Amidst all the talk of a Euro 1 trillion fund to bail out ailing Euro countries, it might help to look at what they done so far.
They set up the European Financial Stabilisation Fund as a Luxembourg regulated Special Purpose Vehicle or company on 9 May 2010. It is owned by the Euro area member states. It has to rely on borrowing to carry out its purposes. So far it has borrowed just 13 billion euros, and lent 9.5 bn euros to Portugal and Ireland. It uses the EU Commission to help perform its duties.
The owners were very keen that the fund should be able to borrow at an AAA credit rating, and wanted it to be able to lend up to 440bn euros. To achieve this they had to make each member state in the company guarantee up to 165% of their share of the 440 billion euros, so that the AAA rated states always covered the full amount at risk. The members have had to agree to guarantee up to 780 bn euros. The German share is 29% and the French share 22%.
The legal base used to set up the EFSM and EFSF was stated as “Article 122.2 and an intergovernmental agreement of Euro area states”. The use of the intergovernmental agreement will become a popular way for the Euro area to move quickly without the legal restrictions of the EU. The legal base of the EFSM, the money provided by all EU states, is the one that has been questioned.
It’s going to take some magic to pump a 13 billion fund into a 1 trillion one.  If the fund is to expand to Euro 1 trillion there are several ways it could do this. It could first of all issue the full 440 bn of euro debt, adding 427 billion to the current total. It has already pledged 34.2 bn euros in additional loans to Portugal and Ireland which it needs to cover by new borrowing.
It can offer to guarantee slices of a country’s borrowing to help that country carry on borrowing in the normal way. Thus, if Italy needed help to borrow at a cheaper rate, the EFSF could guarantee the top one fifth of Italy’s new debt issues, protecting bond buyers from a 20% haircut or partial default. This would enable them to say they had 5 euros of firepower or capacity to borrow for every one euro of guarantee committed. It might help keep Italian interest rates down.
The company could set up further funds or special purpose vehicles to channel other investors’ money into Euro area debt. That is why they are now asking China if she would like to contribute. They may also ask other sovereign wealth funds in the Middle East and elsewhere if they fancy such an investment. Token contributions or tough terms are the likely result of such requests. If they could raise 100 to 200 bn euros extra, that gets them closer to their trillion objective.
The EU is trying a little spinning and praying for a little magic. Today they have a 13 bn euro company. Tomorrow they want to impress the markets with the possibility of a 1 trillion one. There are ways of getting there. They draw on techniques used by investment banks and others in the run up to the Credit Crunch. The very politicians who have spent so much time condemning the bankers for the ways they behaved in 2005-7 now seem to be copying their techniques to gear the EFSF.
The bottom line is the strong states are being drawn more and more into subsidising and propping up the weaker states.
October 29, 2011
Don’t publish this, John, but you’ve left out a ‘have’ between ‘they’ and ‘done’ in the second line. More power to your keyboard, and very best wishes.
October 29, 2011
All this financial smoke and mirrors, and creative accounting, just leaves me cold.
All they are attempting to do is shore up overborrowed county’s, when what they should be doing is simply living within their means.
Each country has a choice, just like any family, try and live within your income without debt, or increase income through extra work (taxes in the case of country’s)
Yes of course sometimes you may have to borrow for the very short term to cover unexpected expense (wars), but you cannot just keep on borrowing for ever without increasing income, otherwise you simply go bankrupt and lose what you had in the first place.
With so many country’s politicians promising their citizens a living standard which bears no relationship to its income (tax take) the politicians are simply being dishonest.
At some stage someone will realise that creating debt for our grandchildren to fund the present services used by us, will not be enough either, what do we do then, take out debt in our great grandchildrens names.
There should be a very simple rule, no country should be allowed to spend more than the preceding years tax take. In other words, spending should only be made on a known income (tax take), not some pie in the sky guesstimate as to what its income may be if all goes well.
Given the amount of debt that most country’s seem to be in, they should actually only plan to spend some 80-90% of the previous years tax take (to include debt interest) so that they can gradually build up a small year on year surplus, and start actually reducing the debt.
Before long some country’s will be in so much debt, that the interest due alone on such vast sums, will consume all of the tax take, with nothing left for any services/pensions/health care/education/policing/defence, at all.
The politicians will still get their salaries though, that you can guarantee.
October 29, 2011
“It uses the EU Commission to help perform its duties.”
Well that guarantees that loads of dosh will become lost in unaccountable ways and the books will never be audited properly or ever be able to be signed off. Who cares? Not the politicians only the bemused taxpayers and nobody takes any notice of them.
October 29, 2011
John, surely a large chunk of that 44o billion euros will be needed to purchase the Italian and Spanish bonds from the ECB. They have bought significant quantities of those bonds, despite its charter precluding such purchases, on the understanding that the EFSF would buy them once it had been legally established. Or have I got it wrong?
October 29, 2011
JR: “The bottom line is the strong states are being drawn more and more into subsidising and propping up the weaker states.”
How long before the strong states are dragged down to weak state status as a result of all this? A monster has been created which is running out of control and being fed by political fanatics and fantasists. The stock markets may have rallied but surely they will dive again next week. Another Groundhog Day following realisation that the Emperor’s new clothes are a fiction.
October 29, 2011
As I understand it, the EFSF will morph into the ESM in 2013. Not sure if the EFSM does the same, as it is funded – 60 billion euro – from the EU budget; supplied by all 27 member state subscription fees.
As Italy, for instance, has to pony up 125 billion of the 700 billion Euro capitalisation of the ESM; it is somewhat intriguing where the money is going to come from? Spain has got to find 83 billion Euro!!!
The only way I can see this working is full federalisation of Eurozone. One federal Treasury; one federal Debt Management Office; one federal Central Bank controlling one federal Euro money printing machine. The treaty setting up the new ESM, appears to give it powers that make it just like our own Debt Management Office.
It appears that the EU as a hole (sic), is making it up as it goes along now. Treaties are now just lists of words which can be interpreted with any dictionary you care to use. If you can’t tell your EFSM from your EFSF, look at http://www.europarl.europa.eu/document/activities/cont/201009/20100908ATT81666/20100908ATT81666EN.pdf
And; what the hell do we need an elected EU Parliament for? They are playing no part in this disaster other than rubber stamping stuff when the Commission tells them.
Is it possible that the EU is the most disastrous supra national organisation ever invented?
October 29, 2011
“Is it possible that the EU is the most disastrous supra national organisation ever invented?”
I think that that just about covers it.
M.
October 29, 2011
See “ESM – the new European dictator” on YouTube. Also on YouTube Die Welt have apparently urged Germans to lobby their MPs against it. It would appear that it is the ultimate instrument of power for a European superstate – very worrying indeed if true. I am not sure, Mr Redwood, if I am allowed to post these links, but will try!
(Source of info: comment section of D Tel article:
http://www.telegraph.co.uk/finance/financialcrisis/8790785/German-turmoil-over-EU-bail-outs-as-top-judge-calls-for-referendum.html
COMMENT SECTION
Die Welt and others have highlighted draconian conditions in the ESM treaty and urged voters to lobby MPs. This may be the EU’s Black Swan event.
October 29, 2011
The federalisation of the eurozone is dangerous. To run it you need some serious competitive talent and the machine doesn’t do that. Its Commissioners are second raters who cannot make it into national politics. They are selected often on the most dubious grounds – like being a woman or even like being the president’s mistress.
Anyway, what Germany wants and what France wants and what Greece wants and what Italy wants are all at loggerheads. Just putting the whole caboodle into one basket case is not going to end that.
October 29, 2011
What I do not quite understand is why we don’t see the left cheering more. Surely this is there ideal situation – socialism in action and everybody becoming more ‘equally’ poor.
October 29, 2011
John,
Could you do a blog on why you remain in the Conservative Party.
Its beyond me why you do.
October 29, 2011
I assume that JR remains because the Tories are the only real hope of ever getting sensible government of the UK again (given the current voting system and the power of the EU bureaucrats).
Albeit a rather faint one with Cameron in charge. Still it seems we will get more Queens than Kings in about 70+ years time (if it is not a republic by then). That seems to be his rather bizarre current priority.
October 29, 2011
Beats me.
October 29, 2011
JR: “How do you turn 13 bn Euros into a trillion?”
Perhaps the Eurozone leaders and bureaucrats are following the example of the man in Northern Ireland who tried to turn his own faeces into gold by putting it on an electric heater. His plan didn’t work either.
October 29, 2011
Just more spin and sticking plasters, more money down the drain as usual and still full steam ahead for the ERM2 iceberg and the end of any democracy in much of Europe.
The parasitic over paid EU bureaucrats won’t give up now they are nearly there.
October 29, 2011
Bernard
I don’t know if it is true, but I have seen figures that put the amount of all the gold claimed to be around as being several times the amount ever mined. Given some of the other fictitious figures that have been bandied around over the last few years, that would not surprise me.
M.
October 29, 2011
Nor me – Countries would not want to under estimate their gold reserves after all. They are good at hiding liabilities and I suppose equally good at exaggerating assets.
October 29, 2011
Perhaps the German Constitutional Court is also concerned about this. Apparently the Court has just taken out a special injunction to ban the work of a special 9 member committee/Euro panel which apparently was set up to fast track financial decisions re the Euro crisis and to obviate, I understand the need for these decisions to be put before the German parliament. Reported in Der Spiegel yesterday. I think this is highly significant.
http://www.spiegel.de/international/germany/0,1518,794578,00.html
October 29, 2011
Chris
Yes looks like its all begining to unwind already.
October 29, 2011
Yes, I saw that early on today and the thought went through my mind, isn’t Germany lucky to have a Constitutional court able to override the politicians. Seemingly they are far more democratic a nation than we ever are these days, which sort of turns history on its head….
October 29, 2011
Europe created the single currency. They created a single central bank to run it. They then let 17 countries join it. A single currency pools the risk from all 17 members into a single entity. The implicit contract is that the central bank is responsible for the currency and the economies in that currency. If you lend to one country then the other 16 will back it.
Then one country got into trouble. The central bank denied all responsibility for the problems. The other 16 members deny responsibility. They make the lenders pay by taking a 50% haircut.
They now want to create a fund to bail out their broken system. They say that they are all behind it. The members guarantee 1 trillion by standing behind the remaining 250 billion of the EFSF.
By only offering 250 billion against 1 trillion being paid to countries that cannot control their spending they are in effect offering to borrow but with an implicit 75% haircut. Lend us $100 and you will lose $75 of it.
Who would take such a deal? The bankers probably will, because they get bonuses on deals signed now. They don’t lose their bonuses when those loans go bad.
I don’t see what sovereign wealth funds have to gain though. I don’t see how they can actually find that extra 750 billion unless it is from our own banks.
Is there any way in EU competition law/financial regulation that the UK can stop our banks lending new money to the EU? Can we refuse to let banks mark down future loans at more than 25% of their value?
October 29, 2011
Look on the bright side, this mismanaged Napoleonic financial lunacy should at least cost our beloved Gallic brethren their AAA status. Every cloud has a silver lining, as they say.
October 29, 2011
Why don’t they follow the Bank of England’s example and just print some more Euros? Far easier than trying to borrow money from China!
To me, the turning of the 13bn euros into a trillion is reminiscent of the South Sea Bubble back in the 1700’s when the Chancellor invested Government money in a scheme where the shares went up ramped up from under ÂŁ100 each to over ÂŁ1000, with the aim of clearing the National Debt. However it was all smoke and mirrors, and when the scheme went belly-up, Parliament threw the Chancellor at the time into the Tower of London.
I just wish Parliament would make a habit of throwing ministers who make a mess of things into the Tower these days. It might make Osborne somewhat more circumspect in his dealings with the EU, which seems to me to be merely another fraudulent scheme designed to steal money from the public to support the Southern Europe way of life.
October 29, 2011
Bernard
I agree with you about asking China to help bail out the EU.
They will want something good in return, and they will certainly not be afraid of hard negotiating. It will be like lambs to the slaughter.
China already underwrites a lot of USA debt, if it does the same with the EU, it puts it in a very, very powerful position for the future, and possible domination.
It could be a case of, do as I say or I will bring you all down.
Have the EU politicians really thought this through?
Have they become so desperate to hang onto power and their socialist agenda, that they are prepared to sacrifice their possible future independence ?
It is begining to look like an economic doomsday scenario to me.
The sooner we get out of this mess that is called the EU the better.
October 29, 2011
We need to extract ourselves from all this blustering and defence of egos and work relentlessly hard to network and develop opinion below the levels of Merkel and Sarkozy with honest communication.
I’m watching for any indication that this is happening in cyberspace.
It isn’t. It’s a disgrace. The top European leaders are out of their depth so we need to work on helping the people they represent become better informed and in the process become better informed ourselves so that alternative coherent, credible and widely consulted views of the future can emerge.
Yes it hasn’t worked in the past but look at how the rest of the world is interacting with its disconnected systems of power now compared with a year ago.
As I’ve said before I am happy to offer guidance to those who are interested as to how this could be done in the case of the Eurocrisis.
In essence you need a team of people who agree loosely the fundamentals of the level of political integration needed between countries to sustain currency integration but are prepared to move from their initial ideas on this should new evidence become available.
They need to be engaging in conversations around this theme on all the European discussion forums and comments to blogs and news articles. Clearly linguists will be needed.
All involved will need to understand the laws of cyberrhetoric –
1. Never assume people have understood your meaning so use partial posts which invite questions and hang around to answer them.
2. Never assume that you have understood what someone else is trying to say so say what you think they have said in a way which is not accusatorial but instead invites them to expand, contradict or elaborate on your summary.
3. Always play the ball not the man. Engage only in the points raised, ignore all personal abuse and never give any.
4. Never assume you know another’s position. If you want to know ask. Understand that people’s positions are very complex and are often in a state of flux during discussions.
5. Always be prepared to be changed yourself by the new evidence and perspectives you discover.
6. Reference what you say with links and encourage others to do the same so you can analyse the roots of your beliefs.
7. Accept personal experience as a form of evidence.
Then get going – discuss the boundaries – discuss the new shape Europe should have without defending a particular view – discuss the routes from where we are to where we should be.
As I said – if you want to see the power of this strategy in action you should look at the emerging quality of the conversation I referenced before (linkedin.com>(group)TED: Ideas Worth Sharing>(discussion)Why would/ should Palestine not request to be permenant member for UNO?) and that is just me doing it on my own in my spare time based on very little prior knowledge. At least you guys wouldn’t have to fight with your computers being hacked and taken out of use.
It’s probably wise to involve me as I have a lot more experience in helping individuals adapt to cyberrhetoric than I can easily describe here and it is often difficult for people used to publicising a specific viewpoint or engaging in adversarial politics to adapt to this form of consultation but that’s up to you.
October 29, 2011
Rebbeca
The simplist and best form of communication is face – face.
Why, because you can read a persons mind very often from the way they move and behave, and you can anticipate (to a degree) when you have pushed far enough, or not hard enough, when negotiating.
Any proffessional salesman will tell you that, as will any proffessional buyer.
The problem we have, is that those who are negotiating, do not seem to have a clue as to how the end game will pan out, because what they want is simply impossible, they want Socialism, without the cost.
Its pie in the sky thinking.
The fact that you have to please 27 Country’s also makes it difficult to reach any other conclusion, than a compromise that really suits no one.
It is why it was a very grave error on Mr Camerons part, to not allow the people to have a referendum on the EU.
If we had voted for out, or for significant renegotiation, his hand and negotiating position would be strong, because if not enough was offered he could say he will simply walk out, and say goodbye with the backing of the UK electorate behind him.
Now he is going to weakly ask and plead for change.
What answer do you think he will get.
What action is he going to take if he gets absolutely nowhere.
Put yourself in the EU position what would you say if you were them.
You have signed up for all of these treaties, they were all discussed around a table, you had your opportunity at the time to say something, you had the opportunity to hold a UK referendum on every one, but no, you said yes to everything, so thats how it will stay, because you are bound by the Treaties you have signed.
If we do something special for you, everyone will want a piece of the action, and we end up in chaos.
I wish Cameron well in his attempt, but I fear he will just be marginalised.
October 29, 2011
I used to wish him well, but no longer. He has avoided keeping his word, now he has cheapened parliament and outright lied. We need a Conservative leader who is not a LibDem.
November 1, 2011
hear hear
October 29, 2011
“The simplest and best form of communication is face-to- face”
Horses for courses Alan. There are many courses for which this statement is untrue and the Eurocrisis is one of them.
Here are some of the reasons why:
1. The perspectives offered through consultation mature, widen in perspective and have time to access deeper insights.
A good politician will consult with many people. But however many people they meet they only get a snapshot on their views. The views of those consulted do not get a chance to mature in the way that they do when they are involved in repeated interactions or when they have the chance to interact with a wide variety of alternative perspectives over time.
2. Anyone with an interest and/or ability can participate in the consultation.
For one-to-one consultation time, space and etiquette dictate that individuals (and our senior leaders in particular) are very limited in the range of people they can engage with in discussion. Cyberspace sets us all free.
At present the vast, vast majority of the talented thinkers in Europe have no access to the debate on the realities of this situation. They don’t have the opportunity to talk to people who understand the writing on the wall and they need that in order to begin to properly express their opinions as to what should happen next.
3. The intelligence and ability of those in authority can develop more rapidly than is possible through person to person consultation.
We expect so much from our leaders but they are people too – trying to rapidly get to grips with situations which are beyond us all.
There is nothing to stop David Cameron creating a cyber identity and conversing freely with anyone who posts on a discussion thread like this in order to more deeply probe and explore their views. Imagine the increased power if he had a team who were mapping and engaging with the discussion forums of Europe, systematically mapping the structures of the arising insights and personalities, probing the justification for points made.
4. The sheer speed of it.
In the conversation on Palestine I have gone from being a total amateur to being one of the most informed people in the world on the issues associated with the current peace process in 4 weeks. Some of the insights generated go way beyond those found in any mass media source.
This is not unusual for well managed online mass discussions. I wrote an original PhD proposal off the back of some: http://mathseducationandallthat.blogspot.com/2011_04_01_archive.html which is when I came to understand that my overriding interest was not in the new insights generated, but in the way in which they had been generated through mass online discussion.
Look at the width and depth of insight that was generated into the future of UK energy in just a few hours in the comments here: http://johnredwoodsdiary.com/2011/10/21/popular-and-unpopular-greenery/
5. Creating mandates in action.
One of the problems of modern politics is that politicians are tied to the promises they made before they were elected. But situations change and decisions have to be made. Mass online discussion creates a democratic route by which the process of making such a difficult decision can transparently and democratically consultative and properly mapped. One-to-one discussion is always ‘behind closed doors’ to everyone who wasn’t there. They can still be powerful forces in generating insights which can then be shared.
6. Online communication is simpler than face-to-face.
It just takes time to learn the rules. It depends, of course, on the purpose of the communication. If it is to sell a viewpoint then face-to-face communication is more effective. If is to develop intelligence and insight and to help people work out what is deeply true for them when all the spin is stripped away then well managed mass online communication is better. That’s what’s needed here because what we need to know is what Europe should look like if the different countries properly
October 30, 2011
Rebecca
Face to face is always better than any other medium in my view, the only disadvantage is in travel time, thus video conferencing has its uses and pluss points.
E mail whilst useful, still requires people to read it, and you do not get an instant respose.
October 29, 2011
What happened in the 70’s was that Greece devalued it’s drachma, which incouraged us all to travel there for a cheap holidays, which in turn allowed them to benefited from the incoming trade and recover.
I know the present situation may not be that simple, but to subject the Greek people to this is inhumane.
October 29, 2011
How can a company be owned by an entity ? who is responsible in the event of a collapse, who pays it’s debts, who signs on behalf of the entity ?, and is the signer culpable or the entity ? These may be silly questions, but they would be my questions before I put any money into something.
October 29, 2011
What a shambles! It would be nice if all those who were pushing the Euro as the best thing since sliced bread would have the good grace to admit they got it badly wrong, just as those of us who were against it predicted! (Business for Sterling etc)
October 29, 2011
Let us just look at this for a moment, quite coolly.
Germany and France have so far raised 13 billion Euros. They have set a target of a thousand billion Euros.
They are trying to raise money in China and from the Arabs, both of whom have very different ideas of civilized living from the Europeans. One is an ancient state based on top down obedience. The other is a religious state working along Muslim lines. What do these two lenders want as a guarantee? (cp Merchant of Venice?) Taiwan? Burkas?
Italy is up for 1.4 trillion Euros at the moment. Already there has been a violent row in their parliament. How long before Italy too becomes ungovernable? And where will the mystic trillion go then?
When governments guarantee things they cannot possibly afford, and then cannot repay, Weimar inflation is the result. Spain, France, Weimar, Turkey, Zimbabwe, almost the USA…….
And then comes a strong man to set the whole thing right………
October 29, 2011
The Europeans should be careful what they wish for. The Chinese ‘investing’ in this fund will give them the sort of power that the Americans exerted over the British after the Suez Crisis. It might seem a great idea when you’re desperate but long term it could be a disaster.
October 29, 2011
Meanwhile, Berlusconi is quoted is saying that the Euro is a “strange currency” that “has convinced nobody”. See http://www.telegraph.co.uk/finance/financialcrisis/8856661/Italian-debt-soars-on-EU-bail-out-fears.html
“In comments that appeared unlikely to calm concerns, Mr Berlusconi issued an extraordinary outburst against the single currency, blaming it for the scrutiny on Italy’s finances. He described the euro as a “strange currency” that “has convinced nobody” and claimed that after Germany, Italy had the eurozone’s strongest economy.
The outburst came just hours after Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), arrived in Beijing to try to persuade China to help finance the eurozone’s bail-out vehicle….”
October 29, 2011
I have an idea – take the 4m Euros that is left (13-9m) and deposit it with RBS. Then borrow 8m with the 4m as security. Take the 8m and deposit it at HBOS as security for a 16m loan. Then deposit the 16m with Barclays as a deposit against a 32m loan. Keep going until they have the Trillion.
Actually it is exactly what they are doing now – a proper Ponzi scheme!
I guess someone will go to jail for this – all together now “oh, no they won’t!!”
October 30, 2011
lololondon: “I guess someone will go to jail for this .. ”
You ain’t seen nothing yet!
Article 27
clause 3.
The ESM, its property, funding and assets (…) shall enjoy immunity from every form of judicial process (…).
October 29, 2011
This video clip from Dan Hannan is a Must Watch.
http://blogs.telegraph.co.uk/news/danielhannan/100114217/a-german-view-of-the-bailout-deal/
I find it frankly terrifying.
Signatories will have all their rights permanently removed and appear to be required to pay any amount decided , within seven days, with no right of appeal and no legal redress in the event of criminality or negligence on the part of the fund operators.
John; Can this drag us into the net too?
October 29, 2011
What it appears to mean is that anyone who invests in that fund can wave goodbye to their money instantly.
October 29, 2011
First there was 81 votes defying the whip. Then the “big bazooka” turned out to be a pea shooter. Now we hear that officials are scurrying around to determine just what powers could be repatriated to the UK. Do you think that Dave is beginning to get it?
October 29, 2011
Here is some late news from the Spectator:
“Thereâs only one thing more humiliating for the eurozone than China buying up its sovereign bonds â and that is if China doesnât. To this end, head of the EFSF Klaus Regling, currently on a sales run in Asia, has said that some of the bonds of his newly souped-up SPIV may be denominated in yuan.
…
With apparently no recognition of the irony, European leaders are saying that the euro rests on âsolid fundamentalsâ while considering switching some of their national debt to another currency to make it more palatable.”
http://www.spectator.co.uk/business-and-investments/blog/7350753/chinas-winwin-situation.thtml
OMG!!!
Denominating some of the Euro’s debt in yuan is yet another reason (as if we wanted any more!) to have NOTHING to do with this stupid car crash of a currency!
When countries have debt in other currencies, other than their own, it only magnifies the situation: when times are good it usually makes it even better, in increasing curreny will make the debt less, but when times are difficult, as they are now, it always worse than it would have been.
Is this the tipping point ???
October 30, 2011
Robert Christopher: “When countries have debt in other currencies, other than their own, it only magnifies the situation:”
Isn’t that exactly what led to hyper inflation in Weimer Republic, the reparations debts were denominated in foreign currency.
October 29, 2011
The ESM document is written to ensure that nobody in government can be held liable in any way whatsoever for the either the disastrous consequences of the treaty, or any amount of fraud that occurs with the fund. You can see the plan. By leveraging up the dough with techniques they don’t understand countries are going to get burned.
October 29, 2011
This isn’t going to work. As winter approaches I can see the economic train wreck in our midst. Its not China we have to fear, its Brussels. Might I suggest that some of the poor leadership decisions are driven by domestic electoral considerations?
Sarko is due to go to the polls in April next year, and although Silvio and Angela should theoretically be there til 2013, both are at risk of being forced into early contests.
This trio cannot be relied upon to do the right thing because they are scared of the electoral consequences. And here in the UK we too have a problem because the public managed to vote Labour out but not to actually vote anyone in.
The proposed solution is a smoke and mirrors ruse. The fundamental problems are not being addressed. I am fearful now that the last few years were only the beginning of the depression. And btw, is Eire going to sign up to the Corporation tax rates it lures multinationals with being set by Paris and Berlin? Because if they do they will never escape from this mess.
October 29, 2011
They are still sitting in the casino having thrown the deeds to the house and the car keys on the table hoping and praying that this throw of the dice will be one that gets them out of trouble.
They are doing this in order to perpetuate a system that imposes ever greater costs onto its own markets and has ambitions for an ever larger and dominant Euro state.
As regulations become ever more burdensome on business and as product specifications become ever more prescriptive and less innovative, we are creating high cost, inefficient industries that are becoming less fit to compete with the outside world. This will leave us with French style protectionism and a largely bankrupt continent.
I am pleased that the opportunity for us to extract ourselves from this madness has come along and I hope we will take it sooner rather than later.
The Lib Dems have agreed to ârebalancingâ our relationship with the eu. I think it is not unreasonable for the cabinet to ask Nick Clegg to join forces with somebody like Paddy Ashdown in persuading his party that they need to support the UK government and the People of the UK in their quest to repatriate powers that will reduce some of these onerous costs.
I think the Euro debate in the House the other day has changed the dynamic. Surely the Lib Dems realise that they cannot afford to cling onto old policies like âwe will join the Euro when the time is rightâ?
October 29, 2011
How does anyone find the energy to follow all this bail out BS? The eurocrats come up with endless special funds, agreements and more acronyms than an entire US special forces movie. But is there anyone that thinks that any money at all will ever be repaid?
It’s all a ponzie scheme, a pyramid sham, a con game designed to delude markets and anybody stupid enough that the elite knows what it’s doing.
The entire Brussels empire and all it’s national government branches do less productive work than my mate at the local boot sale on a Sunday morning. He is also ahead on the “not destroying everybody else’s livelihood” front too.
October 29, 2011
I wrote a comment. It has vanished? How unusual.
October 29, 2011
When we obtain loans we have to show how we are able to repay them. What demonstrable steps does the EFSF require of the recipients to enable them to draw down the loans.
October 29, 2011
Greece was a very cheap holiday destination. It was relaxed and warm and you could stay for a holiday at a fantastic exchange rate. When they joined the Euro this was destroyed. Greece became similar in cost to other nearby countries. So Greece lost most of its tourist industry. It has no other industry and so cannot repay its debts. Kicking the can down the road will do nothing. We are led by half wits and fools.
October 29, 2011
Comments are appearing on the site instantainiously. Wow
Reply: So I now see. I have asked the service provider to reinsert the moderation loop which has clearly been lost without my consent!
October 29, 2011
“I think the Euro debate in the House the other day has changed the dynamic. Surely the Lib Dems realise that they cannot afford to cling onto old policies like âwe will join the Euro when the time is rightâ?
The Lib Dems are finished. Their core vote, the young, was lost with the tuition fees. They will be vanishingly small after the next election. Because Cameron is so inefective it will mean another Labour Government led by Wallace.
October 29, 2011
So, if I understand this right, the SPV is the Eurobond in all but name – in other words debt issued by the Eurozone and guaranteed by all.
Is this right? I thought the Germans wouldn’t tolerate such a thing.
Whenever I hear the term “Special Purpose Vehicle” the Enron logo appears in my mind for some reason. Aren’t SPV’s magical tools for hiding liabilities?
October 29, 2011
This EFSF company registered in Luxembourg, what coupon is it anticipated to pay?
October 30, 2011
Its all new debt. This financial chicanery is all new debt ,ultimately lumped onto the taxpayers. The investment bank model is the one that has got us into this mess, they have to be hare-brained and reckless to want to use that model to solve a debt problem.
This is the crop that Geithner sowed, when he advised them to lever up the fund. Lever up a fund to solve a leverage problem. They are digging the hole deeper.
These people are (unpleasant-ed).
October 30, 2011
If the Greek perception is that Greek taxes are being used to bail out French and German Banks, there is no way on earth that the Greeks will pay their taxes and declare their income.
No way on earth.
And who can blame them?
October 30, 2011
If effective representation has been removed from the ballot box, can’t we fight this through the courts, as they are doing in Germany. I suppose without a documented constitution for the UK, it may be difficult to make a case. But surely, there must be some legal angle exposed that can be the basis of a case ?