Extend and pretend day?

If the Euro area decides after all to lend Greece another 53 Billion euros that they can’t pay back, we need to ask what was the crisis for? Why close the banks, undermine asset values, put Greek people into more misery and cut the output and tax revenues of the Greek economy? Why seek to change the Greek government and then lose a referendum when the Greeks called the Euro area’s bluff? And if Greece agrees to the austerity it rejected, why did they put themselves through the pain and cuts of the last few weeks, when they could have volunteered for austerity earlier to release more cash?

Extend more loans and pretend that you will get your money back has been acting as a policy for years. It has become a lazy habit which the markets and the borrowers like. Once again as Homer nods Mrs Merkel looks the other way. The aim may be to defer the continuing Greek crisis for 3 years to her successor.It will then be even more difficult and costly to resolve.

If by any chance Germany this time stands up for honest money and says No to those who want to give Greece a loan which will one day become a gift, then the remodelling of the Euro can begin. Fewer members with decent finances would be a more sensible proposition, doing less damage to the economies locked into it.

It is unlikely the cost of a further bail out for 3 years will be as little as Euro 53 billion. Some forecasts say there will be extra money from the IMF on top. They also need to factor in the costs of bringing the Greek banks back to life. I can’t see how they will get away with less than an extra Euro 100 billion to reopen, strengthen and make liquid the banks and offer Greece some spending money for the next three years. Then there would be presumably at least Euro 100 bn of debt cancellation or easier terms to a similar value on top of that.

If Germany is wavering and thinking of giving in again to Greek demands, at least they should offer far less money for a shorter time period, and expect to see progress on the Greek reforms before they offer yet more money and a longer period of support.The problem is, the medicine Germany thinks the Greeks need is still the opposite of what the Greeks believe they need. The underlying tensions remain. It is difficult to see how sacking more public sector employees can work unless the private sector economy has the cash, credit and exchange rate to allow it to grow and create more jobs than the public sector destroys.

The Greek economy must be weaker now than when the rows began earlier this year, making recovery more difficult. Kicking cans down the road is more problematic if the people kicking want to go in opposite directions.

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92 Comments

  1. JJE
    Posted July 12, 2015 at 5:13 am | Permalink

    They thought that it was a can that they were kicking down the road all these years but it turns out that it’s a grenade.

    • Hope
      Posted July 12, 2015 at 8:41 am | Permalink

      Germany has made it clear that its two proposals are : Brussells take over the public administration of Greece! Or Greece leaves the Eurozone for five years. It is clearly demonstrated by the proposal and by Shultz’ previous comments that these EU fanatics keep raising the prospect of getting rid of elected national governments for imposed EU imposters!

      The UK public needs to grasp the real purpose of the EU. It is not trade, friendship or mutual cooperation. It is about creating an EU superstate inch by inch in an underhand way. Fanatically introduced by those with their nose in the trough, corporations who make vast profits and kills off competition from small enterprises.
      Time for the auK politicos and MSM to come clean. The UK does not want a puppet government implement the orders of the unelected EU, it wants its own free sovereign independent nation to trade with the world.

      • formula57
        Posted July 12, 2015 at 10:55 am | Permalink

        @ Hope – are you sure when you say the UK “wants its own free sovereign independent nation to trade with the world” for when the Scottish part was offered that, it was turned down?

        • Hope
          Posted July 12, 2015 at 11:38 am | Permalink

          The majority in Scotland wanted to stay in the UK. It should be remembered the numbers we are talking about, 5 million Scots of which 1.5 million wanted independence or an alleged independence to implement the orders of the EU! If they want to be independent fine then be so but do not say they want to remain in the EU. So the 1.5 million deluded souls need to consider do they want true independence or not. Devolution or dissolution should never have been given int he first place, once more, the conniving Blaire implementing the EU dream.

        • Denis Cooper
          Posted July 12, 2015 at 12:59 pm | Permalink

          Come on, the SNP insistently made the false claim that if Scotland became independent then it would automatically be a new member state of the EU, and with no price to pay for that.

          • Hope
            Posted July 12, 2015 at 10:07 pm | Permalink

            Boris Johnson writes apiece in the DT about the tyrannical rule of Germany/ Brussells. He asks why are other leaders in the EU not rallying to help the Greeks. He needs to use his mobile to Cameron and directly pose his question why Greece is given the option of being run by Brussels and sell its assets or forced to leave without any funding or support?

            Cameron was very vocal about Russia over Crimea. Now is his chance to stand up for a weak sovereign nation being bullied by tyrants in the EU and Germany.

      • Denis Cooper
        Posted July 12, 2015 at 1:05 pm | Permalink

        “The UK public needs to grasp the real purpose of the EU. It is not trade, friendship or mutual cooperation. It is about creating an EU superstate inch by inch in an underhand way.”

        What puzzles, and worries, me is that so many of the UK public still have not grasped that. I can understand it with young people who have been (illegally) indoctrinated at school, but it is harder to understand why it should take so long for that realisation to dawn on older people.

        • Hope
          Posted July 12, 2015 at 9:34 pm | Permalink

          Because they believe prime ministers and chancellors. The interviewers do not challenge them so they are convinced they must be telling the truth. It is then repeated and repeated again.

    • yosarion
      Posted July 12, 2015 at 6:51 pm | Permalink

      Why don’t the Greeks set up one big Fudge Factory, After all,
      the EUSSR uses more of it than any other political entity on Earth

  2. Peter van Leeuwen
    Posted July 12, 2015 at 5:51 am | Permalink

    As argued before, this is not just a financial question, geo-political aspects will also be weighed. Similarly, this is not just Germany versus Greece, there are 19 EZ members and 28 EU members to come to an agreement.

    • Brian Tomkinson
      Posted July 12, 2015 at 7:49 am | Permalink

      Not forgetting the influence and pressure from the USA.

    • Ian wragg
      Posted July 12, 2015 at 8:09 am | Permalink

      PvL. As Germany is the defacto paymaster I don’t think it matters what the other 27 think. The Germans have been lied to and Murky is on very thin ice.

      • Peter van Leeuwen
        Posted July 12, 2015 at 11:21 am | Permalink

        @Ian wragg: The Finnish government has taken a rather strong position. It is not all about Germany.

      • Denis Cooper
        Posted July 12, 2015 at 1:29 pm | Permalink

        The German politicians in all of the old parties are on thin ice; they were all complicit in depriving the German people of their beloved national currency, on the promise that this would never mean that they had to subsidise people in other euro countries – that was expressly prohibited by the treaties, the German people were told, as indeed were we by the treacherous advocates of the euro, including a Tory MP in a letter to the national press – and they were all complicit in allowing economically and culturally unsuitable countries to join the euro so that now there is a real prospect that the Germans will have to pay. This is another reason why I tend to think that Schaeuble is bluffing, quite apart from the geopolitics the last thing he would want is for the contingent liabilities which have been imposed on German voters to be crystallised into real losses.

        • Roy Grainger
          Posted July 13, 2015 at 6:48 am | Permalink

          I don’t think Schaeuble himself is bluffing but ultimately he will be overruled by Merkel who by nature wants a “consensus” solution whatever the cost.

    • Hope
      Posted July 12, 2015 at 8:43 am | Permalink

      It is an unelected dictatorship trying to rid nation states of sovereignty, dignity and independence. It has crept into being so far by underhand stealth lies and deceit. The out of date construct called the EU has no place in the modern world. It should be consigned to third world doctors hips where vast amounts of money are wasted on a few fanatics while their populations starve.

      • Peter van Leeuwen
        Posted July 12, 2015 at 10:59 am | Permalink

        @Hope: in none of the other 18 democracies in the EZ they would call 4 million voters a democratic irrelevance. They aren’t dictatorships, however often and loudly you keep saying this to yourself. You also don’t appear to understand that not the institutions, but the 18 other EZ countries are doing the negotiating here.

        • Edward2
          Posted July 12, 2015 at 11:34 am | Permalink

          Everytime I look on my TV on mews broadcasts, all I see is Mrs Merkel and the Greek PM.
          Where are all the others hiding?

          • Peter van Leeuwen
            Posted July 12, 2015 at 9:10 pm | Permalink

            @Edward2 I can see your point but that is just the media’s choice. I had some time this weekend and (on internet) watched the so-called “doorstep” (briefing reporters on entering the building) of the participating leaders and finance ministers in the four languages I’m comfortable with. There is a range of opinions with regard to Greece, notwithstanding the relative weight of the largest countries.

        • Hope
          Posted July 12, 2015 at 11:42 am | Permalink

          You did not listen to Shultz who wanted to overthrow the Greek government or the latest proposal by Germany to place public administration with Brussels! That is a dictatorship, not what the Greek people voted for at the elections or lt weeks referendum. Be open and transparent PVL it is a controlling dictatorship by anyone’s definition. Perhaps something straight out of the European Commission which sends out orders without listening. Kate Hoey was absolutely right.

          • Peter van Leeuwen
            Posted July 12, 2015 at 9:13 pm | Permalink

            @Hope: Even Schulz is a (directly) elected EU official although in this matter with the Greeks not very influential. Hardly a dictator if he lacks the power!

    • Graham
      Posted July 12, 2015 at 9:25 am | Permalink

      If it’s predominantly a ‘geo political’ situation then why don’t your colleagues just give the money to Greece and let the facade continue – until something new comes along.

      Perhaps more aggression against Russia might be more interesting for you ‘geo political’ types.

      • Peter van Leeuwen
        Posted July 12, 2015 at 11:19 am | Permalink

        @Graham: “more aggression against Russia” – it appears that you live in an upside down world.

    • Posted July 12, 2015 at 12:38 pm | Permalink

      Peter Van Leeuwen,

      It is just a financial question. Or, as I would put it, it’s just a question of the right sort of economics.

      It is quite possible, with the application of the right type of economic policies for Greece, and the other depressed EZ economies to start to recover very quickly. Recovery in the EZ generally means everyone wins including Holland and Germany. Capitalism will be shown to work for everyone as it did in the immediate post-war period when Western Europe’s capitalists had to be on their best behaviour and prove their system was superior to the alternative on offer in the East. It certainly was and can be again.

      It’s a no-brainer really.

      Fix the economic problems and there are no longer any “geo-political aspects”. Why would there be?

    • Denis Cooper
      Posted July 12, 2015 at 1:06 pm | Permalink

      Wrong way around, the paramount purpose of the euro is not economic or financial, it is political/geopolitical/geostrategic, as you very well know.

      • Peter van Leeuwen
        Posted July 12, 2015 at 9:17 pm | Permalink

        @Denis Cooper: I would say it is both economic and political , but the political motivation to force Germany to accept it right after 1989 should not be forgotten.

    • Ken Moore
      Posted July 13, 2015 at 8:04 am | Permalink

      Is there anyone left in any doubt that these ‘geo-political purposes’ are merely a front for a bit of post world war two score settling by the German elite. Perhaps we should stop being so politically correct about it and just tell it as it is….
      Mrs Merkel wants to hang onto her German led superstate dream very badly and is prepared to pay any price in terms of suffering… and that should concern us…

  3. Leslie Singleton
    Posted July 12, 2015 at 5:59 am | Permalink

    Dunno how he reconciles what he is saying now with the baloney he used to spout about the ERM, but his article in today’s Mail is spot on. Cameron should grasp the obvious opportunity for us deriving from the Greek fiasco. On that fiasco itself it is doubly ridiculous and unacceptable that not only was the result of the referendum a resounding No but Tsipras vehemently recommended that No. Yes, I think one can safely say that underlying tensions remain.

    • Leslie Singleton
      Posted July 12, 2015 at 6:08 am | Permalink

      Postscript–So which comes first, pumping in more money or writing off the old, which it has long been obvious would never get repaid, or should the new money be synchronous with writing off the old? Madness. And did not this new Greek government of left wing loonies say just a very few months ago that they were not asking for and did not need new money? As they say, you couldn’t make it up.

      • Roy Grainger
        Posted July 13, 2015 at 6:50 am | Permalink

        new money first then in a couple of years when it has all blown over they’ll write off some of the debt. Oh, and we might chuck in a a few hundred million as “humanitarian aid” ourselves.

  4. agricola
    Posted July 12, 2015 at 6:49 am | Permalink

    Greece and Germany kicking the can down the road in opposite directions at least takes the pressure off the English football team. However, taking it less frivolously it is the Greek people who are really suffering and it is they who deserve our sympathy and help.

    However much they are loaned, it will not kick start their economy, only prolong the agony. Better take the bold decision and leave the Euro, they can then with the Drachma control their economy, and we can support it by taking holidays there.

    As the ECB. at the behest of many EU members who believe in free lunches have made successive unwise loans, they should bare the financial burden and cancel the debt. Same with the IMF who illegally have lent money to a part of a general currency area when they are there to bale out nation states only. Greece can then start with a clean sheet.

    If and when the Mediterranean countries come asking for similar treatment, those in Brussels might need to question the wisdom of the Euro experiment at long last. It all makes your leaders position increasingly untenable. Change there must be in the EU, but they are not minded to accept this for a long time. There is to be much more pain and breast beating before sense prevails. See it in microcosm with our own Labour party. Fail at election time, try to find a future purpose and in the process fight over the entrails. All to no benefit to the people they aspire to represent.

  5. Ex-expat Colin
    Posted July 12, 2015 at 6:57 am | Permalink

    I agree…a lot of money that the media inaccurately splurts on about. I suppose humanitarian aid has been prepared (planned)? No surprise Varoufakis got out of the way having been identified as a child and likely telling them what will happen.

    I did not understand why Tsipras went to the EU parliament just to get a tongue lashing or slight licking. They don’t influence much at all. In fact it was an awful lot of high level babble with Tsipras rather harshley told to bring more detail. Oh, Verhofstadt demanded or would have waved hands and exploded?

    We await mevrouw…again, after yet another dinner.

    Any chance of seeing the Green paper on the BBC?

    • agricola
      Posted July 12, 2015 at 9:15 am | Permalink

      Colin, take a few moments to watch Nigel Farage in the European Parliament during Mr Tsipras’s visit. He was clear, concise, and analytical; in the process being sympathetic to the Greek people and destroying the track record of the EU throughout this prolonged crisis. He talked more sense in ten minutes than I have heard from the mouths of the EU ever.

      • Ex-expat Colin
        Posted July 12, 2015 at 11:02 am | Permalink

        Agr:

        Saw NF earlier and then saw Verhofstadt try to trash it as right wing…whatever. And he offered to visit Athens..to help out?

        See what Donald Trumps been saying of late…familiar?

  6. Gary
    Posted July 12, 2015 at 7:05 am | Permalink

    we’ve been over this so many times. If you have a currency union the rich States are obliged to fund the poor states. That’s how it works in the USA, that’s how it works in the UK. There is nothing novel about this and I don’t know what the problem is. If the poor States want to leave the Union then they must fund themselves and they usually choose to print themselves so much money they go from the frying pan into the fire.

    So why are we so obsessed by this ? Probably because the EU superstate is actually de facto Germany, and Europe is then Germany and Frankfurt usurps London. The rest is hot air. We already fought 2 wars to contain Germany, the third is being fought and that is to break up Europe.

    • Peter van Leeuwen
      Posted July 12, 2015 at 7:49 am | Permalink

      @Gary: That amounts to a rather sincere stating of eurosceptic intentions in the UK!

    • Leslie Singleton
      Posted July 12, 2015 at 8:12 am | Permalink

      Dear Gary–Not quite so simple as you say. Do you think that there are, I know not how many, different languages and cultures and histories and laws involved plus the possibly important fact that there is intense hatred might have something to do with it? Apart from whether distinct bookish reasons can be identified there is the simple question of degree to be overcome, meaning that Germany is a phenomenally effective maker and exporter of stuff, with its people hard working and paying their taxes whereas Greece couldn’t be more to the contrary. Another aspect is that these days, but not when the UK and USA were being formed, we have intense 24 hour media coverage with everything that moves being examined and second guessed continually and special interest groups all over the place especially socialists denuding what they want. Back then there was more deference not to say ignorance and people just got on with it.

      • Leslie Singleton
        Posted July 12, 2015 at 8:14 am | Permalink

        demanding not denuding (!)

        • Jagman84
          Posted July 12, 2015 at 2:16 pm | Permalink

          Leslie, I think denuding is quite apt with regard to socialist economics. They seem determined to asset-strip the wealth from the population and give it to favoured minorities.

      • Gary
        Posted July 12, 2015 at 11:37 am | Permalink

        Leslie

        Of course there is intense hatred, and that is what I am talking about ! All the other so-called reasons given by the Euroskeptics are rubbish. The Euro has debt. Yes, but the Euro has less debt than the UK or USA. The Euro has to bail out failed states within the union. So does the USA and UK. The EU is a dictatorship. So is the USA and UK by the same criteria. The EU needs a tax union…….yes, just like the USA and UK. The EU needs austerity, the EU needs to print, what is diffferent about this argument to everywhere else ? Same old stuff everywhere. Every critisizm of the EU can be applied to the USA and UK.

        So yes, we are left with hatred and fear/envy of Germany as the prime motivator to break up the EU. As you say.

        • Denis Cooper
          Posted July 13, 2015 at 1:56 pm | Permalink

          Probably because you have none yourself, you are confusing patriotism with xenophobia.

    • BobE
      Posted July 12, 2015 at 12:32 pm | Permalink

      This is the third attempt by Germany to dominate Europe. With luck it will fail like the other two did.
      (Greece was part of the group that agreed to remove German debt in the 1950’s)

    • Denis Cooper
      Posted July 12, 2015 at 1:43 pm | Permalink

      You forget that the French wanted the euro precisely to contain a reunified Germany, it was nothing to do with any malign intentions that you may impute to the British. The fact that it hasn’t worked out like that, that the euro has made Germany more dominant, is also nothing to do with us. And I am intrigued to know how you think any form of warfare could “break up Europe”, would that involve selecting geological fault lines and secretly planting super-powerful thermonuclear bombs to blow the continent apart?

      • Gary
        Posted July 13, 2015 at 11:23 am | Permalink

        where did I say warfare was required or suggested ?

        You can break a political/economic entity up by using politics or economics. Usually when that fails some pretext for war is the last resort. History is littered with examples.

        • Denis Cooper
          Posted July 13, 2015 at 1:56 pm | Permalink

          “We already fought 2 wars to contain Germany, the third is being fought and that is to break up Europe.”

  7. alan jutson
    Posted July 12, 2015 at 7:13 am | Permalink

    Lending money to people who you think cannot pay back.

    Poor decision making.

    Lending more money to people who have already defaulted, and who you know will not pay you back, and who want a write off of the last amount.

    The economics of the mad house.

    People wishing to borrow money, and not wanting to control their expenditure in any way.

    Optimists.

    People who want to borrow more money, want to escape paying off existing debts, and still want to spend as before.

    Just plain daft.

    But

    The EU works in mysterious ways, and the taxpayer funds it all.

    • Gary
      Posted July 12, 2015 at 9:40 am | Permalink

      what is any different about this than anywhere outside the EU. ? 2008 started outside of the EU precisely because banks loaned recklessly and wrote derivatives off book opaquely.

      But there’s that old dog the EU to kick.

      • alan jutson
        Posted July 12, 2015 at 10:06 am | Permalink

        Gary

        Agreed, it involves the IMF as well, although this time (at the moment) only the EU are looking for another agreement, but I am sure the IMF will probably follow at a later stage even though it is not a sovereign country with its own currancy.

        History tends to repeat itself inside or outside of the EU.

        lessons are never learned.

        • acorn
          Posted July 12, 2015 at 11:53 am | Permalink

          The IMF has its own currency, called the SDR (Special Drawing Right). Backed individual members sovereign currencies.

      • Denis Cooper
        Posted July 12, 2015 at 1:47 pm | Permalink

        So do you think that the government of Greece is almost as credit-worthy as the government of Germany? Well, to be fair, at one time the credit ratings agencies did say that, which is why the yields on the government bonds converged, although they never became identical.

        • Gary
          Posted July 13, 2015 at 11:26 am | Permalink

          The so-called convergence numbers of Greece was a lie. A trick of bookkeeping using fancy derivatives. Neither the Greek people nor the current govt are responsible for that.

          BTW : is the credit worthiness of Newcastle or Northern Ireland the same as London ? Maybe you should be calling for them to break away instead of subsidizing them ?

          • Denis Cooper
            Posted July 13, 2015 at 2:07 pm | Permalink

            Of course the Greek government cooked the books, and the German government already knew that at the time it agreed to Greece being allowed to join the euro. The convergence of government bond yields was largely the result of the credit rating agencies saying that all eurozone governments had similar credit- worthiness, either ignoring the lies being told by some of them or assuming that whatever the treaties said if necessary the stronger eurozone member states would bail them out. Newcastle is part of England and England and Northern Ireland are both parts of one sovereign country, the United Kingdom, while Greece is notionally itself a sovereign country, not part of any larger country, and indeed is recognised as such when it becomes a High Contracting Party to the EU treaties.

    • turbo terrier
      Posted July 12, 2015 at 11:57 am | Permalink

      Alan

      Lending money to people who you think cannot pay back.

      Very well laid out Alan.

      I do trust you have sent a copy to Empress Nick of La La land.

    • acorn
      Posted July 12, 2015 at 12:04 pm | Permalink

      The taxpayers won’t fund any of it. The ESM will borrow the money by issuing a Bond in the Euro market. The Bond will be guaranteed by all the member states. The tax payers will only have to pay out if Greece defaults by Grexit.

      Unfortunately, nobody appears to have told the German taxpayers, who want Greece out, this fact.

  8. lifelogic
    Posted July 12, 2015 at 7:17 am | Permalink

    Exactly but group think insanity, in politics, is a very powerful force. As we saw with Major’s moronic ERM,HS2 and the greencrap.

  9. Brian Tomkinson
    Posted July 12, 2015 at 7:53 am | Permalink

    The EU in action. Why, oh why, does your leader wish to keep us imprisoned within such a rotten organisation? Is he incapable of leading an independent, self-governing country which trades with the world?

    • lifelogic
      Posted July 12, 2015 at 3:35 pm | Permalink

      Looking at the poor direction of the last budget, and the good people he leaves on the back benches while promoting token dopes, I would say yes he is incapable of leading self governing country well.

  10. CHRISTOPHER HOUSTON
    Posted July 12, 2015 at 8:26 am | Permalink

    Even 3 years ago, some of the comments from players in the EU/Greece Talking-Marathon, would have been regarded as racist. Interesting that despite their prejudice, ignorance, and pathetic nationalisms they still are signed up, officially, to the European Dream.

    It should be clear that when such political UN-correctness is hypocritically at the highest pay-rates of EU politicos then it is time to turn the page of history, remove and roll up with pomp and ceremony, national flags flying in Brussels, and march them to their national homes where they will be welcomed with varying degrees of recognition and respect dependent on the proportion of foreign migrants temporarily abiding there.

    The ruling classes of Europe are not good enough to be an EU. They are not good enough to be our leaders even in our own bless-ed homelands.

    So JR, for now they will attempt to pretend and extend the Greek Tragedy, continue to Talk for Euroland, supping time-to-time from their gold and platinum thermos flasks as they most probably believe “Whatever you do in a foreign country, don’t drink the water ” and, kick the can down the road one more time.

  11. Ian wragg
    Posted July 12, 2015 at 8:30 am | Permalink

    It’s very interesting that Poland and Croatia are dithering about joining the Euro. Polish opposition minister says that they agreed to monetary union not a transfer union. Of course if the t & c ‘ s change you are quite at liberty to change your mind.

    • Denis Cooper
      Posted July 12, 2015 at 1:54 pm | Permalink

      You’re not at liberty to unilaterally change your mind if you are bound by a treaty with others, not unless you wish exercise your national sovereignty and abrogate that treaty commitment. The better way is to insist that there must be a change to the treaty to relieve you of that previously incurred legal obligation, and that is something which Cameron should have raised back in the autumn of 2010.

  12. oldtimer
    Posted July 12, 2015 at 8:31 am | Permalink

    The announcement that the meeting of EU leaders has been cancelled has just been made on the Marr show. The reason was not stated but it was assumed (by Gillian Tett of the FT) that the finance ministers could not reach agreement with Finland being one that did not agree to a further bail out.

    It looks like chaos tomorrow in Greece. There seems to be real doubt that the present Greek government has the necessary skills or competence to manage an orderly Grexit. Let us hope that EU finance ministers and the IMF provide the necessary technical and administrative support to manage the process. Grexit will impose a debt haircut but that will not be enough to manage the short term shock to Greek society. The EU should also be ready to provide short term aid money to alleviate that shock.

  13. Denis Cooper
    Posted July 12, 2015 at 8:33 am | Permalink

    There is talk about a lack of trust, that is to say trust that the Greek government and parliament will properly implement anything that they agree to do so. There is talk about the need for closer supervision to ensure compliance, even though the troika has not been exactly hands-off in the past.

    Surely the simplest answer would be to suspend the Greek constitution, declare Greece to be a protectorate or the eurozone, like a company in administration, with the German government nominated to act for all of the eurozone governments, and install a reliable German as Governor-General with wide-ranging powers to rule by decree?

    It would probably only need a short enabling act to be passed by the Greek parliament and the President, there are precedents for that kind of thing.

    • JJE
      Posted July 12, 2015 at 10:34 am | Permalink

      Not sure if this is a serious proposal. It seems more like a surrender in war. Can you think of anything that might go wrong – a revolution or coup perhaps?

      The international lender of last resort and de-facto sovereign receiver is the IMF, not Germany.

      • Denis Cooper
        Posted July 12, 2015 at 1:58 pm | Permalink

        As I have said in another comment, publication of which JR has said he will defer until the position is clearer:

        “Woe to the vanquished.”

        And the Greek people have been vanquished, defeated, conquered.

    • bluedog
      Posted July 12, 2015 at 11:32 am | Permalink

      Denis, you’re not suggesting a retirement posting for a certain elderly gentleman with Greek ancestry and plenty of German relations, are you? All would go well until the official photograph of the new government was due to be taken…

  14. Peter Stroud
    Posted July 12, 2015 at 8:49 am | Permalink

    I thought that the Euroland leaders would band together and, once again, fudge the issues to keep Greece in the fold. But now it looks as if this might not be so. It is pretty clear that Greece will suffer terrible hardship which ever way things go. Staying in with more money temporarily in their coffers, will delay the pain. Leaving with debt relief will be horrid. But it should trigger some hope and allow Greece to negotiate trade agreements with whoever she wishes. However, I still worry that the Euroland leaders will, somehow, fudge the issue once more.

  15. Denis Cooper
    Posted July 12, 2015 at 9:22 am | Permalink

    Here is what is reliably claimed to be the one page note privately circulated by the German government on Friday, proposing that Greece should either accept harsher bailout terms and closer supervision to ensure compliance, or it should leave the euro for at least five years to sort itself out with international help:

    http://www.sven-giegold.de/wp-content/uploads/2015/07/grexit_bundesregierung_non_paper_10_juli_2015.pdf

    The German proposals include the transfer of €50 billion of valuable Greek assets to an external fund based in Luxembourg, to be privatised to defray the debt.

    “Woe to the vanquished.”

    Reply I do not know if this is a true version, as the translation has no heading/provenance. I have been trying to check it out as it seemed like a caricature of the German position, but recent events implies they are arguing like this.

  16. Tad Davison
    Posted July 12, 2015 at 9:24 am | Permalink

    John,

    As it might help your readers come to an informed conclusion, may I point them in the direction of RT’s Sputnik programme hosted by George Galloway (episode 080). In part two, Professor Steve Keen gave a good take on the future of the Euro. Incidentally, part one had the former Conservative Transport Secretary, Steve Norris, give an interesting appraisal of the looming mess on the London tube system. That was enlightening too.

    Tad

    • Tad Davison
      Posted July 12, 2015 at 11:44 am | Permalink

      They might also wish to see Episode 782 of the Kaiser Report, and have a listen to what is said about Germany’s Trade surplus. No wonder the Germans love the EU so much! They dominate the place, without a single shot being fired.

      Tad

  17. Tad Davison
    Posted July 12, 2015 at 9:27 am | Permalink

    ‘Once again as Homer nods Mrs Merkel looks the other way.’

    Would that be Homer Simpson by any chance? Even he would make a better job than the current crop of juffle-headed nonsense peddlers.

    Tad

  18. Graham
    Posted July 12, 2015 at 9:30 am | Permalink

    Germany should pay up and shut – they are top dog and de facto owners of Europe after all.

    etc ed

    • bluedog
      Posted July 12, 2015 at 10:45 am | Permalink

      The German govt. won’t pay up – they’d have to tell the voters if they did. The Germans are about to walk and leave the rest of Europe in the lurch. Compatible nations will be selected by the Germans to join a Bundesbank managed Euro-mark, in the view of this writer. The UK will undoubtedly get an invitation, which should be declined.

      • Denis Cooper
        Posted July 12, 2015 at 2:05 pm | Permalink

        But if the Germans walk they will be paying up anyway, insofar as what are now contingent liabilities will be crystallised as real losses if Greece defaults on its government debt in one way or another. The only question would be whether it was better to do that and “cut their losses”, rather than incur further liabilities to become greater losses in the future. And of course if Germany walked away from the euro it would entirely collapse in very short order, as many of the countries are only in it because it seemed a good idea to share a currency with Germany, and without Germany they would not want to carry on sharing a currency just with each other.

        • bluedog
          Posted July 12, 2015 at 10:48 pm | Permalink

          Politically it must be easier to sell the idea to the German electorate that crystallising existing losses is preferable to living with an open-ended commitment. Merkel is more than capable of arguing that the EMU has done well for Germany, but that success has come at a cost the Chancellor now regards as unacceptable. ‘Our patience with the EMU is exhausted and it is time for other measures’.

  19. Ken Moore
    Posted July 12, 2015 at 9:33 am | Permalink

    We keep being told that a Greek Euro exit is the most likely option but commentators do not seem to grasp the devotion that the Eu grandees have to the building of a German led United States of Europe.
    Greece cannot be allowed to leave and god forbid prosper on her own with a devalued currency. If other countries were tempted to leave and de-value they would never be able to afford to buy as many Volkswagens and other German made goods!.
    They might start building up their own industries and stifle German dominance
    That would never do!.
    Greek politicians are now hooked on the class A drug it’s dealer the Eu, hands out and will keep on hovering up the money… keeping the country dependent to it’s pusher like a good druggie does.

  20. Colin Hart
    Posted July 12, 2015 at 9:58 am | Permalink

    How long will it be before the continentals wake up to the fact that Greece is just a symptom of the problem?

    None of this would be happening on the scale at which it is, if they had not all locked themselves into a single currency. If they want to preserve any fragments of the European project they need to make plans to undo the Eurozone and go back to national currencies, monetary policies and interest rates.

    They won’t thank us for telling them but someone should.

    • fed up southerner
      Posted July 12, 2015 at 11:27 am | Permalink

      Colin, Nigel Farage has told them this on numerous occasions.

  21. Posted July 12, 2015 at 10:22 am | Permalink

    It seems to me this is all about France insisting on German tax payers paying the bills for less poorer nations, including France.

    This boils down to a battle of France v Germany with millions of innocents being made to suffer.

  22. bluedog
    Posted July 12, 2015 at 10:40 am | Permalink

    Wolfgang Schauble’s 5 year Grexit plan is code for something much bigger. Working on the assumption that the Germans actually know what they are doing, this is surely a finger wetting exercise to see who says what next. After the recent article by a former German finance minister in the DT, one is left with the impression that the Germans look at the UK and Sterling with envy.

    It must be possible, Dr JR, that in your own conversations with German interlocutors you have said things which have suddenly caused the pfennig to drop. The mood change is palpable. The Germans have had enough of the EMU and its problems, and probably enough of the EU too. Where this leaves the Greeks remains to be seen, but now that the Germans have moved the goal-posts by declaring that they don’t trust the Greeks at all, the Greeks are in a very bad position indeed. One thing is certain, no national government can tolerate a situation where thousands of expensive man-hours are permanently tied up in crisis meetings, a solution is required.

    The history of major financial crises is that nothing much happens during the holiday month of August, only weeks away. Things get critical after the US Labor Day bank holiday weekend, when the titans of finance return to their offices and decide that something must be done. In which case, watch out. This time promises to be no different.

  23. Mike Stallard
    Posted July 12, 2015 at 11:25 am | Permalink

    Citizen Redwood, we all know that the Eurozone is going to create more and more poverty especially in the ClubMed Area. As things get worse and worse, what we need is more Europe. This will enable a strong central government, under a Firm President, supported by an efficient and well informed European Police Force, to spread the capital. resources of the Democratic Federal Republic fairly.
    This will be especially necessary as the Russian advance into what ought to be European Union States turns into a war footing situation.
    When the new Constitution, already being planned by a Constitutional Convention due to report in 2017, comes into action, the way will be open for some positive and effective action.

  24. forthurst
    Posted July 12, 2015 at 11:26 am | Permalink

    “If the Euro area decides after all to lend Greece another 53 Billion euros that they can’t pay back, we need to ask what was the crisis for?”

    Political brinkmanship and with Germany being bullied into further lend and pretend and Greece being likewise encouraged to take a further dose of the medicine that it is killing it by degrees. Greek debt will not be written off because Merkel would not survive the backlash, whilst the Greek economy will continue to shrink under the further economy withering imposts that are being demanded. There is not likely to be an injection of sanity into the situation whilst Germany and Greece continue to love the Euro despite all its adverse consequences and the neocon warmongers are able to pull Europe’s strings.

  25. Posted July 12, 2015 at 12:14 pm | Permalink

    “Extend and Pretend”

    That’s a good way of putting it. Why do the EU leaders, who we’d expect to be intelligent people, insist the Emperor has the finest clothes when it’s obvious to the observing child he’s stark naked?

    It’s because, as the euro is constructed, as a pseudo single currency, or rather a collection of tightly pegged but slightly different euros, the alternative is too frightening to contemplate.

    The sensible course for Greece, as many on this blog have argued, is to default on its loans and exit the euro. The rest of the eurozone will be left to pick up the tab. Than after Greece, it will be someone else who’s the next in line. Maybe Spain or Italy. The sensible course will be for them to default too, and leave what’s left of the eurozone to pick up their tab.

    In the end there will be only one or two countries left. Probably Holland and Germany who’ll be left with the bill for the entire mess we now call the eurozone. That must be a scary prospect. So, to change the metaphor, they need to get their heads out of the sand and fast. The need to genuinely fix a severely deficient monetary system cannot be any more pressing than it is.

  26. Denis Cooper
    Posted July 12, 2015 at 2:19 pm | Permalink

    At least Samantha knew that the meeting was cancelled in good time to get a joint in the oven. I actually felt a fleeting sympathy for all these people whose Sundays have been wrecked because the Germans agreed that the Greeks should have cake, along with everybody else apart from the British and the Danes who inexplicably declined it, but
    then the Greeks wanted to both have the cake and eat it.

  27. matthu
    Posted July 12, 2015 at 2:20 pm | Permalink

    Nigel Lawson in the Mail on Sunday notes that “there is not a single EU law, regulation or directive past, present or future, which would not be legally binding on the UK, opt-out or no opt-out.”

    Would it then make any difference at all were Cameron to secure restoration of UK opt-outs on EU legislation that were given up by Labour prime minister Tony Blair as he is reportedly trying to secure?

    Personally, I wouldn’t give any regard to any “opt-outs” purely on the basis that they would undoubtedly be bartered away at some future time. We don’t want opt-outs: we want self-determination.

  28. graham wood
    Posted July 12, 2015 at 3:49 pm | Permalink

    “The history of major financial crises is that nothing much happens during the holiday month of August, only weeks away”

    It seems amazing cheek to me for the Wimbledon tennis finals not to be cancelled this year in the light of the Greek crisis. I mean, what a complete distraction when the whole world is in suspense and hanging on every word that comes out of Brussels. (yawn)

    • bluedog
      Posted July 12, 2015 at 10:40 pm | Permalink

      Bread and circuses for the elites are just as important as for the masses, Mr Wood.

  29. Posted July 12, 2015 at 5:23 pm | Permalink

    The endless pot is being tapped into again .They are playing a game of Russian roulette:keep giving and taking more and more and then all of a sudden the bullet to finish it all will be fired.

  30. Iain Gill
    Posted July 12, 2015 at 5:43 pm | Permalink

    Who expects the UK to pay back the 1.5 trillion, plus unfunded liabilities, going up extra billions per month? It is a nonsense in a in nonsense construct. The international financial system limes fairy stories…

  31. DaveM
    Posted July 12, 2015 at 6:36 pm | Permalink

    Why has the BBC started referring to Sturgeon’s collection of council leaders as the ‘Scottish Government’?

  32. Posted July 12, 2015 at 6:39 pm | Permalink

    It is now clear that France and Germany are pulling in opposite directions. Germany says ‘no’ to unity at any price and is quite prepared for a ‘temporary’ Grexit. France is trying to resist a Grexit (at more or less any price) and is saying that if there is a Grexit it must be permanent.

    It is understood that M Hollande and French officials advised Mr Tsipras in detail as to what Greek proposals would be likely to gain acceptance. Since similar proposals were rejected by the Greek electorate in the referendum, it is surprising that Germany, Finland and others have smelt a rat. In a nutshell, the Greek government isn’t trusted.

    In this situation, it is high time that UK diplomacy was active in defending our own interests. We want a Grexit and we want many Member States to leave the Euro zone, which is likely (if it survives) to mutate into a full blown Federation. To me, it an unpleasant surprise that Conservative Eurosceptics have not been active in pressing this view on the Prime Minister. It needs to be done.

    Sorry – in para 2, it should be ‘it is not surprising’.

  33. NickW
    Posted July 12, 2015 at 8:16 pm | Permalink

    What the Eurozone Ministers are failing to realise is that forcing the Greek government to enact Legislation to implement draconian cuts and tax rises before they agree a bailout is pointless and deeply offensive to the Greeks.

    After the referendum and after the incessant escalation of demands for more austerity, there is no possibility whatever that the Greek people will co-operate with their Government in implementing the creditor’s demands.

    If you were a Greek; would you?

  • About John Redwood


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

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