Mrs Merkel seems to be at war with herself. Euro Merkel knows she has to do what it takes to keep the Euro together, and to advance her European dream of a German led united Euro area – or EU as she would prefer. German Merkel knows that more and more of her fellow countrymen and women, and members of her own party, have lost patience with Greece and do not want a Euro more of Germany’s money to be lent, given or pledged to Greece.
Mrs Merkel also probably has enough self knowledge of both Germany’s considerable power in the EU, and the constraints on being seen to use that power too openly. Were Germany to lead a public ousting of Greece from the Euro, there would be bad press about brutal Germany cutting loose weaker countries because Germany had no sympathy with poorer countries nor any wish to share burdens and riches within the Eurozone. Were Germany to give ground and lead yet another bail out of Greece, but insist on austerity policies, there would be those who spoke and wrote about an authoritarian and dogmatic Germany forcing others to do as Germany instructed. Neither is a welcome thought capable of uniting a happy Eurozone.
So Mrs Merkel dithers. She tells us all where there is a will there is a way. If only Greece can behave better they might be accommodated. This is rather like saying if Greece had elected a CDU government there would not be a problem. At the same time she seeks to reassure her restive German friends and Parliament that this time there will be no easy terms bail out for a Greece which has failed to conform to past loan terms and to work properly through agreed programmes.
The tragedy for the Euro area is no-one around the table seems capable of leading the zone to a decision. That is why we have had weeks of damaging bad press for the zone, weeks of lending Greece more money from the ECB who assisted whilst the politicians delayed, and now two weeks of banks closed, no additional liquidity, and an air of great crisis. The ECB was made to carry the Euro from January and has now lent a total of Euro 89 billion to Greek banks, only to see them close and be unable to pay out people’s money when requested.
The preparatory work for Sunday’s meeting can run over once again all the old detail about what Greece might cut from its state budgets and which tax revenue it might be able to raise, but this is now looking very dated. The economic have deteriorated markedly thanks to the dithering of this year. Greece is starved of cash. Tax revenues have fallen. Output has suffered from the lack of confidence and now from the bank closures. Agreeing a modest three year loan and some changes to the state budget is not about to trigger a decent recovery and set Greece on the path to financial independence within the Eurozone. It might kick the can down the road one more time, only to create a bigger and more expensive problem some months later.
The first fix the assembled leaders need to arrange whether Greece leaves or stays within the zone is a fix for the banks. That will now be costly, given the damage inflicted on them. The banks may well need extra capital, as well as substantial additional liquidity. They remain the responsibility of the ECB and the wider Eurozone unless and until Greece leaves the Euro and has her own independent Central Bank. We are probably talking tens of billions here.
The second fix is for the Greek economy. Whilst I do not agree with all of Syriza’s policies, they are right to say the EU/IMF package has failed so far to get Greece growing, but growth has to be the priority. How do you get cash to flow and sensible new credit to be extended in a part of a currency zone that is as damaged and stressed by its single currency’s rules and massive German surplus?
The third and largest requirement is to fix the politics. The Euro bosses decided to take on the Greek government, aiming either to change their policies or to change the government. Instead the Greek people backed their government. What is the Euro area’s answer to a democratic government that simply does not accept Euro area rules? Lecturing them on their duties as borrowers has not worked. Either the Euro area has to have the full powers it needs to overrule a member state’s government, or it has to sit down and talk to whoever is elected and try to accommodate them. The last few weeks have seen a largely impotent Euroland clumsily interfering in Greek politics and losing. On Sunday they have to show they have learned from this bitter experience and can find a way to improve the position. If they decide they cannot lose face and lend Greece more, they need to help Greece organise an orderly transition to the drachma. That has to start with the ECB standing behind the Greek banks so they can open again.
July 10, 2015
As you say:- If they decide they cannot lose face and lend Greece more, they need to help Greece organise an orderly transition to the drachma. That has to start with the ECB standing behind the Greek banks so they can open again. This is what must happen and as soon as possible.
The problem is it is not just Greece but Spain, Portugal, Italy and France …..
Meanwhile I see Osborne is still absurdly claiming “… what have we got, a country where the debt is falling” needless to say the BBC today staff did not bother question the bonkers claim.
Then we had him defending his landlord mugging by claiming it was creating a level playing field with owner occupiers. Complete and utter tosh as usual, just how stupid does he think people are. Level playing field in what sense? It was level already he is just thieving to support the government’s endless waste with essentially double taxation. It is his endless waste he needs to tackle.
On the positive side we did need a reduction in benefits and he does seem to be slowly killing the pointless green industry, just not quickly enough.
July 10, 2015
Wolfgang Nowak writes a good article in the DT today. Worth a read. The flaw in his piece being the Cameron had a” golden opportunity” to negotiate a fantastic deal for the UK when Germany wanted a fiscal pact and wanted to break the rules to save the EU project, Cameron true to form let it pass and continued to pay up with our taxes. If only we had a PM who could negotiate a good deal for the UK rather than the weak roll over imposter we have who talks a lot and delivers nothing. All con and spin. Europhile to his core.
July 10, 2015
LL, Osborne is deliberately lying to change public opinion. He knows very well the Debt is not falling, it s rising and will continue to do so. What is worrying is what journalists are not challenging him. This is a forerunner to the EU scare tactics for the referendum to come.
The glaring omission being that he promised to balance the structural deficit by 2015. He failed miserably. Now he claims it will be 2020 a year later than his forecast in March! It seems to have escaped JR’s mind as well when he wrote his blog the other day. It must be a deliberate omission as JR is well versed on the economy.
Twice the amount of tax rises to tax cuts, this from a false claim by Cameron that he is a low tax conservative. All spin no substance.
July 10, 2015
In a Conservative government too, no Liberal fig leafs to cover his modesty. Altogether now….. Gideon’s in the altogether, the altogether, the altogether….
zorro
July 12, 2015
” Osborne is deliberately lying to change public opinion. He knows very well the Debt is not falling, it s rising and will continue to do so. ”
It’s not a question of lying. But, it’s good that he’s done what he reasonably can, as a Tory chancellor, to reduce worries on the question of National debt. There’s really no need to create worry in the general population needlessly on the question of debt.
As events in Greece show the harder you try to reduce the debt, the higher it gets. If Greece has had expansionary budgets instead of contractionary budgets for the last 7 or so years then the debt problems would be much less than they currently are.
Firstly, the debts would be lower as a % of GDP. Secondly, the Greek economy would be in much better shape than it is and much less likely to arouse worries in its creditors over its ability to service those loans.
July 12, 2015
You do not reduce reduce worry by making false claims that the debt is falling. He perfectly well knows it is rising and his budget will make it rise further over the next five years. This is against the background that he would get rid of the structural deficit by May 2015, claiming a fall in the deficit as a percentage of GDP in the election campaign. It is not reducing worries by knowingly spinning false claims. If he does not know the difference between debt and deficit then he should not be in office, with part-time or any time. The public deserves to know the truth so we elect the party that reflects our views on the way our taxes are spent. Cameron claimed openness is the best disinfectant. They need to try acting in what they preach.
July 10, 2015
Dear Hope–Yes that article was absolutely brilliant but unfortunately Germany is, but we are not, in the Euro making the article a waste of time as regards its (anti)climax . I see no hope whatsoever of bridging that chasm.
July 11, 2015
I don’t share that view. Germany knows it is in a lose lose position financially. Will Germany’s fanaticsism for creating an EU superstate override sensible financial considerations and its angry proletariat? It is an issue where a decent negotiator could do a deal to suite two of the largest contributors to the EU and use the issue as a lever.
Germany’s view is always held high because it pays the largest amount of the bills. The no hope comes from our head negotiator who was recently reported, 29/6/2015, to have said that he firmly wants the UK in the EU and will need to make the case of leaving too risky. He did not reject he said this!
A bit of clue of the two posh boys intentions is that they keep implementing all matters Eau no matter how daft or no matter how much they demand. This OnS calculates the UK will be force to pay another additional ÂŁ1.7 billion. What do the taxpayers get in return? It is good news for the infrastructure of other European countries while our public spending is being supported by further tax rises!
July 10, 2015
I see the Foreign and Commonwealth Office now advise against all but essential travel to Tunisia. Doing the work of the terrorists for them.
What makes them think anyone is any safer in London or anywhere else in the UK. About 3000 people die in the UK every day. We should have some perspective and not be cowed, it just helps the terrorists.
July 10, 2015
Well they have to up the ante don’t they so that they scareeople so that they ask for more security, and make the Tunisians know what will happen if they don’t play the game.
I always find it strange (well, not really) that these terrorist outrages always seem to serve neo con foreign policy interests…… In this case bolstering the case for more U.S. bases in Africa as part of the expansion of AFRICOM ….. Why do these terrorists commit these offences to try and provoke the U.S. To intervene when they could achieve their purported objective without doing so?
zorro
July 11, 2015
Bob Quick has it right. If adults want to freely leave this country for IS then let them, even provide transport for them, but leave their passports at the check out to prevent them coming back and being a threat to the rest of us. It helps fulfil the security of our country and is cost effective for security forces.
Anyone think Cameron will implement any time soon? ÂŁ750 million for HMRC to increase staff to get more tax, as it did last parliament, when we have a mass immigration problem without the means to count people in or out, no way of monitoring, let alone stopping, EU criminals convicted of murder entering and remaining in the country and it appears not enough resources to check or boot out terrorist preachers as we read in the over today.
How does the EAW make us safer than extradition treaties as we have with the rest of the world? Brought to you by the two posh boys who do not know the price of milk!
July 10, 2015
Good to see some relaxation in planning, let us hope it is well thought through for a change. Over restrictive planning (and building control) is a huge negative on UK productivity.
July 11, 2015
Planning needs to be revised, but the proposal is completely daft. The Govt will override everything. The problem is mass immigration not housing. It will allow the Govt to give away social housing at the cost of taxpayer! No provision for infrastructure for this mass increase in people, when billions of of our taxes are willingly given away to the EU to spend on infrastructure for other European countries! It will also allow more wind farms despite local people being assured their views would matter.
July 10, 2015
Blindfolds not merely obligatory blinkers are necessary for Mrs Merkel and her Eurolords. With blindfolds they may confuse the 11 million Greeks ( including children, over 65s and 2,000,000 migrants ) with the 23 million European unemployed.
The EU annual unemployment bill in welfare handouts, social costs, ( plus unnecessary educational courses to reduce the number actually registering as unemployed ) should far exceed any bailout and restructuring costs to Greece. For decades Mrs. Merkel and her Lords and Ladies have considered such costs wholly manageable. Not a crisis at all but streamlining and improving productivity per unit ( unit employed that is ).
Otherwise, Mr Draghi of the ECB should be blindfolded and asked to include millions in “bailout” or better “streamlining” for Greece with his regular monthly printing of hundreds of million bundles of Euros in his Quantitative Easing programme.
The added bonus for Euroland is that I am not charging them for this advice. They would only pay me in Euro anyway.
July 10, 2015
You are declining payment in euros which were worth 60p in 2000 and are now worth 72p. The euro is actually quite a successful currency if you want to hold something that retains value, in spite of recent events.
July 11, 2015
In terms of its trade weighted external value the euro has been all over the place since the exchange rates of the legacy currencies were fixed, as you can see by clicking on “All” for the chart here:
http://www.ecb.europa.eu/stats/exchange/effective/html/index.en.html
I note that you choose 2000 as the start of your comparison, when it just so happens that the minimum ever value of the euro index was 81.3 on October 26th 2000; why not choose another start date, such as December 18th 2008 when it stood at 114.4, compared to 92.9 now?
July 12, 2015
Denis,
It’s called cherry picking data to suit one’s political purposes. I always try to avoid the temptation to do that myself, hopefully successfully, and always advocate the use of graphs rather than a couple of lines of text which cannot convey the full picture.
Even graphs can be manipulated to suit. So, for example of we wanted to argue that National Debt as a % of GDP was a problem we’d just show the rise on a graph starting in 2007.
If we wanted to show it wasn’t a problem we would show a graph dating back to the start of the 19th century.
If we wanted to lay it on think we’d show ÂŁ on the y axis rather than GDP.
July 10, 2015
Whatever is the outcome the Greeks know, and it is part of their strategy, that the Germans will be forced to pay. Either in debt write off or to keep the Greeks going. The first is a one off painful outcome for Germany. The other actually increase the losses it will incur. 80 percent of Germans recently surveyed do not want their taxes give to the Greeks. The sensible outcome from the EU would be to let the Greeks go. However, that goes against all their political ideology and land grab. Those who want to change the world order to create an EU superstate do not want Greece to go as it threatens the EU project ie the USA. The trouble for the negotiators is that the Greeks know this. Hence they ar being stubborn against EU threats.
July 10, 2015
It is at the “5-past-12” moments that geo-political aspects come into perspective. Mr Putin and other eurosceptics may want a Grexit, but for quite different reasons than Mrs Merkel or Mr Schäuble. And the Greeks may not like the euro-whip (its rules) but don’t fancy being outside the eurozone. I agree that, at least in Greece the EU/IMF packages have failed. Some harsh questions face countries like Germany and other wealthier EU members. Any Greek transformation into a modern EZ member may take decades rather than years and so these countries also have to pay up for the geo-political benefit to keep Greece in the EU. The Germans will have to compromise. Sorry though for Putin and some other eurosceptics, the Greeks are unlikely to leave the EZ and the EU.
Reply You are not on Euro message here. Glad you accept the need to help Greece if you wish to keep them in. Silly linkage of Eurosceptics who want Greece to leave the Euro so she can be better off, and Mr Putin! Try and think of a better reason why Greece should continue to be poor in the European Unemployment and Recession Organisation EURO.
July 10, 2015
The only reason reason why Greece should “continue to be poor in the European Unemployment and Recession Organisation EURO” is so that the fools who designed and implemented the systems can continue to delude themselves for a little longer and not have to admit the true extent of the damage done and extent of the debt that has to be written off.
Also to encourage they others in the queue not to try to follow them.
July 10, 2015
@Lifelogic: I don’t think that the Greek people or the Greek government would see it your way.
July 11, 2015
German people will see it that way as it is their taxes paying for this stupidity. Wolfgang Howak, former advisor to the chancellor, recognizes it in his article. But it was published in the DT so in your view would not count or should be given a detrimental label.
July 11, 2015
Peter vL
You are right the Greeks don’t see it that way, but then neither do they see it your way either. They just want their cake and eat it. I was also talking to a Frisian family over here on holiday , yesterday, and it seems that some of your countrymen at least don’t see it your way either.
July 12, 2015
@libertarian: Many different opinions in the Netherlands indeed. I actually would agree with a Grexit as well as not having a Grexit. I just notice that geo-political arguments are heard more often and also that the motivation of many British eurosceptics is too weaken the EU (indeed like our neighbour in the east) and that Germans and most other continentals want to keep the EU strong.
July 10, 2015
You are right there Peter, if the EZ wants to keep Greece a member taxpayers in EZ countries need to send Greece money just as if it was a region of the Netherlands which was poor and needed money. The reason there is an intractable problem is whereas if a region of the Netherlands elected corrupt big spending leftist govts such as Greece has had, which wanted massive expenditure and over-employment, the Central govt would simply overrule it, In the EZ the states are in theory independent democracies. If the EZ is to be compatible with democracy, democracy needs to move up to the EU level. Not a prospect which has any support in the UK and I wonder really whether it has support elsewhere in the EU?
July 10, 2015
@Richard1: Now that conquering and overruling is no longer the done thing in Europe, at least in the EU, you may wonder whether a “Euroland” (federal state) is the only alternative. Because the EU is a new and unique hybrid structure, we are in uncharted territory. For one, these “independent” democracies realise they are interdependent. Peer pressure, “overruling-lite” (such as in the submitting of national budgets for review), banking union, increased cross fertilization due to modern online media, ever cheaper transport and an emerging European lingua franca, I think that all these factors will help to establish (over the longer term) a multilayer, democratic, hybrid constellation in which a single currency will have survived and contribute to the single market operations.
July 11, 2015
Peter,
European countries have always been interdependent. For 2000 years at least . And throughout that time there have been consistent attempts by European states to form a single entity in one form or another, whether it be via conquest, religion, or whatever. None of them have worked for long though, or at least none of them have worked for more than a century or two, because ultimately human nature dictates that people are – for the most part – essentially localist and tribal. And ultimately one state ends up dominating for whatever reason – military, financial, or other.
Language and culture also has a massive part to play. If your countrymen spoke German, do you not think the Netherlands would be part of greater Germania by now? I do. Likewise Belgium; however, Belgians originate from the Belgae tribe not the Frankish or Saxon tribes.
There is no reason why an attempt to create a single European entity through financial means should be any more successful that the other means I’ve mentioned.
If European politicians concentrated on simply working together for mutual benefit rather than trying to form a superfluous and expensive centralised governance it would be far better for everyone. There would be nothing wrong with a council of leaders who met from time to time and agreed to help each other out in various ways – there’s just no need for what the EU is trying to do.
July 12, 2015
@DaveM:
2000 years ago, in the time of horse and cart, interdependence was at a much smaller scale.
The EU construction is different from previous attempts. As a hybrid it will continue not to be just a single entity. How long it will last is anybody’s guess, my guess is that it will outlast us.
Languages are much more similar if you look at regional level, “East-Dutch” being like “West-German. Frisian is more different and still Frisians haven’t established their own country.
The EU as entity wasn’t created by “financial means” and could have continued to operate without a euro. It started by voluntarily uniting the “industries of war” (coal and steel) as to prevent future war between member states and all the rest followed from that over time. Current conflicts between member states are fought out at the conference table and at courts.
If you look at the figures, the centralized part of the EU is very small. The number of EU civil servants is comparable to that of medium sized town.
Reply Many national civil servants spend their days implementing and enforcing EU rule!. The idea that the EU has stopped wars is bizarre. NATO and the US presence in post war Europe stopped wars. Democratic Germany would not invade democratic France if there were no EU. You pro EU people have such a poor view of individual EU countries.
July 10, 2015
PvL
What would it take for you to admit the Euro was a colossal mistake that has impoverished Southern Europe. A write down of Greek debt and another bung will just move the problem back a few months. Holidays in Greece are about 50% more in Greece than Turkey which offers similar facilities. The rise in price due solely to being in the Euro. Exactly the same as Cyprus where we lived for 12 years. As my neighbour says. 3rd world countries with 1st world prices.
July 10, 2015
@Ian wragg: It would be a fairer question to the “impoverished South” (because in my bias I might think of different causes of an impoverished South). I Expect that you’ll find the people largely supporting the euro. Greek people are a good example as you must have noticed by now.
July 11, 2015
Peter vL
As you completely failed to answer Ian Wragg’s question and told us what we already know, the Greeks like being in the EU/Euro, I guess you don’t actually know. Which is understandable as there is no rational economically its purely political . The funny thing is that the Eurzone is going to crash and burn because the one aim it has , unification of Europe into a single federal superstate, is the one thing that Greeks, Spaniards, Italians, Portuguese etc don’t want.
July 12, 2015
@libertarian: You assume that it was the euro which impoverished the South of the EU. Most economists would dissagree with you.
July 10, 2015
I don’t think the EU/IMF packages have failed yet. I think we need to wait and see what happens before we talk of success or failure.
Leaving the euro and returning to the drachma isn’t likely to reform the Greek economy in my view. It might not even provide a temporary boost, and in the long term is quite likely to result in a continually declining economy and devaluations.
The euro will cause unemployment and recession if economies are run badly, but the right way to avoid this is to run economies well, not to leave the euro and devalue. Devaluation will prevent unemployment and can provide temporary boosts to an economy, but in the long run what people need is well paid jobs in a well run economy that pays its way. I don’t think devaluation is an effective way to do that.
July 10, 2015
@Alan: While I appreciate your point, if I compare the predictions (extrapolations) which the troika made for Greece some years ago with the current reality (they are very very far off) I would still have to call them “failed”, at least the troika should have acknowledged much earlier that their forecasts were so far off and change approach. We don’t need bookkeepers to mend this country but very creative thinkers.
July 11, 2015
Peter vL
Totally agree we need creative thinkers. The current trend in everything is towards small, nimble, flexible. That counts for businesses, political parties, Armies, Trade Unions, etc. We urgently need to rescue the European project from the middle aged, white male dominated northern European 20th century dinosaurs and create a modern 21st century European trading block
July 10, 2015
Wolfgang Nowak, former advisor to German chancellor, thinks Greece ought be to let go and a new EU created. He suggests it is an ideal opportunity for Cameron. Although the article was written in the DT so presumably you dismiss the article as you like to label people who do not agree with your view or that of the dictatorial EU.
July 10, 2015
@Hope: I will try and read it later tonight, first there is Wimbledon!
July 10, 2015
@Hope: Interesting article by Wolfgang Nowak. For Germany and the UK to join forces and “recreate” the EU I would think that there is now still too much uncertainty about the UK (the referendum). Maybe such an opportunity will be developed after (and if!) the UK referendum results in an “In” vote.
For this weekend I don’t expect such developments. I don’t even see it as a bad thing if France and Italy get their way occasionally against German wishes.
July 11, 2015
Let us all hope we vote out after the sham renegotiation by EU fanatic Cameron ably assisted by his fanatical advisors Heseltine, Clarke and Major. All of whom would have the UK in the Euro and all use/used scare tactics before. They should feel embarrassed and ashamed of their stupidity. Major in particular for loss of homes, business and hard earned taxpayrs’ money. He and his like should be held to account and face consequences for their actions or given titles or seats in the Lords. Similar to what is advocated by politicians for bankers.
July 10, 2015
Nowak’s article suggests there is a large and growing constituency of Eurosceptics at the highest level in Germany.
One can conclude that among the policy options being considered in Germany is German exit from the EU in all regards. It is easy to imagine a cluster of Germanic states, such as the Netherlands, Austria, the Czech Republic and the ever faithful Finland, forming a new currency zone based on a re-emergent DM.
Perhaps we should be flattered that Nowak sees a place for the UK in this grouping, before politely declining the offer.
July 10, 2015
Reply to reply: Let me first applaud the tolerance of accepting dissenting views on this site and then ask the question if my linkage is really so far fetched. Of course I don’t like the EU equated with EUSSR, or the euro equated with mass unemployment either, so why do I lower myself to this linkage I wrote?
1. Exit the euro still means exit the EU (until some clever fudge will be found)
2. Would ardent eurosceptics shed one tear if countries left the EU? (the Netherlands? Finland? Denmark? Greece? The UK?)
3. Hasn’t the euro discussion of the last few days seen the entry of geopolitical arguments? On the continent we have clearly noticed this.
4. Have we forgotten that there always has been a political dimension to the euro? Unbiased reading of the post 1989 years would show us.
I would argue that I’m still on euro message here, obviously regretting it that there is such a mess in Greece and agreeing that wealthier EZ countries should take part of the blame.
But it is so crystal clear to me that the Grexit arguments put forward by a Mr. Schäuble (German finance minister) are driven by totally different intentions than those of the eurosceptics who don’t like the EU whatsoever.
From say an USA geopolitical perspective, both a Grexit and a Brexit are unwanted, seen as weakening the EU. And both Mr Putin and some of the eurosceptics hope for Grexit and Brexit, as it would weaken the EU.
July 10, 2015
The Eu has not been created for the people it represents or is for the people it represents. That is why it has been created by stealth to be something different from what the people thought it was. Shultz clearly shows the dictatorship that has become and why it must be dissolved from its current format and trajectory. He nor any other unelected dictator should be allowed to call for a nationally elected government to be ousted for an EU imposed regime. Simply disgusting and against every principle our ancestors fought to prevent in the last World War. Obama should be told to stick it, like all the other EU fanatics. He would not countenance the U.S. becoming subservient to southern America countries because they share trade and nor would Canada accept becoming a province of the USA. Therefore we,should not accept his views on this side of the Atlantic.
The German taxpayers are in a lose lose situation. Serves them right.
July 10, 2015
PVL, scaremongering and disparaging labeling of people all in a couple days because of your lack of substance for wanting an E U superstate! Dear dear.
July 10, 2015
No problem, Mr Redwood. Greece is a Christian (not Turkish!) European country and therefore must be included in Europe. Furthermore, there is the Acquis which states that any country which has accepted the Euro must continue in the Euro Area.
If you question the Acquis, that is like telling the Pope that you are an atheist or informing the Conservatives that Mrs Thatcher was a bad Prime Minister. It will not wash.
The European colleagues are working on this. On 1st June the Constitutional Convention was set up, due to report in 2017. The plan is for a Federal Democratic Republic of Europe, where the countries (states) are represented by a Parliament which votes by Parties, not countries. The Spinelli Document plans that this united constitution will be in force by 2025. Then the Euro Area will be just one big country like the USA and the currency will flow naturally round all the areas, just as the Dollar does today.
Greece, of course,will be a State within the Federal Democratic Republic, just like Germany.
No problem there.
July 10, 2015
Because as Peter van Leeuwen has just amply explained it is not just about money. Most of us should be able to understand that.
July 10, 2015
“Mr Putin and other eurosceptics may want a Grexit”
Now the Dutch Deceiver is reduced to smearmongering.
July 10, 2015
@Denis Cooper: you may have written this before I added ‘reply to reply’. My linkage is really not so far-fetched as it may have seemed to you. I also intend to use it only sparingly. It has to be recognised though that your wish to have a Grexit has a different motivation than wishing for a Grexit from a German perspective.
July 11, 2015
Normally I find your interventions in our affairs merely annoying, and a spur to get us out of the EU so that we no longer have to endure your uninvited perpetual advocacy of a system which is deeply against our national interests, whatever your own fellow citizens may think about it; this time I find it pretty vile.
July 11, 2015
@Denis Cooper: Since is “Grexit” your affair? You’re not even part of the Eurozone! Outsiders meddling in EZ affairs with the aim to weaken the EU perhaps?
Reply The UK has money at risk through the IMF and contributes via general EU funds to Greece so we have every right to express a view. We do not expect to be part of the decision making processes of the Euro group as we have no wish to pay Euro bills for this disaster.
July 10, 2015
“Any Greek transformation into a modern EZ member may take decades rather than years and so these countries also have to pay up for the geo-political benefit to keep Greece in the EU.”
Remind me how many decades it took after WWII for Germany to become the most economically powerful state in Europe from a recumbent start and despite a third of it having been swallowed by the Bolsheviks? Did the Marshall Plan help fund chronically high unemployment? Germany had the Deutschmark, the antithesis of the Euro. Greece will never recover until it has full employment which it will never have with the Euro.
As to the ‘geo-political benefit’ of keeping Greece trapped inside the dysfunctional EU; whose benefit would that be? The machinators in Washington who have decided to fund the administration of Governor Mikheil Saakashvili in Odessa, now a Ukrainian citizen, an ex-President of Georgia …………………..?
July 10, 2015
“How do you get cash to flow and sensible new credit to be extended in a part of a currency zone that is as damaged and stressed by its single currency’s rules and massive German surplus?”
The only answer is for the rules to change. I’m expecting a cobbled together agreement to emerge soon which will be worse than no agreement at all.
The “massive German {trade} surplus” is indeed the problem. I’d add in the even larger (in GDP terms) Dutch surplus too. The Greek crisis originated due their trade deficit, not government social spending.
If the rest of the Eurozone buys more goods and services from Germany and Holland than the Germans and the Dutch buy from the eurozone, they must finance this by selling financial assets and/or borrowing. This creates external debt. This is true regardless of the budget balance of those other eurozone countries.
The austerity measures have only worked insofar as now the eurozone economy, apart from the surplus countries, is in such poor shape that the population cannot afford to buy those German and Dutch imports. That’s not good for the eurozone (Greece being just the worst affected) and neither is it good for Germany or Holland.
July 10, 2015
Your last two paragraphs seem to me to be answering the ‘problems’ that you state in the previous paragraphs. As you say, the other Eurozone countries cannot go on buying from Germany unless they borrow money to pay for what they are buying. I would have hoped that by now the bankers would have learned that they cannot safely lend to people who are not earning enough to repay, and borrowers would have learned that they cannot go on increasing their loans. Then Germany would have to concentrate on exporting outside the Eurozone – something that it is already quite good at, and can get better.
July 10, 2015
Exactly so Peter. The Dutch and the Germans have done extremely well out of the Euro. The exchange value of the Euro has been kept artificially low by club-med countries. That would not have happened if those two countries were outside of the Euro. They owe Greece, for one, a big favour.
July 10, 2015
I never cease to be amazed at the arguments you put forward.
Surely if Greece is unable to buy from Germany then they will need to produce more at home.
If Greece is unable to buy from Germany then the trade surplus of the latter will get smaller. There is no good reason for countries with a trade deficit to keep buying and no good reason for the Germans or others in surplus to redistribute their income to permit it.
July 13, 2015
What you say is true only if different countries have different currencies. The relative values will, unless there is govt interference, then self adjust.
July 10, 2015
Debt write down…and a big one. And I thought Greece wanted a 20 year debt payment holiday?
It sounds like another kick of a heavier can uphill…much heavier and steeper hill.
July 10, 2015
Remarkable how this entire crisis and the consequent suffering of ordinary people was created by the greed and stupidity of politicians dreams. In fact almost all economic problems are caused by politicians and their cronies meddling in things they clearly do not understand. Assisted by do gooders, dreamers, bureaucrats and bankers political arrogance causes wars, depressions, unemployment, poverty and social divides across the world. Now it’s getting worse. Our idiot leaders ruin states in Africa and the Middle East to the point that people will risk their lives to escape and flood our borders, people are starting to starve in Greece, dozens of greedy governments are desperately hoping they can avoid bankruptcy, America and it’s poodles are trying to start a war with Russia and China. For how much longer will people continue to blindly follow psychopaths just because they get a small percentage of votes in an election with little choice?
July 10, 2015
Excellent and clear minded analysis, Dr JR. As you say in your post, the politics is the largest issue.
Looking at the sentiments of the Greek electorate, they seem to be hanging on to nurse (the EMU) for fear of finding something worse. Their deep-seated insecurity has blinded them to the fact that this particular nurse is actually giving them lethal injections. It follows that for the Greek electorate to have the confidence to escape the deadly embrace of the EMU, an alternative support mechanism needs to be offered to them while they transition to financial independence. Would you see an opportunity to create some form of Anglo-American currency zone, not unlike the former Sterling area? The drachma would be an essential component of this, but backed by the US and British governments. The deal apparently accepted by the Greek government today seems to be a recipe for further economic contraction. Without the pre-conditions for economic growth, it is hard to see how Greece can ever service a reasonable level of debt.
The French government is offering a more liberal interpretation of the Eurozone, but it maybe that now is the time for a constructive alternative proposition that can be sold to the Greek electorate.
July 10, 2015
The problem is:
The Greeks want a financial settlement without political pain for them.
The Euro Zone want a political settlement without financial pain for them.
The solution, they both have to accept financial and political pain.
July 10, 2015
There clearly needs to be a large debt restructuring and radical market driven economic reforms. But that’s not what Syriza or the Greek people seem to want. They just want a very large bung, perhaps with nominal reforms which are unlikely actually to get implemented. Mr Schauble is right. If the EU really wants to try to get the EZ to work the best thing would be to chuck Greece out, and allow potential Syriza type voters in other countries to see the consequences. (In the end with the right policies the consequences would be positive, but that’s years down the line).
July 10, 2015
The problem is Greece ; this fudging and nudging has gone on far too long to the point of boredom . The EU is ineffective and useless and the politicians who keep it alive are misguided idiots . Call a spade a shovel and cut the cancer out .
July 10, 2015
What I learn from this interesting problem is that democracy is one thing, and money another. Further, you are only free to the extent that you’re not in debt. Having got his unexpected (and probably unwanted) democratic mandate for defiance, Mr Tsipras has discovered what it’s really worth. Bombast no longer serves his turn. He is now singing small.
It seems Mrs Merkel may soon have her victory – which is a victory for the principle that the rules apply to everyone, and thus a Good Thing. Magnanimity will be in her interest, so I confidently expect she will behave magnanimously.
July 11, 2015
The rules did not apply when it came to allowing Italy, Spain and Portugal into the first wave of the euro, and then a few years later allowing Greece to join. If the rules had applied at those crucial points then there would not now be the current debacle with Merkel saying that the rules must apply, although she herself has also changed her mind on that in the past.
July 10, 2015
I don’t think the euro caused the problems with the Greek economy. These are long standing, and have been compounded by reckless lending and borrowing, and brought to a head by the world financial crisis. What the euro has done is one of the things it is meant to do – to cause any deficiencies in the way the economy is being run to be obvious. It is not possible to cover up governmental failures by devaluation, which is the way Greece used to conceal its economic difficulties from its own people in the past.
At least the Eurozone has tried to help, and may well continue to try to help, the Greeks to reform their economy. Without that the Greeks would only have the IMF, which has been less helpful and less sympathetic than the Eurozone. It is still quite possible that Greece will stay in the Eurozone and reform its economy. If it leaves it will quite likely return to a continually declining economy with a devaluing drachma. No one wants that.
July 11, 2015
Would you be happy to lend your credit card to somebody who you knew to be irresponsible and profligate and more than a little shady?
That is the kind of analogy that JR uses, and while the German government did not exactly lend its credit card to the Greek government it did lend something close to its own credit rating, on the strength of which the Greek politicians were able to borrow excessively at cheap rates from private investors who were willing to lend excessively on the assumption that whatever the EU treaties might say if necessary the other eurozone states would bail out the Greeks and so they would be paid. An assumption spread by the credit rating agencies, it should be said, who bear a lot of responsibility for the huge mistakes they made in assessing the risks of many other financial instruments apart from Greek bonds.
July 10, 2015
John, unlike many of your contributors, I don’t have a grip on financial issues so I rarely comment, but I read elsewhere that the Bank of England has a 13.6743% share in the ECB.
How does this affect us with regard to Eurozone debt?
Thank you.
Reply The UK share has not been paid up so no we only have a tiny share. we also have a clause which says we share no profits and are liable for no losses. we would have to pay up our shares and join the Euro to the 13%
July 10, 2015
Sandra, the non Euro countries only pay 3.75% of the prescribed capital, about ÂŁ55 million for the UK.
July 10, 2015
If indeed the outcome on Sunday is to kick the can down the road again, the invited presence of Mr Cameron will be interesting and potentially hazardous for him. No doubt he will be asked (perhaps more likely the EUrocracy will demand) that the UK stump up billions for the latest rescue in the interest of solidarity – the EU version of “we`re all in it together”.
What is your advice to Mr Cameron if this is how events pan out? It seems to me that there are two possibilities.
Either they want a UK contribution to help keep Greece in the EZ or they want a UK contribution to help Greece transition to Grexit while remaining in the EU. I think he should reject the first possibility. On the second he should be open to discussion – perhaps Greece should be a candidate for some of the foreign aid budget?
July 10, 2015
For Greece to stand any chance of repaying even a part of its debt it has to rebuild its moribund economy, I am glad to see you recognise this point because apparently the Euro technocrats don’t. Being on Euro welfare as it is at the moment is just saddling everyone with more debt, especially the taxpayers of other countries. I see no answer to this problem other than an orderly move to the Drachma, one accompanied not by Euro nastiness but instead by a comprehensive programme that will help Greece recover. Maybe one day in the future some of the debt can then be repaid. There is no easy solution, but above all Greeks must come to terms with their own failings, the only path to this truth is to operate their own currency and take the consequences of whatever actions they are responsible for.
July 10, 2015
So Merkel is in a bind because she knows she cannot get additional help for greece past her own parliament. In any case, further help for Greece would transform the Euro into a very soft currency as no-one in their right minds would continue to hold their investments in Euros.
What better than to pretend she would still like to retain greece in the Euro, while invite all EU leaders together on Sunday and have Cameron be the one to block further loans to Greece and save Europe.
Cameron then comes back to UK as victor and calls a snap referendum citing how we all need to hang together to guard against the threat from North Africa and Russia.
(Did I mention how the Foreign office had suddenly and inexplicably changed their advice over Tunisia?)
July 10, 2015
A bit more pressure so that USA can get their military base…..
zorro
July 10, 2015
Once you are in the EU and particularly the €zone you have to obey their strictures or be punished. There can be no escape from the €zone without feeling the full force of its retribution. Reminds me of the approach of another organisation.
July 10, 2015
If the Greece people had any self respect and common sense they should withdraw from the Eurozone. They will not get the debt write-offs the IMF says they need ( and I doubt whether 30% will ever be enough ) because it isn’t deliverable politically.
Frau Merkel would have to expend a great deal of her political capital in trying to get debt relief through the Bundestag. With 80% of the German population firmly against pouring any more German Euros into the country, she will have only a slim chance of success.
The Chancellor has proved time after time to be unwilling to go out on a limb and I doubt whether she will do so on this occasion.
The only hope of a deal is therefore one without debt relief.
That will effectively just be another can kicked down the road and will simply perpetuate the crisis. The problem will return and be even more expensive to fix.
It will also make life infinitely more difficult in countries like Spain which will be even more likely to elect Podemos in the general election which must be held before 20th December.
Neither course of action is without risk but it is surely now blindingly obvious to everyone that Greece cannot live within the Euro. If they fudge the issue again by keeping her on board, Eurozone leaders will look both weak and ridiculous.
July 10, 2015
” no-one around the table seems capable of leading the zone to a decision”
That is simply because the “zone” is not a community but a collection of individual nations with different problems. There are wolves and horses mixed in with the sheep.
July 10, 2015
A time for seeing wood from trees. Both EU and Greece being culpable it is time for a gracious separation. The ECB and IMF to right off Greek debts and then both to pump liquidity into the Greek banking system. It is the Greek people who are doing the real suffering and as a European State and a member of NATO they should be supported.
Time then for Greece to revert to the Drachma and build a new economy based on it. A devalued Drachma should give them a kick start in the industries they are good at, Tourism, Shipping and Food. It then becomes the sole responsibility of the Greek government to run their economy sensibly while retaining their relationship with Europe as a trading partner only.
July 10, 2015
I wonder what the German and Finnish MPs may make of any agreement? Is it possible that Merkel could lose such a vote? “Expect the unexpected” is the name of the game here.
It is a shame Cameron is trying to toady upto such EZ leader types for his pathetic ‘renegotiations’…
July 11, 2015
Well, I’ve always said that the name of the game is “Expect any kind of fudge to preserve the eurozone intact so that it can continue its expansion across the EU and eventually engulf the UK as well if we are still in the EU.”
July 10, 2015
My suggestion for the name of the OUT campaign group is “Democrats”. It encapsulates what the campaign is about and is inclusive as well as being a nod to the Left.
July 11, 2015
You can sign up to support the Better Off Out campaign which will start its active referendum campaign in September.
July 10, 2015
All the classic reasons why the European Union and also the Eurozone does not work and never will.
When are we leaving?
July 10, 2015
Plus,of course,Mutti has been told by Big Daddy Obama that Greece must be kept in.Perhaps Obama would like to help out by getting the Fed to print a couple of hundred billion more dollars to help out.
July 10, 2015
The most fascinating question in contemporary Europe remains “What did the Bundesbank expect to happen when it acquiesed to Germany joining the Euro?”
It would be naive in the extreme to suppose the Bundesbank did not predict for itself the trajectory the Euro has followed but it is very hard to imagine that it surrendered its powers for the capitulation to Greece and the Euro that is now expected.
Let us not rejoice at the temporary end of this Greek saga but mourn the passing of German financial probity.
July 11, 2015
As I recall the independent Bundesbank had already been forced to acquiesce to Ostmarks being converted to Deutschmarks over its objections.
July 10, 2015
I watched Nigel Farage make a speech in the EU Parliament recently where he said that Greece should leave the EU and establish their own currency again. It would obviously be hard but at least they could leave with their heads held high. Many in attendance applauded his speech and agreed. What kind of future will they have if this debacle continues? They could end up being taken over and then what? The longer this goes on the more painful it will be for them. I can’t see the debt being written off so what is the answer? The more in debt they get the worse it all gets. A decision has to be made because it is playing havoc with many markets in Europe and uncertainty is not good. Great to listen to a minister from Iceland this morning on Radio 4 going on about how Britain would be better off outside the EU. How refreshing. He made sure that the claims the interviewer were making were false and that the threat of losing jobs was rubbish. Unfortunately I could not listen to it all and missed who the minister talking was but it was interesting to hear a positive attitude to Brexit from someone outside of the UK.
July 10, 2015
What is really annoying is that 80% of Greeks want to stay in the euro. This is the trouble with democracy when people decide against what apparently is good for them.
July 10, 2015
This is an interesting article on the genesis of the Greek crisis, putting it into the much broader context of the evolution of the EZ.
http://www.capx.co/germany-is-not-to-blame-for-the-greek-crisis/
July 10, 2015
The EU is a committee-run club for politicians and bureaucrats whose first principle is to ignore the voice of the electorate in favour of supposedly elite technocrats. The results so far in general unemployment and stagnation in the EZ, the financial mess in Greece and the mess in Ukraine created largely by EU bungling, show that these elites know nothing of the real world. True believers still dream of creating a superstate by stealth to keep the Euro going, at any cost. But there is no means for decisive leadership to emerge so everything is endless fudge and can-kicking. Like socialism, the EU was a nice theory but does not work in practice.
The unpredictable and in many ways unfair British democracy does at least come up with decisive governments. Unlike almost all other EU members the UK never had its constitution rewritten in the 20th century following invasions, occupations, military coups or dictatorships. Unlike those countries we never needed the EU to save us from something worse. It is more and more obvious as the latest farce unfolds that we still do not need it. We will be far better off as an associate member of the EU inside the customs union but outside the EZ and with full commitment to NATO.
July 10, 2015
The Empress Angela is certainly confused trying to reconcile the internal contradictions of a eurozone which includes Germany and Greece, two countries which patently should not be sharing the same currency, and are only doing so because two of her predecessors insisted that economically and culturally unsuitable countries – first Italy, Spain and Portugal, then Greece – must be allowed to take part in what is above all else a political, in fact a geopolitical, in fact according to the French Prime Minister yesterday a “geostrategic”, project:
http://www.telegraph.co.uk/finance/economics/11730086/Greek-deal-in-sight-as-Germany-bows-to-huge-global-pressure-for-debt-relief.html
““France refuses to allow Greece’s exit from the euro,” said Manuel Valls, the French prime minister.
“Keeping Greece in the euro and therefore in the heart of Europe and the EU is something of the utmost geostrategic and geopolitical importance. Allowing Greece to leave would be an admission of impotence,” he said.”
But if anything her Finance Minister Wolfgang Schaeuble is even more confused:
https://euobserver.com/tickers/129573
“Greece needs debt haircut, says Germany’s Schaeuble”
“A write-off of some of Europe’s loans to Greece might be needed, Germany’s finance minister admitted for the first time on Thursday, but also ruled it out as impossible. “There cannot be a haircut because it would infringe the system of the European Union,” Wolfgang Schaeuble told a Bundesbank conference.”
Well, it would hardly be the first time that the EU treaties were infringed in the cause of the “geostrategic” project of “ever closer union”, would it?
And who really cares that the national parliaments of all the EU member states have approved those treaties, down to the last comma, with those elected representatives who bothered to give the matter any thought at all, rather than just voting as they were told, presumably believing that they knew what the treaties meant, exactly what powers were being conferred on the EU institutions, and that those EU institutions and the national governments would all diligently stick to those treaties as approved and made part of the national law of every member state?
Let’s see what the EU has to say about this:
http://europa.eu/eu-law/decision-making/treaties/index_en.htm
“The European Union is based on the rule of law. This means that every action taken by the EU is founded on treaties that have been approved voluntarily and democratically by all EU member countries.”
Yeah, sure, based on the rule of law as that was understood by Giovanni Giolitti, Italian premier before the First World War, who famously explained:
“The law is something we apply to our enemies. For our friends we interpret it.”
When are our own MPs going to start to object to this partial application of the rule of law by the EU institutions and the national governments including our own, and the consequent undermining of our national parliamentary democracy?
July 10, 2015
Martin Schulz recently said on ITV news that “Britain belongs to the EU”. Several people have told me this may just be a translation error. Yet I have checked his twitter account and he writes in perfect English. Furthermore he will be aware this was reported by ITV and the Telegraph with that as the headline and has, as far as I am aware, not tried to clarify the matter. I have tweeted him for clarification but no reply.
Why does this matter? Because he previously said this…
“Any attempt by the UK government to repatriate powers to Westminster is likely to be a drawn out and cumbersome negotiation.”
If Martin did not think in this way then why does his mind interpret powers being repatriated to Westminster (see my previous quote) as something that *we* have to negotiate with them (the EU) and not something they have to negotiate with us. There is an assumption of subservience in such wording. We must not let them normalize this assumption in the way they use language.
Mr Schulz said his favourite book is “The Ages of Extremes” by Marxist historian and Stalin apologist Eric Hobsbawm. Hobsbawm until his death was an apologist for the murder of millions of innocent people by the Communist leader Joseph Stalin.
July 10, 2015
John, Frau Merkel is facing some real resistance back home as you can see from this article –
http://www.breitbart.com/london/2015/07/09/merkel-faces-rebellion-as-100-german-mps-write-greece-out-of-euro/
What the Europhiles are ignoring is the fact that they are not helping Greeks by lending more and more money to their government – all the grants given so far have been used to relieve French, German banks from their risky lending in Greece, and that money is gone, never to be seen again. Lending them more money makes payback far less likely, better to bite the bullet, set Greece free and watch their economy recover as they revert to the Drachma. Then Portugal, Ireland, Italy, possibly France and Ireland can follow the example and we will be back to a free and democratic Europe.
July 10, 2015
If Germany will not stick by its Eurozone colleagues in the same way that a region within a single state might stick by and give finance to another part of that state then there is no point to the Eurozone. It is currently a terrible mess of neither one thing nor the other. The EU needs to decide what it wants! Although I think that the main difficultly is that it is not being honest with itself or the people, by trying to achieve federalization by stealth!!
July 10, 2015
Essentially the problem at the heart of the Euro crisis is that what the politicians want and need to make the Euro viable : i.e. a United States of Europe, is not what the people who elect them want.
To make matters worse, the unelected Officials in Brussels have ignored the wishes of the electorate at ever opportunity. Remember the Dutch, Irish and French referendums ? They were never going to let a small thing like democracy stand in their way.
Let’s hope they have a rude awakening if or when some kind of can-kicking deal is agreed on Sunday and it is subsequently rejected by one or more of the Parliaments that have to vote for it.
I’m not holding my breath……………..
July 10, 2015
Interesting Telegraph article today by a Swiss MP and an Icelandic MP suggesting that having initiated EFTA, but then having abandoned EFTA for the EEC (choosing The Six over The Seven, as it was put at the time) we should now go back to EFTA.
From some of the trolling comments it is clear that this is an suggestion which inspires real fear among the eurofanatics who want to keep us in the EU at all costs.
July 10, 2015
Including the Conservative MEP interviewed on World at One – a eurofanatic straight from the Clarke and Heseltine EU sycophants’ academy!
7Eurosceptic party? Pull the other one.
July 10, 2015
The Germans in particular seem to have taken all leave of their senses. The rest are no more than a bunch of senseless morons, bound to follow Merkel’s lead.
The over-riding aim seems to be to change Greek politics and the Greek economic model into something more akin to the German one in the face of a clear resistance from the electorate.
This is just wrong and is something the British should think long and hard about.
The Greek debt can be resolved fairly painlessly by converting it into 50 year level debt bonds paying 5 percent interest, payable annually and would require a sacrifice of 8 percent of present day GDP.
Painless, and no more than the sort of debt to income a domestic mortgagee might be expected to conservatively bear.
If the German people don’t want to lend the Greeks more then, just don’t lend it.
Simple, but don’t mess with liquidity of the banks because the ability of a German with a current account in DB Berlin and on holiday in Athens is unable to access his account unless the ECB is willing to do what Central Banks are expected to do, in order to support the fractional reserve banking they are all so keen on
July 10, 2015
It seems to me that most of the main protagonists are utterly poleaxed by unresolved dilemmas of their own making.
The Greeks want to stay in the Euro, break all the membership rules, renege on their debts, incur some billions of new debt that they can’t service, and lay claim to all of the freedom of action normally attendant upon a sovereign state in good financial standing.
The Troika want to protect their vanity project, paint over the cracks, write off the Greek debts while not writing off the Greek debts, or at least not so plainly that the other Euro-convalescents like the Irish can see that. But at the same time they don’t dare give their own taxpayers the slightest hint of the ultimate price tag for this tragic farce.
Every party to this controversy is pursuing mutually exclusive goals. Strikes me, that has to be sorted out first, with some honest straight-talking and establishment of true priorities and limits.
July 10, 2015
Alas, far more common sense from Putin than you would get from Cameron/Osborne…. http://rt.com/news/272962-putin-greece-european-commisssion/
zorro
July 10, 2015
Does anyone really believe that the Greeks will keep any of the promises they are currently making to get their hands on yet more loot?
You’d need to be extraordinarily naĂŻve to do so, or extraordinarily cynical and amoral.
July 10, 2015
We are now in the crazy situation where the latest Tsipras proposals are MORE severe than the creditors’ proposed package that Tsipras persuaded the Greek electorate to reject.
If the Greeks will not reinstate the drachma – or be forced to – then for goodness sake agree something practical:
– ECB to resume trickle finance to the Greek banks
– Agree the principle that the Greek economy must grow at least 1% pa so that their tax revenues increase
– Select items of reform from the proposals that will eventually help growth, which includes reducing excessive spending on pensions & defence, privatising ports and selling off shares in telecoms company OTE, and scrapping tax avoidance by favoured groups. This includes collecting taxes from the rich and scrapping the 30% tax break enjoyed by the wealthiest islands. The pace of implementation to be compatible with the 1% pa growth target.
– Reject increased taxation of shipping companies and any VAT increase
– Agree the principle that State debt repayments may be delayed but reject debt forgiveness for the time being; that can wait
– Keep any additional bailout fund to the minimum
It goes without saying that the UK should contribute nothing unless Greece agrees a Grexit.
July 10, 2015
Somebody ought to explain the rules of negotiation to Cameron .
The best time to kick a man is when he’s down .
July 11, 2015
Which is what the Germans may well now do to the Greeks.
Churchill famously said:
“In war: resolution. In defeat: defiance. In victory: magnanimity. In peace: goodwill.”
but I wouldn’t expect much of the last two over the next few days and weeks.
July 10, 2015
I Iove all the countries in the EU for their difference ; the cultures are exciting because they are different ; then why try to make them the same ?? the grey banal boring Euro which keeps getting every one into trouble and has its hooks on the one too powerful. Stop it!
July 11, 2015
Mrs Merkel’s dilemma has been resolved. Syriza has surrendered.
It’s obvious what has happened. Syriza called the referendum with the expectation of losing it. They did not even want to win it!
They could have then walked away saying that they’d done their best, and if the Greek people wanted to accept the EU ultimatum, then they’d need to find another government. Yanis Varufakis resigned the day after the result because he could. Alexis Tspiras didn’t have that option. Though he would heave wished he had.
The leadership of Syriza are a disgrace! They should hang their heads in shame at their betrayal of the Greek people.
July 11, 2015
In recent days there has been a rumour that Tspiras did not intend or expect to win the referendum. If the people had voted for the troika’s proposals then he would have been justified in reversing his policy and accepting them, or some similar package. Instead the people voted 61% to 39% to reject the proposals, but now Tspiras has made supposedly new proposals which are similar but in fact somewhat more harsh and the elected representatives of the Greek people have voted 251 to 32 in favour of them, more than reversing the verdict of the people only six days ago. As you say it is a disgrace, but I would extend that beyond just the leading Syriza politicians to almost all the Greek politicians. Together they have made a total mockery of Greek national democracy, and I wonder what the longer term consequences of that may be.
Reply Syriza’s defence I believe is they are now asking for Euro 53 billion for 3 years, not 7bn for a few months, and debt relief as well, so it is a different loan package that they want and may be offered. I am not on either side as they think both Greece and the Euro area are wrong in their approaches.
July 11, 2015
Last week I was predicting that the Greek people would capitulate under duress and vote Yes to accept the troika’s proposals. I was wrong about that, but now instead their elected politicians, a majority of whom had urged them to vote No, have capitulated. It is a surrender as ignominious as that of the British in Singapore in 1942, and has an analogous root cause in that a vital supply fell outside the control of the defenders – in that case it was water, while in this case it is money. Yet three quarters of Greeks are still content to have their money supply controlled from Frankfurt, and I doubt that it will ever dawn of them that even if in some respects it may be superior money to that previously supplied from their own capital Athens under the control of their national government it would still better to have national control of something so vital.
Now I read here:
http://www.rferl.org/content/eu-lenders-okay-greek-reform-plan-ready-new-bailout/27121594.html
that there will probably be a third bailout, and once again the UK will be expected to pledge money to the IMF as part of that scheme:
“European authorities believe Greece’s sweeping budget reform plan is good enough to be the basis for a new bailout worth 74 billion euros, European Union sources said July 10.
The European Stability Mechanism is ready to consider putting up 58 billion euros, with another 16 billion euros coming from the International Monetary Fund in what would be a third round of debt relief, the sources said.
The recommendation of those creditors to accept Greece’s plan as a starting point for a new bailout deal must be approved by eurozone finance ministers at a meeting July 11, and later will go before all 28 EU members at a summit July 12.”
Whether that summit will actually go ahead now seems in doubt; but if it does I would hope, but not expect, that Cameron would block the unnecessary and quite inappropriate and arguably illegal involvement of the IMF.
I also read here today:
http://www.telegraph.co.uk/news/newstopics/eureferendum/11732668/david-cameron-working-time-directive-eu-referendum.html
“David Cameron to demand opt-out on EU work law in referendum negotiations”
which of course is one of the demands first mentioned back in the autumn of 2009, when it was anticipated that the eurozone would need EU treaty changes and that would create a “golden opportunity” for the UK government to extract such concessions; but just such a “golden opportunity” arose in the autumn of 2010 when Merkel demanded an EU treaty change to provide a legal base in the treaties for the eurozone to set up a permanent bailout facility, the ESM, and Cameron declined to make any use of it.
We seem to be trapped in a kind of “Groundhog Day” scenario here; the years go by, promises are unfulfilled, mooted radical proposals are diluted down to levels which only homeopathists would think could be effective, excuses are made, cans are kicked further down the road, and it just goes on and on while all the time the process of “ever closer union” continues relentlessly.
July 11, 2015
The “negotiations” between the EU (Mrs Merkel) and Greece (Mr. Tsipras) have been nothing but a show intended for their respective electorates as both have already said many times that they do not want Greece to leave the Eurozone.
Greece in the Eurozone will always need to receive financial support from German and other Northern European taxpayers even if it were possible to make the country run as well and efficiently as these countries. It is only necessary to examine existing single currency areas such as the US and the UK to see this.
So there will be no lasting solution until either the German taxpayers or the Greeks elect a government willing for Greece to leave the Eurozone.
The lesson for the UK is that Mr. Cameron and the EU are themselves only involved in a show negotiation as Mr. Cameron has made it clear that there is no way he would vote for the UK to leave the EU. For serious negotiations to take place to either leave the EU or to reform the EU it will first be necessary for the UK to elect to Parliament a Eurosceptic HOC.
So, again the Greek can will be kicked down the road with much time wasted when the EU should be dealing instead with the massive influx of migrants arriving in Greece and Italy and eventually throughout the whole of the EU, particularly the UK