Greece, elections and the Euro

Ever since the Greek voters rejected EU austerity policies the Euro area has been in a state of shock. The rest of the zone, led by Mrs Merkel, tried to pretend nothing had happened. If Greece wanted the rest of the money under the last loan agreement, they said she had to carry on with the cuts and the privatisations to qualify. If she refused to comply with the pre determined EU spending, tax and economic policies then there would be no more money. The Greek government for their part said they had just won an election with a mandate to tear up the agreed policies of the loan. The irresistible force of EU policy had just met the immoveable object of the Syriza political movement.

The tensions became clear through substantial withdrawals of funds from the commercial banks in Greece. The EU blinked first, and advanced large sums under an emergency loans programme from the European Central Bank. Greece did not have to comply with the wider loan agreement in order to qualify for large additional borrowings. The difficulties also showed as the Greek government struggled to find the cash to pay the day to day bills. The EU blinked again, and gave the Greek state permission to issue Treasury bills to raise the money to pay the pensions and wages. The first two messy rounds went to Syriza.

On Friday Greece is meant to repay the IMF some money. We are now told they can delay until the end of the month, when more will be owing. The IMF has now blinked. The IMF, the ECB, the EU, France and Germany met earlier this week to construct a “final” offer to Greece. Presumably this is another attempt to lend Greece more money with conditions attached. Greece was not invited to the meeting. The Greek PM spent his time writing a furious article condemning Euro area economic policy and explaining again he was elected to change it.

My guess is the Euro area leadership and the institutions that have lent so much money to Greece will blink again. They will offer to lend more money with less onerous terms. In due course they will have to accept they have lost a lot of the money they have lent to Greece in recent years, and construct an elegant way of writing some of it off or down. If they dig in and demand full enforcement of their loans and loan conditions and turn off the cash taps they are currently using to fund Greece, the Greek government may decide to walk away from the debts. If the Greek government meekly surrenders then it loses all domestic authority, and it may prove difficult to implement the policy changes the EU demands.

It is a dangerous and fascinating contest. It is a real tragedy for all the Greek unemployed and struggling businesses caught up in it. I do not think Syriza’s economic policy will lead to a strong Greek recovery, nor do I think the EU should carry on with the policies for Greece that have done so much damage to jobs, incomes and output in recent years. The obvious first step in a Greek recovery would be exit from the Euro, the one policy neither side will accept. If they stay inside the Euro then there is a simple choice: yet more unwelcome austerity, or much larger transfers of cash from the richer parts of the zone, which have to be grants, not loans. It has to begin with a major debt write off by the EU states and institutions that have lent money. The Euro scheme for Greece is indeed being part of the European Unemployment and Recession Organisation. It is now testing democracy in an extreme way.

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112 Comments

  1. Lifelogic
    Posted June 3, 2015 at 5:17 am | Permalink

    I agree fully with all that. As you say :- The obvious first step in a Greek recovery would be exit from the Euro, the one policy neither side will accept.

    It is indeed testing or rather destroying democracy, but was this not the aim of the EURO project all along. Giving a justification or ruse for the creation a single EU superstate while drawing all power to the unelected centre and away from the voters.

    • Lifelogic
      Posted June 3, 2015 at 7:16 am | Permalink

      Good to read the sensible Bjorn Lomborg in the Telegraph today suggesting the best way to spend overseas aid. Some even producing a £120 return for every £1 spent. Meanwhile we have our greencrap religion government spending billions on wind, endless fields of PV cells, HS2 and similar compete nonsense which will often have a totally negative returns.

      http://www.telegraph.co.uk/news/earth/earthcomment/11647440/Fed-up-with-UK-aid-being-frittered-away-Here-are-19-things-it-should-really-be-spent-on….html

    • Lifelogic
      Posted June 3, 2015 at 7:53 am | Permalink

      Also Britain can afford to live with high debt forever says IMF. Well perhaps, but not when so much is spent on pointless and damaging dross like greencrap grants, pointless aircraft carriers, happiness indexes, pointless bureaucrats usually doing more harm than good, HS2, road blocking, the EU, damaging wars, over regulation of everything, endless tiers of interfering and expensive “government”, new over prices government building, a very inefficient legal system, endless payments to enlarge the feckless …..

      http://www.telegraph.co.uk/finance/economics/11644471/Britain-can-afford-to-live-with-high-debt-forever-says-IMF.html?WT.mc_id=e_DM22160&WT.tsrc=email&etype=Edi_FAM_New&utm_source=email&utm_medium=Edi_FAM_New_2015_06_03&utm_campaign=DM22160

      • Lifelogic
        Posted June 3, 2015 at 11:37 am | Permalink

        On the greencrap: Cameron today in PM questions says “no more grants for onshore wind farms”, but what about offshore wind farms and photovoltaic farms that make even less economic sense?

        We should also tax back the grants on the existing facilities in some way, they are an economic nonsense (without greencrap grants) as the developers must have know. It is a scam against the tax payer and fuel bill payer.

        Why can cover fields in hideous PV cells or with wind turbines but not build pleasant and much needed houses on them?

      • acorn
        Posted June 4, 2015 at 6:04 am | Permalink

        Every one of your posts reminds me of the Eric Idle python sketch,

    • Hope
      Posted June 3, 2015 at 8:18 am | Permalink

      JR, you are correct about one thing, it is a tragedy for those ordinary people who are desecrate and do not understand the complexities of the Euro or the back room and possibly underhand deals that allowed this mess to be created in the first place. A political dream with dire consequences for ordinary people who are unemployed, lost homes and dignity. This is before all the commercial detriments.

      If the EU was a trade group as portrayed to ordinary people over forty years and stuck to a trade group only then all this could have been avoided. A few politicos causing devastation to hundreds of millions of people to create an EU superstate. Iceland was correct to go alone as were the Swiss and Norwegians. Time for governments to speak and stand up against this EU political construct.

      Why is it being allowed to continue without any of our government speaking our about it? Even Junker has passed comments, albeit I suspect for his political ends to keep Greece in the EU project. Meanwhile your party has given extra billions of taxpayers’ money to support the quest and is on manouvres to dissolve England into regions for the project!!

      • Denis Cooper
        Posted June 3, 2015 at 10:20 am | Permalink

        Our government has spoken out about it, but unfortunately it has said the wrong things by telling the eurozone states to “get a grip” and rush on to federalise as quickly as possible, apparently forgetting that by EU law that federalised bloc must in the end comprise all of the EU member states apart from the UK and Denmark, the only two EU member states with treaty “opt-outs” from ever having to join the euro. As a foreign policy it is insane, as insane as it would have been for Pitt to urge Napoleon to consolidate and further expand his empire so that Britain would end up isolated and bereft of allies so that it could easily be conquered.

    • Iain Gill
      Posted June 4, 2015 at 12:48 am | Permalink

      I always enjoy reading lifelogicsdiary.com, I am surprised you let this john redwood chap post so much…

  2. Peter van Leeuwen
    Posted June 3, 2015 at 5:41 am | Permalink

    Greek democracy (government plus people) doesn’t want to walk away from the euro. But neither does the Dutch democracy, the French democracy or any of the now 19 democracies. From Jeroen Dijsselbloem I understand that there are still other measures possible, in case the Greeks cannot fulfill their agreements, short of a Grexit, but which he doesn’t want to talk about. So no Grexit in sight.

    • libertarian
      Posted June 3, 2015 at 8:15 am | Permalink

      Peter v L

      Of course as a “single federal country” with one currency then of course the Eurozone has to do whats right for the “country” as a whole not just the wealthy North Region. They MUST drastically devalue the Euro in order to save Greece, Spain, Portugal, Italy, Ireland.

      • Peter van Leeuwen
        Posted June 3, 2015 at 10:08 am | Permalink

        @libertarian: Measures which are good for the whole of the eurozone are indeed needed. Now that fiscal discipline is growing, maybe some careful mutualisation of debt can be introduced. I imagine, not before the issue Greece has been brought to some solution.

        • Posted June 3, 2015 at 12:43 pm | Permalink

          ” Now that fiscal discipline is growing” ???

          What is the point of this “fiscal discipline” you refer to when inflation is negative in the eurozone?

          Inflation is the only reason for imposing ‘fiscal discipline’. There can be no other. The ECB can create as many euros as it likes and hand them out to whoever it likes. What’s the only danger? Too much inflation.

          The powers that be in the EU need to set an inflation target of say 2% or 3% for each of the eurozone countries and hand out enough euros to each government make that happen. They can call it QE or whatever they like – but it can only be the creation of those euros which will give each economy enough spending power to enable the full utilisation of their productive capacity.

          Germany and Holland may object because they wouldn’t get as many euros, they wouldn’t need as many, to hit their inflation target. But they’d still benefit. They’d have customers who could afford their products.

          The UK would benefit too. We wouldn’t have quite so many economic refugees to process. The only downside from the currently depressed southern European countries would be that they might have more than a few economic refugees from the UK to cope with, who might be eager to escape their cold and wet climate and their zero hour contract jobs!

        • libertarian
          Posted June 3, 2015 at 2:09 pm | Permalink

          Peter vL

          But once you’ve shared everyones debt equally amongst the 19 members ( 18 of which are in big debt trouble) you are still left with how you get out of the mess you are in and the case is still as true as the day you fudged the rules to allow entry , the Euro is to high a price for Greece and the other Southern regions of Euroland. Their main industries tourism have collapsed because of this. Their main sources of employment have collapsed because of this.

          Come on , if you really want and I mean really want to be one country then you need to act like it. Take it on the chin.

          • Peter van Leeuwen
            Posted June 4, 2015 at 10:00 am | Permalink

            @libertarian: my problem is that there is no creative thinking thrown in, they all seem just bookkeepers. Why not a huge investment in Greece’s economy by outside parties on a revenue-sharing base, in e.g. the tourist industry. It would generate cash for Greece and for the investors, it would show best business practices which could be imitated, and phasing out in e.g. twenty years it would all become Greek property.
            (revenue sharing gives temporary protection to outside investors)

          • libertarian
            Posted June 4, 2015 at 9:51 pm | Permalink

            Peter vL

            Oh dear, as a socialist you don’t understand business. It doesn’t matter how much of other peoples money you throw at it or what natty marketing hype you come up with to justify it. You need CUSTOMERS in order to have a business. Greece was a popular holiday destination because it was cheap. It isn’t any more therefore people go elsewhere. It really is vanishingly simple if you aren’t an eucrat with no business idea.

    • Hope
      Posted June 3, 2015 at 8:20 am | Permalink

      What a pity. We need countries to be bold, independent and courageous against the political contagion, called the EU, that is causing havoc and unnecessary suffering to millions of people across the continent for no logical reason. All that is a required is trade group.

      • Peter van Leeuwen
        Posted June 3, 2015 at 10:09 am | Permalink

        @Hope: I don’t think that the eurozone countries want that. The political dimension is part of the eurozone, has always been.

        • Alexis
          Posted June 3, 2015 at 12:42 pm | Permalink

          The EU is attempting “the complete abolition of democracy in Europe……For those countries that refuse to bow to the new authority, the solution will be simple: Harsh punishment….. with Greece being the first victim,”

          according to premier Tsipras (quoted in the Telegraph 31/05/15)

          His opposition to the reality of political union could not be more vehement.

          • Peter van Leeuwen
            Posted June 4, 2015 at 9:49 am | Permalink

            People under great stress sometimes exaggerate. Greece is under stress. The EU is only bystander, full stop. The other eurozone countries aren’t trying to demolish Greek democracy, they’ll Greece free to raise the money in whatever way it wants, as long as it has a viable plan to make its economy grow and start paying back. Taxing only the rich in Greece would e.g. be fine with the rest of the eurozone.

    • forthurst
      Posted June 3, 2015 at 8:22 am | Permalink

      “From Jeroen Dijsselbloem I understand that there are still other measures possible”

      Exactly. What would be more appropriate, from the civilisation that gave the world the dramatic works of Aeschelus and Euripides, but for a deus ex machina to bring this long running drama to a triumphant conclusion; then exit Eurosceptics stage left and haloed Europhiles, stage right.

      • Peter van Leeuwen
        Posted June 3, 2015 at 10:11 am | Permalink

        @forthurst: 🙂 🙂
        We’ll have to wait and see.

    • Know-Dice
      Posted June 3, 2015 at 9:07 am | Permalink

      I wonder if the reason for Greece not already having left the Euro is more to do with the rest of the Euro zone keeping face and the possibility of a “house of cards” effect rather than what is best for Greece and the Greek people.

      If they had jumped two years ago with a “golden parachute” from the Euro zone, I would suggest that they would be in a much better position today, and in control of their own destiny.

      • Peter van Leeuwen
        Posted June 3, 2015 at 10:21 am | Permalink

        @Know-Dice: The Greek government and people (opinion polls) were complicit in this choice to stay together with the eurozone.

      • libertarian
        Posted June 3, 2015 at 2:13 pm | Permalink

        But Greece can’t leave the Euro without also leaving the EU. The Greek people and their politicians all are wedded to the “free money teet ” on offer from EU.

        If they could have the Drachma back and stay in the EU that would be their preferred choice I’ve no doubt

        • sjb
          Posted June 3, 2015 at 10:52 pm | Permalink

          Recent Greek polling finds the following:

          “71 percent of those polled wanting to keep the euro while 68 percent said a return to the drachma could worsen the economic situation.”[1]

          “66.5 percent said they preferred the common currency over 27 percent who would prefer a return to the nation’s old currency. “[2]

          “76.6% are in favor of Greece staying in the Euro zone and just 19.2% think it should be better to return to the drachma.”

          [1] http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_24/05/2015_550319
          [2] http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_05/05/2015_549713
          [3] http://en.enikos.gr/economy/28704,Over-50-of-Greeks-afraid-of-Grexit-scenario-opinion-poll.html

          • Know-Dice
            Posted June 4, 2015 at 7:27 am | Permalink

            No matter what the option polls say, what is actually best for Greece?

            The continual drip drip and austerity for which there is no clear solution, or may be a new start outside of the Euro and Europe?

            I see this morning – “Greek Prime Minister Alexis Tsipras says talks in Brussels on Greece’s debt crisis were “constructive” and he believes “an agreement is in sight” [BBC Website]

            How long is that going to last? – may be till the first payment is due….

          • Denis Cooper
            Posted June 4, 2015 at 9:15 am | Permalink

            In other poll findings, 78.6% said that they wanted to have their cake and eat it, while 64.2% wanted somebody else to pay for the cake in the first place.

          • libertarian
            Posted June 4, 2015 at 9:56 pm | Permalink

            What part of what I wrote are you struggling to understand sjb?

            In order to stay in the EU they HAVE to stay in the Euro and I think you’ll find thats what I wrote. So your poll links aren’t 1)Surprising 2) useful or 3) pertinent to my argument 4) you don’t seem to have the poll results for stay in EU but have the drachma back

    • Denis Cooper
      Posted June 3, 2015 at 9:51 am | Permalink

      Well, Peter, perhaps you could explain why your own Prime Minister Mark Rutte proposed that the EU treaties should be changed so that a country could make an orderly withdrawal from the euro without having to leave the EU altogether, a proposal which he made public not just once but twice:

      https://euobserver.com/news/118925

      but, as far as I know, has never said anything more about that suggestion over the following two and half years?

      I suppose that had nothing to do with Angela Merkel having lent on him to get him to shut up about that idea, which is not really compatible with her stated goal of eventually getting every EU member state into the euro?

      • Peter van Leeuwen
        Posted June 3, 2015 at 1:52 pm | Permalink

        @Denis Cooper: Yes Denis, I heard him state this idea too. Was he just flying a kite? No I think he really meant that and maybe still thinks that.
        Now that the eurozone is still in a fragile state, he might have been asked to shelf his idea until the next treaty change is to be expected. Personally, I would guess that to be around 2020, which then would also solidify any preliminary arrangements made with the UK in order to keep it in the EU.
        Obviously it would be better if countries were not forced by the pre-agreed EU rules to join the euro but would all flock to the euro anyway. Some countries do so because of more security against a Russian bear, but that is not the ideal motivation either. We need a lot of patience but I expect over time the euro to become an financial success, not just a political glue.

        • Peter van Leeuwen
          Posted June 3, 2015 at 1:56 pm | Permalink

          P.S. Nice picture Denis! Imagine these youngsters to all be old men in dark suits and Mark would just look like David C. walking among his party workers. 🙂

        • Denis Cooper
          Posted June 4, 2015 at 9:18 am | Permalink

          “he might have been asked to shelf his idea”

          He’s the Prime Minister of a supposedly sovereign state, put in that position through a national democratic process, and yet if he’s told to shut up about something he complies?

          • Peter van Leeuwen
            Posted June 4, 2015 at 7:23 pm | Permalink

            @Denis Cooper: Mark Rutte didn’t say this as government, but as VVD party leader. Unless you can dig up any proposal that the Dutch government made, that I believe was the context. See all he young party workers in their VVD T-shirts.

            Government proposal are usually published (like the government asking for a coordinating economic commissioner, like the government listing 52 areas in which more subsidiarity was needed, or the UK friendly statement that the “Time of ‘ever closer union’ in every possible area is behind us”

          • Denis Cooper
            Posted June 5, 2015 at 12:41 pm | Permalink

            Total rubbish, Peter, Rutte was Prime Minister at the time and he made his statement as the Prime Minister and jointly with the finance minister Dijsselbloem, as you can see from the link I gave. Then Merkel told him to shut up about it and so he did. Your own Prime Minister, Peter, stopped saying something that was very important because the German Chancellor didn’t like it.

      • ian wragg
        Posted June 3, 2015 at 3:08 pm | Permalink

        Denis, PvL is not interested what the Dutch or any other national leader thinks.
        He is a fully paid up member of the Euro elite and it is his remit to big up all things EU.
        This is why he observed 3 months silence before the GE as he couldn’t be seen to be interfering with domestic politics.

        • Brian Tomkinson
          Posted June 3, 2015 at 5:17 pm | Permalink

          Ian,
          But boy is he making up for lost time now that the referendum is approaching!

        • Bob
          Posted June 3, 2015 at 8:43 pm | Permalink

          @Peter van Leeuwen
          Is it true?
          Are you being paid to promote the EU?

          • Denis Cooper
            Posted June 4, 2015 at 9:19 am | Permalink

            I think he does it more for love of the EU than for money, but one can’t be quite sure.

          • Peter van Leeuwen
            Posted June 4, 2015 at 7:30 pm | Permalink

            @Bob: The Netherlands has interested (senior) citizens, is that suspect? No connection with the EU, not paid for anything I do, which I trust is the case for many pensioners in Britain?
            My interest was borne some twenty years ago, working as a consultant. I have a huge British and a huge Dutch family
            If you’ll allow me, this will be my last “declaration of interests” for 2015, it does get a little tedious.

          • Denis Cooper
            Posted June 5, 2015 at 1:00 pm | Permalink

            The fact remains that you are not a citizen of this country, and yet you constantly propagandise on behalf of the EU against our national interests. As I may have mentioned to you before my own family extends to relations who are Spanish, Portuguese and German, but I would never think that this somehow gave me the right to intervene in the politics of their countries, of which I am not a citizen.

    • acorn
      Posted June 3, 2015 at 3:57 pm | Permalink

      Each member state still has its own Treasury and its own National Central Bank (NCB), just the same as the UK. The UK Treasury, having its own sovereign currency, can spend what it likes when it likes and the BoE can’t stop it; but, if it thought it was inflationary it would jack up interest rates.

      The Greek Treasury uses a foreign currency, the Euro, it is required to borrow its spending money by issuing Debt IOUs in the Eurosystem. This is done to impose fiscal discipline (???) on the member state; 3% deficit limit etc.

      The ECB is not the lender of last resort in the Eurosystem, the NCBs are. The ECB does not provide Emergency Liquidity Assistance (ELA), that is done by the NCBs also under rules of European System of Central Banks (all 28 NCBs plus the ECB).

      The ultimate sanction on Greece would be the ECB deciding the Greek NCB had broken the rules and disconnect Greece from the Central Banks payments clearing system. The Greek Euro would detach from the ECB Euro; float off and assume some exchange rate in the FX market.

      The Greek Euro would eventually get renamed as, say, the New Drachma and everybody lives happily ever after. Particularly when the Eurozone collapses and probably the EU with it. Which is why the EU, which owns and directs the ECB by Treaty, is not going to let it happen, even if a lot of us want it so.

      If the Greeks feel guilty about their debts, they should do deals only with their private sector creditors that were not insured. Fiat currency issuing creditors Central Banks / Treasuries and the IMF, will get their money back eventually by various taxation systems.

  3. Richard1
    Posted June 3, 2015 at 5:49 am | Permalink

    It is indeed a fascinating contest – though pretty horrible if you are an unemployed or impoverished Greek. Of course Greece should leave the euro. That would be an automatic default as she could probably re-denominate most of the debt into drachmas. If not there would need to be an agreed debt restructuring. Independence from the euro would enable Greece to hold her head high and stand on her own feet – selling whatever goods and services to the world she can to prosper – tourism, yogurt, ships, whatever it is. The excellent economist Allister Heath makes a succinct point on this: those who vote for socialism, profligacy and class war can’t expect the rest of the world to bail them out.

    • Andy
      Posted June 3, 2015 at 8:46 pm | Permalink

      That is the point about Greece. When the Junta fell Karamanlis began nationalising things. He was followed by Papandreou who really created this socialist, clientism state. It is ok the Greeks wanting a Socialist paradise, but what they can’t expect (and actually do expect) is that some one else will pay for it. That is why the Greeks shouldn’t get the 7.2 Billion the remains in the bailout but should be politly told to get knotted.

  4. Posted June 3, 2015 at 6:19 am | Permalink

    “….much larger transfers of cash from the richer parts of the zone, which have to be grants, not loans.”

    Exactly right. The problem is explaining to the Germans. They often can be very smug about their own economy and simply express bewilderment that Greece shouldn’t be able to manage with the euro. If they can why can’t Greece? – they ask! They aren’t economists but they are intelligent people and they can’t figure out the answer!

    It’s all because of that much neglected, almost forgotten, economic parameter of the current account surplus or deficit. The trade deficit in crude terms. Germany and Holland do well with the euro because they have lots of euros coming in from export surpluses. 7% and 10%. Countries which don’t have export surpluses have big problems meeting the 3% budget deficit limit.

    That needs to be doubled. There needs to be a common system of eurobonds. Germany and Holland need to do themselves a favour and start importing more. The problems of the euro aren’t insuperable. All it needs is for more than a few overpaid euro technocrats to spend a few of those euros and buy some economics text books!

    PS Any comment Peter Van Leeuwen ?

    • Peter van Leeuwen
      Posted June 3, 2015 at 8:14 am | Permalink

      @petermartin2001 I think that I largely agree (I’m a layman in financial issues). At the time I supported eurobonds but was part of a minority in the Netherlands. I understand that North Europe needed a system with more peer pressure on southern countries to enforce fiscal discipline, but now that this is starting to happen (even France is trying harder), the time could be ripe for relaunching that idea, which could happen gradually (first only certain kind of debt to be mutualised). After all the Dutch export also suffers when things are going bad in e.g. Spain. Sadly, we suffer from one-liner politicians an a few one-liner media and the false image that Southern countries are just lazy and live of our hard work isn’t easy to erase.

      • Posted June 3, 2015 at 1:13 pm | Permalink

        I shouldn’t worry about being “a layman in economic issues”. The so-called experts have made the most appalling mess of the common currency union known as the euro zone. We need more laymen to point out the obvious!

        As a fellow “layman” I would make the point that it should be obvious to all that Greece is never going to repay its debts in euros. It doesn’t have anywhere near enough. However, it can repay in the provision of goods and services to the rest of the eurozone.

        So when do you think this will happen? When do you think Ms Merkel and Herr Schauble will realise the obvious failings of their policies andtry something different? Do you think they should tray something different?

        Come on! You very kindly give us, daily, the benefit of your opinions on why the UK shouldn’t give up on the EU and its core eurozone. You might want to tell us all when and how this mess is all going to end. You must have given it some thought!

        • Denis Cooper
          Posted June 4, 2015 at 9:24 am | Permalink

          Kees Vendrik, the chairman of the Dutch court of audit, has just caused a bit of a furore by publicly stating that it is every unlikely that Dutch taxpayers will get back the money lent to Greece.

          • Posted June 4, 2015 at 11:35 pm | Permalink

            Denis,

            I’m sure he’s right. I’m not sure why Dutch taxpayers should get upset about that though. They, through their own or their govt’s choice, run a 10% of GDP trade surplus. That means every year they are accumulating some €70 billion euros, or the equivalent in other currencies, which they can’t spend. Simply because if they did spend them they wouldn’t be running a surplus any longer.

            Even if the Greeks were able to find enough euros, which I’d guess would be less than €1 billion euros pa, to make their interest payments to Holland for their share of the debt, what difference would it make? It would be just be another amount of money to be stashed in their reserve bank.

            It would no difference at all to the wellbeing of Dutch people.

            PS Any comment Peter VL ?

    • Hope
      Posted June 3, 2015 at 8:24 am | Permalink

      Good post. It will not happen because despite all the rhetoric of common purpose for the EU political project, national interest will pervade no matter how slow they wheel this disaster to its destined gaol. Holland and Germany will not give up their advantage as it might make them stronger or give levers inside the project!

      Time for governments to turn the EU project of a superstate into only a trade group. Friends and trade is all that is required.

    • forthurst
      Posted June 3, 2015 at 8:53 am | Permalink

      “Countries which don’t have export surpluses have big problems meeting the 3% budget deficit limit.”

      Which is probably why that limit was set in the first place and why, therefore, it was absolute folly for the Greeks to pay (words left out ed) to hide their deficit and for the crazed Eurozealots to ignore what the runes were telling them and let Greece join their exclusive club.

      • Denis Cooper
        Posted June 3, 2015 at 3:03 pm | Permalink

        I see that (words left out ed) are now saying that it may be necessary for Greece to default in order to unlock negotiations. So (words left out ed) having helped Greece into this disastrous mess now sees fit to offer advice to Greece on how to extricate itself from it.

        Reply If a bank is giving known advice which is public then quote it, otherwise just talk about what Greece is doing

    • Denis Cooper
      Posted June 3, 2015 at 9:00 am | Permalink

      Well, the German people were reassured that the euro would not mean that they ended up transferring wealth to poorer countries. As indeed we were; I recall a letter in a national newspaper from a Tory MP dismissing fears that if we joined the euro we could end up having to pay for pensions in other countries, because that would be prohibited by the Maastricht Treaty. I presume that this was a Tory MP who had actually read the treaty, unlike the Tory MP for Rushcliffe.

      • Peter van Leeuwen
        Posted June 3, 2015 at 10:26 am | Permalink

        @Denis Cooper: there is however also the argument that transferring some wealth to poorer countries will make us wealthier in turn due to increased trade and export. Easily demonstrated with statistics about the countries that joined the EU in 2004 and which have received out of of the structural funds.

        • Posted June 3, 2015 at 12:55 pm | Permalink

          PeterVW,

          You, and the Germans, could be much weathier by having fewer exports and more imports! Instead of producing goods and services for other people and taking in their IOUs (which you can’t use or spend), you’d either be using that stuff yourself or swapping it for other goods and services which you can use.

          Ever thought of it like that?

        • Lifelogic
          Posted June 3, 2015 at 1:35 pm | Permalink

          The way to transfer wealth of poorer countries is to trade with them not send aid to governments.

        • Posted June 3, 2015 at 2:56 pm | Permalink

          Oh Peter please this Keynesian claptrap has to stop. It is total nonsense . Think about it Holland pays money to Greece so that the Greeks can make yoghurt or whatever and sell it back to the Dutch. Please explain where this has increased the wealth production of either nation?

          Please explain why all the nations that have received money from the structural funds are STILL basket case economies with huge unemployment numbers.

          Face it socialism doesn’t work, never has and never will and I’m afraid that the EU is built on a premise of socialism lite.

          The reason that free marketers etc don’t believe in socialism isn’t as the Labour haters would have you believe that we are trying to impoverish the poor and make the ill, weak and hungry worse off. Its because having run businesses we have a basic understanding of how money and wealth creation works. We realise that we need to lift the weak, impoverished and poor OUT of that trap so that they have more and spend more and oil the wheels of commerce. That my friend is why Greece is trapped, its trapped by socialism from the EU. The Greeks aren’t lazy, they are just prevented from being able to do what they do best. Small is beautiful. Politics as if people mattered.

          End the EU now and set them free

          • Posted June 4, 2015 at 1:23 am | Permalink

            Libertarian,

            If you think it’s nonsense, it just means you need to think about it a bit deeper until the penny drops.

            If you did you’d perhaps realise that a country can only repay debts in things it produces. It can’t pay in gold if it hasn’t got any gold. There were those who thought like yourself in the twenties and insisted that Germany repay reparations in gold which it clearly did not have. That was, as history shows, a big mistake.

            It’s equally a big mistake to insist that Greece pay in euros when it doesn’t have euros and can’t create the euros. Greece can only repay by supplying the things it produces. That could start with holidays to Greek and Dutch workers. Then there would have to be other goods and services to follow. It means building up the Greek economy rather than destroying it.

          • acorn
            Posted June 4, 2015 at 8:14 am | Permalink

            “We realise that we need to lift the weak, impoverished and poor OUT of that trap so that they have more and spend more and oil the wheels of commerce.”

            That statement is pure Keynesian “demand side” thinking, surely some mistake!!!???

          • libertarian
            Posted June 4, 2015 at 10:10 pm | Permalink

            Peter martin /acorn

            Oh for crying out loud.

            Peter, I never mentioned paying “countries debts” but you might want to ask yourself what countries produce because the answer is nothing. Countries tax and they tax the wealth producers. As I’ve told you before many times you talk twaddle about money. I’ve never mentioned gold, any commodities or government debt

            Acorn

            No it isn’t Keynesian demand side thinking , its free market common sense. Those of us that actually do the doing, create the wealth, jobs and the money that government spends don’t deal in “economic theories” because every single one of them has always been wrong. You obviously didn’t bother to think about how, because that would involve doing something rather than spouting theoretical models.

            Dig a hole fill it , dig a hole fill it is all that Peter vL was proposing. Total guff.

        • Denis Cooper
          Posted June 3, 2015 at 2:57 pm | Permalink

          This is just an attempt to justify gross breaches of the treaties, or as Christine Lagarde described them “major transgressions”.

    • Stephen Berry
      Posted June 3, 2015 at 3:35 pm | Permalink

      But Peter, the Greeks already are getting a wealth transfer from the Germans and the other more efficient Euro economies. The Greeks can have a large public sector, earlier retirement than the Germans and other state subsidies whilst still having a currency with a good purchasing power. The Germans know this full well, having provided the same benefit to the old East Germany after reunification, and they figure that enough is enough.

      When the Greeks finally leave the Euro, they would immediately pay for their own extended public sector and this would manifest itself in the diminished purchasing power of their new currency. The return to the Drachma would also solve the current account deficit problem between Germany and Greece. The Germans would send goods to Greece which the Greeks would pay for in Drachmas. What can the Germans do with these Drachmas? Use them either to buy Greek goods or to invest in Greece. Problem solved for both the Germans and Greeks.

  5. Mike Stallard
    Posted June 3, 2015 at 6:32 am | Permalink

    Brilliant analysis – thank you. Much appreciated.
    If you are a Committee, unelected (so you never get to meet your constituents), unaccountable (so you never get any criticism from the general public), working in secret (so you are a victim to every single lobby group and also to your hairdresser and gardener, and taxi driver and mistresses and wife and even your children – Mr Joslin taught me that in Cambridge in the 1960s!) then you make the wrong decisions and end up in an awful group think.
    People often bang on about the democratic deficit: Greece is the result.

    • Anonymous
      Posted June 3, 2015 at 7:43 am | Permalink

      The UK masses (the ones you need for a successful Out vote) are paying little attention to Greece or the other boring and intricate EU issues.

      Without a key issue to focus them they aren’t particularly exercised about our country being run by a bunch Belgian ticket collectors – especially when they are told that 3 million jobs will go if we dare sack them.

      • Mitchel
        Posted June 3, 2015 at 9:49 am | Permalink

        I agree with you,anonymous,no amount of intellectual argument is going to persuade the unengaged masses to change the status quo.What it will take ,in my opinion,is a major financial meltdown that can be attributed to mismanagement in Europe – one that,unlike 2008,hits the average “hardworking family” in their pockets and entails real hardship.

      • Denis Cooper
        Posted June 3, 2015 at 10:34 am | Permalink

        Many among the UK masses are willing to give Cameron a chance to get whatever changes may be needed to sort out the worst problems with the EU. They may have doubts about how much he will be able to achieve but they are prepared to suspend their final judgement on whether we should stay in or leave until that becomes clearer. About a quarter have already concluded that he will achieve little and we should definitely leave, but by far the largest group, more than twice as large, could be satisfied if it seemed that he had been able to stop or even partially reverse the process of EU integration. Only a minority actively want any further integration, and of those a small minority actually want a European federation.

    • Peter van Leeuwen
      Posted June 3, 2015 at 8:19 am | Permalink

      @Mike Stallard: I imagine that Greek politicians do get to meet the people. So do all the members of the eurogroup. Would you suggest that Mrs Merkel or Mr Renzi meet fewer people than David Cameron? Or are unaccountable?

  6. Posted June 3, 2015 at 6:50 am | Permalink

    Greece should walk away .The money which would be used for their recovery will not be going to the places it is needed . A country cannot be come stronger by more and more debt and thereby being controlled by the big beast. If Greece leaves, the EU will lose the money owed in total , they will not be getting back the regular payments and Greece will have a chance to keep it’s historical identity.The disappearing identity is already being blamed on inward migration policies .What a sham not being invited to a meeting about your own Countries welfare, what an insult.

    • Peter van Leeuwen
      Posted June 3, 2015 at 8:21 am | Permalink

      Greece can walk away. It doesn’t want to. Neither its government nor the majority of the Greeks want to walk away. Maybe they see things different from the British.

      • Denis Cooper
        Posted June 3, 2015 at 10:05 am | Permalink

        Greece can walk away from the EU in its entirety, but as the EU treaties stand it cannot walk away just from the euro while staying in the EU.

        Obviously on top of all the other factors the prospect of being thrown out of the EU altogether, cast into outermost darkness, will very much colour the views of ordinary Greeks on the advisability of abandoning the euro and reverting to a national currency.

        Allegedly there is now a “Plan B” emerging:

        http://www.irishtimes.com/business/economy/eu-said-to-be-considering-plan-in-event-of-greek-exit-1.2210752

        “Euro-area governments are considering putting together an aid package for Greece to cushion the country’s economy if it was forced out of the euro, according to sources.”

        “”Within the EU there are a lot of financial funds which will continue to be available for Greece,” Thomas Steffen, Germany’s chief negotiator with Greece within the euro area, said at an event in Berlin last week. “There is no reason to even contemplate, that Greece would leave the European Union.””

        No reason at all, apart from the EU treaties, but then we know that when push comes to shove there are few scruples about breaking them.

      • Posted June 3, 2015 at 10:52 pm | Permalink

        I have just read your comments in this blog and you insist that all Countries want to stay in the EU. Do you realise that there are groups in all of the 19 countries who would love to leave and yes I didn’t know this off the top of my head;I had to resort to Wikipedia.

    • Hope
      Posted June 3, 2015 at 8:26 am | Permalink

      The Greeks will realise this tragedy will continue for years. How many people will leave the country, how many will be able to bear the suffering? As you say it is time to walk away. The fear of dictatorship has gone, Greece can be an independent free trading nation making its way in the world like Iceland.

    • Mitchel
      Posted June 3, 2015 at 9:55 am | Permalink

      The EU money has already been lost -the Greeks simply cannot now,or in any reasonable timeframe,repay any significant part of their debt.It is a case of the EU having to extend and pretend in order to avoid a default event from being declared.

  7. Ian wragg
    Posted June 3, 2015 at 7:10 am | Permalink

    And still we have a large selection of our ruling class that want to join this ridiculous circus. Be in no doubt that CMD would sign up in a jiffy if he gets a yes vote. As murky says just because some countries are not YET ready, the project must continue
    How much will we lose John via the IMF if Greece walks away.

    • bigneil
      Posted June 3, 2015 at 11:04 am | Permalink

      As we are £1.5tr up the swanee at the moment ( and climbing), CMD isn’t bothered about how bad this country gets financially. He will sell this nation to the devil for what HE wants – a seat at the top table of the EUSSR. I never thought I would see , a more dangerous to this country, “person”, than TB. Then along he came to prove me wrong. CMD will go down in the history books of the future for what he is doing to this nation.

      • Timaction
        Posted June 3, 2015 at 7:16 pm | Permalink

        I’d say they are all as bad for this Country and don’t understand or even care about the National interest as they see themselves as Europeans and guardians to further the EU political project. Walk on Mr Osborne with his EU plans to balkanise England under the guise of power to the communities. What about delivering the English votes instead? The Tory party are loyal to their leaders who are avid Europhiles and against the British people particularly the English. Got a feeling Mr Farage may have a word or two to say in the forthcoming debate and the truth will out!
        Any word on what the actual renegotiation is or the red lines………..thought not!
        During the in/out campaign its finally time to tell the masses of the truth. Then let them decide, not the usual jobs at risk, completing the market, voice in the world, little Englanders.

  8. alan jutson
    Posted June 3, 2015 at 7:25 am | Permalink

    Just shows how far you can push the EU if you have the people on your side.

    Are you listening David Cameron !

    Perhaps part of a solution would be for the Greeks to lease an Island to the EU so that they can put all of the refugees from northern Africa on it, to keep them all in one place whilst they decide what to do with them, given they seem to not want to return them from where they came.
    After all not many EU Countries seem to want them.

    The simple solution would be to return them of course, and then the boats may stop coming, but nothing seems simple when the EU is involved.

    Problem for the EU is that if Greece is allowed to get away with it, who next. !!!!

  9. DaveM
    Posted June 3, 2015 at 7:33 am | Permalink

    It seems ironic that the stated aim of “ever closer [political] union” – which the EU has attempted to achieve via a currency union – is the thing which is preventing true cohesion.

    Much as I despise the idea of a supranational EU superstate (which I believe was only conceived so the Germans could have a seat at the top table), the idea of a European council which enabled cooperation between European countries with regards to trade, investment, policing, security, and so on, is a good one. No need for treaties, etc, just a council of leaders who talk like grown-ups.

    Rather than the expense of a single currency supposedly binding countries together, a warm-hearted initial distribution of funds, and possibly further LOANS when a country was in trouble might have been a better idea.

    Typical greed though; rather than spreading the wealth as socialists like to pretend they do, all they’re actually doing is trying to enrich themselves. Feel sorry for the Greek people though.

  10. Brian Tomkinson
    Posted June 3, 2015 at 7:59 am | Permalink

    This situation epitomises the overarching political ambitions of the EU. Nothing can stand in the way of destroying the nation state and creating a country called Europe. When talking of the EU they and their lackeys in the British media usually say Europe rather than EU. We know of course that Europe is much more than a dictatorial anti-democratic EU.
    How many more such crises will follow? Only the UK and Denmark have an opt out from joining the euro. Six countries in the EU are currently waiting to join and any country wanting to join the EU in the future has to also accept the euro.
    Should we be so foolish as to vote to remain in the EU then it is clear that the next step will be for the UK government to tell us that having confirmed our desire to be governed by the EU, we must also join the euro in order to take our place at the top table and exert our full influence.

    • Denis Cooper
      Posted June 3, 2015 at 10:44 am | Permalink

      And we may well be told that we don’t need a referendum on whether to join the euro because we’d just had a referendum through which we’d expressed our support for being part of the European project, which obviously does involve eventually adopting its single currency, and surely we realised that?

      That is what the Estonians were told by their government:

      http://euro.eesti.ee/EU/Prod/Euroveeb/Main_Page/left_menu/Changeover_to_the_euro_in_Estonia/12_211205_Euromoju.html

      “The decision to join the European Union, which was approved at the autumn referendum of 2003, expressed also support for accession to the euro area.”

      It would only need words like “notwithstanding any provision of the European Union Act 2011” in the Bill to join the euro to cancel the legal requirement for a referendum under Hague’s so-called “referendum lock”.

      Reply Recent entrants to the EU sign up to the Euro at the same time.Of course the Uk would still need a vote to join the Euro even if it had voted to stay in prior to that.

      • Denis Cooper
        Posted June 3, 2015 at 2:52 pm | Permalink

        All the countries which have joined the EU since the Maastricht Treaty have been forced to take on that treaty obligation. That was what the EU leaders, including John Major, agreed would happen. So having got a treaty opt-out just for the UK, under pressure from his party, Major was happy to see the euro imposed on every other country in the EU. That included Denmark at the time, its opt-out came later after the Danes had rejected the Maastricht Treaty in a referendum.

        I agree with Brian that an In vote in the referendum could easily be taken as an effective mandate for the government and Parliament to sign us up to other integrating measures, including the euro.

        As repeatedly pointed out at the time, the “referendum lock” law is in no way entrenched against normal repeal, and a later Act for us to join the euro without the referendum laid down in that law would almost certainly be taken as an implied repeal of the earlier provision even in the absence of those “notwithstanding” words. However to be absolutely sure of avoiding trouble in the courts it would be safer to put them in.

      • ian wragg
        Posted June 3, 2015 at 3:14 pm | Permalink

        I believe Poland and Croatia to name 2 are backsliding on this commitment. I was in Dubrovnik recently and the cafes and bars wanted paying in the local Kunar.

        • Denis Cooper
          Posted June 4, 2015 at 9:29 am | Permalink

          The Polish people are now strongly against joining the euro, but the Polish government is under a treaty obligation to do that, as the EU Commission reminded Poland a few years ago.

      • Roy Grainger
        Posted June 3, 2015 at 4:38 pm | Permalink

        Of course the Estonian government has other reasons for wanting to bind themselves tightly to the EU, can’t blame them really.

  11. Tad Davison
    Posted June 3, 2015 at 8:14 am | Permalink

    Some commentators (not the BBC I hasten to add, they would never condemn anything to do with the EU. I have to go elsewhere to listen to a proper, informed debate) have suggested that in the event of a Greek default, the democratically-elected Greek government might eventually be removed in favour of a puppet, imposed upon them by the EU. Now that really WILL be dangerous and fascinating!

    Tad Davison

    Cambridge

    • bigneil
      Posted June 3, 2015 at 11:14 am | Permalink

      If the Greek govt become “unemployed” can we expect them turning up here for their freebie life on the English taxpayer? Everything funded. Just roll up with a foreign accent and get a NI number, House, never-ending money, healthcare, etc all magically appear. How do we do it? Simple – We make cuts and cuts to everything here (with the intention of turning it into a 3rd world country), while importing thousands to help the cause.

    • Bob
      Posted June 3, 2015 at 1:48 pm | Permalink

      @Tad

      “Some commentators (not the BBC I hasten to add, they would never condemn anything to do with the EU. I have to go elsewhere to listen to a proper, informed debate) “

      The BBC is not living up to it’s obligation under the Royal Charter to educate, inform and entertain. The billions of pounds it burns through every year could be put to much better use.

  12. Posted June 3, 2015 at 8:19 am | Permalink

    Meanwhile Spain , Portugal , Italy and Ireland are watching the scenario very closely . If further concessions are made to Greece , there will be a queue for hand-outs . Sharing surpluses has limits because , once given , the black hole opens up . It was a forlorn hope with Greece ; they fudged their entry requirements in the first place with false declarations , suffered subsequent economic decline making recovery impossible and then veered to the left in desperation .

    Fiscal control without political control is a non-starter ; the EZ have not the mechanisms in place to exert disciplines and without a common discipline , unity of purpose cannot happen . The North and South of the EZ are very different places and , after all , why should the North feed the South ?. Europe is no longer the weary war torn area and Germany no longer presents a military threat to it . Greece cannot maintain a response that will make sense to the North and must exit the EZ if it wishes to have a life of its own .

    • turbo terrier
      Posted June 3, 2015 at 7:16 pm | Permalink

      BY

      Similar scenario in the UK. Why should the South keep bailing out the North?

      Most of the devolved areas in Scotland have proved to be a failure and still they keep screaming I want, I want, I want.

  13. majorfrustration
    Posted June 3, 2015 at 8:23 am | Permalink

    If the EU injects more money there is no guarantee that policy changes will be made in Greece. Likewise a massive haircut does ease the situation but there again can you leave the Greeks to sort out their structural/social problems. Doubt it.
    Take the hit and let Greece leave the EU

    • Denis Cooper
      Posted June 3, 2015 at 2:37 pm | Permalink

      There’s already been a massive haircut for private bondholders, who have lost well over half of the payments they were originally promised. That was in 2012 and it was called “debt restructuring” to avoid calling it “default”. That’s why only about 17% of the Greek government debt is now owed to private investors, all the rest is owed to the IMF, EU institutions and eurozone governments.

  14. fedupsoutherner
    Posted June 3, 2015 at 8:28 am | Permalink

    As long as Germany continues to flourish in the EU then all is fine with the world.

    I think Greece has to come out of the EU and give up the Euro to save face and maybe make their own way in the world once more. Why on earth would we want to vote to stay in such a mess and be drawn into the problems the Euro is presenting?

    As for Greece not being invited to talks, well, it beggars belief and I am surprised they have accepted these terms but then I suppose they didn’t have a lot of choice as democracy and openness has all but disappeared from the EU.

  15. A different Simon
    Posted June 3, 2015 at 8:34 am | Permalink

    VW is part owned by the State of Lower Saxony and the companies articles of association says that it’s primary purpose is to enrich the people of lower saxony .

    In the UK we are told the Post Office needs to be privatised to create fairer competition and the banks need to be returned to private ownership and Austrian’s complain about state aid to nuclear new builds .

    Isn’t it time that the rest of the EU put pressure on the Germany to sell it’s stake in the VW – i.e. enforced VW to be fully privatised ?

    This comes up year after year and the German’s get it brushed under the carpet .

    As I understand it , when Digby Lord Jones became Minister of State they unbelievably assigned him a chauffeur driven German car which he quite rightly refused and demanded a bottom of the range Jaguar instead .

    Seems like the British Authorities love to spend British taxpayers money on German cars / personal computers / trains rather than support home grown industry .

    • turbo terrier
      Posted June 3, 2015 at 7:11 pm | Permalink

      ADS

      Steady on there. It is only the UK that sticks to the rules. Are you wanting mayhem? The Germans are very good at making rules not so good in implementing them, so one must ask oneself have they the will and the ability to change? Don’t hold your breath!

      • A different Simon
        Posted June 4, 2015 at 7:40 am | Permalink

        My problem isn’t with the Germans looking after their own – which is in many ways admirable .

        My problem is with the British establishment which has decided unilaterally that it is verboten to put British Citizens first .

        I wish I knew why so many of them are inherently anti-British .

  16. Stephen Berry
    Posted June 3, 2015 at 8:37 am | Permalink

    Recently a friend of mine visited a Greek restaurant in Germany. He was surprised that the owner of the restaurant praised the British to the skies. What masterstroke had the British pulled off this time? It turns out that, indomitable as ever, they are still going on holiday to Greece! No small achievement when such is the bad feeling engendered between Germany and Greece by the Euro crisis that German tourists are now reluctant to make Greece one of their holiday destinations.

    How will this end? Understandably, most Greek voters still want to hang on to the Euro. The day after the Drachma comes back they know a trip to the petrol pump will provide many of them with a shock. But opinion polls seem to show that Syriza voters would rather return to the Drachma than submit to Troika policies. Tsipras has to widen this view so that it encompasses not only Syriza supporters. When that happens, Greece will leave the Euro and the nightmare will be over. And events are slowly inching in that direction.

  17. CHRISTOPHER HOUSTON
    Posted June 3, 2015 at 9:01 am | Permalink

    The EU member states will indeed find an elegant way to write off or down Greek debt and will use a similar template to construct a Fiscal Union albeit in a fragmented and elegant form. The Greek fiasco will most likely spread to Spain unless we believe over-optimistic pre-election economic forecasts.

    The EU has a political interest in pumping money into Greece. It has to ward of Eurosceptic parties and movements which feed on the EU economic demise.

    We have been lucky in England so far, perhaps because of our nation-wealth and tolerance irreparable damage has not been done to communal adhesion.
    Some might view votes to UKIP as an expression of a sort of electoral/national safety valve rather than a protest-vote and similarly votes for Mrs Marine Le Pen. Those voters and ones banking on the Tory Party require a positive outcome to their aspirations. Failure to deliver on Europe would deepen their commitment to vote and probably encourage more to join them.
    The UK and even France to some extent are experiencing an economic boom.We should expect the already successful Right parties do do even better,- much better in an economic downturn.

    Off topic but if the SNP is more successful in detaching Scotland’s one and a half million voters from the UK then I believe Yorkshire and other northern UK powerhouses should be facilitated in producing and marketing whisky.
    A stag could be featured on the label standing seemingly in front Conisbrough castle, a moorland scene as background and titled “Monarch of the Dales” with corner motifs of the Yorkshire blue and white flag to show the world just where its coming from. Perhaps it could be subtly sweetened a smidgen with Pontefract liquorice thus taking away a nasty sharp and sometimes medicinal after-taste and so be more acceptable to Russian/European/Asian. North and South American sweet-tooth palates, the existence of which almost all their home-grown spirits and beers indicate. Just a thought for the SNP to mull over. We mean business.

    • turbo terrier
      Posted June 3, 2015 at 7:06 pm | Permalink

      CH

      Regarding the whisky. Now that does seem like a plan, a very good one.

  18. Denis Cooper
    Posted June 3, 2015 at 9:20 am | Permalink

    If Cameron wanted to assume a positive leadership role within the EU, and start on his work to transform it into something more acceptable to the British people, then he could pick up on the suggestion made by the Dutch Prime Minister Mark Rutte in 2012:

    http://www.politics.be/persmededelingen/34118/

    “We want to allow a country to leave the eurozone if it wishes to. At the moment that is not the case. A country can only give up the euro if it leaves the EU. We should revise the Treaties to change that. We are ready for this.”

    In fact Cameron should have demanded that EU treaty change more than two years earlier, as part of the quid pro quo for agreeing to the EU treaty change that Merkel started to demand in the autumn of 2010, which was formalised as European Council Decision 2011/199/EU of March 25th 2011.

    Moreover Cameron could say that if Greece did decide to withdraw from the euro, the course of action recommended by many economists, then the UK stood ready to join in efforts to ensure an orderly transition back to a national currency.

    That could be in the form of a bi-lateral loan, like that extended to Ireland, not to pay off any of the existing debt – which requires another solution, possibly turning it into very long term debt – but to make sure that Greece could continue to function as an advanced orderly society during the transition and then start to recover.

  19. The PrangWizard
    Posted June 3, 2015 at 9:36 am | Permalink

    Just shows what you can get if you negotiate hard. But Cameron and his ilk are not strong enough. If we stay in the EU monster will continue to consume us.

    The only way is OUT.

    Same with ‘English Votes…’; a weak position to take, and will the SNP get away with wrecking it? As a result and anyway has it not lost all momentum and credibility?

    And they are also intent on wrecking the EU negotiations. See what happens when you appease an enemy!

    The demand should have been ‘True English Parliament’, but that was always unlikely with Unionists, because to concede that would acknowledge the beginning of the end of the Union. But what is the Union for and who is it for anyway now?

    It’s time at last to recognise the situation and to begin planning the break-up and for those in England who believe in England to truly to put England and English things first.

  20. Dan H.
    Posted June 3, 2015 at 9:39 am | Permalink

    What is going on here is really quite simple: different people and nations are discovering that if you stand up to the EU’s leadership, they always give in. It happened first with Russia some years ago, when Putin discovered that the EU’s diplomatic service were inexperienced and didn’t know how the game was played. He then decided to permit his cronies to interfere in Ukraine, as it was completely clear that the EU had not the bottle nor the troops to oppose him.

    Greece is now discovering exactly the same thing: if you largely ignore the outraged bleating and clouds of misinformation and simply tell the EU no, they eventually capitulate. Oh, they make a great deal of noise about the matter, but all of this is just noise, there’s no bite there. If you simply stand your ground and tell them to go do one, that is exactly what eventually happens.

    Of course, France knew this all along. It is about time Britain caught on and pushed the EU about a bit more, just for the sheer animal joy of it.

  21. Atlas
    Posted June 3, 2015 at 9:58 am | Permalink

    Indeed John,

    It is a case of:

    “Wanting to have your cake, eat it, but still have your cake at the end”

    on both sides.

    The Germans want to hide the fact that their banks lent without checking the facts, The Greeks want a perpetual financial bung. And others in the EZ just want to enjoy self-righteous tut-tutting (conveniently forgetting when they cow-towed to both France and Germany breaking the 3% limit a few years ago).

    • turbo terrier
      Posted June 3, 2015 at 6:52 pm | Permalink

      Atlas.

      You forgot to mention with the cream on top!!

  22. Roy Grainger
    Posted June 3, 2015 at 11:56 am | Permalink

    The Eurozone have just embarked on a massive QE programme, so why don’t they use the newly created money to buy long-dated Greek government debt, cancel any interest payments on that, and hold that debt till it expires by which time inflation will have eroded its value and it can be repayed. It’s what the UK has done after all.

  23. Denis Cooper
    Posted June 3, 2015 at 2:20 pm | Permalink

    I’ve just come across this recent article by Andrew Lilico on the ConservativeHome website:

    http://www.conservativehome.com/platform/2015/05/andrew-lilico-any-eu-renegotiation-must-by-definition-include-treaty-change.html

    “Any EU renegotiation must, by definition, include Treaty change”

    But he writes at one point:

    “I think there’s very little chance of the EU, any more, being able to agree to the sorts of changes Britain requires (I think the last realistic opportunity we had of achieving what we needed was 2010).”

    Andrew Lilico is one of the few Conservative authors who openly acknowledge that Merkel demanded an EU treaty change in the autumn of 2010, and that was the envisioned “golden opportunity” for the UK government to demand other EU treaty changes in return, but Cameron declined to make any use of it; now he seems to think there will be no similar opportunity in the future, certainly not the near future.

    On the other hand I also read today that a German MEP suggests that if we were to get an exemption from the process of “ever closer union” through a protocol – which for the removal of any doubt would be a treaty change, just as much as if it was written into the main body of the EU treaties* – then in return we should give up our remaining powers of veto:

    http://www.theguardian.com/politics/2015/jun/02/britain-eu-veto-opt-out-david-cameron

    “Britain must give up EU veto if it opts out, Cameron told”

    “Weber said Cameron’s demand that ever closer union should not apply to Britain could be accommodated by a special “protocol” to the EU treaties enshrining a UK opt-out.

    “But if there is a request for an opt-out for the UK, we can ask for compensation,” he said. “If the British want an opt-out, the rest of the union can ask that they lose their veto on the system. They cannot have the right to block the others if the others want to go forward. We should add [to any opt-out] that Britain has in the future no right to use its veto in any domain if the others go further [in integration].””

    * Article 51 TEU:

    “The Protocols and Annexes to the Treaties shall form an integral part thereof.”

  24. Jon
    Posted June 3, 2015 at 5:34 pm | Permalink

    I suppose the Creditor bodies don’t want to be seen as kicking out Greece but at the same time can’t give Her something that would cause contagion to other Mediterranean nations. They need to work it to a position that they can say it was a choice of Greece that they left the Euro.

  25. turbo terrier
    Posted June 3, 2015 at 6:51 pm | Permalink

    As usual spot on the money John.

    The Greek Government should listen and take notice of the Kenny Rogers song the Gambler.

    Know when to hold them

    Know when to fold them

    Know when to walk away

    Know when to run

    Never count your money until you leave the table, there is time enough for counting when the dealings done.

    Unless they have a sword in the sand moment how long will this saga carry on?

    I feel there will be no winners only losers. In reality for the Greeks it must seem like death from a thousand cuts.

    They have to learn the hard facts of life the hard way , it is a result of playing with the big boys who have more money, the only thing they can do as with all bad card games is to remember that you can always get out by paying or running. Give it a few years and Scotland with all their demands will face the same scenario if they are given them without Westminster going guarantor. Like with the turbine subsidies “you wanted them you pay for them” It is totally wrong to expect the consumers of England to pay. Sometimes the facts of real life are very hard!

  26. turbo terrier
    Posted June 3, 2015 at 7:03 pm | Permalink

    Its a bit rich when you listen to Empress Nicks speech to the EU Parliament.

    Like her predecessor she still seems to believe if they go independent they will be allowed to keep their membership.

    With all that is going on in Europe at the moment I wouldn’t trust anyone of them to change the stance of the last President who if I remember made it quite clear regarding membership for Scotland they would have to apply in their own right and meet all the criteria which would include the euro. Go get it girl!!!!!

    Take a good look at Labour they thought they could revamp everything and look at them today. The world has moved on.

  27. Posted June 4, 2015 at 4:41 am | Permalink

    Not totally on-topic but still relevant to our discussions about Greece. Are the IMF coming around to a more sensible POV on debt? They write:

    “Distorting your economy to deliberately pay down the debt only adds to the burden of the debt, rather than reducing it”

    You might want to Google that sentence for the many IMF references.

    It’s not quite how I would put it – but nevertheless the IMF is making the same point as I’ve been making on this blog for a while now. Ultimately what matters is that governments should steer a sensible path between having too much much inflation on the one hand and too high a level of recession on the other. Nothing else really matters. Not debt. Not exchange rates. They will always take care of themselves if the economy is working well.

    The ‘markets’, despite many assertions to the contrary, only care about debt when they think it can’t be repaid. When economies are functioning well, there is nothing to worry about. Especially when countries are in charge of their own currencies. But when they aren’t, and when countries aren’t in charge , they do worry. That’s when the problems start.

  28. Posted June 4, 2015 at 8:33 am | Permalink

    The Greeks can choose their own government. They cannot choose how other countries and institutions are governed. Time to force a default and a Grexit. The UK Foreign Office should be lobbying for this outcome; instead we sit on the fence.

  29. REPay
    Posted June 4, 2015 at 3:45 pm | Permalink

    Yes, by definition a single currency has to be a transfer union. It says a lot for the political class in Greece and the wider EU that they are prepared to create so much misery to uphold an economically flawed idea. They will beggar the Greeks for a century.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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