Welcome to Euro fairy land

Once upon a time lots of European countries decided they wanted to be friends with each other.That was a very good idea.
They had a history of being enemies, and fighting. That was a very bad idea.

They formed a club. They did a few things together. They planned what to grow and farm together. They did a bit more trade with each other. They managed to stay friends for many years. Emboldened by their success, some of the ring leaders of these countries said, “let’s now become very special friends. It’s boring just being good neighbours. I know how to show we are the best of friends. We will share a bank account with each other.”

They asked some wise men (yes they were mostly men) how you could do that. They said it was all a bit complicated for countries to do that sort of thing. You first had to share a currency, and to do that you needed to bring all your different currencies closer together.

All the country ring leaders said they thought that sounded lovely. They would do just as the wise men told them. They would make their currencies stay at the same rate against each other for ever so long. Once they had done that, they could easily then swap all the currencies into their shiny new common currency. Hey presto they would be sharing a bank account together. It all sounded ever so modern. They said it would mean they would all show great solidarity. Some said they liked solidarity though they were not quite sure what it meant or entailed. It would be All for One, and One for All, they were told. Who could disagree with that?

So they told all the world that they now had a special relationship. They told all the nasty wolves in the financial markets that if they tried to mess them up, they would spend loads of money stopping the wolves. The wolves would be foolish to try to take them on.

The problem with wolves is they can’t help themselves. They often don’t believe nice people like government leaders. So when they were told what rates the currencies would trade at, they said “We don’t agree. We think you’ve got it wrong”.

So every time the wolves sold a currency, to try to get it down below the European prices, the countries spent billions of money stopping them. The trouble was, the more they bought, the more the wolves sold. The debts got bigger and bigger, as the governments tried harder and harder to keep their currencies up. The Germans, who had the best currency, got fed up with owning more and more of the weak currencies. They started asking themselevs why they had to do that.

Then one day the governments saw they had spent too much, but still the nasty wolves were selling. So they gave up. It turned out that though they really did want to show solidarity to each other, propping up the pound sterling was just too dear for them. Italy and the UK and other smaller countries were pushed out of the super friendly money club. The Germans were no longer prepared to spend loads of their money keeping it all going. There had to be some limits to solidarity after all.

Tomorrow we will learn how the doughty European governments were not to be beaten by the nasty wolves. They were going to have their common bank account after all.

PS Whilst I am writing the fairy tale (3 day serial) please write in with your issues and worries.

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73 Comments

  1. Posted December 21, 2011 at 8:04 am | Permalink

    This could just as well be a parable of the Bretton Woods agreement and we all know what happened to that.

    • Disaffected
      Posted December 21, 2011 at 4:47 pm | Permalink

      Despite seeing the steam train rushing towards the rabbit, it remained in situ and was obliterated. It should have had the sense to run away to live a long fulfilling life. If only politicians were more intelligent than rabbits.

  2. Boudicca
    Posted December 21, 2011 at 8:12 am | Permalink

    Unlike fairy tales, this one doesn’t have a happy ending; it just has various different degrees of bad.

    The least worst option is to do a managed deconstruction of the Eurozone. So that is, of course, the option the EU refuse to even consider.

    The worst option for the UK is to stay inside the EU, with our international trading ability, economy and political freedom hamstrung by Brussels. So that, of course, is the option our Government (LibLabCON) refuse to even consider.

    • uanime5
      Posted December 21, 2011 at 12:59 pm | Permalink

      53% of our exports go to the EU and we’re a net importer. So we don’t really have an international trading ability.

      • Ben Kelly
        Posted December 21, 2011 at 3:05 pm | Permalink

        The EU will still be there and if they wish to trade with us will not impose tariffs if we leave otherwise we would reciprocate and as you say we are a net importer.

      • Disaffected
        Posted December 21, 2011 at 4:44 pm | Permalink

        You forget the huge amount the Uk imports from the EU which is of more value to them. Your answer is another reason why the UK needs to leave the EU ASAP to build upon its trading with other nations outside the EU ie emerging markets where, most experts, think the real business is to be had in the future. Do wake up.

      • Tim
        Posted December 21, 2011 at 7:21 pm | Permalink

        Actually less than 40% of our trade is to the EU and even that is distorted by goods counting as EU if they go via Rotterdam and Ireland moves goods to Northern Ireland for its deeper ports for onward export.
        We had a £50 billion trade deficit last year with the EU and £262 net over the last 10 years. Do we really need this monstrous undemocratic body tieing us down with ridiculous legisaltion and bureacracy?
        I read this week that they are changing car insurance tables to match both sexes when statistically the insurers know the risks after years of data. They are still meddling with the fishing policy and no reform of the CAP. They just interfere and cost us £9 billion to implement its directives annually. Trade and friendship is all we need. Not the social chapter and the rest of the hogwash making it a “backwater” within 50 years with an already reducing market share.

      • libertarian
        Posted December 21, 2011 at 10:18 pm | Permalink

        Wrong, as normal

  3. Kenneth Morton
    Posted December 21, 2011 at 8:34 am | Permalink

    The EU has spent millions and millions on propaganda explaining the idealised heroism of EU founders. Some of the comic strip publications that have been produced to explain E U policies, aimed at schools and school children, have been very much along the lines of this fairy tale.

    Not so very different from the way things are in North Korea. Will there be scenes of wailing and mass hysteria in the next twelve months should the Eurozone begin to disintergrate? I do hope so!

  4. Antisthenes
    Posted December 21, 2011 at 8:55 am | Permalink

    It appears happy days are here again. The ECB is flooding the euro-zone with cheap money borrow at 1 % and re-lend out at 5/6% . The twist and turns of this soap or is it sit-com has us glued to our seats we do not know if to laugh or cry whichever it does have a feeling of déjà vu about it.

  5. alan jutson
    Posted December 21, 2011 at 9:20 am | Permalink

    In the new Never Never Land, where more borrowing is thought of as food (you cannot live without it) they were getting bored with the same old menu, so they sought employment of a new cook, the old cook had seemed quite happy in her old job, with her own books, but she was encouraged to put herself forward for an althogether bigger and more influential cook book position, where she could use new ingredients from around the World.

    New recipies were thought of but evntually rejected, before they then realised that they were happy with their own comfort food after all, no matter that it would eventually probably cause them a terminal illness, through lack of neutriants.

  6. lifelogic
    Posted December 21, 2011 at 9:22 am | Permalink

    Indeed but can you please find a smooth transition happy ending back to sanity?

    The BBC, on Home Planet (radio 4) yesterday, finally admitted on air that the earth has indeed had no statistically significant warming since 1998. Can we please therefore not wait another 13 years just to see what happens? And stop the absurd green bling and wind farm agenda now.

    We could use the money to do helpful for humanity instead and anyway it is quite clear that these wind farms simply do not work even in C02 terms (nor economic ones). Perhaps some inoculations, dealing with malaria, clean water, birth control, medical care or basic nutrition for example.

    It is surprising given the BBC’s general agenda this was not the headline news for the day. So all the UK countryside ruined for Cameron and Huhne’s pointless religion, at a vast cost and for no purpose whatsoever (even if the C02 theory were right). Electric cars (their other mad agenda) do not work either (even in C02 terms).

    How is that speeding ticket coming along it – seems very slow indeed and is needed to save the UK countryside?

    • Disaffected
      Posted December 21, 2011 at 4:55 pm | Permalink

      Here here. Do not forget, chocolate pot Dave has the power to sack Huhne, but he does not have the courage to do so. A bit the like the EU referendum that is never going to happen while he is in charge, all talk no action. No repatriation of powers nor a EU referendum from Libs or Tories; as both wanted it is difficult to understand (nothing in the coalition agreement) what prevents them giving the public what it wants?

      Osborne gearing for a happy EU New Year, namely how he will fund or underwrite the next EU bail out tranche of money via the IMF while still imposing austerity and more taxes on the public of this country. Come on Tory sceptics do something for goodness sake.

      Reply: Mr Cameron’s power to sack Lib Dems is not absolute in the way his power to sack Conservative Ministers is. He would not do so I suspect without the agreement of Mr Clegg.

      • lifelogic
        Posted December 21, 2011 at 6:18 pm | Permalink

        Yet people can be sacked just for going to a party where some other guest wear the wrong outfit. Best not to go to any parties at all since you can never be quite sure of how the other guest will dress it seems. They might look fine but at any point whip off their DJ’s to reveal almost anything. You never quite know.

        • APL
          Posted December 22, 2011 at 9:03 am | Permalink

          lifelogic: “Yet people can be sacked just for going to a party where some other guest wear the wrong outfit.”

          How is Mr Balls still in the shadow cabinet, around the web there is photographic evidence of him dressing in very similar types of uniform.

          • lifelogic
            Posted December 22, 2011 at 12:45 pm | Permalink

            Never mind – the weakness and lack of electoral appeal of Miliband and Balls is about the only positive thing around at the moment.

      • Disaffected
        Posted December 22, 2011 at 9:32 am | Permalink

        Will Clegg need to get approval from the EU and Germany first? Why is there a disproportionate amount of LibDems ministers for the number of MPs they have? Minority party with a minority activist as leader.

    • Tim
      Posted December 21, 2011 at 7:33 pm | Permalink

      My pensioner near neighbours have just moved into their kitchen diner as they can’t afford the heating bills for their house anymore. Mr Redwood please make Mr Huhn aware so he can be proud. Many will be doing the same on limited fixed pensioner incomes so we can have more windmills that don’t work and unproven science, green global warming/changed to climate change religion as we haven’t had the former! Many of our elderly will be making choices to eat or heat this winter. Outrageous! We need to urgently remove Huhn and have the courage to pull out of the Koyoto agreement like Canada. Oops, we can’t, as we’re signed up to the 20% renewables by 2020 EU directive. It’s the politics of madness and another reason to leave the EU. High energy using industry will simply move to another country that doesn’t disadvantage its products. The aluminium factory in the north was a recent example.

  7. Gary
    Posted December 21, 2011 at 9:37 am | Permalink

    Meanwhile , the Fairy Godmother is in such economic trouble , that she could go belly up at any moment, even before the EU :

    “If there is anything the global financial system needs, is for the rating agencies, bond vigilantes, and lastly, general public itself, to realize that the UK’s consolidated debt (non-financial, financial, government and household) to GDP is… just under 1000%. That’s right: the UK debt, when one adds to its more tenable sovereign debt tranche all the other debt carried on UK books (and thus making the transfer of private debt to the public balance sheet impossible), is nearly ten times greater than the country’s GDP. To call that “game over” is an insult to game overs everywhere”

    http://www.zerohedge.com/news/psssst-france-here-why-you-may-want-cool-it-britain-bashing-uks-950-debt-gdp

  8. Paul Rivers
    Posted December 21, 2011 at 9:38 am | Permalink

    When you get to part 3 it would be reasonable to expect that the system collapses, but recent actions by the ECB in arranging unlimited 3 year lending to banks ( on lent to buy govt debt )and the statements of no future private sector burden sharing in debt reschedulings ( which improves the integrity of non greek govt bonds as collateral ) makes me wonder if the end game is a long way away. In the accounts of the ECB the capital flows between surplus and deficit countries is reflected in the Bundesbank being the largest creditor to the system ( I saw a number of E310bn in 2010 for the credit they provide and it must be much larger now). Surely the numbers are so large for the Bundesbank that they just have to keep the system going. What am I missing ?

    reply: I think you are right. The unlimited credit to banks acts to run an interbank market that has dried up in the private sector. It also reassures banks that need to roll over their bonds or longer term borrowings that there is a public sector alternative if they cannot. It does allow some financing of the big surpluses and deficits within the zone. They may hope it also produces more demand for sovereign bonds from the banks, but they would be foolish to put money borrowed from the ECB into weak euro sovereign debt.

    • Paul Rivers
      Posted December 21, 2011 at 10:49 pm | Permalink

      according to Ambrose-Pritchard in the Telegraph today the Bundesbank correspondent bank lending account exposure to other central banks in the ECB (“Target 2″) is now E465bn. Given also their exposure to the fringe via measures such as today’s lending programme they are probably near to the point of no return as far as cutting and running. So the break up will rely on the drip drip of austerity in the fringe becoming unacceptable in those countries. Other than Greece next year ( which will serve initially as a warning of how terrible it can be to pull out), this will take a long time. Combined with some QE next year justified on the basis of failures in the money transmission mechanism, we could be looking at a very long decay period.

  9. Peter van Leeuwen
    Posted December 21, 2011 at 9:49 am | Permalink

    Wolves cannot help themselves, they hunt. In order to outgrow the jungle, wolves need to be fenced in.
    Even though there are some animal-rights activists fighting for the wolves’ free reign, there is a growing coming together of countries (in eurozone, EU, G20) where the need of “regulating” the wolves is acknowledged. Wolves already have created too much havoc.

    • libertarian
      Posted December 21, 2011 at 10:24 pm | Permalink

      What you and your socialist friends in the FU EU don’t realise Peter is the Wolves of the investment banking markets are in fact you, me and all the business men and women of the world. It’s OUR pension funds, savings and investments they are managing and they are managing them to get the best returns possible. So your friends utterly stupid idea of taxing and regulating them even more will only make the situation worse and impoverish the European people even more.

      If you keep on doing what you’ve always done you’ll keep on getting what you always got. If you want a different result DO SOMETHING DIFFERENT.

      There is one solution and only ONE. The Southern European countries need to exit the Euro which they never qualified to be in, in the first place

      • Peter van Leeuwen
        Posted December 22, 2011 at 6:17 pm | Permalink

        @Libertarian: In Dutch democracy there are at least 10 significant political affiliations and I’m not in the socialist category. I don’t see much wrong with trying to regulate a financial sector run amok (completely out of order).
        I support the effort to regain power from this financial sector and bring it under more democratic control.

    • James Young
      Posted December 22, 2011 at 4:11 am | Permalink

      Nonsense, I’m so fed up of hearing all this anthropomorphism in relation to the markets. I know its populist and I know it deflects attention from the real culprits (the arrogance of the federalist-at-all-costs) but the ‘markets’ are not a sinister collective of ruthless wolves determined to destroy and deconstruct. They are merely the collective disparate sentiment of the world; of the man / woman in the street and his / her self-invested pension plan, of the real money fund manager managing YOUR pensions trying to make benchmark with as little risk as possible, of the supermarket check-out clerk and their small stock holdings received in lieu of a Xmas proper bonus, just as worried about their own futures and the state of this fiasco as anyone else. They are merely the mercury in the barometer, and you don’t blame the barometer when its tipping it down outside do you?!

      I don’t blame JR for using the metaphor in this instance as the allegory is not without irony, I suspect, and it is a requisite part of portraying the situation in the layman’s terms a Xmas fable dictates but please lets not let the truth of the matter be clouded by such lazy leftist propaganda.

      non causa pro causa.

      Reply: I am glad you did detect a little irony. The fairy tale is written from the EU government perspective. I allow myself to deviate when we get to the choice of endings.

      • Peter van Leeuwen
        Posted December 22, 2011 at 6:07 pm | Permalink

        @James Young: Interestingly, yesterday evening, 3 former Dutch prime-ministers of 3 different political persuasions were interviewed together. Although disagreeing on some issues concerning the start of the euro, I believe they all three agreed on the cause of the financial crisis: the total disregulation of the financial sector and (mainly Anglo-Saxon) casino capitalism. I haven’t yet found a Dutch source which doesn’t agree with this! Can you help me? I realise that this is a sensitive issue in Britain and will spare you the quotes from experts and politicians from this side of the North-sea.

        reply: Euroland banks were regulated by EU regulators – were they following Anglo-saxon capitalism?
        The period of regulatory failure in the noughties was a period of growing and complex regulation, with substantial EU input – the problem is it didn’t work.

        • Peter van Leeuwen
          Posted December 22, 2011 at 11:03 pm | Permalink

          As I understand it, the globally intertwined financial sector was not at all well-regulated (following AngloSaxon practices if you like), including eurozone banks. Failing EU-regulation has been recognized and e.g. bankers, the central bank, the government and even an EC-commissioner in the Netherlands have received some scorne when appearing before a parliament inquiry (which had as its mandate to investigate in order to learn lessons for the future)

          Reply: So it was a failure of EU regulation then. What is the point of all this regulation if they cannot stop major banks going bust?

          • Peter van Leeuwen
            Posted December 23, 2011 at 12:51 pm | Permalink

            The EU should not have followed the US/UK culture in finance so easily. the view afterwards is that the financial sector was very much un/under-regulated. As such the EU, including its regulation is also to blame. If few but effective rules could do the job and protect the citizens, great, but who’d trust Boris Johnson and his lobbyists descending on Brussels?

    • Jose
      Posted December 22, 2011 at 8:09 am | Permalink

      Peter, you should watch the video on Daniel Hannan’s site of Michael O’Leary talking to your beloved Brussels bureaucrats. It sums up the way they work rather well.

      • Peter van Leeuwen
        Posted December 22, 2011 at 5:18 pm | Permalink

        Dear Jose, I had already watched it yesterday and it is hilarious and should make the EC ashamed. I also watched the 2nd O’Leary clip (more difficult to find via a few links, so if you like to check use the following search term in youtube or google: “Ryanair’s YES to Europe Campaign”. What a great example he is of the possibility of both being critical of the EU and also 100% squarely in support of the euro and the EU membership!
        (P.S. I do read Hannan’s blog occasionally but have stopped reacting, because after the Norway massacre I found that he attracts too many extremist and possibly sick people with whom I don’t wish to engage)

    • APL
      Posted December 22, 2011 at 9:12 am | Permalink

      Peter van Leeuwen: “In order to outgrow the jungle, wolves need to be fenced in.”

      Peter, I am a little lamb, give me your life savings and I will guarantee you a negative 25% per annum return.

      I promise not to invest in the rock solid Greek National bonds, which I suspect even you might avoid, returning as they appear to a 60% loss.

      • Peter van Leeuwen
        Posted December 22, 2011 at 5:25 pm | Permalink

        @APL: How lucky I am that my pension fund didn’t invest all my (pension) savings in sterling pounds, because, living in a euro-Holland, they would have lost almost 30% with your recent devaluation. I do love lambs-meat though. Are you as committed to please as the pig who wanted to serve ham&eggs?

  10. Bernard Otway
    Posted December 21, 2011 at 9:49 am | Permalink

    First the euro and NOW the Arab Spring which has turned out to be exactly the opposite,an
    Egyptian lady stripped of her top and violated by the soldiers in full view of the world,and
    supposedly political prisoners in Libya from the NOW opposition [previously pro Gadaffi]
    PLUS PLUS Tunisia is rapidly turning into a carbon copy of Iran /Saudi Arabia with a new
    RELIGIOUS POLICE. WHEN will Europe’s leaders from the left realise that all these Grandiose plans DO NOT WORK,in fact the opposite happens.As Boudicca says THIS Fairy tale will have NO HAPPY ENDING nor will the Arab spring, it could be SCORCHED EARTH
    for instance IF/WHEN Egypt goes Islamic Theocratic, where will the tourists come from to fuel their Tourist industry their biggest earner when beaches and facilities are segregated
    and women scuba divers have to be covered all over in the RED SEA.As for the Eurozone crisis Peter Mackay’s column this week in the Mail,stated that German and Italian lawyers in 1942 in the absence of any Greek signed into being a LOAN to NAZI Germany of 477 million REICHSMARKS which is calculated to NOW be worth taking inflation and an interest rate of 3% worth 60 BILLION ,IT HAS NEVER BEEN REPAID,if I was Greek I would be very angered by Germans telling me to do anything.These are that facts that the
    idiot eurozone leaders stupidly ignore.

    • Alan Wheatley
      Posted December 21, 2011 at 12:50 pm | Permalink

      The EU in general, and the Eurozone in particular, seems to have many of the characteristics of a theocracy. This would explain why there is so little sign of logic and reason.

  11. Andrew Chantrill
    Posted December 21, 2011 at 9:53 am | Permalink

    Out of interest, just before we were ignominiously ejected from the ERM how much did other European countries pay to maintain the value of our currency?

    reply: Geramny gave up on us – I do not recollect how much was spent by them before they gave up

    • Alan Wheatley
      Posted December 21, 2011 at 12:46 pm | Permalink

      If you read “In Office” by Norman Lamont you get the inside story. At least the story according to him: but it reads reasonably true to my mind.

  12. MajorFrustration
    Posted December 21, 2011 at 9:54 am | Permalink

    Worries – well can we expect this Governemnt to do what is financially right for our country – leave the Europeans to get on with it themselves. Its time they learnt the hard way. It seems a fact of life that politicians are both susceptible to grand gestures (ego trips) and meddling. I only hope that DC does not assume he can save the euro with our money – lets get it back from the Banks first.

  13. Chris
    Posted December 21, 2011 at 9:56 am | Permalink

    Article in Der Spiegel today acknowledges the lessons that Euroland can learn from Argentina and its recovery from financial disaster (another lesson also can be drawn from the dogged attachment to the gold standard in the Great Depression – Paul Mason’s excellent analysis on Newsnight some weeks ago).
    “The Crash Specialists:Argentina’s Lessons for a Crisis-Ridden Europe
    By Jens Glüsing
    http://www.spiegel.de/international/world/0,1518,804856,00.html
    Ten years ago, Argentina’s economy was in a shambles, the victim of vast sovereign debt, a peso that was pegged to the US dollar and rigid IMF austerity measures. A decade later, Europe is facing many of the same problems. Argentina’s recovery has plenty of lessons for the euro zone — if only it would listen…

    Two American economists, Nobel Prize winner Paul Krugman and crisis prophet Nouriel Roubini, have advised Europe to take a close look at the Argentine debt crisis. “It seems as if they still haven’t learned anything from our crash,” Lavagna says, pointing out that Europe has prescribed its debt-ridden member countries the same austerity measures that brought down Argentina. “That creates a long-lasting recession,” he says, “and the region spirals further and further into decline.”

    Roberto Lavagna, 69, ….fields calls from worried bankers in Spain or Portuguese investors seeking advice. The World Bank even flew Lavagna to Madrid for a recent seminar on the euro crisis.
    The elegant Argentine is considered a specialist in handling national bankruptcy. It was he who negotiated the restructuring of Argentina’s foreign debt during his term as economics minister from 2002 to 2005….”

    • uanime5
      Posted December 21, 2011 at 1:06 pm | Permalink

      Interesting thing about Argentina is that it has convinced several other South American states to bloc trade ships from a nearby island nation. The main reason is that they believe these islands should belong to them despite the wishes of the native people. A possible future for the UK if it leaves the EU?

      http://www.telegraph.co.uk/news/worldnews/southamerica/falklandislands/8969569/South-American-trading-bloc-bans-ships-with-Falklands-flags.html

      • A different Simon
        Posted December 21, 2011 at 4:46 pm | Permalink

        Yep , we have to reconcile our differences with Argentina .

        Going to be a lot easier to do a deal once decent volumes of oil are proved up .

        That could take decades as none of the big boys will get involved for fear of reprisals from South American countries .

        The latest sabre rattling could be timed to coincide with the arrival of a deep water exploration rig which is contracted to drill at least 4 holes in the South Falklands Basin starting as early as Feb 2012 .

  14. Brian Tomkinson
    Posted December 21, 2011 at 10:04 am | Permalink

    A fairy tale is typically a story about something that would not usually happen in real life but in this case it isn’t fiction but fact. Perhaps it would be better described as a horror story.

  15. Posted December 21, 2011 at 10:17 am | Permalink

    Personally, I can’t see that there is anything our government can do about the Euro mess, all it can do is to try to shield the country from the possible effects, without wasting our money in useless support schemes.
    What I am worried about is that our government doesn’t seem to be able to stop spending, that the deficit is still increasing, and it looks as if this country will loose its AAA Credit Rating.
    This report in today’s Mail is typical
    What bonfire? New ‘super quango’ has already hired 5,000 staff sacked from abolished health bodies
    So we abolish one lot of quangos, no doubt paying staff compensation for loss of their jobs, and then promptly re-employ them under a new name, no doubt to do the same jobs.
    It is this double dealing, which is tantamount to downright lies, and addiction to spending which I find far more worrying than problems with the Euro. It is not what I expect of a Conservative government.

    • alan jutson
      Posted December 21, 2011 at 1:08 pm | Permalink

      E P

      You are just filled with a feeling of despair when you read this sort of report.

      How and why is this allowed to happen John ?

      Who dreams up these sort of jobs and why ?.

      Where does the money come from to pay for it all, and who has authorised it ?

      If someone wants to drink, eat and smoke themselves to death, given all of the publicity on the subject, should we not just let them, but tax those items even more to either help pay for treatment whilst they are alive. Or the alternative, which is to refuse to treat them on account that it is self inflicted harm.

      • A different Simon
        Posted December 21, 2011 at 4:55 pm | Permalink

        Alan ,

        Surely someone who drinks/smokes/eats themselves to death is doing the country a favour ?

        We are overpopulated and if someone voluntarily takes 15 years off their life they are performing the nation a great service aren’t they ?

        Surely they will be saving the country at least £250,000 in old age pension and benefits (assuming they would retire destitute as the majority of the population will) never mind reducing the pressure on land an energy .

        If anything we should be subsidising these items .

        • alan jutson
          Posted December 22, 2011 at 9:07 am | Permalink

          a different Simon

          The problem is Simon these people do not die quickly, they usually use up vast sums of money from the NHS in the form of treatment, operations and drugs. hence th need for extra money from them to pay for it.

        • APL
          Posted December 22, 2011 at 9:20 am | Permalink

          Alan Jutson: “which is to refuse to treat them on account that it is self inflicted harm..”

          People who smoke and drink contribute substantially more tax to the revenue than a teatotal non smoker.

          Surely they should be able to expect something in return for their additional voluntary tax donations?

  16. Shade
    Posted December 21, 2011 at 10:40 am | Permalink

    I am sure the reality tale will go on to show that, if one approach to sharing the same bank account fails, another will be tried – and then another, and another etc.

    It is now beyond dispute that the EU project is, and always has been, about political union with a single currency and fiscal union as final building blocks. This has seemed obvious to many of us for a long time but we were told for years that this was not the case and that we were “winning the argument” in Brussels. Whilst there was a possibility that this may be correct, there were many who agreed that it was still worth the club membership fee. However, now that it is clear that we will be in a club of one , compared with the other 26 in their club (the real EU), there is absolutely no point in pretending to be in the same club. We should amicably resign our membership and wish the others all the best for their future. The only reason for not doing so (logical people don’t buy the 3 million jobs and peace arguments) would be that the politicians actually want to be in the single currency , fiscal union and political union.

    Surely our politicians wouldn’t lie to us – would they?

    Toodle pip

  17. More paper money
    Posted December 21, 2011 at 10:52 am | Permalink

    So the ECB is now printing 3 year money for banks, eh.

    Kicking the tin-can further down the road, just as the gradient of the road is getting steeper and steeper. What a “smart” move by the wise men!

  18. lojolondon
    Posted December 21, 2011 at 10:55 am | Permalink

    Dear John, I note you have totally avoided the personalities of the farmers. They are :
    – The onion farmer, who divided up his land for holiday homes and ended up unable to farm on the land that was left
    – The lazy, inefficient wine farmer who didn’t bother to tend his vines and so just hung around the pub all day with a begging bowl
    – The kindly farmer who pensioned his workers off earlier and earlier, until they could retire just before starting work
    – The small, green farmer who, upon finding his local bank was in trouble, bet his whole farm investing in it
    – The big, super-mechanised farmer, who did fantastic business selling goods to his inefficient neighbours. He thought he was a millionaire, but has recently discovered that no-one except his neighbours accept monopoly money, so totally worthless
    – Then, of course, there is the ‘nasty’ neighbour. He always wanted to play with the rest, but they always teased him and took his sandwiches. He kept bringing the best sandwiches to parties because he figured ‘well, they are only taxpayer’s sandwiches, and after all, maybe now they will like me’. for some reason he never wanted to share his bank with the others, so they envy, resent and hate him more than ever now, as he is the only one who is largely self-sufficient.

    • uanime5
      Posted December 21, 2011 at 1:09 pm | Permalink

      Is the self-sufficient ‘nasty’ neighbour a net importer? If so then they’re not self-sufficient.

      • lojolondon
        Posted December 21, 2011 at 2:57 pm | Permalink

        Nice try!
        Nasty neighbour exhibited balanced trade until fishing and farming was decimated by the Fourth Reich. However, still better off than the EUSSR, and will be far better off when the £15Bn per annum gift to the ugly sister is suddenly stopped.

  19. lola
    Posted December 21, 2011 at 10:55 am | Permalink

    I flatly disagree that the ‘markets’ (currency markets in the case) are wolves. They are not. They are more akin to a collective of wise trustees who do not want to risk their beneficiaries wealth on poor investments. Consequently they will stop investing in/ lending to countries that look as if they will default on their loans. The markets are the Good Guys. The EU are the Bad Guys. End of.

    reply: This is a Euro fairy story, so the good and bad are reversed from your point of view. That’s part of the humour of it! Today’s is a reminder that solidarity only goes so far in Euroland.

    • lola
      Posted December 21, 2011 at 12:40 pm | Permalink

      Quite. Apologies – I’m having a bit of a sense of humour bypass on all this now…

      • James Young
        Posted December 22, 2011 at 4:25 am | Permalink

        ah, I should have read further down the thread before posting my prior response. I still stand by it though!

  20. Posted December 21, 2011 at 10:59 am | Permalink

    I’m waiting for the bit where Merkel and Sarkozy fall down a well and get eaten by a wolf.

  21. lola
    Posted December 21, 2011 at 11:09 am | Permalink

    …and it’s more like EU la-la land.

  22. Androcles
    Posted December 21, 2011 at 11:12 am | Permalink

    Having invited us to “please write in with your issues and worries.” I am concerned about our banking system. To quote from another source — “The Independent Commission on Banking , the Vickers Commission, was established more than a year ago to consider structural reforms to the UK banking sector to promote financial stability and competition. It released their final report September 2011 and the Government stated this week that it has been accepted in full and will be implemented in full..
    The report is an utter failure against its stated objectives. In short, the Independent Commission on Banking has not addressed a fraction of the fundamental problems with the modern banking system.
    The Banking Commission is not a response to the financial crisis and has done nothing to fundamentally change the likelihood of future crises. It has done nothing to reduce the harm that banks can inflict on the rest of the economy, or to look at the impact that the banking system has on poverty, debt and inequality.
    Rather than looking at fundamentally changing the nature or structure of banking, they have focussed on what to do after the fatally-flawed banking system inevitably implodes.”

    In the entire 363 page report, there is only one mention – in banking jargon – of the fact that banks can create money, where this process is referred to as ‘credit creation’ (p166). There is no mention of this fact in the rest of the report, despite that fact that the most significant role of banks in their current form is the creation of money.

    In other places the Banking Commission refers to the massive creation of money by banks in the run up to the crisis in very indirect terms, saying things such as “Leverage ratios of assets to equity capital had ballooned to around forty times – twice historically normal levels…”, rather than simply stating that banks doubled the money supply in the space of 8 years.”

    John, would you please give your view on this issue.

    Reply: I do not recommend a return to gold or some other fixed system driven by commodity supply rather than by creedit creation and fiat currency. I understand the growing frustration with paper money and with fractional reserve banking, and recommend various ways of managing this system better.The establishment is a long way off wanting fundamental reform of the kind a link to gold would require.
    The first is to have more intelligent central banking. I have been a long standing critic of the Bank of England’s boom and bust run 2005-10.
    The second is to have much more commercial banking competition. I would have blocked various mergers in the last decade if I had the power. I am now urging the split up of RBS to create new competitors on the High Street as soon as possible, and to limit risks by limting the size of the new banks created.

    • RDM
      Posted December 21, 2011 at 3:30 pm | Permalink

      I totally agree with that!

      But could I add to the second;

      I believe we need a banking revolution, not just more competition! And to that end, could I borrow £10bn off the ECB, to start the “British Technology Investment Bank”?

      What do think of; Global forces behind the concentration of markets (banking, energy, etc …), added to state monopolies (BBC, BT, etc …) are to strong for competition to be that effective, the major players are finding it to easy to hold prices down. Or the cost of entry is to high for local competition?

      What’s your initial response to such a statement?

      Can we regulate markets with out making them less competitive, globally?
      Should we not allow innovation, technology, and even support local competition to breakup the state supported monopolies?
      etc…

      I’m (again) asking these questions, not because I can’t guess, in a round about way, your answers, but because I just can’t believe we have got our selves into this position! The way it looking at the moment, at best we have 10yrs of paying off debt, with 1% growth if we are lucky. Some of us still haven’t gotten over the 80’s!

  23. Denis Cooper
    Posted December 21, 2011 at 12:02 pm | Permalink

    Interesting commentary here:

    http://euobserver.com/843/114698

    “Doubts increase over usefulness of new fiscal treaty”

    “Just a few days into the making of a new intergovernmental treaty on fiscal discipline, serious questions are being raised about whether the slight draft offered to date is either useful or necessary.”

    “Following the first day of negotiation on the proposed 14-article treaty, first circulated at the end of last week, the three MEPs at the table noted that virtually all the provisions could be done using the current EU treaties.”

    “Both MEPs, briefing colleagues on Tuesday evening (20 December,) noted that the legal services could give no answer when specifically asked what in the draft pact could not be achieved under current EU law.”

    “There are legal doubts about whether an article in the EU treaty which suggests that if member states are in dispute over points of EU law the European Court of Justice can adjudicate, can be used as a model for the intergovernmental pact.

    But the political barrier is possibly higher. Verhofstadt pointed out that there has never been an incidence of member states fighting over application of EU law to the stage that it goes before court.

    Meanwhile, a suggestion in the draft pact that member states should police each others efforts to enforce the rules – for example Belgium bringing Germany to court for breaking the deficit rules – was similarly criticised.

    The current such article in the normal EU treaty has been used just six times in the last 60 years. By contrast the European Commission has brought legal cases for breach of EU law over 2000 times in the same period.”

    My own two comments on this:

    Firstly, Article 2 of the intergovernmental agreement explicitly acknowledges that it is legally inferior to the EU treaties and laws, and therefore it cannot permit any actions which would could not be permitted under the current EU treaties, which remain unchanged because Cameron refused to allow any changes to be made.

    Secondly, the draft agreement does not seek to allow Belgium to take Germany to the ECJ for breaking the deficit rules – that would still be disallowed by Article 260(10) TFEU in the EU treaties – the only recourse to the ECJ being if Belgium claimed that the “Balanced Budget Rule” law installed by Germany was inadequate.

    It would certainly be amusing to watch that happen, especially if the ECJ found for Belgium and Germany was then forced to change its national constitution to allow a stronger “Balance Budget Rule” law than it has now.

    • Denis Cooper
      Posted December 21, 2011 at 12:06 pm | Permalink

      That should have been Article 126(10) TFEU.

  24. Michael Read
    Posted December 21, 2011 at 12:23 pm | Permalink

    Come on. When you’re good, y0u’re very good and when you’re bad …

    The ambitions of eurocrats are of a piece with those of bankers. True, you deign to deliver the occasional kick to your erstwhile colleagues, most prominently in supporting the call for a separation of utility from casino operations, but nowhere near the gusto visited upon von rumpelwink and his pals.

    We are on our knees. Bankers have played a big part in our demise, helped by that socially dysfunctional misfit who happened to be our prime minister.

    Surely, we don’t have to loll in a tent outside St Paul’s cathedral to require you to show the same degree of enthusiasm for reforming the bankers as for those individuals who want to set up a Eurogulag.

  25. Alan Wheatley
    Posted December 21, 2011 at 12:36 pm | Permalink

    BBC BIAS

    For those with twenty minutes to spare I recommend the Culture, Media and Sport Select Committee hearing of 13th December when the BBC were questioned on their annual report. It is available on iPlayer as broadcast on 16th December at 18:45.

    In the context of EU bias, the questions from Philip Davies are most relevant, which start at about 1hr 13minutes.

    As Mark Thompson had agreed that polls have shown that, say, about 50% of the population are in favour of the UK leaving the EU, he was asked to explain why it is that monitoring of the BBC (by Newswatch) over the last eighteen months has shown that this point of view was represented by at most 2% of the coverage. Mark Thompson could not believe that there had been such a miss-match, he did not recognise the coverage figures quoted to him, and was confident that, for instance, the extensive coverage of issues relating to the recent EU summit have given a comprehensive and balanced view.

    Lord Patten joined in to point out that many polls over time have shown that the vast majority of the population trust the BBC, and that between 2/3 and 3/4 of the population rely on the BBC for their news. His conclusion was that if such large numbers are happy there could not possibly be the bias of which the BBC was being accused. I would like to have put to Lord Pattern that if you rely on a single source for your news you are not well placed to judge its trustworthiness.

  26. javelin
    Posted December 21, 2011 at 1:07 pm | Permalink

    Interesting to see another E489 bn liquidity pumped into the EU Banks – by 554 bidders. Easy money if you want to hold more soverign debt.

    Reminds me of the E442 bn alloted in June 2 years ago – and look how successful that was.

    My take on it was that it shows the weakness of the EU zone. Plus it diverts 554 billion from investing in the economy to propping up involvent Governments. In the long run its the tax payers risk. ECB has been sneaky and pulled a fast one on the Bundesbank too.

  27. javelin
    Posted December 21, 2011 at 1:12 pm | Permalink

    Following on from my previous comment.

    Its begining to look like banks and Governments getting into a symbiotic arrangement – where the public and business are actually left out the loop.

    Banks lend Governments money, and the Government borrow money from the banks. The Central Bank supply liquidity. Its all looking like money has been diverted away from the Economy and into a kind of “Repo Loop”.

    • javelin
      Posted December 21, 2011 at 3:55 pm | Permalink

      The markets have now given the thumbs down to the LTRO of today – from the fringe bloggers to PIMCO – all have denouced it as a Ponzi, or Shell Game (give with one hand and take with the other). Markets await French downgrade – that the French finance ministry has been manicaly setting expectations after being told by S&P last week.

      With faith in bonds now pretty much shot, and faith in equities being shot months ago, I await the French downgrade to see if there are any unforseen consequences during a quiet trading day before Christmas.

  28. Graham Hamblin
    Posted December 21, 2011 at 1:30 pm | Permalink
  29. Barbara Stevens
    Posted December 21, 2011 at 1:37 pm | Permalink

    John, my two kids have always been brought up to know, if you want anything, you have to work for it. They have, own their own houses, have worked consistantly, and not been unemployed. When one of them did lose her job she got another quickly. Also went back to college to enhance her chances. They are now both in employment, yet one is now on short time working. This crisis as effected his lifestyle and of course he as a mortage to pay. Fortunately both have no children so that expense won’t effect them. Paying their bills is a worry, but they have been told many times not to have debt, which they don’t have, or if they have reduce it as quickly as possible. They do live within their means, work hard, and don’t take holidays, drink or smoke. What else can they do. Yet, if they find themselves out of work, its these sort of people who find no help there at hand. Building Societies don’t help either when this happens, they are slow to help, and often like banks go for repocession far to quickly. I find this very annoying when people have worked itend to work again, the government should be helping these people more with the interest payments on the mortages, its far to long to wait for help 9 mths. Again, those that do work are penalised and those that don’t helped. What as this country come to.

    • alan jutson
      Posted December 21, 2011 at 2:57 pm | Permalink

      Barbara

      Your story could be told thousands of times over, but still it seems to make no difference to our political leaders.

      The System is designed against the way of life you outline, but in favour of those who do not want to work, who have lots of children, who remain single, who have no savings, who do not own their own property, and who plead poverty at every turn.

      The problem is so many promises of State (taxpayer funded) aid have been made to the group I describe, that they are now a huge voting block at any general election to keep the system as is.

      Aware Duncan Smith is trying to resolve some of the problems within the system, but the recent 5.2% rise in Benefits has killed that one absolutely stone dead for him.

  30. Bernard Otway
    Posted December 21, 2011 at 2:35 pm | Permalink

    To Uanime5 a question IF YOU DARE ANSWER IT which I doubt.
    And it is a question/comment I have made several times in the last three months.
    Given that when we bailed out Ireland last year we were told it was because they are our Largest single trading partner and we sell £29 billion a year to them [population 4.3 million]
    What could/SHOULD we sell to the combined population of Canada/Australia/New Zealand
    [65 million] all three Commonwealth countries many of whose people STILL refer to us as THE HOME COUNTRY,with lots of Family links,since WW2 5 million have gone to Australia alone from here,ONLY in direct proportion to their populations Vs Ireland
    we could/SHOULD be selling them £435 Billion pa YES FOUR HUNDRED AND THIRTY FIVE BILLION POUNDS,second part of the question when we joined the COMMON MARKET in the seventies europe generated 35% of World GDP in five years time this is
    going to be DOWN to app 15% ,did we therefore not shackle ourselves to a slowly DYING
    CORPSE and really should unshackle ourselves before the contagion from them turns into Gangrene. Funnily enough on reading that SAAB is filing for bankruptcy it was stated
    that the Chinese were offered but were NOT interested,you see they bought Volvo a couple of years ago,WHAT happens to the poor 3700 SAAB employees now WHITHER THE FABLED EU. We have the commonwealth to sell to and should ,the Spanish have the
    for want of a better word HISPANOPHERE and the Portuguese have the PORTUGOSPHERE,even the French have the FROGOSPHERE. Answer please cogently argued and written.

  31. Electro-Kevin
    Posted December 21, 2011 at 2:52 pm | Permalink

    Well since you ask of my issues and worries …

    I have terrible athlete’s foot which becomes resistant to all remedies. I fear that a mutant strain will break out from my toes and manifest itself as a flesh eating variety that will plague the whole of humanity – in time for Christmas.

    It may not be the kind of worry that you meant but it puts the EU in perspective does it not ?

  32. Posted December 21, 2011 at 6:06 pm | Permalink

    Sudden, massive progress on pensions. What happened? Did someone realise that public sector pensions are actually quite a sensible thing and that it’s better to devalue wages? Did someone lock Francis Maude in a cupboard? If so please buy whoever it was a single malt on me John. I’ll pay you back some day.

    Any chance of a reshuffle in the direction of sanity in education policy as a New Year treat?

    Also any chance that your story could recognise those who saw good policy in European relations as being a disparate, person-to-person thing rather than a central policy thing?

  33. Phil Richmond
    Posted December 21, 2011 at 11:08 pm | Permalink

    John – My fears and issues could take up a 10,000 word essay so I will list 3 new year wishes instead.

    1) Britain leaves the EU.
    2) A real Conservative leader becomes PM after a coup d’etat and replaces the current vacuous quisling incumbent. (possibly David Davies)
    3) A real Conservative Chancellor replaces the current clueless incumbent ( Yourself)

    Merry Christmas John. (or happy Winter Festival as they say on the BBC/Guardian)

  34. Posted January 5, 2012 at 6:44 am | Permalink

    Howdy would you mind sharing which blog platform you’re using? I’m planning to start my own blog soon but I’m having a difficult time selecting between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your layout seems different then most blogs and I’m looking for something unique. P.S Apologies for getting off-topic but I had to ask!

  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
    Published and promoted by Thomas Puddy for John Redwood, both of 30 Rose Street Wokingham RG40 1XU
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