Greek chaos


I find myself in agreement with some of the Greek left wing parties. I think cutting the minimum wage in Greece by 22% is wrong. It is too far too fast when the Greek economy has stalled for lack of demand. There are other easier cuts in spending that they might make, but only if they also take some positive action to stimulate the economy. That means getting out of the Euro.

I think it wrong that the EU tells Greek politicians what budget they should set. It removes the last vestiges of proper democratic accountability in Greece. The surprise is not that it triggered six resignations by Ministers,  but that it did not trigger the resignations of most of the rest. However, it all makes perfect sense if they are to remain locked into a single currency where other countries have to pay a lot of their bills. They need to resolve the issue of Who governs? They need to persuade all the voters in Euroland of a new political architecture which shifts decision making to the centre if they are to have any chance of getting the politics to reinforce the bureaucratic imperatives of a shared money.

There is a passive sullen response from much of the Greek establishment. They follow EU and IMF orders because they are told they have to. They are totally dependent on the next loan or hand out, so they feel they have to accept what they are told. Unfortunately for them too much of the “assistance” comes in the form of loans, and not enough in the form of grants. This leads to bigger debt problems. The Greek establishment then retaliates in the only way left to it, demanding a larger “hair cut” on the debt.

There is a fundamantal dishonesty in all this. If all concerned want the Euro to stick together they have to pay more for Greece. Surely it is more orderly and seemly to pay more up front, instead of pretending to lend them money and then conniving at default on the debt at a later date?

The Germans know from bitter experience just how dear it is to pay for a single currency in a state which struggles to keep up with the rest of the zone. They found they had to put billions into East Germany when they went for a premature currency union in 1990. They did not do that by “lending” money to East Germany. They just paid up. They do not want to do the same for Greece, because they do not have public consent to do so. Yet all the time Greece stays in this union, there are liabilities building up for German taxpayers. They may end up being paid by default rather than by voluntary grant, but it will come to the same thing.

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  1. Zorro
    Posted February 12, 2012 at 7:03 am | Permalink

    I cannot believe that the EU establishment think that their medicine will help the Greeks recover within the Eurozone. I do not think that is their objective. This is the first ‘vassal’ economy. The Geemans will eventually start demanding physical recompense for these loans. Let’s face it, the Greeks aren’t Germans so wouldn’t qualify for a grant…..

    Like a boa constrictor, they are squeezing the life out of Greece before swallowing it whole. They’ve gone beyond wanting the beach hut timeshare….

    I find it ironic that some who comment here are happy to defend this medicine in the Eurozone whilst screaming blue murder at some spending cuts or tax cuts to stimulate growth in the UK.


    • APL
      Posted February 12, 2012 at 11:51 am | Permalink

      Zorro: “I find it ironic that some who comment here are happy to defend this medicine in the Eurozone whilst screaming blue murder at some spending cuts or tax cuts to stimulate growth in the UK.”

      Two points.

      1 .Greece is being compelled to make cuts – because it is in the thrall of a foreign power.

      2. We need to make the same adjustment, because our government spending is dependent on how much the government can borrow.

      We had a short period of time to start to make the adjustment before like Greece we will be forced to adjust.

      Our politicians are clearly spineless, unprincipled, only in the job for the money they can skim out of the system and basically the situation is hopeless.

      Greece style civil unrest will follow in the UK within the next five years.

      • uanime5
        Posted February 12, 2012 at 8:40 pm | Permalink

        One point.

        1 .Greece is being compelled to make cuts – because it mismanaged its economy and now needs loans from a foreign power.

        • Disaffected
          Posted February 13, 2012 at 9:17 am | Permalink

          Yes, but the Europe knew this when they allowed Greece into the Euro. It does not have the ability to devalue its currency or any other mechanism to work its way out of the problem without giving the country to Europe to form part of the socialist pan European state they dream about. Greece was easy pickings.

    • Christopher Ekstrom
      Posted February 12, 2012 at 7:34 pm | Permalink

      The Greeks have continued on fighting WWII whilst the rest of us were fighting the Soviets. Now this deeply confused people are expected to wake up & smell the coffee. It’s a swindle. The Greek people will rise & reject this abnegation of their hard-won nationhood. Then they continue on being deeply confused/nuts & overspend as much as possible.

  2. Sue
    Posted February 12, 2012 at 7:09 am | Permalink

    I think the whole fiasco is disgraceful. What is worse, is we are members of this corrupt club. We need to distance ourselves from these greedy, self serving Eurocrats. My sympathies lie with the Greek people who are suffering terribly because of “The Project” while the Eurocrats continue to waste taxpayers money on their invasion of Europe.

    It’s time for all European citizens to be asked whether they want to continue with this idiocy!

    • NickW
      Posted February 12, 2012 at 10:21 am | Permalink

      At this point it is worth reminding everyone that all Eurocrats PAY NO TAX on their (enormous) salaries and expenses.

      They have exempted themselves from taxation.

      Morally, when one considers the problems caused by tax evasion in Greece and Italy, that is outrageous.

      By their actions, the Eurocrats are encouraging and supporting the behaviour which is destroying the Southern European economies.

      Perhaps if the Eurocrats set an example and voluntarily submitted themselves to taxation it might go a long way towards encouraging a reduction in tax evasion.

      And vice versa.

      • APL
        Posted February 12, 2012 at 11:54 am | Permalink

        Nick W: “Eurocrats PAY NO TAX on their (enormous) salaries and expenses.”

        Out of interest, does ‘Lord’ Kinnock, and ‘Lord’ Mandleson, pay tax in the UK on their European Union stipend?

        • lifelogic
          Posted February 13, 2012 at 9:40 am | Permalink

          I do not think they do in the UK.

          • APL
            Posted February 13, 2012 at 1:56 pm | Permalink

            lifelogic: “I do not think they do in the UK.”

            Supplementary question. Do these multimillionaire supporters of the Labour party who draw their income from foreign interests, do they actually contribute to the Labour party while not paying tax in the UK?

            ReplyNo, as it is illegal for a party to receive foreign donations

          • lifelogic
            Posted February 14, 2012 at 9:04 am | Permalink

            EU salary is taxed by the EU, rather than at the national level. Taxation varies between 8% and 45% depending on individual circumstances. Needless to say they also get lots of other “expenses” and fringe benefits too.

            I believe UK residents who receive such incomes/pensions can contribute to political parties perhaps even the ones that helped get them the job in the first place.

            Certainly the EU gives substantial funding to the BBC.

      • Bob
        Posted February 12, 2012 at 12:18 pm | Permalink

        I have no objection to Eurocrats not paying income tax as long as the same rule applies to all EU citizens.

        There shouldn’t be one rule for them and another rule for us.

        Abolish income tax!

    • uanime5
      Posted February 12, 2012 at 8:41 pm | Permalink

      The Greek people have suffered because they repeated elected incompetent leaders, not because of the EU which is currently trying to save their country from total collapse.

  3. lifelogic
    Posted February 12, 2012 at 7:21 am | Permalink

    “It removes the last vestiges of proper democratic accountability”. Not much in the way of vestiges are visible – even in the UK. Indeed had the majority of politicians and Major & all the Libdems had their unimpeded way we would probably be in the EURO and very nearly in just as bad a position.

    “They may end up being paid by default rather than by voluntary grant, but it will come to the same thing.”

    Indeed doubtless people like Osbourne will be handing over the loans while telling us how profitable the loans will be. How are our Irish & Greek profits coming on by the way Osbourne?

    • lifelogic
      Posted February 12, 2012 at 9:33 am | Permalink

      What about the ruling on prayers at council meetings? Is this going to finally push the comically lefty bishops out of the Lords or perhaps are we going to have unfair representation of all the religions, greens, imams, rabbis, astrologers, fengshui, hindu to distort what little remains of our democracy.

    • Disaffected
      Posted February 12, 2012 at 1:19 pm | Permalink

      And Clegg wants to change the culture of Britain. He made it clear before the last election: read Wikipedia. He does not like the British culture and he intends to change it.

      Christian faith being removed by stealth on a political whim after thousands of years in existence. First gay marriages in churches, no tax breaks for married couples. Bash CEOs and capitalism, keep welfare benefits very high so it does not pay to work under £35,000. Mass immigration to continue to fulfil the aims of changing our culture, let the EU run the UKs budget and ultimately let the UK become a region of the pan European state. Now the coalition wants to rob public and private sector pensions rather than make public spending cuts.

      • uanime5
        Posted February 12, 2012 at 8:49 pm | Permalink

        Christian faith starting being removed from the UK in the 18th century when David Hume realised it was all nonsense.

        Also England and Wales weren’t Christian until 380 when the Roman Empire formally adopted Christianity, so it hasn’t been in the UK for thousands of years.

  4. stred
    Posted February 12, 2012 at 7:36 am | Permalink

    Please correct me if wrong, but if further loans were refused to Greece then previous loans would probably be unpaid in full for the time being. However the government would be unable to pay the excessive number of generously paid state employees and pensioners and the necessary action would have to be taken internally.

    There would be no need to enforce a lowering of the minimum wage, as industries would have to adapt to survive. The European banks previously persuaded to lend to Greece would be bailed out with ECB money printing by the way of cheap loans.

    The problem has been caused by extending loans in the hope of avoiding a default by an overspending state which will never get rid of the excess spending until it has no way of paying for it. (The same could happen in the UK if it were not for the fraudulent buying back of loans to lower borrowing rates and fleecing of the non- feckless) The Euro would then recover and the previously overspent PIGIS would have to become competitive by adjustment of wages, pensions and taxation.

    • Electro-Kevin
      Posted February 12, 2012 at 10:42 am | Permalink

      Stred – I happen to agree.

      The majority of people within the EU seem to be – by varying degree – in state employ.

      Even so called ‘private sector’ workers are employed servicing people on the public sector payroll: builders, hairdressers, mechanics, waiters, waitresses…

      Our post war ‘wealth’ wasn’t wealth at all but newly available credit.

      Now the nasty grey man with his brief case has turned up at the door and he wants his money back. He’s getting paid in dodgy notes manufactured by Granny in the kitchen. (She has to live with us now owing to the shortage of housing stock)

      The nasty grey man knows this and has turned on the zero gravity machine – except it only works on precious metals and so all the gold and silverware is floating away… so too the bronze from the war memorial and cables from railway station.

      My guess is that many a disposessed youth from the more impoverished regions of the Eurozone will seek their way here for cramped lodgings and postable wages and I won’t blame them one bit.

      However, those I do blame are our own politicians who talk with authority on issues such as energy supply, housing supply, infrastructure supply, healthcare supply …

      What are their projections ?

      They haven’t a clue.

      Their ‘debates’ on everything, from how ‘our’ people will behave and what they will consume (especially how much) are entirely bogus.

      • Bill
        Posted February 12, 2012 at 11:20 am | Permalink

        My understanding is that the money received from Germany and elsewhere pays public sector workers in Greece. The Greek government or its officials are public sector workers. No wonder they accept it since the cash effectively finances their own wages.

        • stred
          Posted February 12, 2012 at 12:30 pm | Permalink

          It really is sickening to see the Greek political class conniving with the Eurocrats in order to keep paying their bloated salaries and pensions- to be paid for by lowering the wages of the already badly paid private employees.

        • Electro-Kevin
          Posted February 12, 2012 at 2:14 pm | Permalink

          Our fortunes are intertwined with the Greeks’ – if not through direct bailouts then via the IMF. If that doesn’t work then through open borders.

          David Cameron thinks we’re stupid.

          David Cameron is a liberal and all liberals think they’re right and that everyone else is stupid. I’m more Conservative than he is. Nearly two years in it is clear that he does not care much for his own people – just securing the ‘center ground’ to win the next general election.

          He won’t win. For the very same reason that he didn’t win the last election despite an open goal:

          Not because he’s white, male or Oxbridge educated but because clearly he’s never had to worry about paying a gas bill, worry about a yob kicking his front door in, worry about what his kids are going to do for a living or if they’ll ever be able to move out …

          Nor does he show any inkling of what makes the people who keep this country going tick.

          • Keith Peat
            Posted February 13, 2012 at 12:17 pm | Permalink

            He lost the last election because he allowed a Murdoch TV company to bully him into a live US style presidential debate. Until then, the Clegglet was going nowhere.

            We cannot now judge El Cam, simply because he is in a coalition.

            We must never allow this kind of live debate to happen again during elections. We are not electing presidents on a two party basis at election time.

            Until then, the Torys were 15 point ahead.

        • lifelogic
          Posted February 12, 2012 at 4:56 pm | Permalink

          Indeed it is the purchase and subversion of the state sector and no one gives a dam about the over taxed private sector – most, one assumes, are leaving or have left.

        • NickW
          Posted February 13, 2012 at 8:49 am | Permalink

          The data shows that the Greek people keep 19% of the bail-out money.

          The rest goes to Banks and the ECB.

          The Bailout money isn’t for the Greeks; its for the Banks.

    • Bazman
      Posted February 12, 2012 at 2:52 pm | Permalink

      What you are saying is to just pull the plug on any more finance. What do you think would then happen to huge swaths of the population before your wonderful correction took place? Could turnout to be even more expensive..

      • Electro-Kevin
        Posted February 12, 2012 at 7:32 pm | Permalink


        “Europe has lost a lot of money and therefore you must be poor now.”

        Former Malaysian PM Mohatir Mohamad.

    • uanime5
      Posted February 12, 2012 at 8:53 pm | Permalink

      The EU is trying to get rid of excessive Greek spending by not loaning them any money until they stop the excessive spending. So far it has worked and Greece is wasting less money.

  5. A.Sedgwick
    Posted February 12, 2012 at 8:22 am | Permalink

    “There is a fundamantal dishonesty in all this” – trademark of the EU.

    • lifelogic
      Posted February 12, 2012 at 9:27 am | Permalink

      Indeed war and gigantic fraud by legal means, but with fewer deaths. Other than perhaps a few elderly people unable to afford to heat their houses any more.

    • Alan Wheatley
      Posted February 12, 2012 at 9:33 am | Permalink


      In Alan Little’s programme, “Europe’s Choice”, last week we heard how Greece’s entry to the Euro was achieved by cooking the books, how it was known that this was what was being done, and how the political majority voted it through never the less.

  6. David B
    Posted February 12, 2012 at 9:12 am | Permalink

    It is the inherent issue with the euro. The plan was political union through monetary union (grab them by their wallets and the harts and minds will follow). The euro was therefore a political construct and as we found out with the ERM when political considerations diverge from economic ones the politicians in charge will try and hold a line even when it untenable.

    The political capital now being spent on the Euro and keeping Greece in it means that if they fail we will see the end of political careers in more countries than Greece and possible a new generation of politicians who do not have the same passion for the EU project.

  7. Alan Wheatley
    Posted February 12, 2012 at 9:21 am | Permalink

    The third of three BBC Radio 4 programmes, “Europe’s Choice”, is today (Sunday) at 13:30, and if the two previous programmes are anything to go by it will be half an hour well spent for those who would like a telling insight on how the EU has handled the Euro project. And for those critical of BBC bias this will offer some cheer as these programmes are definitely not pro EU propaganda.

    Programmes are available on the iPlayer for a week, and from the Programme’s web page as a prodcast download.

    • Bob
      Posted February 12, 2012 at 11:02 am | Permalink

      Sounds like Greece is in greater need of our foreign aid than India.
      If we scrap the marriage tax allowance and IHT reforms we can send them even more money.
      Why don’t we make swathes of our front line military personnel redundant too, after all if we have any need for military action our EU friends will always help us – E.G. The Falklands. I’m sure France would lend us an aircraft carrier (fully equipped) if needed.

      • Zorro
        Posted February 12, 2012 at 3:14 pm | Permalink

        They may supply us with some Exocet missiles too……oh wait


        • APL
          Posted February 12, 2012 at 8:59 pm | Permalink

          Zorro: ” some Exocet missiles too ”

          Yea, this time they may give them to us blunt end first.

          Some allies!

          The Belgians don’ t forget, refused to sell us high explosive too.

          Some allies!!

          • sjb
            Posted February 14, 2012 at 4:37 pm | Permalink

            “FRANCE was Britain’s greatest ally during the Falklands war, providing secret information to enable MI6 agents to sabotage Exocet missiles which were desperately sought by Argentina, according to Sir John Nott, who was Defence Secretary during the conflict.

            In his memoirs he reveals that while President Reagan was pressurising Lady Thatcher to accept a negotiated settlement France helped Britain to win the conflict.

            Although Lady Thatcher clashed with President Mitterrand over the future direction of Europe, he immediately came to her aid after Argentine forces invaded the Falklands in April 1982.

            “In so many ways Mitterrand and the French were our greatest allies,” Sir John says. ”

    • GJ Wyatt
      Posted February 12, 2012 at 12:32 pm | Permalink

      Agreed, though there’s not much new in Allan Little’s programmes for anyone who has been paying attention to euro matters, they are nevertheless riveting. Especially the finger pointing to double standards for the big countries which broke the Growth and Stability Pact. A burning building with no exits. It is quite astonishing that the Greeks with their history don’t go for the tried and tested decouple-default-devalue solution. They fear what the eurocrats in Brussels say, that leaving the Euro means leaving the EU. Meanwhile savvy Greeks send their capital abroad after they’ve bought that generator that enables them to avoid the taxes levied via electricity bills.

    • lifelogic
      Posted February 12, 2012 at 5:03 pm | Permalink

      Is anyone not critical of BBC bias? Will the programs cover the huge, almost pivotal, role the BBC has had in getting the UK and others in to this EURO top down undemocratic system of government.

      Clearly they need to back track a little as their EU line has been proven patently absurd like Majors ERM fiasco. But I would not trust them one inch (sorry 2.54cms in BBC talk) going forwards they will just be a little less biased. They are also back tracking on Climate but again not very much they are still infected with the religion but realise that few others are convinced.

  8. Mazz
    Posted February 12, 2012 at 9:36 am | Permalink

    In a public survey conducted by RASS, 48.1% of the Greeks say “Yes” to Bankruptcy, while 38% say “No”. The majority (61.5%) wants elections now.

    I wish the Greek people well. I hope Greece will stand up for their own democracy, against the non-democratic, dictatorial EUrocrats.

    • lifelogic
      Posted February 12, 2012 at 5:05 pm | Permalink

      The Greek people will I assume but their state sector just want to be paid it seems so will do as they are told.

    • uanime5
      Posted February 12, 2012 at 8:57 pm | Permalink

      Unless the Greeks can reform their economy so it goes from being massively in debt to producing a surplus without needing an extra money after the election they will still be reliant on the EU for bailouts.

  9. Brian Tomkinson
    Posted February 12, 2012 at 9:43 am | Permalink

    JR: “There is a fundamantal dishonesty in all this.”

    Correct and that dishonesty is at the heart of the anti-democratic EU. They have lied year after year that they don’t want a country called Europe or a United States of Europe when in fact that was their ultimate goal. They knew that if they asked people if they were happy to have their democratic rights and sovereignty removed they would receive a resounding rejection so they proceeded by stealth and deception. Worse still, because of their deceit they have constructed a currency which cannot function for the very reason that they have not established the political union they crave. If this were in the Middle East or North Africa our politicians would be voicing their outrage at this subjucation of democracy.

    • APL
      Posted February 12, 2012 at 9:01 pm | Permalink

      Brian Tomkinson: “They have lied year after year that they don’t want a country called Europe or a United States of Europe when in fact that was their ultimate goal.”

      To be fair, I don’t think that is disguised at all on the Continent.

      It’s our politicians that are the liars on that score.

  10. Alan Wheatley
    Posted February 12, 2012 at 9:51 am | Permalink

    What we are witnessing with the Euro is but a worked example of one of the consequences of membership of the EU (all be it probably in the most significant area).

    The same centralist, uniformity is being applied everywhere, irrespective of the benefits to member states. The EU is fundamentally and inherently undemocratic. It was always going to end in tears; what has been in doubt is when and by what route.

    Perhaps we are seeing the beginning of the end. It would seem that some EU politicians think so given there stubborn stance to save the Euro and their dire warns of the consequences for the EU should they fail.

    At heart the issue is the relationship between the state and the citizen. If citizens find themselves in a position where their governing institutions can no longer act in their best interest they will rightly conclude there is no merit in allegiance to those institutions.

  11. MajorFrustration
    Posted February 12, 2012 at 9:57 am | Permalink

    I am not quite sure what is supposed to happen after the 130bn loan is made – I presume the austerity measures work and the Greek economy emerges into the sunny uplands of a stable european economy. However the realist in me feels that (a) implemenation of the austerity measures will be ineffective – look at the capital/utility sales programme todate – ziltch (b) the new money is just going into a black hole and I very much doubt if any form of monitoring will prove effective.
    Better to let Greece go and use 130bn to support Spain and Italy.

    • NickW
      Posted February 12, 2012 at 3:31 pm | Permalink

      The previous loans given to Greece have failed because the austerity measures have put the economy into a death spiral.

      It is 100% certain that more loans and increasing austerity will make the situation worse.

      100% certainty.

      The current Greek PM is the man who cooked the books to get Greece into the EU in the first place. That does not make him a disinterested observer, he is already complicit in acts which resulted in appalling consequences for his country.

      • APL
        Posted February 12, 2012 at 9:06 pm | Permalink

        NickW: “The previous loans given to Greece have failed because the austerity measures have put the economy into a death spiral.”

        The loans are intended to keep the government of Greece solvent until they can align tax revenue with spending.

        To do that in most Western European economies would require a reduction of 25% in government spending. Given that Greece doesn’t collect nearly as much tax, as its contemporaries it is probably a worse percentage for Greece.

      • stred
        Posted February 13, 2012 at 9:43 am | Permalink

        He was a room mate and friend of George Papandreou when they were studying in the States. re Wiki. George was not a fully qualified (Euro compliant-ed) so he had to be usurped by his mate.

  12. outsider
    Posted February 12, 2012 at 10:07 am | Permalink

    The contract Greece is meant to sign with the troika is like victors’ terms after a war. Among much else, as I read the documents, they are effectively obliged to sell state assets and land to foreigners without even any regulation or safeguards.

    There is one good feature: they must make quarterly reports on their performance in meeting a long and detailed list of numerical targets. Perhaps our own government might achieve its fiscal plan better if it had to do the same. The trouble is that Parliament does not have the authority of the troika. After all, the Bank of England so reports on its inflation performance and is simply excused for failure with a nod and wink.
    Maybe the Greeks will say no, although as you will remember, Sir John Major was quite prepared to impose perpetual recession on the UK economy in 1992 in order to stay in the ERM and the Opposition was right behind him.

    One question: If Greece accepts the terms, Mr Redwood, do you still think it is inevitable that fiscal transfers will be regularized in order to sustain the single currency? If so, is it not the case that the 25 ( or even a few fewer) could push through a big rise in the next EU budget round to finance various old and new aid funds and the UK (like the Czech Republic, Sweden and Denmark) would have to make a full contribution to these fiscal transfers?

    Reply: They are finding alternatives to tax financed transfers through the banking system. No I do not expect them to push through a large increase in the EU budget and I do expect Mr Cameron to veto any large increase in the next multi year budget proposal.

    • APL
      Posted February 12, 2012 at 9:08 pm | Permalink

      JR: “I do expect Mr Cameron to veto any large increase in the next multi year budget proposal.”

      Another fantasy veto.

    • Alan Wheatley
      Posted February 12, 2012 at 9:24 pm | Permalink

      Re reply, is it only a “large” increase that is to be vetoed. “Large” is a VERY flexible word!

  13. oldtimer
    Posted February 12, 2012 at 10:51 am | Permalink

    The other aspect of German reunification is that the fx rate between East and West was set at 1:1. This was a political decision and against the advice and warnings of the then head of the Bundesbank. West Germany has been paying the price ever since.

    The euro construct is a similar, if not identical, case of inefficient economies being joined to the very efficient, but without the transfer payments that the former East Germany has enjoyed. Presumably the current generation of German politicians is well aware of this history and does not want to be sucked into a bottomless pit of transfer payments to the less efficient members of the EZ. The occasional hints that Greece should exit the EZ suggests this is so. It looks more and more as if Greece will default, they will not get their rollover finance and the the state will default on its repayments. It has all the signs of an impending disorderly default.

    • forthurst
      Posted February 12, 2012 at 2:20 pm | Permalink

      “West Germany has been paying the price ever since.”

      Even more so, has the East which became totally uncompetitive, at a stroke.

  14. alan jutson
    Posted February 12, 2012 at 10:56 am | Permalink

    The situation seems very simple, and could be resolved if politicians were simply honest.

    A government is elected to govern the country, if they are then incapable of running the country they should either resign and have a general election, or alternatively they outline the reasons as to why they cannot run the country in the manner they promised, and put forward a referendum choice with some solutions as to how to solve the problem.

    Thus the people decide their own fate and destiny.

    Cutting the minimum wage and simply sacking millions of people, will simply lead to more black market ecconomics and less tax receipts.

    The people have to face the facts, their own politicians got them into this mess by over spending and over borrowing, now its payback time, but if you ask people and institutions who loaned the money to simply take a haircut, then do not expect further finacial aid to be forthcoming from the same source without you having to put up some form of guarantee, and paying a higher rate for any future loans.

    The sad fact is many ordinary working and retired people will pay a heavy price.

    Civil unrest, very possible.

    Other Nations should take note.

    • NickW
      Posted February 12, 2012 at 3:25 pm | Permalink

      That democratic solution was vetoed by the EU.

      The former PM proposed a referendum and was kicked out of office by the unelected power clique at the head of the EU.

      When any Government is faced with two equally appalling but necessary choices, a referendum is the only way to minimise civil disorder during the implementation of their decision.

      Every single decision of the EU has made things worse for the Greeks.

      • alan jutson
        Posted February 12, 2012 at 7:43 pm | Permalink

        Nick W

        “That solution was vetoed by the EU”

        Yes it was, because rather unprincipled politicians chose to take advantage of the situation to gain p[ower for themselves, instead of agreeing with the proposed Referendum for a rather more democratic solution.

        • uanime5
          Posted February 12, 2012 at 9:08 pm | Permalink

          Actually it wasn’t vetoed by the EU, the Greek PM cancelled. All the EU did was tell the Greek PM that the bailout would be delayed until after the referendum (why give Greece a bailout if they’re only going to reject it) and the Greek PM realised that he couldn’t wait that long to for other people’s money.

          • alan jutson
            Posted February 13, 2012 at 8:39 am | Permalink



      • uanime5
        Posted February 12, 2012 at 9:07 pm | Permalink

        The Greek PM agreed to a bailout with the EU, then decided to hold a referendum on whether to accept the bailout and set the date of this referendum several months after he was meant to get the bailout. As a result the EU told him that he wouldn’t get the bailout until after the referendum (why give Greece a bailout if they’re only going to reject it). The Greek PM realised that he did need the money before the referendum to avoid bankruptcy so he cancelled the referendum.

        In conclusion there’s no point in Greece holding a referendum on a bailout if the country will go bankruptcy without it.

    • uanime5
      Posted February 12, 2012 at 9:00 pm | Permalink

      Are you describing the UK or Greece?

      • alan jutson
        Posted February 13, 2012 at 8:41 am | Permalink

        It could apply to almost any Country where a huge choice has to be made, and where politicians seem at odds with the will of the people.

  15. Dave B
    Posted February 12, 2012 at 11:06 am | Permalink

    I would have thought Mr Redwood would be recommending the abolition of the minimum wage in Greece, not lamenting a change in the numbers.

    Reply: I have often argued that a minimum wage either prices some people out of work or does nothing to raise wages. I opposed its introduction, preferring a minimum income system where tax and benefits help gurantee a decent minimum. However, I do have sympathy for low paid workers currently in work who are suddenly told they have 22% less. It’s a question of how you get from the wrong place to the right place – this is too far too fast. It will hurt a lot of low paid people, and depress demand further.

  16. Thatacher-right
    Posted February 12, 2012 at 11:13 am | Permalink

    I’m particularly concerned at the idea of bullying all the main stream parties into agreeing to the agreement terms before the election. This is logically equivalent to saying that if you don’t agree with the terms you have to vote for one of the fringe parties. Is that really what they want?

    • Zorro
      Posted February 12, 2012 at 3:34 pm | Permalink

      This is actually one of the most obscene aspects of the whole issue……effectively, they are dictating thrilling positions of sovereign people taking part in elections. The EU does not like elections or sovereign people exercising their right to choose.


      • Zorro
        Posted February 12, 2012 at 3:37 pm | Permalink

        Polling positions

    • uanime5
      Posted February 12, 2012 at 9:11 pm | Permalink

      If the Greeks don’t accept their terms they don’t get any money, that’s negotiation not bullying. Also all parties will have to comply with these terms if they want additional bailouts, so it doesn’t matter who is elected as long as Greece needs EU support.

  17. frank salmon
    Posted February 12, 2012 at 11:23 am | Permalink

    Fundamentally, the Germans are right to ask Greece to get into better shape. But we could end up with civil war if this goes on. Better to let the Greeks blame themselves by leaving the Euro and facing the realities. Ironically, what we really need to help them with is the principles of democracy and rule of law.

    • backofanenvelope
      Posted February 12, 2012 at 12:38 pm | Permalink

      Personally I think the EU is a force for war. You only have to see the newsreel shots from Greece to see that they blame the Germans for their predicament. If I was a German planning my holidays, I think I’d avoid Greece.

      • outsider
        Posted February 13, 2012 at 12:19 am | Permalink

        A BBC reporter claimed on Sunday night that he was attacked by Athens rioters who said they thought he was German. Does not sound good for expanding the Greek tourist industry.

  18. Damien
    Posted February 12, 2012 at 11:33 am | Permalink

    Yes its ugly and will only get worse no matter what the details of the latest lend and pretend scheme! The first € 110 billion in 2010 was just the down payment now to be followed by bailout number two € 130 billion (add another € 75 billion in ‘other costs’).Not even the Germans can expect the these measures to be agreed today will actually be implemented and inevitably another rescue package will be expected.

    UK exposure to Greek sovereign debt is around €14.6 billion compared to UK exposure to Irish debt which is €113.5 (BIS 2011). The Irish are determined to stick to the EU/IMF terms agreed for the bailout. One of those terms was for new legislation on handling bankruptcy.

    The draft Personal Insolvency Bill was published in late January and must be passed by the end of April 2012. The feeling is that by reducing the period of bankruptcy for individuals from 12 down to 3 years it would reduce bankruptcy tourism to the UK.

    The new Personal Insolvency Arrangement is a ‘voluntary arrangement’ and importantly will include mortgage debt. It will allow for debt forgiveness based on a persons financial circumstances. If the majority of creditors disagree then the PIA will not be settled. The government hope that the banks and other lenders will opt for PIA rather than bankruptcy and eviction as they think the banks would loose being forced sellers in a dire market.

    Various warnings have been issued about the impact of this new legislation with Moody’s estimating 25% of mortgages could be written down. Some say this could be over €30 billion. The EU/IMF say it is necessary to help the Irish economy move on.

    Bill Clinton hosting an investors summit for Ireland is very bullish on the prospects for Ireland reported as saying by the Irish Independent
    “You’d have to be nuts not to take advantage of the unique investment opportunity presented by one of the most business-friendly countries in the world, with the youngest, best-educated workforce in Europe and an unemployment pool of 14pc..” “If you think the US economy and the global economy will recover, Ireland is the place to invest. It is the only sophisticated economy in Europe with an average age lower than that of the US.”

    The UK has helped bailout Ireland and the Queen’s visit did much to improve relations however given the importance of bi lateral trade there has been little support voiced by our politicians for the decorum of the Irish in handling this crisis. Thankfully Ireland is not Greece!

    • NickW
      Posted February 12, 2012 at 3:38 pm | Permalink

      If European Governments are going to throw money at the debt problem, most people would agree that forgiving the debt at the household mortgage level is morally and practically superior to bailing out Banks.

      The consumer will immediately be able to begin spending and supporting the economy again, whereas bailout money given to Banks simply ends up in the pockets of pin striped bandits, where it stays, (or finds its way out of the Country).

  19. Keith Peat
    Posted February 12, 2012 at 12:08 pm | Permalink

    Sad thing is that all us little people may blog away with so much sense till the cows come home. Politicians learn early to appease those who keep pricking them with pins by allowing them to set the agenda, pretend to operate some ‘democratic’ solution and still finish up pleasing the disaffected or vested interest minority against the interests of the whole. Thus is the history of EU too. Why would it be different?

    However when we lost the 2nd World War to the US, who stripped us bare ‘helping its bestest friend’ to fight global tyranny, we had been left denuded of the world’s largest Navy and thus unable to even protect our own fishing grounds from Johnny Foreigner who the whole of Europe, not just the German’s, would defend against us if we did. In fact we were lucky that the Americans, after much thought, supported us and helped us with the Falklands war. Had they not they would have been the Malvinas since 1982.

    Defeatist? You betcha! Since 1944 until recently, we have been USA’s aircraft carrier, not even a USA State to enjoy their privileges and wealth in return, and now we have been handed over to the EU, no colonies, no dominions; a busted flush! So what are we all debating here? We no longer have a choice or any say with any major players; including Europe. What cards are we holding at all other than hot air that is?

  20. Tedgo
    Posted February 12, 2012 at 12:23 pm | Permalink

    Like the previous Prime Minister of Greece suggested there should be a referendum on the bailout. Such a referendum should also include the alternative option of an orderly default. Of course the previous PM was quickly removed. Finding someone to explain and promote an orderly default would also be difficult.

    I guess the next stage after the bailout will be a suspension of parliamentary elections on the grounds of national emergency.

    • uanime5
      Posted February 12, 2012 at 9:16 pm | Permalink

      Such as referendum would also have to be voted on before Greece got any bailout money. This means a Greek PM would have to negotiate the terms of the next bailout months in advance of needing it, rather than waiting until the last moment for the best deal.

  21. Single Acts
    Posted February 12, 2012 at 12:24 pm | Permalink

    “I find myself in agreement with some of the Greek left wing parties. I think cutting the minimum wage in Greece by 22% is wrong”

    Oh dear, you have been in Westminster a long time if you think you can ‘know’ what Greeks should earn. You surely accept someone’s pay should be the market price based on the interaction between buyers and sellers. Anything else causes unemployment.

    Does anyone seriously dispute this?

    Reply: No, I have often argued myself for market rates and no legislation to interfere. I am talking about the immediate impact and the pace of change, not suddenly arguing for government wage fixing if you do not start with it.

  22. figurewizard
    Posted February 12, 2012 at 12:26 pm | Permalink

    The demands of the EU are designed to save the crumbling edifice of the Euro and have little if anything to do with the long term interests of Greece. The Greek government’s problem with this is that while the politicians appear to be unable to understand this fact; the people on the street most certainly do.

    People versus the government is not a good recipe for a successful outcome; the only practicable way out of this mess for Greece is to do as some economists are beginning to say, which is for her to leave the Euro and submit to the discipline of devaluation. Judging by the pronouncements coming out of Berlin these days, the only objection to this can be a question of when.

  23. David John Wilson
    Posted February 12, 2012 at 12:56 pm | Permalink

    If the EU is serious about helping Greece it needs to stop treating it like a naughty child by punishing it at the same time as slipping it few Euros to see it over the next year.
    There is little evidence that any actions are being taken to help it improve its economy other than by insisting on cuts. A few positive actions like discounts on holidays in Greece, placing contracts with Grek companies etc. while probably only making a small difference to the actual monetary position would make huge differences to the morale and co-operation of the Greek people. Currently the reverse is happening and the rest of Europe is shying away from spending any money in Greece as they fear a default.
    The minimum wage proposal is partially an attempt to make foriegn spending in Greece more attractive. We should not criticize their attempts to solve problems in areas where we are unwilling to help. There are groups of the population in many countries in the EU where reducing the minimum wage would also reduce the unemployment level at little if any cost to the government.

    The UK should be seriously be looking at reducing the minimum wage for the under 25s. Even if this resulted in increased benefits in a few cases the overall money flow into the exchequer would probably be positive.

    • uanime5
      Posted February 12, 2012 at 9:20 pm | Permalink

      The Government has already reduce the minimum wage for everyone. Employers now call all their low paid jobs ‘apprenticeships’ and only have to pay one third of minimum wage. The result of this is that is that people earn less, pay less taxes, need more benefits, and spend less.

      • David John Wilson
        Posted February 13, 2012 at 1:30 pm | Permalink

        There is a need for apprenticeships to be required to lead to a recognised qualification. There should be a much stronger link between vocational courses in schools and colleges, the initial qualifications to which these lead and subsequent apprenticeships leading to further levels of qualification.
        There should be no discounting the minimum wage unless there is a recognised qualification in view.

  24. Leslie Singleton
    Posted February 12, 2012 at 1:05 pm | Permalink

    The present fiasco came about even though it was (really was) assumed it couldn’t happen, meaning that investors had a 100% rock solid (but wrong) belief that the more efficient and wealthier countries would subsidise the weaker–else why bother?

    Indeed it was not so long ago that Merkozy was saying loudly that it was simply out of the question that the IMF would be allowed, repeat allowed, to help a EU country.

    Given that the exigencies of economics and much else (such as differences in history and cultures not to mention the people concerned despising each other) swept all that away, what chance is there now of investors investing in Greece without fundamental revision in the whole basis of the EU–which is not on the cards, at least not yet, whether the Eurofanatics like it or not?

    It may be that Greece is more likely to receive investment if she stands up honestly, defaults and leaves the Euro–at least then investment would be based on a realistic, much higher, Drachma rate.

  25. Nick
    Posted February 12, 2012 at 1:14 pm | Permalink

    The UK is just as bust. In spite of promises to publish the numbers the government still persists in not doing this for the state pension and state second pension.

    The reason is clear. They have no intention of paying out any money for them. They know the bust is coming.

    Fraud all the way.

    So John, still not in the Whole of Government accounts as promised by you when you were trying to be re-elected? Just what have you got to hide?

    Reply: the government has published full accounts including public sector pension deficits, bank liabilities, PFI, PPP and other unfunded liabilities, unlike the previous government. We have argued before about the way to account for a pay as you go state pension scheme. You can add the capitalised value in if you like, there’s no secret about it. The num,bers are well known. The government thinks it is a pay as you go scheme, and just as the government does not capitalise the liability of those future pensions it does not capitalise the value of the tax revenues that will pay for it on the other side of the ledger.

    • JimF
      Posted February 12, 2012 at 10:31 pm | Permalink

      “The government thinks it is a pay as you go scheme, and just as the government does not capitalise the liability of those future pensions it does not capitalise the value of the tax revenues that will pay for it on the other side of the ledger.”

      It’s not really a pay-as-you-go scheme, is it?. It’s a benefit now, pay later scheme. A company or individual can’t relieve themselves from bankruptcy by insisting a creditor takes for granted future hypothetically possible revenue streams which aren’t presently crystallised or contracted for. Otherwise nobody would ever go bankrupt!

      This is where the dishonesty started, with government passing on the liabilities of fathers to their sons. Instead of righting this wrong, governments have increased liabilities pushed back, right until the cliff edge. Perhaps it started with Beveridge, some might blame Wilson or Heath or Barber or Brown.

      Reply: That is a tough view. In one sense then all public spending is an unfunded liability. We are promised future health care, future benefits if we need them, future defence – none of this is provided for by past savings. You have to stop somewhere when capitalising future costs. Companies do not have to capitalise future wages on their balance sheet though they have contractual liabilities to employees.

  26. Max Dunbar
    Posted February 12, 2012 at 1:32 pm | Permalink

    I can understand the German reluctance to bail out the Greeks. You make comparisons with the bailout of East Germany but I think that that is not the same thing. The Germans wanted to look after their own as they always have done and that is quite natural. There are many Greeks as well as Turks in Germany. They are still Greeks and still Turks and therefore treated as aliens by the Germans. The Greeks and Turks are almost indistinguishable from one another as Greece was under the control of the Ottoman Empire for hundreds of years. Ask a German what he thinks of the Turks (Greeks) and you will almost invariably get the same answer. Not a lot if sympathy.

    The Greeks have no love for the Germans either. At the end of the war German forces withdrew and Greece descended into anarchy and civil war immediately. British army units such as The Black Watch were stationed in Greece and fought the Greek communists and others. The political situation was very confused with many factions.

    There is a possibility that Greece will again be pushed into anarchy and civil war if this financial pressure continues, and that will probably mean a return of the “Colonels”. If the “Colonels” do not take over then another Balkan emergency may ensue and Britain could once again be involved on the ground in Greece.

  27. Johnny Norfolk
    Posted February 12, 2012 at 1:36 pm | Permalink

    This EU is the Evil Empire. We should have nothing to do with it.

    • Keith Peat
      Posted February 12, 2012 at 11:33 pm | Permalink

      Damned if we do. Damned if we don’t now though. We couldn’t even defend our 12 mile limit from the EU now if we had to!

  28. StevenL
    Posted February 12, 2012 at 1:48 pm | Permalink

    cutting the minimum wage in Greece by 22% is wrong

    Won’t that just lead to more ‘cash in hand’ tax evasion? I know little of Greece, but they are said to be worse than Italy for this, and my Italian mates tell me this kind of thing is rife. Minimum wages go through the books and the rest doesn’t. They are all sitting on piles of illegally obtained Euro banknotes they need to launder apparently.

    • uanime5
      Posted February 12, 2012 at 9:23 pm | Permalink

      As Greece doesn’t have income tax it’s easy to avoid paying taxes on the money you earn. Something the Greek Government needs to crack down on if they don’t want to be reliant on EU bailouts.

  29. Michael Read
    Posted February 12, 2012 at 2:01 pm | Permalink

    Yeh, but … isn’t the government acting in the same way regarding the NHS.

    Nothing in the manifesto about what was planned. If anything, it was business as usual. Then, when the election is lost and a government of convenience borne out of desperation is formed then cue health service reform.

    This is exactly as a Eurocracy would act. You’re all at it together.

    Reply: I have set out in the past on this site the pledge to reform the NHS in the last Manifesto.

  30. David Langley
    Posted February 12, 2012 at 2:04 pm | Permalink

    John, its amazing, in the micro world if you are a business and going bust, going to the bank for a loan to pay your creditors will get you back out on the street fast Banks do not lend to pay debts as it is obvious you will not be able to repay the loan as your business plan is dead.
    Plus it is a crime to get supply without the means to pay. This is a country doing the same thing, and it is illegal by the rules of the EU, and the ECB surely. It has to be madness and of course will end in default but on a grander scale.

  31. Bazman
    Posted February 12, 2012 at 2:59 pm | Permalink

    A united Germany is everything to Germans They just paid. Almost the day after the fall of the wall a DM was put on a pack cigarettes to help pay for this.

  32. Martyn
    Posted February 12, 2012 at 3:05 pm | Permalink

    Did anyone else see a Reuters report last Friday on a letter allegedly from the Federation of Greek Police, who accused the IMF’s top official for Greece, Poul Thomsen of “…blackmail, covertly abolishing or eroding democracy and national sovereignty” and threatening to raise an arrest warrent for his detention? Apparently the threat is largely symbolic since legal experts say a judge must first authorize such warrants, but it shows the depth of anger against foreign lenders who have demanded drastic wage and pension cuts in exchange for funds to keep Greece afloat. The letter continued “Since you are continuing this destructive policy, we warn you that you cannot make us fight against our brothers. We refuse to stand against our parents, our brothers, our children or any citizen who protests and demands a change of policy,” said the Federation, which represents more than two-thirds of Greek policemen.
    I doubt it would get anywhere near that stage, but it does seem to indicate dangerously rising tension and resentment in the Greek populace; one wonders what would happen if their police force went on strike?

  33. sm
    Posted February 12, 2012 at 3:20 pm | Permalink

    Who is gaining or not losing from the present arrangement? Both in Greece and the EU. It just keeps grinding on.

    There must be an election surely and a choice given to the Greeks people? The eurozone/Greeks can then decide to pay up with direct transfers or walk away to let the Greeks resolve it internally.

    Looks like the EU having bailed out itself may be able to watch the local athenian state go into bankruptcy. The problem is any deal they make cannot peaceably stand without the support of the people of Greece.

    Do elections matter any more?

  34. badgerbill
    Posted February 12, 2012 at 4:37 pm | Permalink

    What could not be achieved by military means in two World Wars has been seen to fail misrerably by economic means thereafter.

    All that has been achieved is the impovrishment of the poorer countries of Europe.

    The EU politicians and those who sympathise with them in this country are a disgrace and ” should be taken outside and shot!”

    All they have achieved is austerity and poverty for the poor who unlike their ‘betters’ have no money to fall back on.

    It is a reflection upon those who are from moneyed and upper/ middle class backgrounds that they have the country in the state it has become. They are an incompetent disgrace to the nation!

  35. Richard1
    Posted February 12, 2012 at 5:02 pm | Permalink

    Very well set out. It would be good to see or hear an actual debate on this, but there never is. Its like ships passing in the night. You and others set out a logical argument for Greece leaving the Euro but no Euro enthusiasts seem to be available to debate it. Its the same vice versa. Rather like global warming. You can hear the arguments on both sides, but never a debate. If there are any EU officials reading this, or Lib Dem / Labour Euro enthusiasts for example, could I ask them to set out why they might disagree with the argument above?

    • uanime5
      Posted February 12, 2012 at 9:31 pm | Permalink

      There’s usually no debate as everyone posts their own opinions and everyone else usually agrees with them or ignores them. Surprisingly there are very few pro-EU non-Conservative on the blog of a Conservative MP.

      Here are 3 reasons why leaving the Euro is bad idea.

      1) As all of Greece’s debts will remain in Euros if they leave the Euro and create a new drachma, which will rapidly devalue, this will cause their debts to increase massively. Also I doubt any country will convert their debts in drachmas as Greece may try to inflate their way out of debt.

      2) While it will make Greek exports better value it will hugely increase the cost of their imports. As Greece is a net importer leaving the Euro will be more detrimental than beneficial.

      3) Neighbouring countries still in the Euro will be able to pay far more for Greek items than Greeks using a devalued drachma. So if neighbouring countries purchase large amounts of raw materials from Greece, rather than manufactured goods, this will result in Greece industries producing less goods and having less to export.

      I may return tomorrow for your answers or I may just read the tomorrows topic and forget all about yesterday’s topic.

      Reply: Even your warped analysis accepts that a devaluation would lead to Greece buying fewer imports and exporting more, something that economy needs to do.

      • outsider
        Posted February 13, 2012 at 2:11 pm | Permalink

        Dear Uanime5;
        You are right that the issues are not clearcut. The best lesson I learnt about economic policy, at the feet of Lord (RF) Kahn, was that the comparison of two systems is less important than the effects of the process of change from one to the other.
        1) Greece is uncompetitive. The choice is between external devaluation and internal deflation of wages and prices. Both cut living standards but internal deflation cuts GDP and the tax base while devaluation focuses the pain on imported goods, such as oil, that the country needs to cut back.
        2) Leaving a currency zone is much more complex than normal devaluation. We await the outcome of the “Wolfson prize” with interest. But it is widely agreed that national debt would be switched to the new currency. Private contracts are another matter. Money supply is critical.
        3) Neither course would solve the debt problem. The choice there is between almost impossible austerity, a haircut that leaves 120% debt but brings EU financial support, or a 100% default that would oblige the Greek government to maintain a (somewhat smaller) primary budget surplus indefinitely.

      • uanime5
        Posted February 13, 2012 at 4:19 pm | Permalink

        The problem arises when Greece needs these imports to make their exports, for example they need to import wood to make chairs. A higher cost of imports and lower price for exports is usually bad for business.

        Another problem with raising the cost of imports is that if you import a lot of food then the price of food will rapidly increase until more food can be produced domestically. Resulting in several years of very expensive foods and probably some riots.

        Greece will need to do a lot of restructuring before it is able to use a new currency that will rapidly devalue.

        • outsider
          Posted February 13, 2012 at 6:29 pm | Permalink

          Yes devaluation has costs but, as we found in 1967 and 2008-9, it is tolerable.
          You overstate the problem with chairs, supposing such an industry exists. If you work in one currency (drachmas or euros) you will see that devaluation only affects one side of the equation, not both.
          Greece should be largely self-sufficient in food though its large agriculture sector is notoriously inefficient and backward (eg poor quality wine, undeveloped fish production).

    • Keith Peat
      Posted February 12, 2012 at 11:49 pm | Permalink

      That usually happens when one side is telling truth and not twisting it, and is keen on debate, and the other is exactly the opposite. Those with a hidden agenda or any agenda are never interested in debate.

      Officials, especially in the EU, use cognitive dissonance for any number of things from global warming, road safety mantras, and the EU itself. All have one thing in common; individuals or companies on the make.

  36. Barbara Stevens
    Posted February 12, 2012 at 6:19 pm | Permalink

    I feel what the EU is doing to Greece is tantamount to blackmail, when they agree they then move the goal posts. You cannot keep demanding more and more, if there’s no money or growth to pay for it. What they are doing is pushing them out gradually, they want Greece to pull out and then they will not be accused of throwing them out. Of course we all know that’s exactly what they are doing. Yes, the country could do other things to make money, by selling off some state organisations. Why they refuse to do this I’ll never know. It appears cutting from the people who earn the least is a recipe for disaster.
    I wouldn’t be surprised if the army does not take over, again, and we have a coup in the EU. Its a fragile democracy and the EU is pushing the country to the limit. Yes, it as it’s self to blame, but so does Germany have some responsiblity, for selling them goods they couldn’t pay for and borrowing to do it. It was the greed of Germans that helped create this situation, and greed of the Greeks to think they could spend today without a thought for tomorrow. May be this will be a lesson to us all.
    I think Greece would be better off coming out of the Euro and applying to the IMF for help, and setting their own rates, and working toward survival themselves, and of course free to do it. I wouldn’t join once free from it, and I don’t think they would after this fiasco. I wish them luck.

    • uanime5
      Posted February 12, 2012 at 9:36 pm | Permalink

      “You cannot keep demanding more and more, if there’s no money or growth to pay for it.”

      The EU is giving Greece the money to pay for this. Also without the loans there would be even less money and growth.

      “Yes, it as it’s self to blame, but so does Germany have some responsiblity, for selling them goods they couldn’t pay for and borrowing to do it.”

      This isn’t Germany’s fault, only Greece’s for buying things it couldn’t afford.

  37. Denis Cooper
    Posted February 12, 2012 at 6:22 pm | Permalink

    Greece should leave the euro, installing the old or a new drachma as legal tender.

    The Greek government should redenominate its debts in drachma, so that it can be sure of paying the nominal sums even though the devaluation of the drachma would cut their value in euros.

    The bondholders already face losing about 70%, so redenomination of the bonds into drachma would make little difference to their losses but would be simpler and cleaner.

    Unfortunately this won’t happen until Merkel has had enough and orders it to happen.

  38. Gideon Mack
    Posted February 12, 2012 at 6:23 pm | Permalink

    The Greeks and only the Greeks are to blame for their insignificant predicamet (to the UK) and the Germans are responsible for bailing them out as they need the Euro stability the most.

    Shock horror – it really doesn’t matter to us despite what the BBC may tell us – what will be will be – we’re out of the Eurozone and just as poor off. Ignore the Greek tragedy and it will not come back to haunt us – trust me.

  39. Jon
    Posted February 12, 2012 at 7:00 pm | Permalink

    What is happening now in the Greek Parliament is confirmation that the problem will still run and run.

    The default negotiated recently will do two things. Drive up real interest rates pushing forward the need for the next bailout and scaring away bond buyers from Spain, Portugal and Italy driving up the real interest rates or the need for further ECB purchases. Further purchases using assets of the nation states as collateral like Germany’s. Surely the public in Germany can see what is going on now?

  40. uanime5
    Posted February 12, 2012 at 8:38 pm | Permalink

    “I think cutting the minimum wage in Greece by 22% is wrong.”

    I trust you also object the Government’s wage for apprentices, which lets employers pay adults one third of the minimum wage.

    “There are other easier cuts in spending that they might make, but only if they also take some positive action to stimulate the economy. That means getting out of the Euro.”

    Doing this will not stimulate the economy but will cause 3 major problems:

    1) As all of Greece’s debts will remain in Euros if they leave the Euro and create a new drachma, which will rapidly devalue, this will cause their debts to increase massively.

    2) While it will make Greek exports better value it will hugely increase the cost of their imports. As Greece is a net importer leaving the Euro will be more detrimental than beneficial.

    3) Neighbouring countries still in the Euro will be able to pay far more for Greek items than Greeks using a devalued drachma. So if neighbouring countries purchase large amounts of raw materials from Greece, rather than manufactured goods, this will result in Greece industries producing less goods and having less to export.

    “I think it wrong that the EU tells Greek politicians what budget they should set. It removes the last vestiges of proper democratic accountability in Greece.”

    I disagree. If Greece wants an EU bailout they have to comply with the requirements for this bailout. It’s no different from a country restructuring in exchange for an IMF bailout.

    “They follow EU and IMF orders because they are told they have to. They are totally dependent on the next loan or hand out, so they feel they have to accept what they are told.”

    Had they run their economy better the EU and IMF would not have to sort out their mess. They have only themselves to blame.

    • APL
      Posted February 13, 2012 at 2:15 pm | Permalink

      uanime5: “I trust you also object the Government’s wage for apprentices, which lets employers pay adults one third of the minimum wage.”

      If someone is an apprentice, the implication is that person is not fully qualified or experienced to carry out the job, thus it is reasonable to pay that person a lower wage until his apprenticeship is finished?

      That sounds reasonable to me.

  41. JimF
    Posted February 12, 2012 at 10:35 pm | Permalink

    So, compare the speeches of two politicians, Mr Cameron and Mr Farage, over the past few years.
    Which of the two most accurately predicted the contemporary scenario you so lucidly describe? With whom would you rather go into political or any other battle?

  42. Andrew Johnson
    Posted February 12, 2012 at 10:36 pm | Permalink

    Please do not post my previous comment. It was sent in error.

  43. pete
    Posted February 13, 2012 at 7:57 am | Permalink

    It seems all their doing is firefighting and thus buying time whilst throwing more money at something which is not going to work.

    It doesn’t take an economist to work out that if you cant add something to deep cuts like lowering taxes, devaluing currencies (which they cant) to get things moving then its simply not going to work.

  44. MajorFrustration
    Posted February 13, 2012 at 4:08 pm | Permalink

    Do we know how the first tranche of the bailout was used?

  45. Backwoodsman
    Posted February 13, 2012 at 8:13 pm | Permalink

    Surely you are right. In the present highly volatile state of Greece it cannot be wise to reduce the legislated minimum wage at the insistence of an external agency,however righteous.Humiliated nationalism and intensifying political and social alienation are a powerful and dangerous combination,especially when there is no short or medium term hope of redemption.
    It so obviously opens up the prospect of further widespread disorder and the potential collapse of democratic and constitutional government that it invites speculation as to underlying non-economic motivation.What is the likely EU response to a ‘failed state’ among its members?

  46. Javelin
    Posted February 13, 2012 at 10:41 pm | Permalink

    The people of Greece have not grasped the depth of their crisis.

    A few burnt out buildings does not reflect a country whose standard of living is going drop by 30% over the next couple of years and is being run by a ex-banker who is a EUrophile.

    The gravity of situation in History does not reflect the people’s will on the ground. That will come to an end.

  47. Derek Emery
    Posted February 13, 2012 at 11:40 pm | Permalink

    The EU is a slow train crash. Merkel’s policies cannot work except for Germany. It’s pure fiction that the EU will become closer in economic performance terms by having all decisions at the centre and with the same taxation etc throughout. This arrangement only benefits Germany with its much higher productivity. The German EZ balance of payments surplus has to equal the rest of the EZs deficit. The debt brake will punish the rest of the EZ which will have to import capital (i.e borrow) year on year to fund this deficit. In a proper state such money is given by the rich regions to support the poor. It is patently obvious from the UK and US a single currency and common taxation and gifting money to regions does little or nothing to address the massive wealth difference between regions that have existed for hundreds of years.

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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