Euro 2 billion to help Greece

 

The EU came to Greece’s aid, with Euro 2bn to ease the Greek “humanitarian crisis”.

It’s all part of their “too little, too late” strategy towards the Euro. Forcing Greece into the Euro prematurely was a mistake by Greece and the other members. Offering the new government 2bn Euros of charity is not going to tackle the underlying structural faults of the scheme, nor will it get Greece back to work. Once you have allowed unsuitable economies into your single currency scheme, the whole zone has   a problem as well as the problem country.

The recent meeting between Mrs Merkel and the Greek Prime Minister may have defused a few  of the extreme tensions between Germany and Greece, but it did nothing to resolve the fundamental issue – who will pay the Greek bills coming up. Mrs Merkel was doubtless  sincere in saying she wants Greece to experience economic recovery and rising employment, but such words create no jobs.

The Greek state and economy needs more money. The Greek PM says he does not want to borrow more, yet that is exactly what he has to do if the rest of the Euro area will not give him the cash he needs. The Greek commercial banks are dependent on support from the European Central Bank, and have had to borrow from the ECB to handle deposit loss. The Greek state needs to borrow more cash to pay its day to day bills, as it seems a tax shortfall once again leaves the government spending more than it raises in taxation. The Greek state also needs to find the money to repay some of the older borrowings as they fall due.

Greece cannot just print its own cash for its banking system as a country with its own currency can. Nor can the Greek state simply issue more Treasury Bills or bonds to borrow more to carry on spending, as all of Greece’s borrowings are under control as part of the loan agreement called the Master Financial Assistance Facility.  The truth is Greece can run out of money, and can be squeezed by borrowing rules, loan covenants and by the European Central Bank.

Mrs Merkel’s fine words about growth, and the EU’s 2bn assistance is a sign of some willingness to compromise. It is still way off the scale of the debt relief or new money that Greece needs to repair the damage to its recession ridden economy with mass unemployment at worrying levels.

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81 Comments

  1. Mark B
    Posted March 25, 2015 at 5:43 am | Permalink

    Good morning.

    Can we talk about Iceland and how they are doing after their financial crash ?

    😉

    If Chancellor Merkel wanted to help Greece, she would tell Mercedes Benz, Bosch and all the other German manufacturers that have benefited from loans made to Greece to by their goods, to relocated there. German jobs for Greek people.

    Otherwise this is going to go on and on.

    • Bac
      Posted March 25, 2015 at 10:34 am | Permalink

      What shame that the EU-funded Ford van factory wasn’t sited in Greece rather than Turkey!

      • A different Simon
        Posted March 25, 2015 at 6:17 pm | Permalink

        Getting shot of the Southampton Ford works will help us stay within our legally binding carbon dioxide budgets .

      • Mark B
        Posted March 25, 2015 at 6:20 pm | Permalink

        What an even bigger shame that UK Citizens in Southampton had their jobs taken from them by the EU and the money Ford used came from member countries and taxpayers.

        And they talk about losing jobs if we leave.

      • stred
        Posted March 25, 2015 at 6:42 pm | Permalink

        Possibly because Turkey doesn’t have to follow EU rules on energy. They obviously didn’t want to fund it staying in Southampton. Fortunately the diesel engine factory iis still going in Dagenham, but the current campaign to condemn diesel on grounds of NO2 doesn’t help, even though pollution is actually reducing and death rates are not increasing.

    • agricola
      Posted March 25, 2015 at 10:46 am | Permalink

      Iceland, why not I wonder. From a government deficit to GDP of -13.5% in 2008 reducing to a normality of -2.1% 2013, -2.0% 2014, and an estimated -2.1 in 2015. I would submit that they had the courage to refuse to bail out their banks and the reason you do not hear much about it is that it worked and left much egg on the face of UK government who chose to bail out their banks.

      Your solution for Greece has merit, but lets not overdo it. Greece needs more industry for sure, but I still believe they must revert to the Drachma even after putting the whole public edifice in order. The Drachma would allow them to take full advantage of the tourist assets they already have.

      • Lifelogic
        Posted March 25, 2015 at 4:26 pm | Permalink

        Indeed the UK bailed out the banks but left many of the banks customers to be robbed dry.

      • Mark B
        Posted March 25, 2015 at 6:23 pm | Permalink

        Whilst I agree with you, there are two points to make.

        1) Greece and her people, do NOT want to leave the Euro.

        2) Despite what everyone in the EU says, they do NOT want Greece to leave the Euro.

        Ergo, Greece will NEVER leave the Euro and this will go on and on. The ONLY solution, and it is the ONLY solution, is FULL political, Economic and monetary UNION.

      • Jon
        Posted March 25, 2015 at 7:24 pm | Permalink

        If Greece went back to the Drachma they would get international aid in the early days. There would be a massive influx of investment from business taking advantage of the cheap land, factories and labour. Could even become a haven for wealthy Russians. They won’t be rich but employment will shoot up and will have a functioning economy, what then for the EU project seeing that? The EU doesn’t want to see that happen so they will drag this saga out.

        The EUurozone will be saddled with the defaulted debt and looking at a thriving holiday destination. Spain after?

    • Richard1
      Posted March 25, 2015 at 5:42 pm | Permalink

      So the perma-stubbled leftists at the BBC have finally managed to purge Jeremy Clarkson. I signed the petition to keep him, not because i watch Top Gear – although the bits i’ve seen and heard were excellent and amusing – but because Jeremy Clarkson represents diversity for the BBC, dominated as it is by Guardianista metropolitan leftism. If the Conservatives win the election its time to move the BBC to a subscription model so it is obliged to serve its customers better than it now does. Poll tax based state funding is bad news for the BBC and entrenches statist and fashionably political correct leftism.

    • forthurst
      Posted March 25, 2015 at 7:01 pm | Permalink

      “German jobs for Greek people.”

      If Merkel told Mercedes and Bosch etc to relocate to Greece, would they in their turn be able to instruct their component suppliers to do likewise? Perhaps Mercedes and Bosch etc might have to relocate thousands of design and process engineers unless Greece has a surfeit of unemployed highly skilled mechanical engineers, not to mention technicians? At least Greece has a large mercantile fleet so they should have no difficulty shipping the finished goods back to Rotterdam.

  2. Lifelogic
    Posted March 25, 2015 at 6:48 am | Permalink

    When in a hole keep digging just seems to be the EU’s way.

    JR what about the fact that Osborne not ruling out yet further VAT increases for the huge 20% level, his budget pension cap muggings and the absurd subletting without permission of the owner proposals. Does he not even know about the imminent election or does he just want to lose? What about the £700 per property landlord licencing (back door tax on rents) and all the other absurdities that create pointless jobs for parasites and increase rents and inefficiency?

    I see that a Lords committee says that economic case for £50bn HS2 not been made. Rather a huge understatement, the project is clearly complete and utter economic lunacy. Why not get rid of this, attack the rest of the government waste and stop all the green subsidy scams (retrospectively or tax them) rather than introduce yet more tax muggings on the productive?

    Reply I voted against HS2 and argued it was not a good investment at the time. I see no wish by the main parties to rethink this.

    • Lifelogic
      Posted March 25, 2015 at 8:42 am | Permalink

      I understand the Lords committee cannot even get full access current usage and other figures so desperate are the government to push the mad HS2 project through.

      • Leslie Singleton
        Posted March 25, 2015 at 10:40 am | Permalink

        I agree with Lifelogic on this especially as HS2 as of now, fatuously, is not going to join on to HS1–the main point I should have thought–Freight from Manchester to Madrid and all that–indeed it is a wonder that Brussels hasn’t issued a directive that they be joined. OK nobody wants to demolish Camden Town but what would be wrong with a junction a few miles North of London probably on the M25 which would not be significantly harder to get to than Euston–indeed for many people it would be easier on basis that anything better than going in to London. To the big important businessmen with their laptops, a taxi or whatever to the new junction would not be very different from one to Euston. And if the junction were on a revived Marylebone/ Great Central route with its bridge heights already at the European gauge so much the better; indeed apart from the pure vanity aspects, I have never heard a word that makes sense to explain why the latter route is not revived almost in its entirety saving perhaps £40 billion. With a modicum of bend straightening it would perhaps be an extra 5 minutes to Birmingham.

        • yulwaymartyn
          Posted March 25, 2015 at 8:24 pm | Permalink

          It took me four and half hours to go from Brighton to East london two weeks ago starting at 6pm. The infrastructure of this country is a disgrace; all the road traffic coming up from the tunnel has to go round the London orbital motorway which is now hopelessly overcrowded. How any politician can say that the roof is mended etc etc is living in a fantasy.

    • Bob
      Posted March 25, 2015 at 2:05 pm | Permalink

      “Reply I voted against HS2 and argued it was not a good investment at the time. I see no wish by the main parties to rethink this. “

      You’re right Mr Redwood, the LibLabCon party is united on HS2, and likewise the issues of EU membership, foreign aid and defence.

      UKIP seems to be the only party opposing their policies.

      Reply The Conservative party as a whole wants a renegotiation and an In/Out referendum so you can vote for Out if the deal is no good.

      • Lifelogic
        Posted March 25, 2015 at 5:00 pm | Permalink

        But Cameron will get at best a fig leaf or two and then campaign for in with the BBC, the CBI, the EU and all the usual suspects.

        LibLabCon party is also united 299+ higher taxes, private pension mugging, absurdly high IHT, the dreadful NHS, daft employment laws, landlord “licencing”, an ever bigger parasitic sector , enforced fake “equality” and all the insane green crap.

      • Timaction
        Posted March 25, 2015 at 6:07 pm | Permalink

        What Renegotiation? What are the red lines? How can anyone trust a Europhile to renegotiate anything? Like asking Gordon Brown to sell the Nations gold. Similar to Cameron’s stated Europhile intentions before any negotiation. Our Presidents have already told him no. Merkl, Junker and Holland have a voice in the EU. Cameron is but an ineffective whimper. Only one party stands for the British people and they are not in the cartel!

      • A different Simon
        Posted March 25, 2015 at 6:12 pm | Permalink

        John ,

        In that case the Conservative Party as a whole has a problem with it’s leadership .

        If UKIP hadn’t started to cost votes in the lead up to an election , particularly for the Conservative Party , we wouldn’t even be discussing renegotiation .

        Look at Mrs May and the European Arrest Warrant and all the other stuff she has been doing her best to rush through .

        Apparently she seems to think she is leadership material . She doesn’t come close to measuring up against your good self or David Davies .

        Actions speak louder than words .

        Fool us once , shame on you , fool us twice , shame on us .

        Reply IT was a group of Conservative MPs who persuaded Mr Cameron to offer a renegotiation and a referendum, not UKIP.

        • Leslie Singleton
          Posted March 26, 2015 at 9:03 am | Permalink

          Dear John–Cannot believe you keep saying that. This “group”, WHY did they so persuade? Unarguably because of the onset of UKIP is the answer.

          Reply I was part of it, and UKIP was not part of our argument/consideration.

          • Leslie Singleton
            Posted March 26, 2015 at 12:36 pm | Permalink

            Reply to Reply–No doubt given that you say so there was no discussion referencing UKIP but all know that it was UKIP that was the trigger or catalyst or underlying motivation.

            Reply It was not my motivation, nor that of my main colleagues involved. We have long campaigned to restore UK Parliamentary sovereignty and do so because we believe in it!

      • Hope
        Posted March 25, 2015 at 6:17 pm | Permalink

        United on the EU energy policy, harmonizing criminal justice by EAW HRA etc. In other words the LibLabCon cartel are vying at this election to promote and implement EU law, policy and regulation as the UK becomes a region of the EU superstate. Only one party offers a different choice where the public regains sovereignty and independence of their country, UKIP.

      • fedupsouthener
        Posted March 25, 2015 at 7:21 pm | Permalink

        That;s all well and good John but we all know the 3 main parties will be encouraging the electorate to vote to stay in. They will not be telling us all the cons of remaining in the EU. Unless people take part in blogs such as your site most of them are ignorant of what is really going on.

        I really cannot see Cameron negotiating a good deal for the UK so we will continue to lurch from bad to worse with no end in sight.

      • Bob
        Posted March 25, 2015 at 8:03 pm | Permalink

        “Reply The Conservative party as a whole wants a renegotiation and an In/Out referendum so you can vote for Out if the deal is no good. “

        If the Tories were serious about the membership renegotiation ploy we would already know what your “red lines” were but so far it’s just a vague promise of unspecified “jam” tomorrow. The Tories couldn’t even negotiate English Votes for English Laws in our own Parliament, so how do you expect to fare against the EU Commission?

        You can fool some of the people some of the time…

      • Mondeo Man
        Posted March 25, 2015 at 8:40 pm | Permalink

        Reply to reply.

        The Conservative party is – in the main – Europhile.

        I have felt the party move away from me over the past twenty years but have continued to support it – right up to (and including) the last general election.

        I did the grown up and responsible thing and held my nose and votedTory to keep wrecker Brown out. This having already held my nose and done the grown up and responsible thing by voting for Major and Howard during the Nu Labour era (even though most of my peers had been beguiled by Blair.)

        Now I am being told by some Tory (rep ed) (not you, Dr Redwood) “Now listen here, little boy. Vote for us or you won’t get your referendum. Vote for us or the bogeymen will get into number 10.”

        Well fat lot of use me being grown up and responsible has done me ! I don’t get a fraction of the respect the communities who turn out jihadi brides do.

        I’m done with it.

        Henceforce I vote for the party that most aligns with what I think and I’m afraid it’s no longer yours.

        Sadly most people will be voting tactically in a general election (again !) and a false mandate will be created on false promises (again !)

        DON’T DO IT people. It doesn’t work !

        • Timaction
          Posted March 26, 2015 at 9:18 am | Permalink

          Of course thinking people are aware of the lies from the cartel. With over65% of our laws being made by foreign dictators its obvious who we must vote for the return of our sovereign democracy, stolen by LibLabCon. We will make strides in this election before a win in 2020. By then the lies will be out for the masses and they will have lived the misery of the consequences of the EU, mass migration and extreme behaviours by some imported by the legacy parties.

    • behindthefrogs
      Posted March 25, 2015 at 2:08 pm | Permalink

      The Prime Minister ruling out future rises in VAT would seem to be a huge mistake. Surely a selective rise in VAT, in particular applying it to problems like obesity is preferable to raising other taxes.

      I would like to see a rise in VAT balanced by a reduction in NICs contributions by both employers and employees. We need to realise that VAT applies to imports and should be replaced by reducing taxes that directly affect home production.

      Reply I do not wish to see tax increases and am glad he has ruled out VAT after Mr Balls’s attack

      • Lifelogic
        Posted March 25, 2015 at 9:46 pm | Permalink

        Tax are far too high already, have been increased hugely by this dreadful coalition (299+ times) and are largely wasted by them on complete drively anyway. 20% vat, 23% NI (both), income tax 45%, SDLT 12%, council tax, mansion tax to come, fuel tax 65%, alcohol taxes 70%, insurance premium tax 6% or 20%, IHT 40%, road tax, landlord licencing tax, landfill tax, green crap energy taxes, planning taxes, social housing taxes on developers, flight taxes, passport fees, building control fees, corporation tax 20%, pension taxes/caps/limits …… how much or many dam taxes do you actually want?

        • Leslie Singleton
          Posted March 26, 2015 at 9:05 am | Permalink

          Dear Lifelogic–I thought we established long ago that it is damn not dam or are you referring to the tidal lagoon plan that you don’t like?

          • Lifelogic
            Posted March 28, 2015 at 11:09 am | Permalink

            Damn, I got it wrong. But then a single “right” spelling is very top down socialist in principle.

            Anyway if you know that a spelling is wrong then you clearly know what was meant anyway – so does it matter?

    • Lifelogic
      Posted March 25, 2015 at 5:23 pm | Permalink

      I suppose it was inevitable that once a Tory prime minister had backed Jeremy Clarkson the BBC would certainly sack him.

      Still at least Cameron (unlike Osborne) has finally ruled out a VAT increase. Mind you we were promised a Cast Iron Lisbon referendum, no if no buts net immigration in the tens of thousands and £1M IHT thresholds. Anyway he is rather unlikely to have a majority at all, given the Labour light agenda he is running.

    • Richard1
      Posted March 25, 2015 at 6:06 pm | Permalink

      The case for HS2 has always been highly contrived. It would never make it past a first review if it had to fund itself in the markets as opposed to by government fiat. If Miliband gets in we now learn that Alex Salmond will not only support this grotesque waste of public money, he will instruct Miliband to begin construction from the North!

  3. Richard1
    Posted March 25, 2015 at 7:12 am | Permalink

    Certainly Greece should never have joined the euro, and the sensible thing now would be to leave. What is interesting though is the euro brings into sharp focus what a disaster it is if a govt pursues unsustainable spending policies. Greece has now ‘out’ though borrowing and printing, as we do in the UK in clearing up the mess after the Labour govt. but it is possible to become insolvent even with your own currency. Another big spending Brown type Labour-SNP govt could take the UK into a similar situation to Greece even without the euro.

    • BeeCee
      Posted March 25, 2015 at 11:41 am | Permalink

      It is probably the SNP’s desire to bankrupt England as the final trump to be played in the next ‘homerule for Scotland’ referendum.

      Milliballs and co are possibly suffiently self-centered to let it happen.

      BroDave needs to recapture the votes of the English now if he is to stop Mr Salmond’s scenario from becoming fact!

      • fedupsouthener
        Posted March 25, 2015 at 7:22 pm | Permalink

        Not much chance of that!

    • petermartin2001
      Posted March 25, 2015 at 2:10 pm | Permalink

      it is possible to become insolvent even with your own currency.

      How? The £ is an IOU of government. The UK govt can create as many as they like. The UK can never involuntarily default on any debt denominated in pounds.

      Of course if they issue too many there will be too much inflation. That’s the only danger.

      • Richard1
        Posted March 25, 2015 at 5:28 pm | Permalink

        No, you should be careful not to let such woolly thinking allow you to vote for a big spending party like Labour or LibDem. It is not automatic that a country can borrow in the capital markets just because it prints its own currency. in 1976 the UK govt was obliged to finance itself by begging the IMF, just as Greece now has to beg the Germans. it could happen again.

      • Denis Cooper
        Posted March 25, 2015 at 5:32 pm | Permalink

        Internal inflation is not the only economic danger; beyond that there are the successive dangers of external devaluation of the currency, a collapse of confidence in the currency, and finally a universal flat refusal to accept payment in the currency if there is any way to avoid getting lumbered with this increasingly worthless currency that nobody wants to hold …

        But there are also political dangers if there are insufficient democratic controls on the government arranging for the creation of as much new money as it may wish to spend, then you are heading for tyranny.

        I wish that I had actually read through this in November 2009, rather than just saving it to read later:

        http://www.cps.org.uk/files/reports/original/111027122313-20091106EconomyQuantitativeEasing.pdf

        But at that time I was a bit busy with Cameron’s abject surrender over the Lisbon Treaty on November 4th 2009.

        NB – “The policy has also received little scrutiny by Parliament. There has been no primary legislation on QE. The only secondary legislation on QE has been a statutory instrument, exempting the policy from the FSA’s authorization regime.”

        Which statutory instrument had been rushed through without even being mentioned in Parliament.

      • Edward2
        Posted March 25, 2015 at 6:23 pm | Permalink

        Confidence first disappears in citizens of other nations when you try to pay in your currency or want to exchange your nations currency for some of theirs and the rufuse to accept your money.
        Next people who live in the failing nation start bartering or only accepting USA dollars instead of the nations currency.

        Inflation gathers pace as shopkeepers one day will accept 100 units for a loaf of bread but next day want 1000 units.
        Importers then refuse to accept the currency.

        Have you not studied German hyper inflation around 1923 or the demise of Zimabwe or the effects of default of some South American countries?
        You can keep printing paper money all you want, only confidence by others keeps the value alive.

      • forthurst
        Posted March 25, 2015 at 7:08 pm | Permalink

        “The UK can never involuntarily default on any debt denominated in pounds.”

        What happens when foreigners obtusely demand payment for our debts in their own nominated currencies? Why did Dennis Healey call in the IMF?

        • petermartin2001
          Posted March 26, 2015 at 5:21 pm | Permalink

          in 1976 the UK govt was obliged to finance itself by begging the IMF

          What happens when foreigners obtusely demand payment for our debts in their own nominated currencies? Why did Dennis Healey call in the IMF?

          If the debts are in pounds, creditors can’t claim repayment in US$ or euros. The UK isn’t like Greece. Sensibly the UK government has retained control of its own currency and has a much larger range of economic options at its disposal. Whatever we might think of policies like QE and the direct purchase of treasury bonds by the Central Banks, these are options open to the UK but not to Greece.

          In 1976 there wasn’t any need for IMF support. Except that the Labour government, of the time, were locked into a fixed exchange rate mentality and wanted to “protect” the pound’s value of $2.oo. They needed to borrow US$ to be able to do that. They simply should have allowed the pound to float as the Conservative government did a few years later when it reached almost parity with the $.

          Big mistake. Everyone remembers the IMF and 1975. The fall to parity, which didn’t last long, is now largely forgotten.

          only confidence by others keeps the value alive

          The pound, the dollar, the euro are all just pieces of paper or digits in a computer. So why are they worth anything? The most plausible answer, IMO, is that we need particular currencies to pay our taxes. Generally, governments all insist in payment in their own IOUs or own currencies. As we have no option, other than going to prison, we have to acquire these currencies somehow. Therefore, there is a demand for them which gives them a value.

          • forthurst
            Posted March 26, 2015 at 7:30 pm | Permalink

            Fiat currency has no intrinsic value and there is no purpose in continuing to imply that it has.

          • edward2
            Posted March 26, 2015 at 9:35 pm | Permalink

            Rewriting history.

          • petermartin2001
            Posted March 27, 2015 at 8:33 pm | Permalink

            forthurst,

            Fiat currency may not have any intrinsic value but it still has a real value. I’d be happy to swap what you might consider to be your worthless currency, for a few of my odds and ends (a few of which do have some intrinsic value), if you disagree.

          • Edward2
            Posted March 28, 2015 at 9:30 am | Permalink

            It has “real value” up until people lose confidence that it has any real value and start using another currency to do their business.
            There are nations today that have official currencies where the US dollar is the main medium of exchange.

  4. alan jutson
    Posted March 25, 2015 at 7:24 am | Permalink

    The new Greece Government are finding out rather quickly that you cannot make political promises to people without cash and a sound economic/tax policy to back them up.

    The EU is finding out that Political dogma costs money, its just a question of how much and who pays.

    The EU citizens are getting restless.

    Socialism is proving once again that it eventually fails, as it runs out of other peoples money

    Meanwhile those responsible live the good life on huge expenses and pensions.

    How many more times does the lesson have to be learned.

    The sooner our Politicians learn the lesson and get out the better.

  5. Roy Grainger
    Posted March 25, 2015 at 7:59 am | Permalink

    It is interesting that the whole issue is being handled directly between Germany and Greece, there’s not even much pretence that it’s Germany acting on behalf of the EU, whatever Mrs Merkel says goes.

  6. agricola
    Posted March 25, 2015 at 8:17 am | Permalink

    To repair it’s economy and create jobs, Greece needs to have control of it’s economy, and as a first step it needs it’s own currency. Greece then has the freedom to do what is necessary.

    We know that they need to sort out the cloud cuckoo land that they lived in before the crisis hit. The austerity they are suffering is no doubt a symptom of the reorganisation they are undertaking. It mostly affects the majority who lack the financial flexibility to dodge the taxes that the wealthy have dodged. I do not blame the wealthy who have done in the short term what they saw as necessary to survive. They too have families.

    Greece has assets, it’s ancient history, it’s climate, food and the Mediterranean. With a devalued Drachma it could exploit these assets. The Euro is preventing this. Leaving the Euro does not take it out of Europe nor does it change it’s access to the IMF, in fact it possibly improves it’s case.

    The problem that the EU elite has is not just Greece as it is now, but the effect on the other impoverished Euro countries if my course of action were seen to be successful. They would then have to think of re-writing their whole approach to a united Europe. It is a bit like the then thinking in the Catholic church when faced by the “heresy ” of Galileo.

  7. Ian wragg
    Posted March 25, 2015 at 8:18 am | Permalink

    When will all the posturing stop
    Greece has no way of servicing it’s colossal debt. When will they bite the bullet and revert to the Drachma. Maybe the 2 billion Euros is just to tide them over until easter when the banks can close and swap currency. Why haven’t the Greek government introduced capital controls on the banks. Maybe it’s the political class that is salting away the Euros.
    I see Gideon has more or less confirmed a rise in VAT after the election. What happened to spending cuts
    Another nail in winning the election.

    Reply He did not. There is no need for a VAT rise, as the published Red Book figures makes clear.

    • Lifelogic
      Posted March 25, 2015 at 10:21 am | Permalink

      Exactly right on VAT why have they got such a desire to throw another election?

      Why announce bad new now? They are very unlikely to win a majority anyway, what is there to lose by some lower tax announcements?

      Reply Mr Cameron did rule out VAT rises today

  8. Denis Cooper
    Posted March 25, 2015 at 8:45 am | Permalink

    “The EU came to Greece’s aid, with Euro 2bn … ”

    Do you mean “the EU”, with all EU member states including the UK chipping in, or just the eurozone states?

    And meanwhile, the stick to accompany the carrot, as it were:

    https://euobserver.com/news/128139

    “ECB set to tighten funding noose on Greek government”

    • Denis Cooper
      Posted March 25, 2015 at 8:59 am | Permalink

      I must have missed it a few days ago:

      http://www.sbs.com.au/news/article/2015/03/21/eu-offers-greece-2-billion-euros-humanitarian-aid

      “European Commission chief Jean-Claude Juncker has urged Greece to grab 2 billion euros ($A2.79 billion) in unused EU development funds as it struggles with a cash crunch and a battered economy.”

      “Greece confronts a serious social problem, a humanitarian crisis,” he warned in justifying the payout.”

      So the answers to my question appear to be:

      a) The UK is indeed contributing towards this “humanitarian aid”, despite Cameron’s claims that he had got us out of any future bailouts; and

      b) This money was originally intended for one purpose, development, but not having been spent Juncker has decided to divert it to another purpose.

  9. ferdinand
    Posted March 25, 2015 at 9:00 am | Permalink

    it is so easy to salve your conscience when using other people’s money. Mrs.Merkel wouldn’t lend Greece her own money.

  10. Brian Tomkinson
    Posted March 25, 2015 at 9:13 am | Permalink

    Mrs Merkel told the German Reichstag last week that “if the euro fails, then Europe fails” – the EU ‘project’ must succeed come what may. So perhaps, rather than “too little too late”, the strategy is just sufficient at any time to keep the show on the road.
    The same tactic will be used by your leader if he were to hold the EU referendumin 2017. His renegotiation is a fig leaf and the outcome of the referendum he has preordained for he, too, is a disciple of the EU. If he were to succeed in his ambition to confirm this country’s subjugation and rule by a foreign organisation, this act of surrender would begin the process of the introduction of the Euro into the UK, which is no doubt why some people are already working up plans for its introduction in 2018.

    Reply Who is working on plans to introduce the Euro, and on whose authority? This government wound up the Euro unit.

    • agricola
      Posted March 25, 2015 at 10:55 am | Permalink

      If you choose to stay in the EU then the adoption of the Euro is an ultimate component in the end game. It will be done on the authority of the then UK government without any referendum and almost certainly against the wishes of the people. Mission creep has been the name of the game since Ted heath’s duplicity.

    • Brian Tomkinson
      Posted March 25, 2015 at 1:38 pm | Permalink

      Reply to reply,
      Perhaps naively, I was hoping that you might enlighten us.

  11. Bert Young
    Posted March 25, 2015 at 9:26 am | Permalink

    If a starving patient is only given a mouthful of food the label “do not revive” ought to be brought into the equation . The question of priority has to be put on the table against the resources available . My view has always been “leave the Greeks alone” , their laid back way of life and lack of discipline does not suit them to the edicts of Brussels . They are not alone in the EZ and the rationale of unity at all costs is flawed .

    The IMF is equally at fault and has no right to commit its funds in what was a politically inspired decision . There are many more deserving cases around the globe where investment support is justified . We are wrong to assist this body without more control over the direction it takes .

    Russia must be delighted at the mayhem that now exists ; having established military bases in Cyprus ( I cancelled my summer holiday there !) it now must regard Greece as another valuable link in the Mediterranean .

  12. ChrisS
    Posted March 25, 2015 at 9:42 am | Permalink

    We’ve done this subject to death here and most of us are of the same view.

    An extra €2bn are only going to kick the can to the end of the street or rather into a Cul-De-Sac.

    There can be only one result – it’s just a matter of time.

    A far more important subject is the latest diatribe from Alex Salmond.

    The SNP are clearly determined to get independence by any means and don’t give a fig for democracy or the constitution of the UK.

    England will live to regret the day that the SNP lost their referendum. Cameron, Clegg and Milliband should have known that appeasement never works.

    All we are going to get is an increasingly bitter campaign for independence while we throw ever-increasing amounts of English taxpayer’s cash North just to keep them afloat. In return the SNP will just blame the English at every turn.

    In the meantime none of the main parties will allow proper devolution for England for fear of unsettling the Union. They need to realise that with the SNP on the ascendancy the Union is effectively dead anyway.

    We should be shot of Scotland once and for all and they can sort out their own mess with their own falling oil revenues.

    As for Salmond’s latest threat, one would hope that Milliband is enough of a democrat to get Labour to abstain at a vote on a Cameron Queen’s Speech if the Conservatives are the largest party after the election. I’m not betting on it, though.

    Milliband knows he will never get another shot at No 10 and I doubt he will be too bothered about getting the keys illegitimately.

    • Roy Grainger
      Posted March 25, 2015 at 12:00 pm | Permalink

      There is much to ponder on observing the SNP’s current antics, starting from the fact that Salmond seems to get an awful lot of airtime given that he isn’t the party leader any more and is not a Westminster MP either. I doubt any other mere MSP and Westminster candidate would get the BBC drooling over him in a similar way. I guess the eventual outcome will be a fully federal UK, I assume Miliband would be more likely to support that if his vote is wiped out in Scotland anyway as seems likely.

    • Dr Dan H.
      Posted March 25, 2015 at 1:47 pm | Permalink

      To be honest, the Scottish really shouldn’t concern us all that much. The Scottish Referendum was a democratic referendum, wherein the people of Scotland were invited to say whether they wanted to be independent, or part of a union.

      The Scots are not idiots, and chose to remain in the union, and further outraged babbling from oily Al need only be replied to by reminding him that the question has been asked, and he has his answer now so would he kindly shut up and get on with his job?

      • fedupsouthener
        Posted March 25, 2015 at 7:28 pm | Permalink

        Salmond has been told all this and yet he still goes on. I cannot believe you live in Scotland because if you did you would know that the SNP have not taken the result of the vote on board. They are intent on destroying the union one way or another and another vote on independence is on the cards very soon. God help all of us living in Scotland. Trouble is most of them want the union with the safety net of the rest of the UK behind them but also want the most power they can possibly get. I don’t hold out much hope of any other party achieving many seats in the election.

    • Leslie Singleton
      Posted March 25, 2015 at 4:56 pm | Permalink

      Dear Chris–I detest everything Salmond is doing and the man himself; but there is no mileage in saying he is undemocratic (within our system) or unconstitutional. The SNP and/or anybody else in the Commons are 100% within their rights to vote down an attempt to run a Minority Government if they wish and are able to. The comments reported as from Tory HQ about “ignoring the wishes of the British people” are poppycock and to my mind pathetic.

  13. Martyn G
    Posted March 25, 2015 at 9:43 am | Permalink

    How sad it is that the birthplace of democracy, Greece, has been reduced to despair and perhaps hopelessness in the present circumstances, not only by its own financial mismanagement over the past decades but above all by being shackled to the Euro. How soon shall we see unelected eurocrats imposed on the Greek government so as to run that country, I wonder?

  14. Leslie Singleton
    Posted March 25, 2015 at 9:44 am | Permalink

    My memory is that the Greek PM and especially the Finance Minister said, and with considerable emphasis, that they did not need to borrow more; though how they could have said that I have no idea. It is difficult to know what they meant as between new money, rollovers of old money, liquidity assistance and now humanitarian funding. An overall total would be good. I asked the other day how Turkey is doing outside the EU but no answer came. Is it that the Greeks would see it as a huge loss of face for them to limp out while Turkey is (still, I think) trying to get in?

    • William Long
      Posted March 25, 2015 at 12:25 pm | Permalink

      You have hit the nail firmly on the head with your reference to loss of face. It is this and almost this alone that is causing the log jam on both sides: the Greeks do not want to leave the Euro because of it and the Eurocrats will not kick them out for the same reason.

    • John Hartley
      Posted March 25, 2015 at 3:03 pm | Permalink

      They said they did not want to borrow more. At that point the figures still showed primary surplus. Continued economic decline , negotiations and the ECB’s unilateral interpretation of chosing who to give ELA to have eroded this away.
      Their analysis was correct, their actions were a combination of not being radical enough in thought combined in forms of action and negotation of a naive belief and appeal to European solidarity. As the ECB is looking to go beyond it’s remit they should print as many Euro’s as the need – the National Bank of Greece as a Euro area member has the power to print.

      I really don’y know why the IMF is demanding the money be re-paid as it is currently funding large loans to the completely bankrupt Ukraine (a country even more bankrupt than Greece) to allow them to buy US weapons using the UAE as a conduit. So any pretence of the need for credit worthiness or economic reform or plan is shown to be utter horse dung. Perhaps the Greeks would get a greta deal if they suddenly import some Russian Separatists ?

      Turkey ( until now) has been doing ok as it has a floating currency and a manufacturing base, it is under pressure now though.

      Reply An individual Euro member state may not print as many euros as it likes. The monetary power rests with the ECB

      • acorn
        Posted March 26, 2015 at 9:02 am | Permalink

        The National Bank of Greece can’t print (issue new) Euro. It issues Bonds (UK = Gilts) for existing Euro. Which is why it gets hit by Bond vigilantes with interest rates. The UK, as a sovereign currency issuer (spender of first instance) does not have to borrow its own currency, but it pretends to. It issues Gilts voluntarily by a simple rule of matching its net spending (deficit) to the Gilt issue, Pound for Pound. Gilts are saving certificates for rich people; pension and insurance funds and are “risk free” investments. By paying interest, they are also a “fiscal stimulus” for the economy.

  15. Denis Cooper
    Posted March 25, 2015 at 9:50 am | Permalink

    Given that the policy of successive UK governments has been that we should be “at the heart of Europe”, playing a full and proactive role in the way that the EU develops – and finally emerges as a new country, a sovereign federation – it seems appropriate to ask how much responsibility the UK bears for what is happening in Greece, which has now been reduced a long way towards the status of a third world country.

    As I understand from my reading of the treaties past and present it would be wrong to blame the UK government under John Major for allowing the Greek politicians to blag Greece into the euro, insofar as it had no say in the matter.

    For the first wave of the euro all the EU member states had to agree which countries would participate, but after that first wave all the decisions on whether to admit an additional state have been taken just by the existing members of the eurozone rather than by all the EU member states.

    On the other hand, Major did not have to agree at Maastricht that this would be the case for the later additions to the eurozone, just as he did not have to agree that all the EU member states bar the UK would be under a treaty obligation to adopt the EU’s single currency, and this would apply to all new EU member states under the terms of their accession to the EU, and he did not have to agree that no country which had adopted the euro would ever be allowed to leave it and revert to a national currency.

    Similarly, Cameron did not have to give his assent to the EU treaty change demanded by Merkel in late 2010, without making any use of that “golden opportunity”to insist that those defects in the Maastricht Treaty must be rectified.

  16. Atlas
    Posted March 25, 2015 at 10:09 am | Permalink

    John,

    Is this sum of money coming from the EU as a whole (ie including us) or is just from the Eurozone?

  17. fedupsouthener
    Posted March 25, 2015 at 10:44 am | Permalink

    The whole EU is a farce and the sooner Greece defaults and revert to the Drachma the better for all concerned.

    I am more concerned at the moment about the position in UK politics with the SNP threatening to undermine democracy completely. All the time the nationalists are so powerful there will be a problem. Alex Salmond and Sturgeon just want to save face and they will go to any length to get their way and yes, anything that goes wrong will continue to be the fault of England and Westminster. All those that voted NO to independence should be voting either Conservative or Labour to keep the SNP out but I am afraid many of them don’t want independence but want the SNP to have a bigger say in politics so that they can have their cake and eat it too!!

    As for HS2, what can anyone say except did anyone in government at the moment go to school and learn math?

    Cameron needs to get a grip and stop subsidies for green energy, stop HS2, and stop wasting more of our hard earned cash on umpteen layers of management in the NHS and get nurses and doctors on the ground.

  18. They Work for Us?
    Posted March 25, 2015 at 10:57 am | Permalink

    The can is kicked further along the road because the EU project is too big to fail and too many political and bureaucratic careers and livelihoods depend on it. Portents of its failure are much like a comment in Henry IV part one “I can summon demons from the fiery pit ….. (Answer) “So can I but will they come”.
    In managerialism when a project that is doomed to fail, the advice not to do it ignored, and can clearly be seen to be failing, it will be declared that the project is a resounding success, is very popular and a triumph of vision to protect reputations. The EU project is a good example of this and so will HS2 be. Unfortunately the projects are too big to quietly abandon them afterwards. We need a proper right of recall for MPs and a proper system for proceedings to be brought for incompetence in public office for ministers and others.

    • Leslie Singleton
      Posted March 25, 2015 at 3:54 pm | Permalink

      Dear They Work–On your last few words I’ve always liked Attainder and Impeachment myself. Yes they are retroactive, so inappropriate most of the time but poncing around trying to find a Law that has been broken is a hopeless task when the evil has been political. Recent examples abound and so far as I am concerned being shown to have damaged the Country is enough. Now what one actually does to punish those attainted is another question and our host would not give his imprimatur to my ideas. It’s his site after all.

  19. Tad Davison
    Posted March 25, 2015 at 11:00 am | Permalink

    If the Germans and all the other supporters of the grand European common fiscal and political project truly believe in it, then maybe they might like to transfer some of their industries to Greece where there is a surfeit of cheap unemployed labour. Surely preferable to continual highly-contentious bailouts that might never be repaid.

    If we in the UK have some areas that aren’t doing as well as the rest of the country, the government creates enterprise zones and ‘powerhouses’ to counter it, rather than just keep chucking money at the problem. It is industry that will sort our Greece’s problem, but maybe the perpetual indebtedness of some nations and keeping them down, is all part of the plan.

    Tad Davison

    Cambridge

  20. stred
    Posted March 25, 2015 at 11:22 am | Permalink

    Somewhat off subject, the spate of recent aircraft crashes have involved the strange lack of communication from the pilots and the planes drifting away from flightpaths. Most passenger aircraft are fed with breathing air taken from the engines and this has been known to lead to contamination with toxic gases. Pilots have complained of illness and in an extreme case, some say it could knock out the crew and passengers. The industry has been keen not to address the problem and modification would be very expensive and time consuming. The latest Dreamliner avoids taking air from the engines.

    If the black box evidence ever leads to this diagnosis, what would be the effect on the airline industry and tourism to countries depending on it?

  21. Mike Wilson
    Posted March 25, 2015 at 1:39 pm | Permalink

    Two thousand, million euros. Pocket money?

    Who’s paying?

  22. REPay
    Posted March 25, 2015 at 2:03 pm | Permalink

    “Forcing Greece into the Euro prematurely was a mistake by Greece and the other members…”

    I recall at the time that many informed commentators pointed out that some countries, including Greece did not meet the entrance criteria for the euro. We have since learned that the Greek government cooked the books and that some EU economists who flagged their concerns were ignored by their superiors. This fudge was then compounded when France and Germany broke the deficit rules but were not fined…so the regulations were seen as fungible.

    A currency based on poor economics, lack of discipline and subterfuge is unlikely to prosper. To compound the problems there are still too many high spending EU governments and the demographics of the Europe look really poor. However, the one bright spot for the Euro is the immense loyalty felt by nearly all senior politicians from mainstream parties. They are willing to spend their voters’ last cent in defence of the currency.

    No wonder we are getting fringe political parties growing across the eurozone! Thank goodness we did not enter the currency, the one thing to thank Gordon Brown for.

  23. petermartin2001
    Posted March 25, 2015 at 2:19 pm | Permalink

    Once you have allowed unsuitable economies into your single currency scheme…

    Germany needs those “unsuitable economies” to keep down the value of the euro on the foreign exchanges. Switzerland and Denmark suppress the value of their currencies by simply creating (printing if you like) Swiss francs and Krone.

    There’s no mechanism in the euro to do that. If there were no “unsuitable economies” in the EZ , Germany would have big problems. Or, rather, it would think it had. It wouldn’t be able to run huge trade surpluses that it much desires.

    Germany is taking its EZ partners for mugs in that respect.

  24. ale bro
    Posted March 25, 2015 at 2:36 pm | Permalink

    Clearly the only way for Greece to balance the books is to raise taxes. From afar it looks as though the poorest don’t have the money, so Greece will have to impose additional taxes on the rich, some form of asset tax being the most likely.

    • Leslie Singleton
      Posted March 25, 2015 at 4:03 pm | Permalink

      Dear ale bro–I have heard it said, and by a Greek, that “there is plenty of money (assets) in Greece–in shipping for a start”. I do not however know how true or not that is. The flavour was that the chaps that own the ships don’t pay much tax if at all and again I do not really know but I wouldn’t be surprised.

      • ale bro
        Posted March 26, 2015 at 11:35 am | Permalink

        Leslie – I have heard exactly the same. In essence, there is a Greek elite who are not subject to the same taxation regime as the hoi polloi. Apparently it is preferable for the Greek government to fund itself via Germany than by extending the rule of law to all Greeks.

        A great solution is to allow people to collect a 10% bounty for shopping evaders. If we had this in the UK, I’m sure it would be a popular scheme.

  25. Chris S
    Posted March 26, 2015 at 10:42 pm | Permalink

    Just heard Alegra Stratton do a seriously biased demolition job on David Cameron on Newsnight tonight onthe Cameron/Miliband interviews with Jeremy Paxman.

    I can’t believe she could have been watching the same Channel 4 program as me.

    None of us here will be surprised but clearly BBC management need to ensure a more even handed approach.

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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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