Well done the G20

 

Sometimes it is best to do nothing. It was good we were spared the high flown rhetoric that they saved the Euro and the world. It was even better than no new money was committed to bail outs. The IMF subs were not quantified and remain to be worked out next year.. The US President let it be known that Euroland is rich enough to pay its own bills. The one positive change was the Chinese promise to move their currency closer to a market rate.  If they wish to save the Euro they need to balance budgets and export more. Shuffling more IOUs round is not going to solve it.

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20 Comments

  1. zorro
    Posted November 4, 2011 at 9:51 pm | Permalink

    The only way that the Eurozone area will be ‘rich enough’ is by printing more Euros……Of course, the US would be happy with that as it would take some more pressure off the dollar and their own QE remedy…

    If the ‘Euromantics’ want their EU and Euro to survive, they are going to have to print and join the inflationary mega-trend along with the US and UK and sit it out….

    The French banks are seriously on the hook for Greece, and they do not want Greece to properly default. Sarkozy had the look of a worried man.

    The best thing would be for the Greeks to default and bring back the Drachma. It will take a few years but they have some natural advantages both geographically and physically…..Other countries have done it in recent times, Russia, Argentina etc

    zorro

  2. lifelogic
    Posted November 4, 2011 at 10:00 pm | Permalink

    “If they wish to save the Euro they need to balance budgets and export more. Shuffling more IOUs round is not going to solve it.”

    Indeed and to do that we need a state sector that is a quarter not half of the economy, cheap energy, far less but good regulation, half the state sector and out of most or all of the EU nonsense of CAP and the rest.

    I see that the government owned RBS/Natwest has made £2B in the last quarter I suspect, from my experience of their general strategy and “helpfulness” they have, in the process of extracting these profits reduced the profits of their good customers and now probably ex-customers by perhaps 10 times this sum. Also I think destroyed thousands of jobs and delayed of cancelled thousands of sound investments in the process. So once again the government has, overall, scored an own goal, damaged its tax revenues, increased its benefits bill and damaged productive industry and growth for the future years in the process.

  3. matthu
    Posted November 4, 2011 at 10:17 pm | Permalink

    Douglas Carswell put it very succinctly:

    If your family found that it had an extra £500, would you;
    a) save it
    b) spend it on something for the kids
    c) use it to pay off debt, or
    d) give it to George Osborne to give to Christine Lagarde to give to a Eurozone basket case, in order to put them deeper into debt?

    • Denis Cooper
      Posted November 5, 2011 at 11:28 am | Permalink

      Seems to me that it’s gone full circle, in a semantic – synecdochic? – kind of way:

      There was a basket of currencies called the ecu, which became the single currency called the euro, which single currency is now a basket case in its own right.

      Sorry about that … 🙂

    • lifelogic
      Posted November 5, 2011 at 2:02 pm | Permalink

      And the £500 per family is, I understand, just what Osbourne has already lost on Greece alone. Still it is not his money just taxpayers they will just have to be cold this winter or something.

  4. Steven Whitfield
    Posted November 4, 2011 at 10:23 pm | Permalink

    Indeed less is so often more. Perhaps Mr Redwood could drag David Cameron away from the television cameras for long enough to remind him that Britain didn’t join the Euro.

    This man gets more like Anthony Blair by the day – I just hope he doesn’t decide to preen himself on the world stage supporting another conflict with Iran …then we really are in trouble.

    If Dave Cameron backs pumping more money into the IMF it’s almost certain it’s the wrong thing to do.

    • Single Acts
      Posted November 5, 2011 at 9:30 am | Permalink

      I fear the Iran conflict is coming with or without Mr Cameron, albeit I expect him to be a willing cheerleader. Do you ever wonder how much blood is enough for these people?

      • Steven Whitfield
        Posted November 7, 2011 at 10:23 pm | Permalink

        I’m sure that the heir to Blair, in his infinite wisdom will examine our shattered finances and threadbare armed forces and decide we should indeed start another pointless war.

  5. Kenneth
    Posted November 4, 2011 at 10:31 pm | Permalink

    The last time there was an attempt to force a union of several European countries and suspend democracy was in the 1940’s.

    I have never accepted the analysis of Edward Heath and other well meaning but misguided politicians that forcing European countries nearer to each other was the way to achieve a peaceful Europe.

    There is unrest in Greece, Spain and Portugal (to name a few) and, if anything, states are pulling further apart.

    Many UK politicians are calling for a more united Eurozone as this is seen as the lesser of two evils (the other evil being the demise of the Euro). I don’t agree and I am not sure if the politicians making these calls really agree with their own rhetoric anyway.

    As painful as it will be, surely the boil should be lanced sooner rather than later.

    I think that to encourage more integration of Euroland is cruel as we are encouraging an even greater explosion when it does eventually happen.

  6. Robert Christopher
    Posted November 4, 2011 at 11:10 pm | Permalink

    What is the point of this one half of a step forward, when it is ten steps back with this:

    Britain suing Europe to stop ‘benefit tourism’
    The Government is to take the historic step of suing the European Commission to stem the growing tide of “benefit tourism”.

    Ministers have discovered that the EU is currently seeking to negotiate deals with Ukraine and north African countries that could result in millions of people being given the right to claim state pensions and benefits in this country.

    http://www.telegraph.co.uk/news/worldnews/europe/eu/8871395/Britain-suing-Europe-to-stop-benefit-tourism.html

    Did the government know about this before the recent EU vote?

    And why sue when all we need to do is leave the EU?

  7. Bernard Otway
    Posted November 5, 2011 at 12:49 am | Permalink

    I am not surprised Obama did what he did,Fox news gave 15 minutes to an interview with
    Nigel Farage this week,the Tea party HAD to have watched it ,and right now are preparing
    their attack politically on the IMF,SO they have been partially headed off at the pass by
    events SO FAR,BUT make no mistake the IMF despite having the ex French Finance Minister at it’s head,and looked like it had been captured by Euro fifth columnists,is still based in Washington and has a remit that is saving NATIONS NOT ZONES and will not risk trouble
    otherwise ALL HELL WILL BREAK OUT.Why are politicians SO NAIVE especially the Euro fanatics,WHEN will they ever learn that while they are imitating Marie Antoinette with their one size fits all let them eat cake ideas,the people are WIDE AWAKE and events will see these staring down at the political TUMBRILLS. Mark my Words

  8. Martin
    Posted November 5, 2011 at 8:45 am | Permalink

    I agree – in this case do nothing keeps the pressure on the indebted to sort themselves out. Keeping the currency printing presses away from inflationary work is another good idea.

  9. Brian Tomkinson
    Posted November 5, 2011 at 9:09 am | Permalink

    As in all such meetings it’s not what we have been told that matters but what we have not been told. In our case we have a Prime Minister who is pretending that we are going to “find” money for the IMF but that will not go to help the Euro zone. Who does he think he is kidding? Are you going to let him get away with this duplicity?

  10. Electro-Kevin
    Posted November 5, 2011 at 9:46 am | Permalink

    Insidious Monetary Fund ?

    I take it all back.

    That it shouldn’t be used to bail out the Eurozone is perfectly sensible.

  11. Barbara
    Posted November 5, 2011 at 10:41 am | Permalink

    “Why not leave it alone?”
    (My favourite quote from Lord Melbourne).

  12. Bernard Otway
    Posted November 5, 2011 at 11:05 am | Permalink

    I urge you all to watch Andrew Neil last night with Portillo,Louise Cooper [an economist]
    and [GET THIS] Alistair Campbell, listen to Eurozone scepticism IN ALL IT’s GLORY,
    actually ALLOWED by the Bolshevik bc,ALL THREE guests saying what 90% of posters on here and of course our esteemed JR do,look also in the media SAINT VINCE is pitied and derided in EQUAL measure,with people like these around him I pity DC [except I don’t as I am in complete contempt of him he has lost me 1,000,000 %,others of his coterie are losing me and thousands of others by CONTAGION”

  13. James Lipp
    Posted November 5, 2011 at 11:07 am | Permalink

    The worlds banking system is based on IOUs, western economy is based on debt. Every time a bank issues money they are giving an IOU.

  14. Mark
    Posted November 5, 2011 at 5:59 pm | Permalink

    This article provides some background data that indicate the likely effects of revaluation by China:

    http://www.bloomberg.com/news/2011-10-13/china-trade-surplus-drops-to-lowest-in-four-months-as-export-growth-slows.html

    Their trade surplus is already slowing somewhat – down to a forecast $170bn this year (or about 4 months worth of US trade deficit) from $295bn in 2008. The main effect is that the value of their holdings of foreign debt (?$3 trillion+) will decline in yuan terms.

  15. Conrad Jones (Cheam)
    Posted November 6, 2011 at 6:10 pm | Permalink

    Hello Mr Redwood,

    ” … Chinese promise to move their currency closer to a market rate”

    Based on what happened during the Aisa Crisis of 1998 involving Countries who had allowed their currencies to float, would it be wise for China to allow their currency to be open for attack by the currency speculators? George Soros did not have any hesitation in costing the British Tax payer billions of pounds during the EMU debacle in the early 90’s – and he’s an American – our allie. So someone like him would have no hesitation in helping destroy the value of the Yuan if it was allowed to float in the choppy waters of international foreign exchange markets.

    It would be like tying a Lamb to a tree in the Longleat Safari Park Lion Enclosure.

  16. Conrad Jones (Cheam)
    Posted November 6, 2011 at 6:14 pm | Permalink

    Just to clarify,

    Goerge Soros was born in Hungary, but he has American Citizenship.

  • 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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