Vote again Slovakia

The news that The Slovakian Parliament has vetoed the bail out plan for the Euro has so far been taken quite well by the markets. They know how EU democracy works. If the EU authorities do not get the answer they want from a vote, they expect the vote to be taken again and again until the answer is Yes.

Proponents for the Euro say that one small country’s Parliament should not be able to hold up their project. They will deduce from this event that there will have to be changes, to stop democratic votes and wayward Parliaments from having a different view from the political core of the project.

Most sensible people would conclude from the ability of one small country to stop the policy of pretend and extend that now is said to be necessary to preserve the Euro that the whole single currency scheme had been wrongly designed in the first place. They might agree with those of us who said at the outset that you need one country with one set of political decision takers if you are to run a single currency.

Meanwhile Mr Barroso has said it would be good if the UK contributed to the bail outs. That has provided a welcome target for some UK Eurosceptics to attack. The government will say No, and will claim credit for resisting such “pressures”. The truth is the UK is contributing to this foolish policy of bail out through the IMF and directly in the case of the Irish loan. We were asked to approve more of the documents for it last night. Labour abstained and a few of us voted No.

The Euro establishment thinks the Euro 440 billion fund must go through. They know, however, it is not big enough. They also should by now realise that there is no point recapitalising the banks against sovereign loss unless they can also take action to stop all future sovereign loss. The banks and the sovereigns of Euro area are hitched together. Solving the sovereign debt crisis is crucial to success. There are still no clear commitments to do so.

Most of those involved in “saving” the euro do now think it rests on agreement between Germany and France, who will become the principal bailers of the damaged zone. The big issues are discussed in hectic meetings between the big two. The other countries are awaiting an answer to their disagreements. How much longer will the democracies of the others put up with this? When will the people and MPs of the other countries start to assert themselves and say they want to be involved in the decisions?

The Euro is still a single currency looking for a single country to love it. The leaders of the EU disagree about how far and how fast they travel towards the single state their currency needs. Even if they got to their destination, they would still need to cut spending or raise revenue to tackle their debt crisis.

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90 Comments

  1. APL
    Posted October 12, 2011 at 7:11 am | Permalink

    JR: “Labour abstained and a few of us voted No.”

    Mr Eustace and his legions of Tories. They voted no too?

    • Jon Burgess
      Posted October 12, 2011 at 9:12 pm | Permalink

      Ayes 271, Noes 22

      So this was approved only because of Tory support. So much for the Tories being the last hope of the eurosceptic public.

      George Eustace voted in favour, by the way. What an unprincipled creep he has shown himself to be, but obviously not a Cameron stooge.

      • APL
        Posted October 12, 2011 at 11:36 pm | Permalink

        Jon Burgess: “George Eustace voted in favour, by the way.”

        Well, if that is the metle of a Tory Eurosceptic, god help us – if we plan to rely on the Tory party.

        Jon Burgess: “but obviously not a Cameron stooge”

        Obviously, he is really sticking that thorn in and making David Cameron dance a merry jig.

  2. lifelogic
    Posted October 12, 2011 at 7:13 am | Permalink

    So Labour (who abstained), most of the Tory party and the always wrong on almost everything Liberals all support giving more UK taxpayers cash to be thrown away yet again on a half baked rescue.

    If Cameron wants to throw money down the drain could he please just use his or Osbournes.

    How are the profits on Greece and Ireland going so far perhaps he could update us on his record so far?

    Meanwhile lack of lending and clawing back from RBS and the likes to business is killing growth every day.

    • lifelogic
      Posted October 12, 2011 at 10:22 am | Permalink

      I see unemployment increases by 114,000 to 2.57m as jobless total hits 17-year high.

      Not surprising given RBS loan snatch back and all the banks restrictions, Huhne’s absurd energy nonsense, lack of confidence in Cameron and the economy (encouraged by the governor of the bank of England’s negative hyperbole), over taxation, general over regulation and EU incompetence everywhere.

      Still we are “all in this together” – apart, of course, from MPs, people who work for the bloated state sector or the bloated BBC or similar. Who have high wages, inflation linked pensions and a variable rate mortgage and are all generally laughing all the way to the bank of course. While the private sector shrinks as a direct result of their actions.

      • uanime5
        Posted October 12, 2011 at 10:01 pm | Permalink

        Don’t forget about Osborne’s policies which aren’t leading to growth and have seen growth be repeatedly downgraded, cuts to public sector jobs, and cuts in the private sector because they have less customers after the public sector job cuts. These have had the greatest effect on unemployment and lack of growth.

        Hopefully Labour’s 5 point plan will be approved to replace Osborne’s plan A.

        • lifelogic
          Posted October 13, 2011 at 6:55 am | Permalink

          Paying people in the state sector, to dig pointless holes, as they usually do is not the solution.

        • Bob
          Posted October 13, 2011 at 2:17 pm | Permalink

          The public sector do not generate tax revenue.

          • Bazman
            Posted October 15, 2011 at 9:05 am | Permalink

            When the government buys from a private company that has only one customer. The state. No tax is generated?

      • Bazman
        Posted October 13, 2011 at 8:02 pm | Permalink

        Not the result of bankings past and present actions, but the fault of the workforce and the state sector such as nurses and street cleaners? More fantasy.

    • lifelogic
      Posted October 12, 2011 at 3:30 pm | Permalink

      Osbourne today in the commons – the last thing business needs is more regulations and taxes – how true but more regulations and taxes is exactly what he and Cameron are giving them.

      No retirement laws, the temporary workers directive, the gender neutral insurance, paternity leave, mothers feeding time, more green and recycling restrictions, high energy “green taxes” more VAT, NI and lots of other back door taxes too and still no sensible bank lending around either.

      What is the point of saying one thing when everyone (and even he himself) must know it is complete opposite of his actions. Everyone in business knows this – he is fooling no one.

      • uanime5
        Posted October 12, 2011 at 10:02 pm | Permalink

        Well I’m sure the employees appreciate having rights. Also how is Cameron increasing NI and VAT?

        • lifelogic
          Posted October 13, 2011 at 6:56 am | Permalink

          They have already increased.

        • norman
          Posted October 13, 2011 at 9:04 am | Permalink

          Employers NI was raised by 1% (the planned 1% employees rise was shelved to much fanfare as though not raising an already sky high tax is some kind of conservative coup) and VAT raised by 2.5%.

        • lifelogic
          Posted October 13, 2011 at 3:15 pm | Permalink

          What employment rights do you have if you have no job?

          • Bazman
            Posted October 14, 2011 at 6:38 pm | Permalink

            A job at any price is not a job.

      • Bazman
        Posted October 13, 2011 at 8:09 pm | Permalink

        Is it OK the short change agency workers and reduce the working conditions of other workers? What reductions and lowering of living standards have the nations bosses had? Having to buy a BMW instead of a Bentley and only four holidays is not hardship.
        Your ideas like many of the elites apologists are a bit like 1960’s architecture. The architects that created these dream tower blocks that made so much sense lived cottages in the Cotswolds.

  3. lojolondon
    Posted October 12, 2011 at 7:50 am | Permalink

    I love it! The EU has to fail, it will be painful, but if the UK stays firm then we can easily benefit from the disaster of communist rule in Europe. If only we had stayed out of the EU as well as out of the Euro, imagine how well off we would be then??

    • Mike Stallard
      Posted October 12, 2011 at 9:18 am | Permalink

      I just cannot understand lojo above. Can you? Which is the sarcastic bit?

      It doesn’t matter anyway because the bail outs will continue and the Conservative/Liberal alliance will continue to pour our money down the drain.

      PS We heard today that the DfE is not going to support our Free School. So much for the Swedish Model promised by Mr Gove before the election. Just as well really, now they have wasted some 5 months this year already by not taking decisions, it is best not to work with them.

      • Robert Christopher
        Posted October 12, 2011 at 11:13 am | Permalink

        Mike Stallard: “It doesn’t matter anyway because the bail outs will continue and the Conservative/Liberal alliance will continue to pour our money down the drain.”

        What! For ever, and a day!

      • forthurst
        Posted October 12, 2011 at 12:56 pm | Permalink

        The last thing the elete would want is for English people to be able to provide free education for their children of a quality equal to that provided by private schools; essentially it’s birth control for the English middle classes. It has worked in the USA and it is working here. Multicultural, mixed sex, mixed ability ‘education’ for all except the self-chosen elite is the order of the day and it would take more than a naivete like Gove to change it.

  4. alan jutson
    Posted October 12, 2011 at 8:04 am | Permalink

    Interesting that Labour abstained.

    I think this is the second time that they have abstained or voted against an EU bailout vote.

    Perhaps this is a quiet, but very sensible policy that Labour are developing, ready for use at the next general election, when they can say truthfully, we did not vote for any European Bailout, it was all the Conservatives who voted for it, and it cost billions of pounds of taxpayers money, which could have been used here in the UK.

    Food for thought ?

    • Mike Stallard
      Posted October 12, 2011 at 9:20 am | Permalink

      No!
      Food for wimps and wussies!
      When a decision needs to be made, make it and then support and stand by it!
      The trouble with Gordon Brown was that he always put party before country.

      • alan jutson
        Posted October 12, 2011 at 10:28 am | Permalink

        Mike

        I agree with your comment, and most of us would make a decision and vote either yes or no, but we are talking politics here, and that appears to be a different world.
        They (political party’s) seem to operate in a totally different environment, with totally different rules, to how the rest of us tend to live.
        Mark my words, I guarantee in time, Miliband will say, we did not vote for the bailouts, (he will conveniently miss out that he could have voted against them) it was those nasty conservatives and lib dems who voted to spend (pour down the drain) hard working taxpayers money, and the inerviwer at the time will underline that, because like it or not, the conservative MP’s by a majority, did vote for it, and its on the record for all to see.

        Yes you are right, Party before country is now becoming the norm.
        Serving the Public seems to have been forgotten.

        Sorry to hear that your Free School appication was rejected, did they give a sensible reason?

        • uanime5
          Posted October 12, 2011 at 10:04 pm | Permalink

          Would the result have been any different if Labour had voted against the EU bailout or would it have passed because Lib Dem and Tory MPs outnumber Labour MPs?

          Re[ply: If Labour had voted in force against it might have been defeated

    • MickC
      Posted October 12, 2011 at 12:47 pm | Permalink

      Yes, very much food for thought.

      Ed Milliband will offer a referendum on EU membership as part of his election manifesto. Many people will vote Labour because of this. There is no downside for him to do so. If he wins and holds the refendum, the outcome is the will of the people and he can take no blame for that.

      The Tories cannot object to it because they promised but did not perform, the Lib Dems cannot object because they favour referenda and would campaign to stay in. It would not prevent them entering a LibLab pact.

      My prediction is that Ed Milliband will be the next Prime Minister.

    • lifelogic
      Posted October 13, 2011 at 7:56 pm | Permalink

      Labour just want it to go through but not get the blame for it.

  5. Robert
    Posted October 12, 2011 at 8:06 am | Permalink

    ”We were asked to approve more of the documents for it last night. Labour abstained and a few of us voted No.”

    Same old Tories playing at being Eurosceptic.

  6. John
    Posted October 12, 2011 at 8:30 am | Permalink

    Not cleear what the last sentence means:

    “When will the people and MPs of the rest start to assert themselves and say they want to?”

    Say they want to what?

  7. javelin
    Posted October 12, 2011 at 8:57 am | Permalink

    Fiscal union WILL have to be voted on. Like death you can’t avoid it.

    It’s simply childish, foolish and misguided to pretend it won’t come down to a vote.

    When it comes to elections the public vote with their wallets and the fiscally integrated Eurozone is bad for the vast majority of Europeans. When the vote comes the political day-dreamers will be swept away in a tide of economic realism. Politicians need to decided if they will be swept away with their day dreams or opt for economic reality.

    • Jwoo
      Posted October 12, 2011 at 1:34 pm | Permalink

      What you are describing sounds a lot like Democracy but the EU isn’t a Democracy, so ways and means will be found to circumvent the majority view as always.

  8. Nick
    Posted October 12, 2011 at 9:00 am | Permalink

    It’s not going to work. Apart from John admitting 440 bn isn’t enough as usual politicians never put a figure as to their mess.

    Lets do that for the UK 7,000 bn in government debts (don’t forget the hidden pensions Maddoff’ed off the books). Even that doesn’t account for bailing out the feckless.

    So what are the strategies governments will take.

    1. Pretend and extend. Just makes the problem bigger down the line.

    2. Borrow and binge. The Condem strategy. Spending was up in real terms. A bigger problem down the line.

    3. Partial default. Here the first to get hit is the citizen. Eg. 5% default for raising the state pension age by 1 year. 15% for changing it from RPI to CPI.

    Don’t forget too that the median worker (25K) who, if they were allowed, had put their NI in the FTSE would have a retirement income of 21K, instead only has 5K.

    That’s what happens when you run a ponzi scheme, and why you need to use Maddoff approaches to accounting.

    • oldtimer
      Posted October 12, 2011 at 10:10 am | Permalink

      I would add to your excellent list:
      4 Devaluation of the currency. We took a c30% hit at the start of the first crisis when billions of pounds quit the UK for safer havens. My theory is that QE is, in part, a precaution against that rush for the exit by holders of sterling happening again; perhaps the BoE has already got a sniff of that in the wind. Of course we all pay for that via higher import prices.

  9. NickW
    Posted October 12, 2011 at 9:05 am | Permalink

    The pretence is over.

    It should now be clear to the whole of the European Union that it is being run for the benefit of France and Germany, who are now deciding policy at every step through bilateral meetings, and then ramming the result down everyone’s throat whether they like it or not.

    France is going to hijack the bailout fund to rescue its own banks and protect its credit rating.

    • alan jutson
      Posted October 12, 2011 at 10:37 am | Permalink

      NickW

      We have been helping them by supporting the appointment of Christine Lagarde to be head of the IMF.

      Could never understand that appointment, when so many other contenders should have been available from financially stable Country’s.

    • Iain
      Posted October 12, 2011 at 11:06 am | Permalink

      Yes, I am surprised that Germany hasn’t had to answer for its policy. It is currently benefiting from the devalued Euro, compared to what would have been the DM value. I gather they are getting a 30% currency gain, meanwhile they are doing everything in their power to not to make the fiscal transfers to other EU countries that being part of the Euro should obligate them to. Its a win win and beggar thy neighbour for Germany, a truly parasitical relationship.

    • lola
      Posted October 12, 2011 at 3:37 pm | Permalink

      Correct. It’s not France and Germany bailing out everybody else. It’s Germany bailing out everyone, including France. IMHO France is playing a ‘guilt’ card on the Germans.

  10. Paul H
    Posted October 12, 2011 at 9:06 am | Permalink

    Slovakia will probably be quietly reminded how much it is the beneficiary of EU largesse (otherwise known as your and my money), and will find a way around its pesky parliamentarians.

    The UK is, of course, on the other side of such an equation, the EU being the beneficiary of UK largesse. Yet year-after-year we turn our back on the levers it puts at our fingertips. I am occasionally tempted to think there might actually be something in the more extreme views expressed by some tinhatters, especially that France and Germany make behind-the-scenes threats to the UK which make it difficult to pull at those levers without triggering outright war.

  11. Brian Tomkinson
    Posted October 12, 2011 at 9:13 am | Permalink

    From the outset, the whole European “project” has been about politics not economics. The introduction of the Euro was a fundamental part of this and the peoples of the sovereign nations have been continually lied to by their own politicians (including in the UK). No opposition is allowed and any votes which do not go the way of the ruling “elite” must be retaken until they conform. Some might call this dictatorship or a form of political mafia. Economic reality is now threatening the political ambition of the so-called political “elite” in the EU. Our own politicians have allowed us to become a part of an anti-democratic organisation which is more concerned with its own power than the welfare of its members and risks ruining not just the whole of Europe but much of the rest of the world as well. With a few exceptions, we have a bunch of politicians happy to stand aside whilst this disaster unfolds.

    • Iain
      Posted October 12, 2011 at 11:27 am | Permalink

      I have tried to contemplate what would it take to reverse the British establishments EUphilla and have come to the conclusion that having invested so much political capital in the project to the point of fanaticism that nothing short of blood on the streets will move them. They have sacrificed everything for the EU project, our law, our democracy, our economy , our employment, our treasure, but one day they will wake up to the horror of the mob on their door steps demanding they pay the price for all this sacrifice, their necks.

      When an establishment becomes intransigent and not prepared to change, or able to change, as ours is over the EU, it makes revolution inevitable. This is the final disaster that is to befall us over the EU. In the past Parliament was sovereign, so could change as events changed, but having locked away all the means to initiate change in EU treaties the British establishment have signed their own death warrant.

      What is the real disaster is that Cameron could have led the British establishment from their own EU folly, but unfortunately he has been found wanting in practically everything that is required in a leader.

      • APL
        Posted October 13, 2011 at 11:08 am | Permalink

        Iain: “This is the final disaster that is to befall us over the EU.”

        I think not. The effect of the treaties (which I maintain are void) is to give foreigners a claim on British soil.

        Long after the European Union is dust, an obscure article in the treaty of Rome, as amended by Niece, Amsterdam, Maastrictt, Lisbon ad nauseum, will be invoked to give authority for this impost or that impudence.

        Rather like the German claims to bordering territories pre WW2.

        I am not singling out the Germans, I think they are the good guys, but using them to illustrate the problems people like Ken Clarke, Cameron, and all the other Tory quislings have laid up in store.

  12. norman
    Posted October 12, 2011 at 9:15 am | Permalink

    There has to be no other option than to stop Parliamentary votes holding things up. No doubt the loss of sovereignity will be easily explained – why should Slovakia, a country of 5 odd million, hold up a process which has already been approved by the other however many Parliaments?

    Events certainly won’t wait for votes to back to various Parliaments two, three, times. This 440bn is just an apperitif, the real meat will come later (and Slovakia knows this so may be positioning behind the scenes that if they railroad this through they can be excepted when the big money starts being talked about in two or three months time).

    As for the UK, we’ve long lost any hope of sensible action being taken by this government, it’s hardly worth talking about anymore other than to continually remind people how void of ideas and imagination the current administration is.

  13. Posted October 12, 2011 at 9:25 am | Permalink

    If Labour had voted against the bail-out, I might have thought that they were beginning to see sense at ,last under the new leadership. But alas the took what I regard to be the coward’s line, and abstained.
    Its a pity, because, except in education, they’ve got as much going for them as the present Tories.

  14. Gary
    Posted October 12, 2011 at 9:59 am | Permalink

    If the derivative debt is as large as many estimate, then it does not matter what type of union is invoked. The debt will consume all of
    the union. And then some.

  15. Robert K
    Posted October 12, 2011 at 10:17 am | Permalink

    Out of interest, and with no sense of irony, I wonder where UK bloggers who still support the euro pitch their tent?

  16. Old Curmudgeon
    Posted October 12, 2011 at 10:24 am | Permalink

    “When will the people and MPs of the other countries start to assert themselves and say they want to be involved in the decisions?” Indeed! The gap between the views of the people in this country and the expressed views of those elected to represent them on this topic, as with much to do with the EU, grows ever wider.

  17. sm
    Posted October 12, 2011 at 11:00 am | Permalink

    Vote again!
    We are getting the message, ”demoEUcracy”

  18. Disaffected
    Posted October 12, 2011 at 11:13 am | Permalink

    John, people in Greece are standing up. People in New York are getting fed up as well.

    As I understand it, Cameron said the UK would not be involved in bail outs (we know he has not told the truth because of money leant to Ireland, IMF contribution etc). Why weren’t the Tory MPs whipped into line so all voted against rather than a few??

    Mass immigration continues unabated, swarms of overseas students entered the country with their family, despite Cameron’s pathetic attempts to claim action being taken to combat the situation yesterday. Today unemployment reaches record highs, public services swamped by demand, welfare claims increase, households where no family member has ever worked since the age of 16yrs increases (370,000 households, not people). Is it any wonder that public spending continues to rise from the few who pay tax. I would have liked to think some tangible progress would have been made since May 2010- I fail to see any. The situation on key policy areas is getting worse. It is very hard to accept the facts that Gordon Brown did a better job than Cameron.

    • uanime5
      Posted October 12, 2011 at 10:16 pm | Permalink

      Given how everything has gotten worse since Brown left office it seems he was a better politician than Cameron.

      Also in New York the 99% movement is protesting on Wall Street that 99% of the population lives in poverty while 1% lives in luxury. Given how the rich keep getting richer and the poor keep getting poorer no one should be surprised if a similar protest occurs outside the City.

      • Electro-Kevin
        Posted October 13, 2011 at 2:19 pm | Permalink

        Uanime5 – You are simply unbelievable !

      • APL
        Posted October 13, 2011 at 2:36 pm | Permalink

        uanime5: “Given how everything has gotten worse since Brown left office it seems he was a better politician than Cameron.”

        Brown was a lousy politician, is a lousy representative. It says much about the poor saps of Cowdenbeath that they tolerate this man, not turning up to Parliament to represent them rather than kick him out on his ear.

        That said.

        Cameron is a lousy politician. He has no experience – and spent his political apprenticeship writing other peoples speeches. Such that when he comes to read one of his own, he can’t tell a stupid unforced error from a good speech.

        That said too..

        Of the two, Brown is more culpable. Think of the UK economy like a fully loaded oil supertanker, a command from the helm to turn is acted on immediately, the rudder are turned the engines are throttled, but nothing happens for an undetermined period of time. The thing is still moving of its own momentum.

        Such is the UK economy, set on a downward path by Brown, now unstoppable until the control surfaces eventually kick in.

  19. Damien
    Posted October 12, 2011 at 11:14 am | Permalink

    I don’t agree that the loan to the Irish was foolish given the systemic exposure of the UK banks to Irish debt. The loan is interest bearing and will be repaid unlike the money given to the IMF. Indeed Moody’s has specifically pointed to the situation of the UK Post Office Financial Services which are wholly owned by a subsidiary of Bank of Ireland. Moody’s have pointed out that should the Post Office Financial Services get into trouble it would be more likely that the Irish government would bailout the depositors than the UK government!

    Slovakia is like Ireland in population size and in that it has stood up against the pressures from the EU as seen with the referendum and the spat over its sovereign right to set its own corporation tax rate at 12.5%.

    The situation in Ireland is bad however they were the first to recognize the scale of the problem and take tough measures to restructure the economy. They set up a National Asset Management Agency (NEMA) to move the toxic property loans from the banks. The loans of e74 bn were acquired at e31 bn. Mike Geoghegan, former CEO of HSBC is undertaking a review of the operations of NEMA. In a separate report by HSBC the US is seen as replacing the UK as Ireland’s largest trading partner. meanwhile production at Irish manufacturing firms was 11.4% higher in August than a year before, largely driven by pharmaceuticals and agri-business exports. Overseas investors are relieved that Ireland has not experienced the rioting seen in other parts of the UK even though the cuts have been more severe in Ireland.

  20. Posted October 12, 2011 at 11:16 am | Permalink

    Even if it does turn out to be a futile gesture, I applaud the Slovak parliamentarians for doing it; it’s a shame our own lot rubber-stamped throwing another £90m away on propping up something we didn’t ask for or support in the first place, while the Eurocrats complain that we are mean for “only” giving them the price of a hospital. If only someone had the cojones to stand up and ask those voting for this spending what they plan for us to sacrifice to keep the Euro and the Greek government going for another week or two…

  21. Martyn
    Posted October 12, 2011 at 11:22 am | Permalink

    “The government will say No, and will claim credit for resisting such pressures. The truth is the UK is contributing to this foolish policy of bail out through the IMF and directly in the case of the Irish loan”.
    You know that and we know that , so if the Prime Minister claims to have said ‘no’ to the EU bailout, would that not in fact be a terminological inexactitude? Or is it, perhaps, that he considers that we, the common, are too stupid to understand? Why, oh why can our leaders not be truthful? That alone might gain them a smidegeon of their widespread loss of respect amongst voters….

  22. Brian
    Posted October 12, 2011 at 11:43 am | Permalink

    Are not our IMFcontributions loans rather than cash handouts? Can we not borrow cheaply in the markets for this and then lend at a profit? Assuming the loans will be repaid.

  23. Jer
    Posted October 12, 2011 at 12:41 pm | Permalink

    If the FT is to be believed then even the “too small” figure of E440Bn puts Slovakia on the hook for E7.7Bn.

    That’s rather a lot of money, even if I believed that only part of that would be lost, say 25% average on sovereign bonds, it’s still a huge amount for a population of 5.5m to pay.

    I’d be furious if my government tapped me up to bail out foreign governments in that way…….. oh , hang on a minute…

  24. Chris
    Posted October 12, 2011 at 1:44 pm | Permalink

    Interesting article giving one interpretation of what is going on behind closed doors re the Euro negotiations, and which seems to underline how powerless/meaningless Slovakia’s vote is in the larger scheme of things. They will be brought into line, and the bigger plan will be implemented
    I am so concerned by the comments that just a few MPs voted No last night. Why does this not get greater publicity – I feel we really do not know what our politicians are voting for in our name. It is only thanks to Mr Redwood that we find out about this. Again it seems to indicate an arrogance in the political class that these issues are considered “not for the electorate”, and that they should be swept under the carpet. Where is the openness and honesty? Is Mr Eustice’s group all that it is made out to be?

  25. MajorFrustration
    Posted October 12, 2011 at 2:01 pm | Permalink

    Yes its a pain having to contribute via the IMF etc but the EFSF will never prove sufficient for its purpose. Besides this all take the public’s eye off inflation – does the Government care does King care. Why not reduce all MPs and BoE directors salaries and expenses by 5% every month until inflation is back to 2%. Where is the accountability?

  26. javelin
    Posted October 12, 2011 at 2:10 pm | Permalink

    I think some of the comments are a little too joyous.

    The fact is the Eurozone has failed already. Whether the Euro survives or not. It has already failed and will continue to do so.

    It’s not a question of whether damage will be wrought but upon whom it will be wrought. It’s very being is a burden on Europe because the reverse capital flows stop that happened at the start this recession to the periphery will not stop – without international capital controls (i.e. fx). The Euro periphery will forever lurch uncontrollably into a deep recession when a small recession looms.

  27. NickW
    Posted October 12, 2011 at 2:24 pm | Permalink

    A cunning plan;

    Instead of bankrupt countries lending money to each other for partial bail outs, it would significantly curtail contagion if each bankrupt country loaned ITSELF the necessary money to pay off its own debts.

    It would be no worse than current Eurozone policy.

    • NickW
      Posted October 12, 2011 at 2:25 pm | Permalink

      Is that what quantitative easing is?

      • norman
        Posted October 12, 2011 at 3:20 pm | Permalink

        In a nutshell I believe it is. The BoE is dipping it’s fingers into our pension pots, equity, savings, anything that has a nominal £ value, taking a portion of that value to themselves (by way of diluting ours which is done via inflation) and using it to buy up government bonds.

        Taxpayers (the same ones from paragraph one who have their existing shares diluted) then pay interest on this sum to the BoE who no doubt give it to the government to waste.

        Jolly clever these banker chaps, intellectual giants standing on the shoulders of midgets like Mises, Smith, etc.

        Here’s some free investment advice: invest in shares of pitchfork manufacturers.

        • Electro-Kevin
          Posted October 12, 2011 at 10:42 pm | Permalink

          Pensions and savings have proven to be a mug’s game.

          For many people working is too.

  28. Peter van Leeuwen
    Posted October 12, 2011 at 3:03 pm | Permalink

    In the infinitely more reliable Dutch media it was known beforehand that the Slovak opposition was not against the EFSF but wanted to topple the government first. That is the reason that everybody predicts a “yes”-vote before long. (The same scenario could have played out in the Netherlands where the opposition however chose to support the minority government on this). Although outsider opinions still make easy (i.e. English) reading, it should be beneath Mr. Redwood to allow himself this anti-European rhetoric of “vote again”. The reality is that this decision required 34 x “yes” from 17 democracies. Unanimity may not be an ideal mechanism, but democracy would first require unanimity in deciding another voting process (e.g.QMV).

    • NickW
      Posted October 12, 2011 at 10:04 pm | Permalink

      Repeating votes until you get the result you want is not democracy in any shape or form.

      It was my understanding that the Slovak vote was based on principled, intelligent, and coherently expressed objections, and was not primarily party political.

      Is the EU paying your wages?

      Is your media as independent and reliable as you seem to think?

      • Peter van Leeuwen
        Posted October 13, 2011 at 8:44 am | Permalink

        The stance by the small populist party was principled indeed, but the largest opposition party was already known to support the EFSF, withheld its vote and has now obtained early elections, and will now vote in favor of the EFSF. National political considerations rather than the EU caused this double vote.
        I’ve never been employed by any EU institution and no, they still don’t pay my wages (would you put in a good word for me?) Usually, Mr. Redwood’s remarks are far from cheap. I don’t have absolute faith in Dutch media, and think it’s better to read a bit in Dutch, German, British and French media.

      • sjb
        Posted October 13, 2011 at 8:55 pm | Permalink

        Your understanding was wrong, Nick W.

        The ratification did not go through on the first vote because it was linked to a confidence motion in the government. The markets knew there was a strong Slovak parliamentary majority in favour of the measure (as shown by today’s vote) which is why the FTSE did not fall by hundreds of points this morning.
        http://uk.reuters.com/article/2011/10/13/uk-eurozone-idUKTRE79C5Q420111013

    • NickW
      Posted October 12, 2011 at 10:20 pm | Permalink

      This is what Ambrose Evans Pritchard, (The Daily Telegraph) had to say;

      Slovakia’s cry of defiance has not been entirely pointless. Richard Sulik – the speaker of parliament – has caught a mood of popular disgust that goes far beyond his own country.
      His objections are unanswerable. How can there be any justification for a state of affairs where a poor but rule-abiding EMU state must bail out a serial violator with twice the per capita income, and triple the level of the pensions – a country which is in any case irretrievably bankrupt? How can it be that the no-bail clause of the Lisbon treaty has been ripped up?

      Are insults against the critics of a manifestly cruel, ineffective and destructive policy your only answer?

      • APL
        Posted October 13, 2011 at 8:57 am | Permalink

        AEP: “How can it be that the no-bail clause of the Lisbon treaty has been ripped up?”

        Simple, the treaty has been abrogated by its contracting parties. The Lisbon Treaty no longer has legal force. The EU is no longer a legal entity.

        1. It has no economic substance.
        2. Now it has no legal substance.

      • sjb
        Posted October 13, 2011 at 8:56 pm | Permalink

        Is the Telegraph as independent and reliable on EU matters as you seem to think?

  29. NickW
    Posted October 12, 2011 at 6:45 pm | Permalink

    The macro danger is that Governments have become dependent on outside funding in the same way as Northern Rock.

    In the face of a global depression there will be no country with sufficient surplus to buy all that debt that Europe and the USA needs to sell to keep functioning.

    If widespread QE is used to fill the funding gap, we may see the debasement of currencies on a global scale.

    One can perhaps understand Mervyn King’s statements better in that context.

    The Slovak Parliament has done the right thing; it should be a reminder to politicians that always doing what seems easiest, results in always going downhill, as the West has been doing for years.

  30. Bazman
    Posted October 12, 2011 at 6:51 pm | Permalink

    The saving of Liam Fox’s job would be more interesting and topical than saving the Euro, which is nearly worth a quid, and in turn more than Fox’s integrity.
    Anyone care to argue the middle class social security does not exist now? Must be working overtime at the moment. With many of the chaps having to do real work. Well, something closer to work, but nothing physical or involving dirty hands.

  31. stred
    Posted October 12, 2011 at 7:55 pm | Permalink

    This is very encouraging. Tomorrow I will pop down to my bank and write myself a big cheque. Then I will lend my increased balance to my son to pay for his economics degree. Problem solved.

  32. Chris
    Posted October 12, 2011 at 8:33 pm | Permalink

    Interesting article giving one interpretation of what is going on behind closed doors re the Euro negotiations, and which seems to underline how powerless/meaningless Slovakia’s vote is in the larger scheme of things. They will be brought into line, and the bigger plan will be implemented
    I am so concerned by the comments that just a few MPs voted No last night. Why does this not get greater publicity – I feel we really do not know what our politicians are voting for in our name. It is only thanks to Mr Redwood that we find out about this. Again it seems to indicate an arrogance in the political class that these issues are considered “not for the electorate”, and that they should be swept under the carpet. Where is the openness and honesty? Is Mr Eustice’s group all that it is made out to be?

  33. Alex Withey
    Posted October 12, 2011 at 9:00 pm | Permalink

    What most troubles me is the attitude of many commentators, particularly in the financial sector. They claim that the economic costs of a Euro breakup and attendant risks of social disorder and war are greater than the costs and risks of permanently ending national parliamentary democracy in order to preserve the Euro.

    Even normally thoroughly sensible people like Larry Hathaway and Paul Donovan at UBS have succumbed to this deeply flawed analysis. Many Americans are also quick to advocate an autocratic European superstate to ensure the financial trains run on time, imagining all Europe’s nation states to be analagous to their own successful federation.

    We are thus encouraged to entertain the hope that a political union will be possible, will succeed and will be stable, despite all of the recent adverse evidence of inter-EU national discord and growing popular discontent. Very little weight is attached to the costs and risks of maintaining an undemocratic fiscal union in perpetuity.

    This is like insisting that we must end democracy in order to preserve our wealth and freedom – an absurd conclusion and a giant leap along the road to serfdom.

    • forthurst
      Posted October 12, 2011 at 10:27 pm | Permalink

      “Many Americans are also quick to advocate an autocratic European superstate to ensure the financial trains run on time, imagining all Europe’s nation states to be analagous to their own successful federation.”

      As the USA manifestly has ceased to operate within the constraints of its own Constitution, it can no longer be determined successful in political terms. For a positive assessment of its economic success it would be necessary to explain away the OWS campaign of the 99%.

    • Richard
      Posted October 12, 2011 at 11:20 pm | Permalink

      Brilliant and well said

  34. Denis Cooper
    Posted October 12, 2011 at 9:43 pm | Permalink

    I take it that JR is referring to the section on “European Union documents” starting in Column 301 here:

    http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm111011/debtext/111011-0004.htm#1110129000005

    Quite a long motion covering approvals (?) for Portugal and Ireland, and ending with this nonsense:

    “… welcomes the Government’s success in securing agreement that the European Financial Stabilisation Mechanism will cease to exist once the permanent, Euro area-only, European Stability Mechanism becomes operational in July 2013; and that Article 122(2) of the Treaty on the Functioning of the EU, the basis for the emergency arrangements, will no longer be needed for such purposes.”

    Anyone reading that might think that the UK government had something of a stiff fight to extract those agreements from other EU member states when it has been the openly stated intention for over a year that the ESM would replace both the EFSM and the EFSF, except of course that bonds already issued would have to be honoured through to maturity, and as for Article 122(2) it’s only a political promise that it won’t be abused again and it still remains on qualified majority voting rather being returned to unanimous decision making.

    Here’s a useful 8 page paper written by a Professor of European Law in June:

    http://www.eui.eu/Projects/EUDO-Institutions/Documents/SIEPS20116epa.pdf

    which explains clearly and accurately what had been done and why and how, from May 2010 up to the radical EU treaty change agreed on March 25th through European Council Decision 2011/199/EU:

    http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:091:0001:0002:EN:PDF

    and projecting forward to the intra-eurozone ESM treaty signed on July 11th:

    http://www.consilium.europa.eu/media/1216793/esm%20treaty%20en.pdf

    which relies on that EU treaty amendment to supply its legal base in the EU treaties:

    Notably, on page 6:

    “So, it is above all the controversial legal basis of the (comparatively small) EU law pillar of the financial stability regime created in May 2010 which prompted the member states, later in that same year, to envisage a treaty amendment for creating a permanent crisis mechanism that would replace the exceptional and legally uncertain EFSM and EFSF.

    Indeed, a treaty amendment could seem to solve both legal problems mentioned above. By inserting an explicit provision in the TFEU which authorizes the euro area member states to put in place a financial support mechanism for countries in budgetary and financial trouble, the effect of the bail-out prohibition of Article 125 TFEU would be neutralized by a complementary norm with the same treaty rank. At the same time, the intergovernmental nature of the future mechanism means that the legally ‘risky’ EU Regulation can be discontinued after 2013 … In addition, the choice for the intergovernmental route had the interesting consequence that the simplified revision procedure of Article 48 (6) could be chosen …”

    And yet this EU treaty amendment through which that crucial bail-out clause would be “neutralized” is being treated as a minor, almost technical, but also virtually unmentionable, treaty change which can be conceded to the eurozone states without the UK goverment expecting any significant quid pro quo.

    • APL
      Posted October 13, 2011 at 2:47 pm | Permalink

      Denis Cooper: “treaty change which can be conceded to the eurozone states without the UK goverment expecting any significant quid pro quo.”

      Yes. And Cameron doesn’t think this is a thing that ‘we the people’ should get a vote on.

  35. Posted October 12, 2011 at 9:57 pm | Permalink

    And all the while we have increasingly restless populations as the stagnation worsens.

    I think, Mr Redwood, you may think about our own situation, especially youth unemployment.

    Consider these problems:

    1. We are pricing youngsters our of a job by insisting they are paid the minimum wage

    2. We have many unskilled youngsters

    3. For those who are skilled, the supply of their skills does not match demand. Many are therefore (temporarily?) unskilled

    Why don’t we get this country manufacturing again by calling on this enormous resource who are at present being left to watch daytime tv or standing on street corners being paid less than the minimum wage (the dole)?

    I urge you to suggest this course of action as a positive move forward in order to kill several birds with one stone.

    • Posted October 12, 2011 at 9:58 pm | Permalink

      I am suggesting (as I did not make it clear) that we abandon the minimum wage for younger people (I suggest those under the age of 26)

      • Electro-Kevin
        Posted October 13, 2011 at 2:34 pm | Permalink

        We already have abandoned the minimum wage for young people. It’s called internship.

        If you want to abandon minimum wage then there has to be some quid pro quo – say a deflation of the housing and rental market and a restructuring of the utility providers who rip us off unashamedly. There is no real need for any of these costs to be as high as they are.

        Next time we do privatisations can we do them right and be a bit more careful about the deals the consumers get ? And also factor in the increased taxes owing to unemployment that always seems to follow ?

        • Electro-Kevin
          Posted October 13, 2011 at 2:36 pm | Permalink

          Kenneth – Do you honestly begrudge anyone £5.60 per hour these days ?

      • Bazman
        Posted October 13, 2011 at 7:18 pm | Permalink

        Any employer paying less than minimum wage has priced themselves out of a job. Why do people under the age of 26 deserve less than minimum wage. Do they somehow have lower living costs than anyone above this age? This would create a pool of cheap labour and anyone over 26 would be getting the sack for being to expensive. Many employers want skilled labour for the price of unskilled and always have done. Is what you mean by their skills not matching demand? They can ram it as I am sure you agree?

        • Electro-Kevin
          Posted October 14, 2011 at 9:51 am | Permalink

          Further to that, Bazman.

          The hard working immigrants coming here for jobs aren’t being paid minimum wage (it would be illegal if they were) so it’s not a case of the hourly rate being wrong.

          There appears to be a reluctance for employees to train school and college leavers.

          There is a paucity of apprenticeships and too many people are going into higher education for which they are unsuited. One suspects that Labour (and now the Coalition) allow this length of ‘education’ into the average person’s twenties to hide the true levels of unemployment. Not only this but we now end up with young people endebted to the Government, possibly into middle-age, for over priced qualifications useless to the student and the country.

          What a swiz.

          Apprenticeships are as rare as rocking horse s*** and leading companies (an airline close to me) rely on trainees working for free and funded by their parents. A friend’s son has not taken a wage for four years despite him having been highly productive for two years. Owing to his employment status he is not entitled to Govt support (according to what I’ve been told by the father) so bank of Mum and Dad it is.

          I am terrrified for my own boys. Both well spoken, well read, bright enough to get into selective school and consistently doing well in SATs.

          I don’t think there’s any hope of them finding a serious career though I keep these thoughts to myself for fear of influencing them negatively. They have expressed concerns about job and education prospects themselves. The news has been filtering down through the school from the years ahead of them.

          • Electro-Kevin
            Posted October 14, 2011 at 10:09 am | Permalink

            It seems to me that the country is in paralysis.

            I felt for Michael Lansley on QT last night (NHS). I knew what he was thinking.

            He couldn’t even begin to explain. He was going to have to try to change whole ideologies in the 30 second pitch that David Dimbleby was to allow him. You can’t change an ideology in a million years.

            He could try starting with “There is no money.” but then there’s:

            “Well deal with tax avoidance and bankers before attacking our public services !”

            How can you argue with that without coming to blows or causing riots ?

            What a mess.

            What a bloody mess.

          • Bazman
            Posted October 14, 2011 at 6:57 pm | Permalink

            Apprenticeships were a supply of cheap labour for employers. The deal being that you as an apprentice had few rights, low wages and no guarantee of a job at the end. In return you where taught skills and a trade, but this was not enough for many companies who did not even want to pay for this and so resorted to poaching from other companies. Not necessarily a bad thing, always went on anyway, and many returned. Skills and inter-company knowledge was exchanged.
            They then decided this was thee only way they would obtain skilled people creating a skill shortage. This was then used to obtain cheaper less skilled labour, bringing us to the position we are in today.
            It is not a skill shortage. If you offered £60 an hour and needed a hundred tradesman, you would have to many tradesmen. Proving it is a shortage of money. Ram it.

      • Bazman
        Posted October 14, 2011 at 6:43 pm | Permalink

        So where is your reply to these comments Ken? I have read your silly right wing anti BBC site and it tells a lot. The anonymity of it is also telling. Many like you come on this site to spout your idiot right wing views which when scrutinised are as just as silly as any extreme left wing views, so silly in fact that you cannot even defend them and anyone who disagrees with you is just a fool.

  36. sjb
    Posted October 13, 2011 at 9:21 pm | Permalink

    JR wrote: “The news that The Slovakian Parliament has vetoed the bail out plan for the Euro has so far been taken quite well by the markets. They know how EU democracy works. If the EU authorities do not get the answer they want from a vote, they expect the vote to be taken again and again until the answer is Yes.”

    I am surprised you did not seem to know that the first vote to ratify boosting the EFSF failed because it was linked to a confidence motion in the Slovak govt. Today, the same parliament voted overwhelmingly in favour of ratification (114 out of the 147 ‘MPs’).
    Source: http://www.thedaily.sk/2011/10/13/top-news/slovakia-approves-efsf-but-at-a-price/

    Reply: Yes, I did know the PM made it a confidence issue, but it was still a vote about the bail out.

    • sjb
      Posted October 14, 2011 at 9:19 pm | Permalink

      Well, the ‘Maastricht rebels’ supported a confidence motion linked to approval of HMG’s policy on the Social Chapter – but I doubt Bill Cash et al supported the measure, particularly as the day before (22 July 1993) they had joined the Labour opposition in defeating the (Conservative) government on the matter.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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