Yesterday’s casual approach to the Italian debt markets by the Euro area does not breed confidence in the currency. It is true the European Central Bank intervened to buy some Italian bonds. It did not do so on a scale sufficient to get the yields down to acceptable levels.
Leaking rumours that France and Germany are now ready to slim the Eurozone down, and press ahead to fiscal union with a smaller group of countries will merely fuel the bears and help exacerbate the crisis. As one who has consistently preferred splitting up the Euro zone and doing it quickly as the best solution, I just wish they would get on with it. How many more jobs and busiesses do they wish to see destroyed first, before they bow to the inevitable? It is interesting to see the President of the Commission battling to hold the Euro and ever closer integration together under the EU, whilst France and Germany are musing about creating a new club for a few.
There has to be a plan on how to fight the battle of Italy, if they are serious about keeping their currency and getting it to work. Are they going to get the IMF to advance the large amounts of money Italy will need to pay for her running deficit and refinance her expiring debts? Are they hoping that Germany will relent, and allow the ECB to buy up so many Italian bonds, that the Italian state can still borrow at affordable rates? Are they about to announce major quantitative easing, overcoming all the German fears of inflation and unorthodox monetary actions? How are they going to prevent the bank market freezing up, on fears of more losses on sovereign bonds?
It is all very well for them to encourage changes of government, and hope that people more enthusiastic about complying with the Euro scheme will arrive in power in each problem country. They are still left with the difficulty that their plan may not work. Just cutting spending and trying to squeeze down deficits that way may not succeed. If the banks are broken and cannot increase their lending, and if the southern member states remain uncompetitive with no ability to devalue, the austerity medicine may not cure the patient.
IMF packages normally entail monetary medicine and devaluation as well as spending cuts. The Euro area is trying to do it without important parts of the cure. Why do they think it is going to work?
Meanwhile, new governments have to follow the old remedies. Their task of gaining and keeping consent for these policies is going to prove difficult.
November 10, 2011
When the EMU was first mentioned, Pohl (Governor of the German Bank) was totally against it. He was only persuaded to allow a single currency if the Bank kept right out of State politics. What he wanted was a safe D Mark based on a safe Bank. We have a big thing about the Somme and the Germans have a big thing about Weimar and inflation.
So I think that the Germans are not going to go back on Herr Pohl’s insistence on a firm single currency.
And the Italians and Greeks are not going to become German – except perhaps the Milanese and the Northern League. How would we like to be pushed around by the Dutch and Germans? Look at the capital that Ed Balls has made out of the “cuts”.
The politicians, with their consensus of engrenage and the acquis communautaire and no turning back are not going to be able to handle this one. And already (Newsnight yesterday) the markets have been spooked, as you say they have,.
November 10, 2011
I see this unfolding as any desperate debtor determined to hold onto their home.
Next month when the rent is due
* the Christmas money will be spent
* mothers housekeeping will be spent
The next month when the rent is due
* Little Timmys piggy bank will be broken open
* Pennies will be plucked from Grandmas eyes
The next month when payment can’t be made
* leniency will be pleaded
* the lawyers brought in.
Countries will default inside the Euro as they can’t leave. Every Euro Governments borrowing cost will rise as sovereign debt is repriced to reflect the reality of the risk. The Basel2/3 nonsense of zero risk capital will be utterly discredited.
Delaying the inevitable will make the leaders and their ideas increasingly threadbare. Like Thatchers Thatcherism or Blairs Blairism the idea of the EZ will be discredited along with the EZ leaders in each country.
Voters will vote to dismantle the Euro after the painful defaults.
November 10, 2011
Voters have ALWAYS voted against the EU and the Euro, even when times were good, with the exception of Ireland, second time round. The governments of Europe know this very well, which is why they will never allow a referendum, we have to earn one by voting for someone who is not Tory, Labour or LibDem.
Reply: Not in the UK – they always vote for it, as they did in 1975 in the referendum in all subsequent General Elections.
November 11, 2011
John,
The public did in 1975 but what they voted for was completely different to what the politicians have allowed it to become. The public do not always vote for it as you say. Most people do not even know whether their MP is Europhile or Eurosceptic, most MPs for their own reasons do not campaign on the issue or let their voters know what their position is. Why doesn’t Parliament make the castings of vote more accessible and make MP seeking election publish their ten most important issues that they will campaign and vote for in parliament either for or against their own party wishes.
Reply: Some of us do set out clearly our views on these matters and stick to them. It’s the electors’ job to pin politicians down in an election campaign before voting for them.
November 11, 2011
Rubbish, it is for MPs to make their case in a clear transparent way. Deceit, sophistry, flannel, and lies are the name of the game. Westminster is so riddled with corruption some find it difficult to understand what they have done wrong! Even when the main parties make “pledges” they do not keep to them. Who could believe them without tangible evidence??
You might recall we had an unusual charge and conviction for misrepresentation MP convicted for this,(guesses who-ed). This process needs to be made easier so that MPs are held to what they say and promise/pledge. A lot more MPs should have been charged and convicted.
November 11, 2011
JR: “Not in the UK â they always vote for it, as they did in 1975 in the referendum in all subsequent General Elections.”
1. I didn’t get to vote on the EU in ’75. As a result I have lived under quisling governments all my life.
2. The EU is never a major point of contention in the UK general elections. It actions that impact our lives are always seen through the prism of the organ it acts through in the UK.
DEFRA and the negligent mishandling of the F&M outbreaks is a case in point. But UK government and politicians are careful never to allow the buck to pass from the UK ministry to the EU policy.
It is a deliberate policy of insulating the EU from the impact of its directives on our (UK population) lives. It also allows the Marxists in the UK government to institute continuous change as there is always a crisis to react to, reform of this department or that aspect of what was formerly traditional British way of doing a thing to implement.
In short the whole thing is cultural revolution and cultural cleansing.
November 11, 2011
Just thought I’d add. When the IMF dishes out it’s medicine it must tell each country how deep the cuts will need to be. This will be the moment of shock. Prime ministers and Presidents will have to choose between 25-35%+ cuts immediately and exiting the Euro. If they stay in then voters choose.
November 10, 2011
The euro can’t be saved. It’s over imo.
France is in far worse shape than Italy.
Everything that has been done up until now has added more debt and made the problem worse. Everything they have planned will add more debt. They are bailing water into the boat.
It’s over. Thank goodness.
November 10, 2011
Perhaps Lord Lamont could advise Sarkozy and Merkel on how best to make a:
âToday has been an extremely turbulent and difficult day. Entirely caused by the insanity of the EU and their damaging drive for a centrally controlled, bureaucratic and undemocratic Europe.”
All cheered over the cliff by Major (a second time), Brown, Blair, Cameron, Clegg, the BBC, Shirley Williams, Ken Clark, Heseltine ………..
November 10, 2011
It’s all fun and games until someone loses an eye.
If only the Germany dominated Eurozone countries could be persuaded to pass an act that would enable them with extraordinary powers in this time of crisis so that decisions could be made with no recourse to elections or national Parliaments then all the problems would be solved.
Then they could at least forego the pretence that what is happening at the moment is still within the bounds of democracy and just brazenly replace obdurate politicians with their chosen ‘technocrats’.
It would only be a temporary measure, naturally, but desperate times call for desperate measures.
Maybe Chris Huhne would like to back up his boast in cabinet last week that if he was dictator of Europe the Euro would be a runaway success and apply to Angela Merkel for the position? They’ve tried everything else, he can’t do any worse (and that’s a first for him).
November 10, 2011
Huhne is deluded. Merkel would not allow him within 100 miles of the country. No sensible person would, accept Clegg.
November 10, 2011
Nor within a hundred miles of engineering sensible energy solutions.
November 10, 2011
High speed, yes, but probably too many penalty points.
November 10, 2011
It seems they are frozen, like a rabbit caught in the headlights of a car. They need either to bail Italy out or give up. Needless to say they all want someone else to do the bailing out but no one understandably is volunteering – other than Cameron, it seems, but ÂŁ40 Billion will not go very far.
The are crossing their fingers and hoping something turns up by magic it won’t. The Germans have to pay or give up and even paying will only defer the problem.
November 10, 2011
“Meanwhile, new governments have to follow the old remedies. Their task of gaining and keeping consent for these policies is going to prove difficult. ”
—————–
They haven’t bothered to gain consent for these policies. They have been imposed by unaccountable ‘foreigners’ – who have either not been elected by the national electorate affected, or who have not been elected by anyone.
This is a form of dictatorship – although carried out by representatives of a supra-national organisation that has failed to gain support for its continued development in a series of national Referenda, but has ignored the results and carried on regardless.
Our own Government, which refuses to permit a Referendum through fear of the result, is now prepared to borrow and contribute up to ÂŁ40billion without bothering to consult our Parliament, let alone the people.
Yet as Cameron admitted, the IMF is not there to support supra-national currencies. It is there to support individual nations whose economies have got into difficulties. In return it imposes a package of measures to stabilise and prevent recurrence. None of the Eurozone countries can make those changes: membership of the Euro prevents it.
Where is the people’s consent in any of this?
November 10, 2011
At the moment the nearest thing to the people`s consent is the reluctance (refusal?) of Angela Merkel to bail out Greece et al because of the commendable belief of the German people in the virtues of sound money – reinforced by their constitutional court.
November 10, 2011
I really think Germany has lost patience with the PIIGS and is preparing to create a nucleus of solvent Euro states. I think the recent comments about Greece being forced out of th EU and various other comments by The Germans are just to soften up the world at large.
It’s funny that everything revolves around what the Germans want and we still have Clogg talking down the Britist Eurosceptics.
When are the fanatics going to say sorry they are wrong and the public generally are correct. Not in my lifetime I fear.
November 10, 2011
When are the fanatics going to say sorry? Fanatics don’t, they have tunnel vision, everything in their view can be sacrificed to the cause, Europe’s economy? the Worlds? they will do it. The revelation in this is that the Euphiles, weren’t ‘philes’, they were fanatics.
The EU fanatics are just like the Socialists and Communists, when confronted with the failure of their system they don’t have the good grace to admit it and go crawl under a rock in shame, they instead claim the failure was due to their project not being tried in its purest form, and make it an argument for more Socialism, Communism, more EU, that is why EUsceptics shouldn’t rest on their laurels, they shouldn’t believe that the EU beast is terminally wounded, they should go out of their way to kill it, and even if you think it is killed, don’t rest even when the beast has its head hacked off and a stake driven through its heart.
As for Germany, remember Germany sank Major’s attempts to remain in the ERM (thank god ). Germany for all its supposed WWII guilt trip has a very strong sense of its own interests and won’t hesitate to sink the Euro when the cost exceeds the benefits to their exporters.
November 10, 2011
Very good point. Double tap them.
November 10, 2011
I understand that Clegg’s mother is German and this perhaps accounts for his unsavory attitude towards the culture of the UK. The Europhile politicians are not going to say sorry, they are going to continue with their dream. Huhne states that wind farms are here to stay despite the economic lunacy of his energy policy, and the Government keeps on saying the economy is their number one priority despite a host of evidence that contradicts the claim including the energy policy- deranged people have a fixation that is impossible to change.
November 10, 2011
It is a well known fact that liberal metropolitan Notting Hill living privately educated and enormously wealthy career politicians know better than us, that’s the long and short of it. There’s no reasoning with them.
November 10, 2011
It is a blessing, I suppose , that socialists generally don’t understand compounding of debt. If they did they would not be socialists. Their schemes cannot work, so the system comes crashing down. Problem is the misery it causes.
There is no way to extinguish debt when even the cash is debt. When there is growth, it is fueled by debt. When bailouts are attempted, more debt. This system is fatally flawed. It cannot work.
And it is not just the euro.
November 10, 2011
Germany and France created a change in government in Greece and Italy and will not allow the countries to have an election as it would turn out to be the same as a referendum on the EU. Hence they want and got interim governments- unelected EU dictatorship. People need to start to wake up about the fanatical Europhiles here and abroad. Wipe the Lib Dems off the political map, oust all and every Europhile MP.
November 10, 2011
Now they are talking about a two tier eu, a core with peripherals. What core ? France has huge public debt, much worse than Italy. So who is the core ? Probably Germany alone. Possibly the Netherlands.
November 10, 2011
The logical answer is for the Eurozone to disband with the largest and strongest economies pulling out first, not the smallest and weakest. Germany could, in theory, withdraw and return quite happily to the deutschmark, leaving a weaker and devalued euro to be used by the rest of the zone. France could follow, then Benelux and so on, until a rump currency of the distressed economies was left. The progressive devaluation of this rump euro would help in correcting the economic imbalances that at the moment are a big part of the problem.
The interesting thing is the intransigence of the eurocrats and their confusion of their own role and the future prosperity of Europe. According to Jose Mauel Barroso in the Guardian today: “We are in a defining moment where we either unite or face irrelevance.” He is right, if unintentionally. When he says “we,” he is referring to Europe – in fact, is the eurocrats that are facing irrelevance. With them, Europe has been brought to the edge of nemesis; without them, Europe has more than a fighthing chance of restoring prosperity.
November 10, 2011
I agree that this would be a reasonably tidy way of the Euro dismantlement, but common-sense would be needed by the Germans in particular and that seems to be in short order.
November 10, 2011
Germany wants to be in charge of Europe. This is an ambition that has lasted for over one hundred years. The wider German population does not want this, but they, like every other national population, are irrelevant. If Germany leaves, she loses control of other European countries, her goods will become expensive and her economy will drastically fall. No this will not be an option.
Good old Greece is still buying 6 submarines from Germany that it cannot afford and cannot justify having, and yet countries are expected to bail Greece out with taxpayers’ money- I object to my taxes being wasted in this way!!! Why don’t we miss out the middle country and give the money to Germany!!!
November 10, 2011
Indeed Germany needs to leave perhaps just with Austria, Luxembourg and the Netherlands.
The rest will split up later.
November 10, 2011
You think Holland will exit with the Germans?
Luxembourg will want it’s independence.
It will be Austria and Germany, like lovers reunited in death.
November 10, 2011
Alas Mr Redwood the European elites do not know what to do. Their thinking all along has been that the great project, the Euro-Soviet, would deliver the fantasy of Altiero Spinelli and others. IF any of these so called leaders had followed events when the Soviet Union collapsed under the weight of its own inefficiencies they might have been more cautious. Unfortunately egged on by their own desires they thought they could change that paradigm called reality. Now we must all endure the consequences of this folly.
November 10, 2011
The Frankenstein monster the EU created called the Euro is now in its death throes whilst its inventors watch on horror struck and in disbelief that their self-opinionated brilliance has not worked as they planned. Still unable to concede that they are failures they try anything but putting down their monster whatever is the cost to others. To misquote Churchill: ‘Never in the field of political and economic intrigue was so much owed by so few to so many’. I suppose it is too much to hope that one day they will be punished personally for their malfeasance.
November 10, 2011
the austerity medicine may not cure the patient Indeed, like medieval medicine, if it kills the patient that would just prove how wrong the patient was to begin with.
The unthinking media commentators harp on about some magical Rubicon of 7%, but each case is different, and despite Italy’s undoubted structural weaknesses its public finances are healthier than often supposed. Government revenue exceeds expenditure excluding interest payments. If it left the Euro and devalued under IMF tutelage it would cope.
November 10, 2011
Maybe not. Over on Zero Hedge I read that it was rumoured that Italy has used swaps to hide there deficits/debts (Goldman?). I do not understand the mechanism by which these swaps work.
How do you know what are on Italian books? Govts can put lots of things off balance sheet etc. with their own legislature.
November 10, 2011
There is no intention of giving any control to the electorate. Look at all the politicians who said we can’t have a referenda because the electorate is ignorant.
So with no control, there is no responsibility. Greece and Italy show this, and its the way the UK is going.
If politicians thieve and lie, as they have all over Europe, then as a citizen with no control you have no responsibility. The consequences are that it is moral to opt out. Move to the black economy and pay cash. After all, why should people be forced to give money to fraudsters? Why should people bail out ponzis?
November 10, 2011
I am get the strong feeling that what is happening in the EZ and the Globalisation has a strategic parallels with the failing of globalisation at the start of the 20th century. Similarly I see parallels in the future with the falling apart of the gold standard (originally for WWI) parallelling what will happen with the EZ.
What I see happening in the EZ are tremors before the quake. Noting that the quake isnt the damage itself, but the damage is a consequence of the quake. There will be a moment of real crisis that will develop in the EZ. But I think the social and political changes that will follow will be the most significant – much like the nationailsation and war followed the end of the 19th century period of globalisation. I’ll also add that the EU has created a paradox – the harder it tried to intergate for peace the more likely nationalism and war appears to be.
November 10, 2011
As Mike says, it’s no good anyone trying to govern southern Europe as if it were northern Europe – whether they’re domestic politicians or foreigners.
Greece & Italy are holding their breaths at the moment – wait till they get interim governments and the “reforms” start to bite. The streets will be lively. And neither country is likely to elect a government with a clear majority.
If there were no euro, the EU would probably be moving serenely on.
Meanwhile, we have the light amusement of watching the irrelevance of the Brussels officialdom exposed ever more sharply when it comes to the big issues.
November 10, 2011
There’s a limit to how far the EU could develop towards a single state without the Euro. You have to remember that the sole reason for the EU is the elimination of the nation states and sidelining of democratic checks which were seen as the cause of catastrophic wars. A trading bloc, or a democracy like the USA or an alliance of nation states is not in its DNA.
It was all about rule by a civil service and this business about elections and national identities being a surface froth which could be ignored while they got on with doing things properly. I’d say that things in the UK are a miniature version of that.
Had the EU and particularly the Euro been limited to a handful of states, Germany, Holland, Luxembourg, Austria an exclusive club with the strictest requirements for entry, monitoring and the means of ejection, it would have been sounder, but that wouldn’t have been politically acceptable for a number of reasons.
November 10, 2011
Reading through these comments the Euro Leaders are being described in the same terms as Generals in the First World War. “Rabbits caught in the headlights”, “confusion of their own role”, “Europe has been brought to the edge of nemesis”, “When are the fanatics going to say sorry ” …
I’ts very easy just to focus on the financial arguments and ignore the people in this situation. Europe is a people/leadership problem. The longer this crisis goes on I think the deeper the language and feelings against the European leadership will be driven. There will be a deep mistrust of the EU political elite that I think is now getting to the point where the whole “project” will fail. Ultimately its going to boil down to collective trust in an idea and the people that support it. The people and the idea are fundamentally linked – like siamese twins. They will go down together.
November 10, 2011
“monetary medicine and devaluation as well as spending cuts”
John, do you thereby imply that the Germans will have to allow perhaps encourage even, and some ECB QE/inflation of the Euro before this saga is complete.
November 10, 2011
From a layman’s perspective I find it hard to determine whether âtheyâ are unwilling /unable to save the euro or just allow the âmarketsâ to knock some heads together in southern EU. Obviously I hope for the latter. For a short fire-fighting period we may actually get technocratic unity-governments in Greece and Italy.
For the longer term, if EU- or eurozone unanimity were to appear out of reach, I could imagine a scenario with a parallel âtreaty of the willingâ, i.e. willing to submit to strict rules/oversight and willing/able to ratify quickly. In such a scenario the eurozone may first end up with fewer members, but may grow again if/when it shows success.
November 11, 2011
Peter, do you really think that the populations of any of the country’s who are bailing out those who are bankrupt/near bankrupt, will want to continue with ever closer union and keep on wasting their own money.
I can see those people who are in reciept of the money perhaps wating more bailouts in the short term, to save them from reality, but then thatsanother story.
More to the point, do you think any of the populations of any Country will even be given the opportunity of a vote !
November 11, 2011
@alan jutson: At least I know there is a huge majority in the Netherland’s parliament for fiscal integration and I expect the same in Germany. We’re given a vote every four years. People who are not content with parliamentary democracy often ask for “the referendum”. Would a referendum have stopped the nationalisation of Northern Rock or ABN Amro? Some decisions, like fire-fighting, don’t even allow time for that.
November 10, 2011
As reported in Reuters.
“The chances have risen of European Central Bank vice president Lucas Papademos heading the coalition in Greece”
” Former European commissioner Mario Monti emerged on Thursday as favourite to replace Silvio Berlusconi and form a new government to stave off a run on Italian bonds that is endangering the entire euro zone.”
The EU will do its best to keep the project afloat until the taxpayer has picked up the bill and the politburo is safe and sound.
November 10, 2011
The Eurocrats want to keep the Euro but they dont ultimately count.
The Ponziano opening and variation.
Target the governments and taxpayers of the world and the EU bloc to bail out as much of the vested interests as possible by purchasing the euro and other assets above a value obtainable otherwise. Impose austerity to free up cash to pay ‘interest’. When that has been exhausted move to another variation.
Utilise ECB borrowing as much as the German consitution law (forget democracy) can be stomach, even to the point of EU quantitative easing. Following on the QE in the US and UK. This allows the wealth to be re-allocated in enduring assets oil,gas, gold etc.
Keep the IMF warm and then at the point of collapse, allow countries to default, leave the euro and possibly the union, then let the IMF to sweep up. Bingo more austerity (free up cash for debt interest) can then be imposed by inflation and devaluation.
Look the Brits have the right idea, most of the uber rich will stay rich diversified into many real assets like land,property owned directly not through potentially problematic paper instruments guaranteed by limited companies.
Perhaps this is the outcome of capital mal-investment, trying to tilt the table to protect capital.
It goes deeper than the Eurocrats vision, pity they decided to trade democracy for convenience. It could have been so different if democracy was at its core with a keep it simple and beautiful.
Money should be left with those that will spend it, not lock it up in multi-generation trusts offshore or speculate on anti inflation positions. Short term it means infrastructure power,roads,and taxcuts on the low paid. We need cash to lubricate production to buyers/sellers within the UK. Methods of managing down material deficits should be the number 1 priority. Negotiation and or outright trade import protection on material deficits – should be moving to the top of the agenda. Tell Border control and Theresa May that includes immigration.
November 10, 2011
Maybe, Mr Redwood, Sir, you could pull together the ideas expressed here and submit a proposal to Lord Wolfson who seeks serious proposals that allow countries to depart the eurozone. You never know, that prize of ÂŁ250,000 might be yours. It might buy your splendid contributors to this blog a drink or two – better that than giving yet more money to Barosso and Merkozy!
November 10, 2011
I wouldn’t count myself as one of the ‘splendid’ contributors here but yes. I could do with a drink right now. The failure in the Eurozone could not be more catastrophic than it is.
It’s hard not to say ‘We told you so’ to Europhiles but we did. Many many times.
November 10, 2011
The European Union and its project The Euro were built upon sand as was known perfectly well when it was first introduced but as it the way with fanatics and zealots they pushed it into being anyway, ignoring the fact the some countries fiddled the books to get in. Now the chickens have come home to roost big time and the Commission, like all committees, cannot offer any leadership. The constituent countries have only one aim – to look after their own interests. In fact France and Germany have only ever had their own interests at heart from the start of the EU. What was the purpose of getting rid of Papendreou and Belisconi when it will just leave a vacuum in those countries ,who desperately need strong leadership? How depressing too that the BBC, who greeted the birth of the Euro with such triumphalism can only bring on three noted pro Euro former politicians to discuss it even as it faces a crisis and maybe catastrophe for us all.
November 10, 2011
John R: “IMF packages normally entail monetary medicine and devaluation as well as spending cuts.”
Monetary medicine ?
Even the British Sugar Corporation will not find enough sugar to make THAT medicine to go down!
November 10, 2011
What we need is a serious outbreak of internecine warfare amongst the Europhiliacs as their divergent interests start to pull the whole monstrosity apart.
November 10, 2011
George had better hang on to that 40 billion IMF loan he is going to need it to give to the UK banks to help them recapitalise as now the Italian bonds they hold are hourly reducing in value.
November 10, 2011
Why don’t they form a Francmark, with Germany and France leaving the Euro as they are the main countries which seem to be keen on financial integration. The Euro could be left to depreciate, which was what the southern European currencies always did in the past. My sympathy tends to be with countries like Holland and Sweden who have, it seems, had a sensible approach to government spending.
November 10, 2011
JR says âif the southern member states remain uncompetitive with no ability to devalue, the austerity medicine may not cure the patientâ.
I beg to differ (a bit). As I pointed out a few days ago on this blog, an EZ country can effectively devalue if wages and prices in such a country drop relative to other EZ countries. Problem is that this is a slow painful process if it comes about via austerity. As I said a few days ago, an instant wage and price cut in such a country would be far better, though it would be costly to organise.
November 10, 2011
“As I said a few days ago, an instant wage and price cut in such a country would be far better”
In such circumstances, attempting to frustrate wage stickiness (see Keynes) by compulsion would almost certainly result in significant public disorder.
November 11, 2011
Ralph Musgrave: “As I said a few days ago, an instant wage and price cut in such a country would be far better, though it would be costly to organise.”
Ralph, I can see your point. But do you think Greece dominated as it is by the left would (could) make the case for cutting salaries? Let alone implement the process.
If it were dominated by the right, the idea would be an instant rallying point for the left and boy would they make hay!!
November 10, 2011
“How many more jobs and busiesses do they wish to see destroyed first, before they bow to the inevitable?”
As long as the jobs aren’t theirs do they care? How many politicians of any party would sacrifice their own ministerial career to keep a small factory open. or to increase our electricity supply by 1% or to reduce the government brakes on fracking of gas (probably to be worth about ÂŁ8 bn a year) by 1%.
And perhaps they would be wrong to. That, allegedly, was the calculation of Iain duncan smoth over whether he was doing sufficient good as a government minister that it would be wrong to give up for the principle of voting for a referendum. If only those without any principles were to get on in [po9litics we would be in a very bad place …. Brussels.
The underlying problem is that when the country runs with people losing jobs for not towing the line but do not for getting it wrong, the country is being wrongly run.
November 10, 2011
⏒s not pinin’! ⏒s passed on! This parrot is no more! He has ceased to be! ⏒s expired and gone to meet ‘is maker! ⏒s a stiff! Bereft of life, ⏠rests in peace! If you hadn’t nailed ‘im to the perch ⏒d be pushing up the daisies! ‘Is metabolic processes are now ‘istory! ⏒s off the twig! ⏒s kicked the bucket, ⏒s shuffled off ‘is mortal coil, run down the curtain and joined the bleedin’ choir invisibile!! THIS IS AN EX-PARROT!!
November 10, 2011
“IMF packages normally entail monetary medicine and devaluation as well as spending cuts. The Euro area is trying to do it without important parts of the cure. Why do they think it is going to work?”
Firstly the IMF wasn’t set up to rescue currency unions of diverse semi-autonomous countries which are culturally and economically quite different.
Secondly, had they ever been worried about what would work, they wouldn’t have embarked on the Euro experiment or would have been altogether more cautious. They’re pretty much on a bucking bronco; they can’t let go because it would hurt and be an admission of failure; in no sense are they riding a horse anywhere, they are holding on and hoping for the best.
November 10, 2011
As an overview, I have been interested to see how quickly the so-called ‘unity’ within the European Union is breaking down into national lines and sovereignties as soon as there’s a crisis.
To be more graphic, Britain’s Prime Minister, David Cameron, has rightly said this morning, how important it is that Britain exports to countries that do have growth in their economy, (he sited China and India). By extension, we can deduce that we should not waste our time with those who don’t have growth (those in difficulties within the EU) that might even go into a steep and protracted decline. Their significance to Britain is being diminished almost daily, as the financial crisis escalates.
Ian Milne, a man who has a good track record as a commentator on EU affairs, states:
‘Trade statistics clearly show the declining relevance of the EU to Britain’s position in the world.
He points out that the EUâs share of global GDP and world trade is set to halve by 2050 â while the rest of the world will grow. Much of that growth, fortuitously, will come in the Commonwealth, which we have shamefully ignored since our accession to Europe.’
This is contrary to what the crazy Mr Balls might say about the importance of exporting to the EU, that incidentally, doesn’t presently have the money to buy anything (but don’t wake him up and tell him, let him sleep on and dream his little cloud-cuckoo Euro-dream).
To get out of the massive debts left to the nation by the last Labour administration, the fact that Britain must grow it’s economy by exporting goods and services to viable countries, is therefore solidly established.
In his pro-active speech, David Cameron clearly recognises that Britain must come first, and by inference, all other countries, both inside and outside the EU are competitors rather than partners. As part of the commonwealth, at least in theory, we in Britain should have a head start.
To be competitive on the global stage, and export our way out of the mire, business has to be unhindered and unfettered by excessive and unnecessary regulation. It is absolutely vital therefore, we re-negotiate Britain’s relationship with the the prohibitive extravagance that is holding us back – the European Union.
Recognition is one thing, delivery is quite another. David Cameron is limited in his ability to cut red tape and regulation, because of his dependency upon a bunch of disparate, off-the-planet no-hopers, who still cling to the dream of a centrally-controlled EU socialist super-state, that has been shown so demonstrably to be totally unworkable. Unless the Lib Dems can be persuaded to change their minds, and actually put Britain first, David Cameron’s words cannot, and never will be, anything other than just that – words.
Tad Davison
Cambridge
November 10, 2011
Spot on Tad. I am not sure and certainly unconvinced that Cameron was ever Eurosceptic. I think there is a hairs width between him and economic illiterate Clegg. Both like the kudos of their position without having the experience, knowledge or personal qualities to run a pub let alone a country.
November 10, 2011
“Leaking rumours that France and Germany are now ready to slim the Eurozone down, and press ahead to fiscal union with a smaller group of countries will merely fuel the bears and help exacerbate the crisis.”
Surely ‘fuel the fires’.
November 10, 2011
Dear John,
Having just become aware of the paper on ‘Global Governance’ by the leader of your party, I cannot understand how you can still be so passive. Unless you organise a leadership contest pretty sharply, you are in serious danger of being tarred with the same brush. I realise that you might loose such a contest, but then you can leave the party with honour. As it is, the party is on a road to serious depletion anyway. Cameron may try to blame the economic slump on indecision by the EU but the public will see through that.
November 10, 2011
John
Somebody once told me that the art of politics is compromise!
But now the time for compromise is over. Someone needs to act now before all the Western countries’ economies go down the pan.
Perhaps those countries outside the Euro 17 should should come up with a plan to raise whatever sum is needed from whatever source to resume market stability – I understand the EMF have not sufficient funds.
Waiting for a Euro zone political compromise, that is never going to be happen, is not the answer.
November 10, 2011
It is a major fault of the European Union that it’s Government is a faceless bureaucracy.
No one knows who sets the policy agenda, or who is responsible for the making of decisions; there is no individual accountability and no individual responsibility.
This makes it impossible for the European Government to restore its credibility or to restore respect among the people of Europe for the European ideal and the European Government.
Think how different it would be if it was clear who was responsible for the wrong policy, who was responsible for the wrong decisions, and if it was possible for an electorate to eject failed politicians with their failed policies and start again with new leaders with fresh policies and a new hope.
If no one is responsible, every one is responsible and the organisation must remain discredited and disliked; governing without consent with all the eventual problems that will entail.
November 10, 2011
http://www.telegraph.co.uk/finance/financialcrisis/8881222/David-Cameron-tells-eurozone-leaders-to-act-now-to-save-currency.html
“David Cameron tells eurozone leaders to act now to save currency”
“Eurozone leaders and the European Central Bank (ECB) must act without delay to save their currency, Prime Minister David Cameron said today.”
Why?
The existence and continued expansion of the eurozone is a deadly threat to our long term national interests, and Cameron should urging them to work out a plan for it to reduced in size with the economic minimum damage.
November 10, 2011
@Denis: still, it is almost endearing being “lectured” by our friend the UK.
Would DC ever take the trouble to lecture Japan, China, the US, Zimbabwe, on their currencies? I’m sure he only makes time for us, and I appreciate that!
( . . . or is he drawing attention away from any national problems?)
November 10, 2011
The EU is a subject DC hasn’t wanted to talk or think about at about at all, well on odd occasions, soon to be forgotten, such as before Euro elections. Now it’s forced itself onto the agenda, he has to find something to say. Pretty much he makes the odd Eurosceptic noise to keep a section of his supporters happy, but drifts along with the EU, pretending he isn’t.
I wouldn’t worry about his lecturing. I doubt any of his fellows in the Eurozone are taking the slightest bit of notice. It’s for home consumption, where fewer and fewer are bothering to listen.
November 11, 2011
DC knows nothing but presentation dear boy.
November 10, 2011
Peter van Leeuwen : “( . . . or is he drawing attention away from any national problems?)”
Very possibly the case Peter.
November 10, 2011
Restoring the Drachma albeit at a substantial discount to the Euro would not only cost the banks a lot less than the 75% haircut that Germany and France were recently suggesting they take on Greek bonds but allow the Greek economy to embark on a painful but ultimately effective re balancing of their economy. The same now goes for Italy and many others. Perhaps, when the dust settles we can then revert to the EEC, which is what I and millions of others voted for in 1975, thereby saving billions in propping up the Brussels money pit as an added bonus.
November 10, 2011
We are witnessing the “Death of Democracy” in Europe. The taste we have to date in the UK is very unpleasant. I forsee Military or Technocratic Governments in the future, as our Public Sector State Pies, have just got too big to service. The State must be cut down to half its present size or smaller. That will take either decisions made under threat of real force or Revolution. We know that the likes of Ed Balls or Miliband will never get back to power and the Coalition has no teeth it seems. Politicians throughout Europe are now “Behind the Game” We are moving into unchartered waters, where Media and the Markets chart our Way.
November 10, 2011
Discussion of a Euro with fewer members naturally raises the question “which members”.
Germany could
Austria probably would
Belgium would love to but
Holland could but I doubt she would
Finland could, but with current politics there probably would not
Slovakia would like to but is very small so does not matter.
Slovenia ditto
France would expect to but it cannot afford it unless it integrates with Germany, and that was not their idea of being in charge
None of the rest are able to keep up, so they wouldn’t
Naturally it would be easier for the strong few to start a new currency as it would have immediate credibility.
One suspects the HMG and BoE have made virtually no preparations either intellectual, legal, political, monetary or fiscal towards a Euro breakup or even a further sever Euro crisis.
If HMG borrowing and spending is not soon brought under control they will have a sterling crisis to attend to – I forecast about 6-9 months time. HMG problems are too advanced to be aborted but not yet ready for an early birth.
November 10, 2011
@Andrew Smith: “Holland could but I doubt she would”
Although the Netherlands is in principle against a smaller eurozone, if I’m well informed, I’m pretty sure my country would join because:
– as a trade and distribution country it does very well out of the euro (unlike Britain)
– it wouldn’t have much choice, being a small country that in the past always shadowed the German mark.
November 10, 2011
And got invaded by the Germans if it put up any resistance.
Your Queen lived near here last time:
http://www.copellafruitjuices.co.uk/public/pdfs/maidenhead-and-cookham.pdf
“Queen Wilhelmina of the Netherlands lived at Stubbings and what became known as the âDutch Campâ was set up in the Thicket to house the Police needed to protect her.”
November 11, 2011
Denis Cooper: “Your Queen lived near here last time: ”
A bit before my time, but I am sure she was very welcome.
November 11, 2011
Get a life, theres a big wide world out there.
November 10, 2011
Looks as though the EU has again managed to install another of its proteges and move forward with their plan to systematically replace elected politicians, in this case, Italy.
The chosen person, Mr Monti, has just been made “an Italian senator for life” by the Italian president thus there will be no need for Mr Monti to undergo any tedious election processes, if what is now reported is true in that:
“Mr Monti has become favourite to lead Italy out the financial morass after Wednesday’s surprise move by President Giorgio Napolitano’s to name him a senator for life. Mr Napolitano also offered emphatic assurances to skittish investors that Mr Berlusconi will step down, as promised, after reforms are passed – likely by Saturday.
With a groundswell of Italian politicians voicing support for a technocratic government led by the former European Union competition commissioner, there is a growing degree of confidence that the transition from Silvio Berlusconi will be swift”.
So now Belgium, Greece, Italy and Ireland have had their governments taken over by EU-appointees and it seems to me that the process cannot be halted. It remains only to see who is next on the list…..
November 10, 2011
I agree that the game is up.
Even our own eu-sceptics were being careful with their language for fear of making markets even more nervous.
However now the loose talk is coming from France and Germany and so it appears either to be incompetence or manipulation.
Whatever the reason, they canât put this loose talk back in the bottle and they canât avoid contagion now.
I can only imagine that while the poorer countries fall away France will desperately cling to Germany and try to form an exclusive club.
The resulting Euro (Deutschmark) could end up trumping the Dollar as the worldâs reserve currency.
November 10, 2011
Like many others, I think it would be in the best interests of everybody if countries defaulted and went back to their previous currencies. This would, of course, lead to the unravelling of the EU, and will not be allowed to happen. Apart from the loss of power of the bureaucratic elite, nobody knows what effect the resulting CDS claims would have on the world banking system.
I believe that the EU will soon start a massive QE operation to buy sovereign debt. After all, if Britain can print 275 billion pounds, what’s to stop the EU conjuring up a cool trillion or two? The Germans are reluctant to do this for historical regions, but when has anyone ever learned from the lessons of history? ( If they had, we wouldn’t be fighting a war in Afghanistan)
However, the German condition for this operation will be fiscal unity; the setting up of an EU treasury (controlled by them of course) .They’ll hand out the money for state spending and organize the collection of taxes. It’ll take a while to get the Greeks sorted out on the revenue collection front of course, but won’t be as huge a problem as reunification was.
I read somewhere that if you take the eurozone as a whole, then the overall economic picture isn’t too bad with regards debt.
QE short term will allow the EZ to survive as it is, enable the introduction of austerity measures slowly (without causing a slump as is happening now) and will devalue the euro, thus improving German exports. Also, it will cause inflation and the erosion of peoples’ savings and pensions, but when have most politicians ever cared about that?
November 11, 2011
So, you missed the recent estimate that by 2020, the Eurozone will have a debt/GDP ratio of 120%, did you ?
November 11, 2011
“estimate” by “2020”. The way things are going, nobody can say what’s going to happen in 8 days’ time, let alone 8 years’ !!
QE it’ll be, and all will be fine short-term…
November 11, 2011
You don’t have to be on the right of politics to realise that the Government had better get this country’s finances in order as quickly as possible, because if the ‘markets’ think we haven’t, they’ll call the Government’s bluff as they have done before.
However, when you see the Chancellor and the Prime Minister calling for fiscal union, one does start to worry how desperate they and the situation must be.
November 11, 2011
Will the Merkozy 4th Richt survive?
November 11, 2011
I comment that Angela Merkel has called for a new paradigm and a new regime in Europe.
The goal of leadership is to provide economic security via greater political union. Such a goal is the effective working of the Clarion Call of the Club of Rome for regional economic government.
Three hundred of the worldâs elite were convened in Rome in 1974, to provide a paradigm for a new economic, political and social order for chaos that would come result out of chaos stemming from sinking currencies, that is competitive currency devaluation, that would come at the end of the Milton Friedman Free To Choose floating currency regime. Their collective call is for regional economic government. Angela Merkel and Nicolas Sarkozy have heard and heeded the eliteâs call. In their joint August 2011 comminique they called for âtrue European governmentâ.
Dr. Worden in The Essence Of Leadership writes, All that a leader must necessarily do as per the essence of leadership is satisfy a followerâs instincts for sense-making (satisfied by meaning) and feeling something as important in some way (satisfied by values). The sense-making itself may be viewed as a duty due to the human need for it (regardless of the particular content of the meaning). The ethical implications may simply be that humans have a hard-wired instinct for sense-making that can be satisfied by a social reality (or paradigm) being proffered by a leader.
Angela Merkel is providing a vision that makes sense as a resolution of the European sovereign debt crisis, which is in reality the failure of sovereign power, that is the failure of sovereign nations, Greece and now Italy.
Greece lost its debt sovereignty in May 2010, and has been receiving seigniorage aid ever since. Now Italy has lost its debt sovereignty, as its interest rate has soared above seven percent and is no longer truly able to sell government bonds. Its bonds were purchased, but not genuinely in the world government bond market, as Tyler Durden relates, they were purchased via indemnity by the ECB Snap Reactions To Italyâs âŹ5 Billion Bill Auction, Which Reeks Of Illegal ECB Intervention.
Fate is operating to pass the baton of sovereignty from failed sovereign nation to sovereign leaders and sovereign bodies. A coup is underway in the EU, where a EU ECB IMF Troika, and globalist bankers are rising to power: âa breakthrough to a New Europeâ is underway, and the new regime will be a Federal Europe with a fiscal union, a common treasury, and the ECB empowered as a bank. Austerity measures, structural reforms, pension overhauls, bank nationalizations, and debt servitude will be de rigueur.
Milton Friedman established the prior economic paradigm, where one was free to choose, and the regime was Neoliberalism, underwritten by the seigniorage of freedom, consisting of floating currencies, ponzi financing of all types, such as the China shadow lending on collateralized commodities scheme, carry trade lending by the Bank of Japan and banks in Austria, and Federal Reserve credit liquidity, ZIRP, and quantitative easing I, and II.
The Club of Rome and Angela Merkel are establishing the new economic paradigm, where sovereign leaders and bodies rule via diktat, and the regime is Neoauthoritarianism, underwritten by the seigniorage of diktat, that is the moneyness of diktat. Leaders meet in summits and announce regional framework agreements, which waive national sovereignty, and establish working groups and edicts, which establishes regional economic government.
Freedom and choice are mirages on the Neoauthoritarian desert of the real. Silvio Berlusconiâs People of Liberty party, also known as People of Freedom party, is an anachronism in the age of diktat.
A totalitarian collective is forming in the Euro zone: totalitarian collectivism is the EUâs future.
November 11, 2011
It is high time that our Prime Minister said that he is indifferent to the fate of the Euro and to any individual state having to remain a member.