caught badly in the storm that’s coming. But there is a silver lining. The absolute unwillingness of Eurozone political elites to face facts and take decisive actions makes it every day more and more likely that the Euro and the EU will come apart. The longer they delay the more their EUSSR dreams slip away.

    They’re doing Eurosceptics work for them.

    John – one thing you may wish to post about is the medium term implications of all this. The deficit funded welfare state model is dead. I don’t think the people or the governments of the west have really internalised that yet. It’s balanced budgets for the foreseeable future. For the political left that simply does not compute.

    • Robert
      Posted September 16, 2011 at 2:36 pm | Permalink

      Spot on !!

    • Derek Vaughan
      Posted September 16, 2011 at 9:48 pm | Permalink

      Absolutely. Someone must tell the public sector union leaders even though I am sure they know this already.

  13. Mark
    Posted September 16, 2011 at 10:14 am | Permalink

    Perhaps Geithner is hoping to persuade China that if he lends to the EU, he has an asset to offset some of the US liabilities.

  14. norman
    Posted September 16, 2011 at 11:29 am | Permalink

    That UBS trader will no doubt face years in jail for recklessly gambling with £1.3bn of money that is not his own.

    How much has George Osborne lost us so far with his daft bailouts? And he’s still at it!

    • forthurst
      Posted September 16, 2011 at 1:43 pm | Permalink

      I think Gideon Osborne should be ring-fenced, but not until 2019, although another school of thought would suggest that if he wants to gamble he should set up an specific institution for that purpose and not treat our money as collateral for his (words left out-ed) recklessness.

  15. apple
    Posted September 16, 2011 at 12:21 pm | Permalink

    none

  16. ian wragg
    Posted September 16, 2011 at 12:33 pm | Permalink

    It’s only our money so why would George care.
    The tories know they are finished so they may as well finish off the bankrupcy that labour started.

  17. Frank Salmon
    Posted September 16, 2011 at 1:49 pm | Permalink

    We have plenty of dollars though. The wise man, Gordon Brown, knew that gold was useless. He bought dollars with it. The gamble paid off and now we have plenty of worthless dollars to support worthless euros. Thank god the pound is safe.

    Realistically, if I knew that our gold had been sold to buy dollars to bail out the euro banks, I would not be a happy bunny.

  18. Peter van Leeuwen
    Posted September 16, 2011 at 2:33 pm | Permalink

    This suggests that:
    – the BOE is not an independent central bank
    – the Japanese and Swiss ministers of finance will attend as well and will get something in return. I’m curious . . .

    • APL
      Posted September 16, 2011 at 4:30 pm | Permalink

      Peter van Leeuwen: “the BOE is not an independent central bank”

      Yes, we know that.

      There is a good chance the Swiss just blew up UBS with their screwing with the Swiss – Euro fx. It’s possible the recent ”rogue trader’ was wrong footed by the Swiss central banks action.

      We very unlikely to have heard about it if he had made a profit.

    • Susan
      Posted September 16, 2011 at 4:52 pm | Permalink

      Peter,

      I think it is fair to say many of us wonder how independent the BOE is.

      Britain will gain nothing in return for attending the meeting, although many people in the UK think that they should.

      However, I am curious to know what are your expectations from this meeting? How do you see the Euro crisis being solved?

      • Peter van Leeuwen
        Posted September 17, 2011 at 2:08 pm | Permalink

        @Susan: My layman opinion: In general: stronger nations keep pressing discipline on France, Italy, Greece of course, hopefully opting for the “community method” (new commissioner, accountable to European Parliament). In the end, they will do what is needed (ESM ceiling, eurobonds etc.). Against my expectations, now that the going gets tough, Dutch mainstream parties are all becoming far more europhile, whereas the populist eurosceptics don’t dare bringing a no-confdence motion. (all very different from Britain)

  19. Denis Cooper
    Posted September 16, 2011 at 3:51 pm | Permalink

    As Osborne is actively urging eurozone governments on to further breaches of the EU treaties as approved by Acts of our Parliament, and therefore part of our national law, can anyone say when he asked for and was granted parliamentary authority to do that?

  20. Derek Weston
    Posted September 16, 2011 at 3:53 pm | Permalink

    Mr Redwood is batting his head against a brick wall as both Mr Cameron and the British Chancellor of the Exchequer support the Euro and I would not be surprised if we joined without a referendum which is par for the course for UK politics

  21. Denis Cooper
    Posted September 16, 2011 at 4:16 pm | Permalink

    “In his speech to the House of Commons, Mr Pitt said that it was massively in Britain’s interest that Napoleon Bonaparte should consolidate his present conquests into a strong and stable Empire.

    Asked whether there might not be a danger that Bonaparte would then seek to extend that Empire across the whole of the continent, and subsequently turn his attention to the invasion and subjugation of this realm, Mr Pitt replied that he had received assurances from the Emperor that he had no further territorial ambitions.

    When a member pointed out it was a matter of public record that Napoleon had already claimed legal title to the dominion of seven other countries in eastern Europe, as well as to Sweden, and that reports received just in the last week showed that he was planning to advance further into the Balkans, Mr Pitt reiterated his firm support for the Emperor’s efforts to bring stability to the continent.

    In his closing words, Mr Pitt strongly urged members to accept the remorseless logic that England could no longer save herself by her exertions, however great, and so should cease from any such futile attempts; but Napoleon could, as he trusted, save Europe.”

    Reply: Great piece, but I recollect Pitt put it rather differently at the time

    • brian kelly
      Posted September 16, 2011 at 7:59 pm | Permalink

      I thought Pitt strove might and main to defeat Bonaparte – even to the point of utter physical exhaustion – against great political opposition. And his efforts – together with our navy – were ultimately successful. To the great benefit of Europe and the world.

      • zorro
        Posted September 16, 2011 at 11:06 pm | Permalink

        Juxtaposition between Mr Pitt and Mr Cameron?…and of course being ironic.

        zorro

      • Denis Cooper
        Posted September 17, 2011 at 10:36 am | Permalink

        It was an attempt at satire.

  22. Mike Stallard
    Posted September 16, 2011 at 4:16 pm | Permalink

    A couple of bob here and there will do no good. If this blog’s comments are to be trusted, France’s two major banks alone are up for nearly 60 billion thinggies. And that doesn’t count Germany’s or our own pitiful involvement.
    As Dan Hannan says: We’re all Doooomed!

  23. Gary
    Posted September 16, 2011 at 6:58 pm | Permalink

    Why are we in this mess ? A few people have a lucid explanantion. Peter Schiff is one, and this govt should be required to view this :

    http://www.youtube.com/watch?v=_BHLguFEN3M

  24. brian kelly
    Posted September 16, 2011 at 7:53 pm | Permalink

    There is much talk of the urgent need to recapitalise the EU banks. I have just read an article by Theo Vermaer [Professor of Finace in Belgium. It describes a kaw passed in Belgium in 1982 in which he states it overcomes the problems of goverment and/or private money being used to recapitalise the banks. He regards the regime described as being very successful. I am not competent to judge but in view of the turmoil in Europe over this very question if may behove some consideration by more expert minds than mine

    http://knowledge.insead.edu/Howtorecapitalisebanks090213.cfm

  25. Bazman
    Posted September 16, 2011 at 9:46 pm | Permalink

    As Brendan Barber says “sup up Lads if ye chuck enough money at enough it it. It’s gonna work!

  26. Bernard Otway
    Posted September 17, 2011 at 12:32 am | Permalink

    Revolution is coming mark my words[that is IF they are allowed and not Ed.] I am not asking for it just saying it is on it’s way,the political class has Lied and lied and lied no one believes them any more,it is no different to the Boy who cried Wolf the people did not believe him,I do not believe a single solitary word spoken by 99.999999% of the political class,and any I ask questions of are so IGNORANT of their subjects I just get angry and shout at and insult them.
    JR I absolve you But I wish you would not ED. me mainly unnecessarily especially 99% of what I say appears so quickly in the press, so if it was legally actionable it would not be there,
    also I would point out I have a degree in Law and have been using it for 40 years,my 43 year old Daughter is a professor of Law mostly taught and encouraged by me,the thought police or any else will never get me. Even what Baroness Flather has now put in the whole mainstream press yesterday and today I have been saying since the day I arrived back from South Africa 24th April 2008,and my Coloured [and proud to call herself that word] South African wife agrees with everything I say ,we have been together since 1987 right in the middle of PW Botha’s state of emergency,in fact the Apartheid aparatus was scared witless of me as I had so much documentation here in britain that I threatened them with.

    Reply: This site seeks to avoid personal abuse, unproven allegations against individuals, and any implied call to violence. It is dedicated to furthering the democratic debate, and can be all in favour of peaceful revolutions in thought and government deed.

  27. Javelin
    Posted September 17, 2011 at 8:35 am | Permalink

    The Eurozone is increasingly looking like economic Armageddon day by day. Platitudes by commentators are extreme. Germany and Greece have dug themselves into political holes so deep that there appears only mutual destruction.

    Here is my concise contribution …

    The problems of the debt bubble and the Eurozone were always on a collision course and they are about to meet in a head on train crash.

  28. Bernard Otway
    Posted September 17, 2011 at 11:40 am | Permalink

    That is exactly what happens Bazman especially with small companies,there is usually only one owner and circumstances end up that he/she DOES fire him/herself it is called GOING UNDER,he/she does not WANT to do it to themselves or employees but HAS to,furthermore
    it has been going on in one form or another for thousands of years,YET we still see a Planet
    with 7 Billion people today that had but a fraction of that 2500 years ago,there have been mass wholesale migrations forced by drought or flood etc etc. IT IS CALLED LIFE, we all live with it,your words also imply that the employers including the state are inherently BAD ,
    thus necessitating the need for unions,they are actually the opposite in by far the majority
    out of self interest,a happy organisation is much much more efficient and thus more profitable than the opposite, ‘I hold these TRUTHS to be SELF EVIDENT’ or something like that was said a couple of hundred years ago.

  • 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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