What if the IMF/EU austerity packages do not work?


          Contemporary politics and much media commentary concentrates on getting the IMF/EU packages through and into effect for Greece, Portugal, Ireland, and to discussing the need for one in  Italy. There is rejoicing when governments change, coalitions form, or even better when there is a government of national unity to close down dissent and opposition.

          All have to sign up to the packages, and anyone who disagrees is said to be  unhelpful, endangering the whole edifice.

       The problem occurs if these policies do not work. Where then is the alternative team and the alternative policy to offer hope or to get it right?  IMF programmes have worked in the past when public spending reductions have gone alongside devaluations and monetary and interest rate manipulations. Getting IMF packages to work in Euroland is altogether more difficult, as they have no control over currency and interest rates, and may find deficits rise rather than fall as economies contract.


  1. BarryS
    November 7, 2011

    Do you honestly know anyone who thinks the austerity packages will work?

    1. lifelogic
      November 7, 2011

      Or rather if they would ever actually be put into place by the “local” governments of the PIGIS and even France?

      1. lifelogic
        November 7, 2011

        I heard Clegg today suggesting that Italy just needs a credible plan to get interest rates down – suggesting that the UK was in a worse position and they (the coalition) provided a “credible plan”.

        Well yes, to a degree, but a big part of the “credible plan” was a floating currency and devaluation.

        Anyway it is looking less credible by the day as they fail to cut spending or get any growth.

  2. BarryS
    November 7, 2011

    For clarity I do mean think not hope or believe.

  3. Ralph Musgrave
    November 7, 2011

    JR is right to say that “getting IMF packages to work in Euroland is more difficult” than in monetarily sovereign countries (that’s those that issue their own currencies). Those packages WILL work eventually in Euroland: after years or perhaps even a decade of deflation, austerity and high unemployment. But that is a patently inefficient way of dealing with disparities in competitiveness.

    Compare that with the 25% devaluation of the pound in 2008: half the UK population didn’t even know it happened and the effect on living standards was minimal.

    Cutting wages and prices in a Euroland country by X% comes to the same thing as an X% devaluation.Thus a Euro country could do a quick devaluation if it organised an overnight 30% or whatever cut in all wages and prices within its borders. That would be extremely difficult and costly to organise. It would be politically difficult. But compared to the alternative: years of austerity, it could be the “least worst” option.

    1. A different Simon
      November 7, 2011

      I don’t know about Euroland but the easiest way to reduce prices and let wages fall to internationally competitive levels would appear to be to cut the cost of accomodation and business premises costs .

      We have now thrown so much public money at maintaining bubble valuations and restricting supply that it makes it very difficult to do what is needed .

      Although I’m a house owner myself I’d like to see a housing surplus generated in order that the cost of living be brought down :-
      – the market flooded with ex-MOD land with planning permissions
      – more social housing
      – regulatory costs brought down
      – measures in place to give British Citizens priority and protection when it comes to owning houses in the UK .

      Back in the days when the rule of thumb for mortgage lending was a max of 3.5 gross salary NET OF EMPLOYERS PENSION CONTRIBUTIONS .

      Now saving for old age has vanished completely from the private sector people need to be compelled/encouraged to save 20% throughout their lifetime so based on the old 3.5 times salary rule they should now be able to borrow and repay :-

      ((100-20)/100) * 3.5 = 2.8 times their salary .

      Assuming a depost of 1 years gross salary we end up with house prices needing to be around 3.8 times salary .

      Even with the recent drops in prices they are around twice that .

      Drastic but what other solution is there ?

      1. Bazman
        November 7, 2011

        It would be interesting to see what happened to any government that reduced house prices especially a Tory one.

        Reply House prices have fallen in recent years

        1. stred
          November 7, 2011

          Selling prices are currently about 30k less than asking for an average in the South.

      2. BobE
        November 7, 2011

        Ordinary houses have allways been roughly 10 times gross income.
        In 1960 earning £1500 and a two bed semi was 15000.
        In 2011 earning £20,000 and a two bed semi is £200,000
        The biggest dificulty is the 20% deposit, 20,000 is a lot to save if your paying £600/m rent.
        10% deposits or even 5% would cause the house market to start up again.

        1. zorro
          November 7, 2011

          In 1960, you say that a two bed semi cost £15,000. Where was that? Have a look at this link…http://www.mortgageguideuk.co.uk/housing/uk-house-price-index.html


        2. Steven Whitfield
          November 8, 2011

          Average earnings must have been around the £8 – 15 a week in 1960?.

          Historically house prices have always been a multiple of around 3.5 average earnings..until’s Brown’s cheap credit bubble pushed them up to 6 or 7

    2. sjb
      November 7, 2011

      Some contributors may be interested in the recent FT article about Latvia’s internal devaluation.

  4. Brian Tomkinson
    November 7, 2011

    European political leaders have created this Euro monster to bring about their ideal of a United States of Europe. Unfortunately, the way in which they constructed it was doomed to failure. Does anyone, apart from them, seriously believe that this flawed currency zone can exist in its present form? The pig headed EU leaders are clinging on to their anti-democratic “project”; in the process they are destroying democracy and driving the world economy into deeper trouble. This resembles a form of political gangsterism or fascism. How long before the other world leaders stand up against the “EU mob”?

  5. oldtimer
    November 7, 2011

    Let us hope that whoever emerges, when present policies fail, can do their sums properly. The present lot in charge appear to share a surprising ignorance of elementary arithmetic.

    The outcome for the peripheral EZ countries looks like default, failure to raise the necessary borrowings and exit from the EZ. The main question seems to be the timing of these events; my guess is sooner than later now that the genie is out of the bottle re exit from the EZ. Following Merkel`s ultimatum to Papandreou, do you know if the Eurocrats have started to work on the mechanisms for exit from the EZ? If not then they are compounding their irresponsibilties.

  6. stred
    November 7, 2011

    Unlike the UK, the Greeks were lucky enough to have a Prime Minister who trained in business methods in one of the best American univerities. He also undertood that his citizens ought to have a say in decision making, as the situation changed.

    Despite his qualifications, he seems to have been unable to contain public expenditure and the ridiculous payouts to state employees cannot be returned, while the private sector is being squeezed dry.

    He must be looking forward to resigning and using his skills elsewhere.

  7. Richard1
    November 7, 2011

    We should try to move the public debate in the UK onto two things: 1) the need for radical supply-side reforms to re-establish competitiveness throughout Europe, and in the UK through opt-outs if the rest of the EU arn’t interested; and 2) the practicalities of a country leaving the EU. So far all efforts are focused on avoiding this and European politicians assert it would be a disaster for a country to leave the Euro. I cant see why this should be true. If 5 or 6 countries were to leave there would be a big mess to sort out, especially with the banks, but we would then have a clean sheet and growth and investement could re-start.

  8. lifelogic
    November 7, 2011

    Exactly as you say:-

    IMF programmes have worked in the past when public spending reductions have gone alongside devaluations and monetary and interest rate manipulations. Getting IMF packages to work in Euroland is altogether more difficult, as they have no control over currency and interest rates, and may find deficits rise rather than fall as economies contract.

    Indeed they are extremely likely to contract and deficits to rise. Especially with, a too high exchange rate and all the rest of the EU nonsense regulations and costs heaped on to them too. That is if the population does not leave or take to the streets first due to the suppression of Democracy by the unelected EU.

  9. Peter van Leeuwen
    November 7, 2011

    While it’s hard to be sure, the Irish IMF/EU bailout appears to be working. In the case of Greece, maybe we’re just witnessing an expensive delaying tactic so that banks will be able to take the hit later on. EU economy stimulating programs in various countries are long overdue.

    Reply: The Irish problem was bropught on by overextended banks more than by a weak state and weak economy. They still have a long way to go to get out of the deficit vicious circle.

    1. BobE
      November 7, 2011

      A couple of friends have given up on Ireland and gone to Aussi. They tell me that Aussi is not affected by the recession and there is a good life to be found there. They are not coming back.

  10. English Pensioner
    November 7, 2011

    One might believe that it is possible that these policies might work if they were actually carried out, but there is no reason to believe that the countries involved will do so.
    The Greek opposition voted against the austerity measures, why should they change their minds just because they are now in a coalition? They will probably agree now to get the money, but it will be spent as if it were a gift just like the last lot, We will be back to square one by next June or even earlier.
    Whilst the EU can issue orders, there is no way they can enforce them (at the moment) against the will of the people, and the people of Greece are inclined to riot at the slightest opportunity. Time will tell what happens with the other countries involved, but I am not optimistic. Indeed, the only optimistic note is that a report in the Telegraph suggests that Britain’s trade would benefit from the break up of the Euro. Let it happen!

  11. Sue
    November 7, 2011

    They haven’t worked for the last two years. I think “the powers that be” will do anything to ensure the Eurozone become one single entity.

    They don’t care who suffers for their project and the coalition in the United Kingdom is aiding and abetting in the crime of causing misery to countless millions of people!

    There is no alternative plan. They’d sooner see us queuing at soup kitchens!

    This is it unless the Nation States say “enough”. We should lead by example. We have a fierce reputation of independence and justice to uphold.

    I have a question. If the IMF is “legally” unable to support the Euro-structure, would be illegal for it to assist Greece if it left the Euro and re-introduced the Drachma?

    Reply No

    1. Brian
      November 7, 2011

      An excellent point in the final para !

      It seems to me that the EFSF should support countries in the EZ .
      The IMF should support countries outside-like Greece when it reverts to the drachma.
      Surely Christine Lagarde should declare an interest and withdraw from any discussions with the EZ .
      As an architect and perpetrator of the present mess her motives and effectiveness must be absolutely minimal.
      Just leave it to Brazil or Mexico to sort out matters on country not currency lines.

    2. oldtimer
      November 7, 2011

      There is an unresolved issue at the heart of the EZ.

      For French foreign policy it is the primacy of the euro.
      For German domestic policy it is the primacy of sound money.

      In the end, I think that Germany will prevail, either by a shrinkage in the number of countries within the EZ to those that can live with Germany while sharing the same currency, or by Germany itself exiting the EZ.

  12. Caterpillar
    November 7, 2011

    Well it is nice to see that there is at least one MP who can conceive of more than one future scenario, a skill seemingly lacking in (nearly all?) other politicians.

    Is there a tabulation of previous IMF interventions that summarise the mentioned variables (exchange rate, intereserst rate, public spending etc.) and the outcome of the intervention? Is there good (and again simple) evidence that suggests the probability of success?

  13. Disaffected
    November 7, 2011

    I think the cat is firmly out of the bag with the unelected dictatorship of the EU Commission with France and Germany leading the threats to anyone who opposes is view or ideology. They stopped the Greek public having a democratic right to vote whether to install dire austerity measures and removed their PM. Messrs Cameron and Clegg, wake up the people of the UK do not want to be part of this unelected EU dictatorship no matter how fanatical Mr Clegg might be about being part of a pan European State.

  14. Anoneumouse
    November 7, 2011

    They haven’t been able to Audit the books for 17 years so it’s not a matter of IF but WHEN.

    I tell you, it is easier for a Trojan Horse to go through the eye of a needle than for the EU Commission to enter the world of reality.

  15. sm
    November 7, 2011

    Who is getting the ‘good funny money’ in return for bad not so funny assets?
    Why indeed if it wont work? Well at least someone gets paid out from public funny money or worse debt bearing money. Ever wondered who they are, if we get behind the facade of the banks.

    I wonder if there is a correlation between those and those who vote no or object to a referendum and direct democracy.

    No mention of how money is created out of nothing by private interests, making banks true intermediaries only is a real solution. The government can then control the money supply openly and directly with some constitutional safeguards- ultimately power lying with direct democracy.

    So assuming this is all about to unravel, where are the preparations to insulate the UK. Making us more self sustainable by 1) Encourage import substitution, 2) reducing energy waste, 3) reducing immigration 4) ending the stranglehold the banks have on the creation of the money supply. 5) nationalising without compensation of onerous liabilites those failed industries required for economic functioning.

  16. alan jutson
    November 7, 2011


    The problem here is that the Politicians of each country have let down their own citizens for decades.

    The politicians who have had the power (which in many cases seems to have gone to their heads) have for years pushed their own agenda with regard to the EU, they have consistantly been ecconomical with the truth, they have refused to consult by referender, with a we know best, slap down the public type of attitude.

    Now it is all going pear shaped, they wonder why.

    The truth is that the EU does not do Democracy, is not interested in Democracy, and is programmed in one direction, and one direction only, which is the complete integration of all European states, no matter what the cost, no matter what the people think.

    The great social experiment, is failing because the money they had, has run out, the membership fee is too high, borrowing as reached its limits, and the people who have to pay for all of this, are now starting to get restless.

    The simple solution is for a quiet peacful revolution by the people, until a new breed of politicians (or those existing ones who have been sidelined) who value their Country and citizens first, before any other, get into a position of influence and withdraw us from this nonesense.

    I understand that protectionism is not good, I undertand that witholding taxes is wrong, but the actions and present policies of those in control at the moment is equally crazy and is fueling unrest.

    For how much longer are we really expected to simply stand by and look the other way, whilst our taxes being poured down the drain every minute.

    Politiians should simply look in the mirror for the answer, but it is they who are in real denial.

    It will all end in tears, its just a question of when, and how much.

  17. Major Loophole
    November 7, 2011

    They cannot work.

    The IMF WILL be in there, sorting out individual countries as per their remit, when, not if, the Euro is exited by the vulnerable EU states. That is the only way IMF intervention can work: when they can control currency and interest rates, as you point out, otherwise they’re simply pushing on string.

  18. John Fitzgerald
    November 7, 2011

    This is the reason the Euro system will never work in its present form. Whereas the USA is a country of diverse races united by a common language (in the main English) and governed by one government and financial system. Europe is a group of diverse races united by almost nothing, apart a loose title namely European! I would say that all the people of the countries in the EU consider themselves as their own nationality first and European second! This great experiment will never work whilst the European state remains this form of conglomeration!

    However I will say in closing that I am not advocating the creation of a European super state! I also believe that will never work either as most if not all the peoples of the countries in Europe would not give up their sovereignty for the great Europe experiment!

    1. Martyn
      November 7, 2011

      “…..as most if not all the peoples of the countries in Europe would not give up their sovereignty for the great Europe experiment!”
      Sadly, I have to disagree because have we and they not already in fact done so? The next step must inevitably be Germany and France imposing their will in whatever way it takes to bring the EZ countries under total financial and economic control, as is already starting to happen, without any regard to what the troublesome peoples may think or feel about that.

    2. stred
      November 7, 2011

      My French friends who live in Roussillon consider themselves Catalan.

  19. Sue
    November 7, 2011

    As feared, the EU and its collaborators have pulled off a coup in Athens. Now what can only be called the occupying powers are preparing to install their own man as the new Greek prime minister.

    You doubt it? Just look at the two names that have ’emerged’ to lead the new government: Lucas Papademos, who was until last year the vice-president of the European Central Bank, and Stavros Dimas, a former European Commissioner.

    Over in Rome, where the EU is manoeuvring to bring down Berlusconi, the name ’emerging’ to be the next prime minister is Mario Monti. Monti is not only a former European Commissioner, but he is also the author of a report commissioned by José Manuel Barroso on the future of the single market –which was a report meant to plan ways the powers of Brussels could be further extended into every part of the member states economic and fiscal lives, including taking control of corporation tax rates.

    More, Monti is a member of the Spinelli set, a euro-fanatic group set up by members of the European Parliament and Brussels heavies such as Jacques Delors to press the construction of a final, centralised government in a country called Europe.

    It all stinks.

    Mary Ellen Synon (Brussels Columnist for the DM).

    We have to get out and quickly!

  20. No Plan B
    November 7, 2011

    Should Greece leave Euroland then there will be a fair bit of ‘ passing the parcel’ as Greek prefixed Euro notes in circulation in the remaining Eurozone countries become worthless. No wonder Eurocrats don’t wish to countenace the inevitable.

    Presumably we’ll have a few runs on the banks in Greece as well.

  21. MajorFrustration
    November 7, 2011

    IMF package for Euroland – its not only down a very large black hole, Im not sure that our government actually have the economic intellect to see the obvious pitfalls. If we do increase our support to the IMF – even tho it is structured as a contingent liabilty lets ask for some collateral. this would make the points that (a)we dont see the IMF Europlan working (b) we dont think our support would/could be ring fenced and (c) we need to protect our tax payers in the event that the contimgemt liablilty is chrystalised. Its time this government started to think for the interests of the people of this country.

  22. Julian
    November 7, 2011

    Whilst not directly relevant to this post I would greatly appreciate an explanation in some future post as to why governments are forced to borrow at different rates. Why is Italy’s cost of borrowing higher than say France. I understand the underlying reason (risk) but how come all lenders to Italy line up the same rate?

    Reply: Because the government effectively auctions its bonds, so buyers establish the common price they are prepared to pay for a new issue.

  23. javelin
    November 7, 2011

    Italy is statring to spin out of control.

    The 450bp gap between the German, Dutch and French basket of AAA rating will trigger a 15% rise in margin calls at the LCH.

    Note : Italy bond prices may rise OR French bond prices may fall to create this gap.

    This ironically means as Greek bonds improve, so will French bonds as their banking sector gets less risky, which means the gap with Italian bonds will increase (which is 415bp at the moment). Italian bonds remain very “domestic” – which means that France will be seen as a relatively safe haven and decoupled from Italy. So as Italy falls France will improve. This creates a negative feed back loop for Italy.

    These increased margins on Italian bonds will make them less credit worthy and will put strain on the Italian banking sector. As I have said for over a year – this is the breaking point and I believe once this feed back loop gets going an Italian bank will put its hand up (out of the blue) and trigger a melt down on the Italian markets – and force a default of Italy.

  24. Denis Cooper
    November 7, 2011

    Under present government policy the British people are in a “lose-lose-lose” position.

    1. If the illegal bail-outs failed and the eurozone broke up in disorder, then the UK would take an economic and financial hit.

    Although according to the CEBR report published today:


    the adverse impact would be much less than pro-euro propagandists claim, and quite short-lived.

    2. If the illegal bail-outs “worked” then that would also have a negative impact on the UK economy, but as a steady drag over the next decade rather than a sharp shock, and without considerable centralisation of authority in the eurozone it would only be a matter of time before there was another eurozone crisis which would once again hit the UK.

    3. But if the illegal bail-outs “worked” and there was also extensive centralisation of authority within the eurozone, federalisation, then the UK would be faced with an inexorably expanding and worryingly undemocratic eurozone federation on its doorstep, would quickly find itself being increasingly outvoted and marginalised within the EU, and moreover increasingly damaged through measures taken by the eurozone federal bloc under Franco-German leadership.

    Then, unless our political class underwent a Damascene conversion and took us out of the EU, which still seems unlikely to happen, we would end up with a government using its Commons majority to bounce us into the euro, and all the federalising measures that Osborne wants imposed on the peoples in the (now) 17 eurozone countries would also apply to us.

    Of these three options the third would be by far the worst, yet it would be the natural consequence of present government policies; the best would be the first, but the government has committed itself, and our money, to doing everything it can to prevent that happening.

    Maybe Cameron will take note of what Sarkozy said:


    “At a Brussels summit last month, the French president, Nicolas Sarkozy, told Mr Cameron that euro-zone leaders were “sick of you criticising us and telling us what to do”.

    For good measure, the Frenchman reminded the euro “outs” that – apart from Britain and Denmark – they were all committed to join the single currency, so it was not in their interest to side with Mr Cameron.

    Several failed to contradict him.

    Some in Britain talk of leading a block of ten “outs”.

    No such block exists.”

    1. Denis Cooper
      November 8, 2011

      Seems to have been overlooked for moderation.

  25. Chris
    November 7, 2011

    Regarding whether it is worth pouring more good money after bad in further bailouts, either direct or indirect, two remarks by a Greek business spokesman (Athens Chamber of Commerce?) this morning on the Today programme are worth noting:
    i) he stated that although all the parties bar one have agreed to the conditions of the Greek bailout none of them has actually seen the conditions set by the EU, except Papandreou and Venizelos, the finance minister – perhaps they are in for an even nastier awakening? (I think it is Samaras who won’t agree until he has seen them).
    ii) the six “southern” countries in the EU (he includes Ireland, as well as Greece, Italy, Spain, France and Portugal) have a staggering 16 trillion euros + debt in total.

    A successful project, the euro? The losers in this will be burdened by debt for years and will lose their sovereignty as the EU are apparently likely to demand that national unity governments step in with suitably approved new leaders appointed – it is even reported in one newspaper that Mario Monti, ex European Commissioner, is the preferred choice of the EU to take over leading a national unity government in Italy. If true, it seems the EU wants Berlusconi to go.

  26. Martin
    November 7, 2011

    We have 7 billion (and rising) people on one planet all wanting a share of that planet’s resources. That has implications for growth. The West needs to get its ideas on resources together quick as China isn’t hanging around.

    Manufacturing – I saw an interview with Mr Trump on CNN the other week. He commented that the entire USA does not make one TV set. He also commented about the undervalued Chinese Yuan.

    The Chinese don’t see this as a problem! (according to reuters)

    Finally the other week Mrs Merkel was in Mongolia sorting out mineral/rare earth rights to help Germany’s manufacturers (hopefully the UK based BMW-mini factory is included). What were our lot doing?

  27. Neil Craig
    November 7, 2011

    Whether the policy works may depend on where you stand.

    A policy which does not allow the Greek economy to grow but does allow the banks and super-rich personal institutions to get most of their money back (which seems to be pretty much the intent) will work, from the point of view of the latter even if if the Greeks and the rest of the European population paying for it, lose out. One of the secrets of politics is that politicians do not always act for the interests they say.

  28. Rebecca Hanson
    November 7, 2011

    You need to effectively run an Arab Spring (and by that I mean the mass discussion through online media) to discuss:

    1. Which rights need to be surrendered to a single greater authority by countries for a single currency to be stable.
    2. What the nature of such a single authority might be.
    3. Which countries would want to be part of a single currency given 1 and 2.

    All three conclusions are, of course, interrelated which explains what any discussions which explored them would be very complex.

    Ask if you want details as to how this should be done.

    Rebecca (@cyberrhetoric)

  29. Norman Dee
    November 7, 2011

    If ever a genuine example of the correct use of the phrase “the thin end of the wedge” was needed this it. The amount of cheese left after each slice is getting smaller and smaller but with all the commitment of a truly stupid mouse they keep nibbling. The mouse will be dead soon, and very quickly after, the body is going to start to rot and smell . If we move quickly enough we might avoid contamination from the rot, but we will have to put up with the smell for a while. However. it’s a smell we know, it comes around everytime a labour government gets voted out of office, so we can manage with it better than most.

  30. NickW
    November 7, 2011

    The EU is effectively a “One Party State”.

    The EU is in the process of selecting suitable leaders for Greece and Italy.

    “Stamping on the face of democracy” is now in progress.

    Isn’t that the very thing that the EU was founded to avoid?

    1. NickW
      November 7, 2011

      Reading the news now, with Christine Lagarde (French Head of the IMF) talking of the “Necessity for States to cede Sovereignty” what we are about to see is a sudden and huge power grab by the EU which will alter history.

      It would be better if the people of Europe were ready for it, and ready to reject it, otherwise, the Monster will be born and there will be non willing to slay it.

      It will consume Europe.

      1. Chris
        November 7, 2011

        Yes, I saw this Lagarde remark and was greatly troubled. What are the 81 group planning to do about this, I wonder?

      2. Martyn
        November 8, 2011

        I read that as meaning “The EU dictatorship now feels itself strong enough to declare war on all EU nations”.

  31. Shaun Richards
    November 7, 2011

    Hi John

    I have been rasing these issues for some time. Here are my thoughts on the IMF from June 8th 2010.

    “This is something of a devastating critique of the situation in Greece when you consider who it came from.. It is hardly reassuring that officials at the IMF feel that there are “doubts” whether she can complete her austerity programme.”

    This was in response to a speech by the Chairman of the IMF’s International Monetary and Financial Committee. So as you can see even the IMF had its own doubts…

    Also I would like to draw attention to a change in the IMFs role.

    “1. It has plainly changed from an organisation which helps with balance of payments problems to one which helps with fiscal deficits. Whilst this may suit politicians, taxpayers and voters should in my view be concerned about the moral hazard of one group of politicians voting to increase funds available to help another group of politicians which may include themselves.”

    And from the same update something which has got more apposite if one considers Danny Alexander’s media interviews over the weekend.

    “Politicians should stop implying that the help provided by the IMF is in effect free. For example US Treasury Secretary Geithner suggested that moves to expand the IMF “wouldn’t cost a dime”. This is one of those superficially true statements that are very dangerous. If you are liable for something it does not cost anything until it goes wrong. Just to quote the IMF itself there are “doubts” over Greece. Any proper accounting system allows for the possibility of things going wrong. After the experience of the last two years we should know the implication of sticking your head in the sand like an ostrich and assuming there are no problems around…”

  32. cosmic
    November 7, 2011

    The IMF was set up to extend loans and impose conditions on sovereign states with balance of payments problems.

    As I understand it, the EU as a whole doesn’t have a balance of payments problem, I suspect the Eurozone doesn’t either.

    This looks like the EU behaving as if it were a state when it suits it and not when it doesn’t suit it and conning money out of the IMF for the equivalent of the US having problems with the finances of one of the states of the union being in a mess.

    It’s a misuse of the IMF.

    The problems you refer to come from the EU being a state and not being a state, from time to time and as is convenient to suit the circumstances.

  33. Martin
    November 7, 2011

    I’m amazed at the numbers of folk who come on here and slag off the EU or the Euro. What about the UK? Where is our growth coming from?

    One company offered to build an extra runway in the South East which would have helped growth. NO said the present government.

    Our country is unattractive to foreign business due to endless queues at immigration at Heathrow. This does not help growth. What happens – the press encourage the government to make the queue longer by running scare stories.

    Added to that we have the sky high air passenger duty tax to keep passengers using Paris and Amsterdam airports.

    Who are we to offer the rest of the world advice when as a a nation we are seem hell bent on destroying our civil aviation industry.

    1. Sean O'Hare
      November 7, 2011

      One company offered to build an extra runway in the South East which would have helped growth. NO said the present government

      Were they going to build it for free or were they proposing that government steal more money from taxpayers?

      Our country is unattractive to foreign business due to endless queues at immigration at Heathrow. This does not help growth

      Given today’s new that UKBA didn’t even bother to check passports that is hilarious.

      Who are we to offer the rest of the world advice when as a a nation we are seem hell bent on destroying our civil aviation industry

      Ah now we know where you’re coming from. Work for an airline do we? The nation is not hell bent on destroying any industry. It is our feckless government that is doing the damage by cow-towing to the Brussels mob, refusing to significantly cut expenditure and slashing taxes.

  34. Bernard Otway
    November 7, 2011

    A post earlier uses the Trojan Horse analogy,I refer all of you to Zapiro’s latest cartoon in the Mail and Guardian [South Africa] he a left leaning previously pro Anc supporter and as a Jew
    very critical of Israel,so not stereotipical BUT very prescient in his observations.Cartoons are very clever in their analogies drawn,look at how cartoonists lampooned our British
    politicians in a very cruel way BUT TRUE in the 1700’s,a very very PRESCIENT cartoon from the last 5 days here is MAC in saturday’s Mail with the subject of Grandparents rights from the recently published report,it is a cartoon that were it about ME would make me feel ashamed of myself as should the Authors of this report,and is INDICATIVE of the state of mind of our ruling class everywhere.

  35. Bernard Otway
    November 7, 2011

    Martin,watch the PRESSURE build to busting point about the mooted airport in the Thames Estuary,it makes absolute sense and will create literally hundreds of thousands of jobs
    which must be British,as for the Duty the pressure on that will be huge, as the law of decreasing returns already applies.I knew people involved in the negotiations to hand back Hong Kong’ one of the conditions was the building of the new airport to replace Kai Tak
    and now you have a major HUB for the far east which Dwarfs it’s predecessor,without it Hong Kong would not be as prosperous or as viable,also the land value of Heathrow must be
    enormous,a mixed New Industry and residential area would be fantastic,it would have fantastic transport links and be on London’s doorstep . Why the Medway councillor quoted as being against is beyond me ,Now is the time to buy property down there if it ever happens.

  36. Martin C
    November 7, 2011

    You have to understand where the “bailout” money actually goes. It goes to Greece of course, but it mostly has to be used to service and roll-over their debt. Very little of it actually goes to the Greeks. And who holds the debt? French merchant banks.
    So this so-called “bailout” money is being used to transfer Greek debt risk away from the French banking system and to the taxpayers who are guaranteeing the “bailout” loans. Us, amongst others.
    No-wonder the French are so keen on more “bailout” loans even though they know perfectly well that the money will not be repaid. Playing for time and praying for more “bailout” loans is a good strategy for those who are currently holding the debt.
    And if the IMF has to “bailout” Italy, well, the sky’s the limit. And we are being put on the hook for it via the IMF.

  37. Bernard Otway
    November 7, 2011

    I just watched an interview on RT [thank god for them,I never thought a Russian TV station
    would be a place of haven for getting truth and not hiding lies that other media here,the BBC
    obviously and now ITN and SKY very disappointingly, do],It was with Brazilian economist
    and Eastern expert,saying that the BRICS will decouple themselves from the Dollar and the Euro and trade between themselves using some kind of balancing mechanism ie a continuous float,he spoke as if the rest of the world ie USA and Europe are about to become superfluous
    which in effect they are,the centre of gravity has shifted,caused by the enormous stupidity of
    the money men in the USA and the politicians in the EU,I even read in an article on Greece
    over the weekend where Greek people were interviewed,that 30,000 have emmigrated to Australia in the last 6 months to ESCAPE,remember there is a vast expatriate greek
    DIASPORA of relatives to Speed up their relatives,rest assured these are the people that any country let alone Greece would not need to lose.This IS what this STUPIDITY is now feeding
    and it will get bigger.The political class MUST STOP all this and [if it can which I very much doubt] get back to promoting and making sure that the peoples of greater Europe get back to basics and do what THEY are best at,ie Greece ,Tourism ,shipping and being a crossroads between Asia and Europe exporting that which is best at ie Unique agricultural
    produce and products,ie Latvia/Lithuania and Estonia the product and by product of Forestry and their peoples intellectual abilities,QUESTION ? where was SKYPE BORN.
    I could go on and on but I am right.As but ONE example WHAT spin offs come out of Formula 1,a purely European because it is really British /Italian invention,ie new circuits
    in Korea ,China ,India,Abu Dhabi,Singapore, and now Austin texas,with others waiting in Russia and elsewhere ,enormous profits out of WHAT car racing that is WHAT.

  38. Chris
    November 7, 2011

    Regarding whether it is worth pouring more good money after bad in further bailouts, either direct or indirect, two remarks by a Greek business spokesman (Athens Chamber of Commerce?) this morning on the Today programme are worth noting:
    i) he stated that although all the parties bar one have agreed to the conditions of the Greek bailout none of them has actually seen the conditions set by the EU, except Papandreou and Venizelos, the finance minister – perhaps they are in for an even nastier awakening? (I think it is Samaras who won’t agree until he has seen them).
    ii) the six “southern” countries in the EU (he includes Ireland, as well as Greece, Italy, Spain, France and Portugal) have a staggering 16 trillion euros + debt in total.

  39. Chris
    November 7, 2011

    Daniel Hannan’s blog is to the point, as always, and highlights exactly where the bail out money is going. He says he actually agrees with the Communists and Greens on their stance, and he urges people to sign the People’s Pledge re EU referendum (not too far off 100,000). Blog plus video clip. (Interesting that the Immigration epetition has taken off, with 100,ooo very close indeed).
    “The EU sunders Greek politicians from their people”

  40. NickW
    November 7, 2011

    I read now that the EU is insisting that all Greece’s opposition parties are to be forced to accept the bail out turns in writing before they get any more money.

    What then, will be the purpose of the Greek Parliament once all the Parties have tied themselves to a single policy decided between Sarkozy and Merkel?

    I hope that at least one opposition party has the courage to refuse.

    1. BobE
      November 7, 2011

      Then there will be a dictatorship run by Merkozy.

  41. Jon Burgess
    November 7, 2011

    You are right to point out that there is no alternative to the ‘more bailout is the answer’ mantra. It seems that there cannot be opposition in Europe to the policies decided for our benefit in France and Germany. Some of us have always known that this axis of power was at the heart of the Eu, but it is now there for all to see and none to deny.

    There are some very worrying developments here, namely:

    France and Germany now seem to be brazen enough to pick and choose who should be in government in foreign lands. During the G20, which other Euro members were consulted on the decision to engineer a government of national unity in Greece? (In other words one that will do what France and Germany want). Imagine the outcry if this was the US, or China or Russia pulling the strings and forcing a change of government in a sovereign nation?

    Looks like it might poor old Belusconi’s turn to be ‘advised’ to leave. I’ve read elswhere that the ECB might be willing to help out Italy if a ‘technocrat’ was in charge. Is that EU speak for Eurocrat?

    We need Churchill but are stuck with the heir to Ethelred the Unready.

  42. Bernard Otway
    November 7, 2011

    Watched a Channel 4 documentary at 8 pm,called Greek for a week it was not in the schedules in the newspapers,but replaced the scheduled programme,I urge you all to watch it,
    It shows in terminology that a child could understand exactly what and why is the Greek problem ,and how it happened.Any politician now denying the USELESSNESS of the Euro
    especially Clegg and his clique should just shut up and recant,and DC and the lot at the top of the Tories should hang their heads for not explaining it like it is in this documentary, it IS
    AMMUNITION to shoot down any argument for the Euro AND the EU.Notwithstanding
    the lecture the Chinese head of their sovereign wealth fund gave about Europe’s welfare state and LAZY INDOLENT people created by this THING. Why do our political class with the exception of you JR and the brave 90 not accept what is OBVIOUS.

  43. Alistair
    November 8, 2011

    Why make so much fuss over Greece. Just refuse to lend them any more. Sooner or later they will realise that they have to start collecting taxes. You can lead a horse to water but you can’t make it drink. The fools that lent money to Greece have had plenty of profits over the years, now its time for those lenders to absorb some losses. Taxpayers are not fairy godmothers.

  44. Chris
    November 8, 2011

    What if they do not work – a good question. It would be very unwise to discount/ignore the will of the people/individual politicians in how this will eventually play out. However much the new EU “politburo” (Groupe de Francfurt) wants to instil discipline and exercise ultimate control, I believe they will find it hard. It is worth looking at two articles on the Athens News website:

    i) the latest news regarding the requirement from the EU for the “outgoing and new Greek prime minister, the finance minister, the opposition leader and the central bank chief …. to produce and sign a letter promising implementation the bailout deal”, and the opposition to this by Samaras, who feels that the bailout terms have already been signed up to and agreed http://www.athensnews.gr/portal/11/50129 “Samaras sees written commitments unnecessary”

    ii) a leaked memo from the New Democracy party to members, which gives a fascinating background to their thinking/approach. http://www.athensnews.gr/portal/8/50141 “Internal ND paper reveals coalition stance”.

    I think that the whole issue of the bailout and the Greeks accepting more austerity measures is up in the air, and certainly not as clear cut as Merkel et al would like.Perhaps that is why they are now insisting on this latest written commitment.

  45. Chris
    November 8, 2011

    The “demise of Papandreou” in three parts, on Der Spiegel, gives further background into the complex situation in Greece and the interrelationships. I suspect the eurocrats may have misjudged the situation in Greece and the “personality” of the electorate. Euro Crisis Heralds the End of an Era in Greece

    Part 1: Euro Crisis Heralds the End of an Era in Greece
    Part 2: A Country Bled Dry
    Part 3: The End of a Prince

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