The full Monti is just more European government

Don’t expect the euphoria over a new Italian government to last long. There is no need to share it. The markets  enjoyed a relief rally on news of a new government forming in Italy. The European establishment is behind Mr Monti, so we should expect the ECB and the spin machine to try to engineer some better results in the bond markets this week to get him off to a good start.

The tasks ahead for him are not easy. He first faces the challenge of putting together a coalition of support within the Italian Parliament when he has never stood for election or been an active party member. He needs the support of Mr Berlusconi’s party. This grouping wants an early election, and is so far only prepared to back the new Prime Minister to implement the measures which Mr Berlusconi rushed through last week. They are likely to quibble about any new measures. The Northern League do not wish to back him, leaving him dependent on the forces of the left, with their strong links to the Trade Unions. They will be suspicious of public sector cuts. Over the weeks ahead we will learn that the first rush of enthusiaism for a PM above politics and for a government of national unity may not miraculously bury all old differences, rivalries and legitimate political ambitions of the parties and people who did get elected.

He next faces the even greater challenge of the poorly performing Italian economy. Italy is in the icy grip of Euro deflation. Italy’s cost base is far too high to compete successfully with Germany within the zone. Money supply is falling, unemployment is high, and living standards have been static for a decade. There is nothing Mr Monti can do to the money supply and exchange rate given Euro membership. Efforts to make Italy more competitive require cutting internal prices and wages, against the combined opposition of business and Trade Union lobbies. The need to make the public sector smaller and more efficient will be resisted by deeply embedded public sector defenders.

Mario is clearly an intelligent man. He has made a good career out of his diplomatic skills as a pro EU official. His time as Competition Commissioner meant he was one of the senior people in the EU responsible for economic policy. To some that makes him a talented administrator who can take on another difficult job. To others it associates him with the failure of the European economic model to generate jobs and prosperity on a sufficient scale. Individual critics complain that his famous case against Microsoft did little to help the EU economy. The team he belonged to heaped regulation on regulation, as they sought to extend the EU’s finger into every pie.

He did recently author a report into developing the Single Market in the EU. This Report provides good analysis of the different political forces within the EU that had led to “integration fatigue” and “market fatigue”. Mr Monti proposed a large programme of further integration, offering to the Anglos Saxons more market opening and competition measures, to the continental social democrats more tax “co-ordination” and common welfare, and to the newer nations more emphasis on investment and European networks. He sought more workers rights and a more competetive market, more public procurement and social service provision. He decided the EU needed a stronger single market to back the single currency. He recognised the big advance made by the Lisbon treaty in favour of more integration, seeing in it full recognition of the need for a”highly competitive social market economy”. He wished to use the powers of the Lisbon Treaty to complete a European level government over most things that matter.

That is Mr Mario’s problem. He is well versed in how to extend EU power and influence through a mixture of right and left facing measures. His Report did not, however, set out how the EU could start to compete more successfully with China, Brazil, India or the USA. Mario may find it is not easy being super when it comes to turning round an ailing economy locked into the Euro at the wrong exchange rate. Markets may enjoy a supporting wind from the EU for a bit for his efforts, but the full Monti is likely to be just more European government rather than a bracing fix for Italy’s problems.

People are rightly alarmed at the easy way two European democracies have been pushed over by EU officialdom. The ever tightening grip of the Euro has given the EU the power of the purse over them. He who has the money has the management in this governing situation. Whether Mr Monti can win support within and outside the Italian Parliament for long enough to have an impact remains to be seen. Going by the policies he and his fellow Commissioners followed for the whole of the EU, he does not have a plan for prosperity and growth which is going to work.

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  1. lifelogic
    Posted November 15, 2011 at 7:14 am | Permalink

    As you say Mr Monti, does not have a plan which will work. He needs to reduce pay particularly in the state sector substantially (without substantial devaluation) and he will not politically be able to achieve that.

    He has spent much of his time heaping more and more regulations on the EU in the interest of central control and big business over small. He is rather unlikely to do anything enable them to compete in a real world economy outside the EU that is happily growing well.

    Cast rubber Cameron seems to believe he is a Euro skeptic in his vaguely worded speech yesterday. Not one I can remotely recognise from his actions – and his words as we have seen repeatedly are worthless.

    • lifelogic
      Posted November 15, 2011 at 7:29 am | Permalink

      Robert Halpin conservative MP for Harlow has interestingly extended the concept of fuel poverty (more than 10% of income on fuel) to include fuel for the car so people can get to work and children to school. After all it is all fuel whether it heats the house or drives and heats the car to work.

      As I have said before If your low paid job is some distance from your home you are quite likely to work for one full day a week – just to earn enough to get you to and from work for the rest of the week. (not to mention the road tax, mot, parking cost/fines and other running costs.)

      In effect 100% taxation in income tax, NI and fuel duty and VAT on the fuel for that first day each week.

      Do they want people to work or not?

      • John Maynard
        Posted November 15, 2011 at 12:08 pm | Permalink


        “Fuel poverty” is a ridiculous left term, invented to disguise the plight of elderly, isolated people who do not have the wherewithall to claim the supplementary benefits which they are entitled to under law, mainly as a result of failures of the bloated welfare industry.

        To extend this flawed concept to the driving classes is grotesque.

        What next, a special tax dispensation for the 4 litre SUV, fashion victims, to save them from paupery too ?

        • lifelogic
          Posted November 15, 2011 at 12:58 pm | Permalink

          I agree fuel poverty is a fairly daft/lefty concept, nevertheless people do need to be able to keep reasonably warm and do need to be able to afford to get to and from work – perhaps over long distances.

          Travel to work is not tax allowable and if you want people to work you need to make sure they are better of financially doing so. Often they are clearly not and high fuel taxes decrease these incentives.

        • lojolondon
          Posted November 15, 2011 at 3:29 pm | Permalink

          People need fuel to get to work, in fact it is far cheaper to take the car than it is to take the train in almost every case, so the poorest people will probably spend more on fuel and less on public transport.
          Including ‘fuel’ as part of the calculations of ‘fuel poverty’ is not just common sense, it highlights the rising cost of fuel (tax) that is foisted on the British public at every turn.

        • Bazman
          Posted November 15, 2011 at 9:09 pm | Permalink

          Bloated oil industry more like. Not just taxes.
          Oil barons have raked in a fortune from rocketing petrol prices which have hit the poorest hardest. The government often gets it in the neck for taxes being creamed of at the pump, but data from the office for national statistics show the proportion has dropped from 80p in the pound on 2001/2 to 66p in 2009/1o/. That’s because while fuel duty has risen by 26% since 2001, forecourt prices have risen by 52%oil companies have 14 billion have been recently announced by three of the industries heavyweights. Shells profits doubled BP 4.3 bn Exxon Mobil made 6.5 bn and BP’s profits trebled to 3.2bn in the same three month period.
          The big losers were motorists with ONS figures showing the poorest 20% of households paid 3.5% of their income on petrol/diesel in 2009/10 compared with1.8% for the richest fifth of the population.
          Once again a regressive, absurd apologist stance on business and tax. They cannot even afford to get to their proposed below minimum wage jobs in the case of benefits being withdrawn. Should they walk to London like Dick Whittington in rags whilst you drive past in your Jag or in a train paid for by your employer who depends on government contracts or plunder of the public’s household budget?

    • lifelogic
      Posted November 15, 2011 at 8:12 am | Permalink

      Any chance of an English or English&American spell checker on your site so that realise, tyre, colour and similar are not always underlined in red? I find it rather distracting.

      • Sean O'Hare
        Posted November 15, 2011 at 4:25 pm | Permalink

        I think you will find that is more to do with your browser than John’s website.

        • lifelogic
          Posted November 15, 2011 at 5:53 pm | Permalink

          Thanks I have fixed it to UK English spelling on my chrome browser – that should help my blood pressure a bit.

    • Disaffected
      Posted November 15, 2011 at 10:27 am | Permalink

      Lifelogic, your views are sound. Cameron only three weeks ago blocked the public from having a referendum vote, sometime in the future, to decide if we wished to be in/out of the EU or to renegotiate our terms. Cameron is utterly clueless, he must go. Merkel made it clear yesterday that there will be closer economic and political union in the EU. The GdF has decided I am afraid. Cameron will not change this or negotiate anything. Th EU will try to capture our main source of income, the City, and we will be forced to do whatever they want. Possibly with Clegg installed by the EU as a”temporary” leader to help us adjust. The UK must leave the EU there is no other choice.

      • lifelogic
        Posted November 15, 2011 at 1:01 pm | Permalink

        Yes I cannot see that Cameron is re-electable given his, say one think do another approach so far.

        How would anyone take his word on anything at the next election.

        • lifelogic
          Posted November 15, 2011 at 1:42 pm | Permalink

          Reported today:-

          “Cameron blames ‘pointless’ EU rules for killing growth”
          so why does he keep signing up this this nonsense. His no retirement, gender neutral insurance, temp. worker directives and countless other endless gold plated lead weights drowning industry. Have a referendum and take some action.

          Just “do” something positive for a change and forget about equality succession and silly photo ops.

          • Disaffected
            Posted November 15, 2011 at 7:01 pm | Permalink

            Why does he not stop paying some of the billions. It was only two weeks ago he withdrew the UK legal challenge for the millions of Euro spent on the Strasburg building used three months of the year because it would upset the French!! All one line quips to grab the headlines, then a lot of back track. A bit like the robust announcement about military spending to be a covenant, then he quietly withdrew the pledge. Quite frankly I think he is starting to make Gordon Brown look good!

        • Tim
          Posted November 16, 2011 at 2:22 pm | Permalink

          They won’t. I’ve voted Conservative all my life but not again whilst this man is their leader. He is a dishonest left leaning showman with no morals or leadership skills. Gay marriage, gender changes to succession, promises of “all we can do” on the EU europhile don’t wash. He’s hiding behind politically correct ideas and is not delivering on anything that matters to Tory voters.

      • nicol sinclair
        Posted November 15, 2011 at 1:53 pm | Permalink

        ‘Clegg’ is a Scots word for a viciously biting sand fly drawing BLOOD. Need I say more?

    • lifelogic
      Posted November 15, 2011 at 10:45 am | Permalink

      It seems the BBC have had to drop the climate change edition of the otherwise excellent Frozen Planet in order to sell it to the US. Now I assume that no one sensible (or in the US) believes BBC/EU propaganda and exaggerations on the AGW issue any more.

      They will still be inflicting it on UK viewers and licence fee payers I assume. It will doubtless be all emotion/religion and very little science as is usual for “climate science”.

      • Winston Smith
        Posted November 15, 2011 at 12:51 pm | Permalink

        This is revealing:

        Another example of this Govt and a Conservative Minister saying one thing, spinning it to the gullible press and then doing the opposite. I can only think that the political elite and the BBC are in it together

        • david hencke
          Posted November 15, 2011 at 5:55 pm | Permalink

          winston smith is right about Jeremy Hunt’s deal with the BBC. What is extraordinary as the author of this blog on the BBC and an ex national newspaper journalist is that having pointed out this story to the Daily Telegraph, Guardian, Broadcast and even the Huffington Post, nobody wanted to know – because they had already written tales saying the NAO had won proper access to the BBC and didn’t want to retract them.

        • lifelogic
          Posted November 15, 2011 at 8:08 pm | Permalink

          Indeed they clearly are and with Lord Patten it will be rather unlikely to change.

      • Martin
        Posted November 15, 2011 at 2:12 pm | Permalink

        Re climate change please see

        The study referred to was funded etc. by people who might be described as right wing.

      • Winston Smith
        Posted November 15, 2011 at 4:18 pm | Permalink
      • lifelogic
        Posted November 15, 2011 at 5:08 pm | Permalink

        What is amazing is that no one now seems prepared to defend the global warming exaggerations other than in silly “proven science” or base appeals to emotion terms. Even David Attenborough seems to have stepped back from the absurd exaggerations.

        No one seems to go beyond the obvious that is has heated up a little bit over the last 100 years (0.7C) and clearly mankind is one of very many factors that affect it. A bit hotter is probably better on balance anyway.

        It is rather like the EURO and the EU in that respect no one left to defend in logical terms and yet it still goes on.

        Mind you as the temperature has not moved for the last 12+ years, despite c02 concentrations increasing, perhaps they are rather wise to start stepping back. Just a shame about all the billions Huhne and similar have wasted so far spoiling the British countryside.

      • Sebastian fairweathe
        Posted November 15, 2011 at 8:04 pm | Permalink

        Re Global warming Lifelogic
        Well Sir, lets see your credentials Mr (MRs??) Life Logic: list the publications you have read in properly reviewed journals; no doubt you have read the IPCC reports and have an answer to each and every point; and can point to your own qualifications and publications to trash those who have, and also those thoughtful people like Attenborough who have remained on the side-lines for so long on this issue.

        • lifelogic
          Posted November 16, 2011 at 8:06 am | Permalink

          I studied maths, physics, and engineering at two top UK universities since you ask. It is perfectly clear that this is a political and religious debate rather than one of science. Read the IPCC reports as a very good example of the political spin on the science.

          No one with any understanding complex chaotic systems, feedbacks, probability, physics and maths could take the exaggerations and projections seriously even before the lack of heating since 1998.

          Anyway slightly hotter is probably rather better on balance as all the evidence seems to indicate.

          There in only so many biblical scare stories, about the hot getting hotter, the dry dryer and the wet wetter that one can take without laughing. There are plenty, far better than me, sensible scientist on the right side of the argument. See Delingpole’s blog for countless links to sanity.

          • Bazman
            Posted November 16, 2011 at 7:54 pm | Permalink

            No wonder you admire him.
            When Delingpole was presented with a hypothetical question. If a dear relative was suffering from a fatal disease, would he opt for the “consensus” treatment recommended by doctors, or advice to drink more orange juice offered by a fringe maverick quack?
            In terms of the science of climate change, that fringe maverick is analogous, of course, to Delingpole’s own position.
            He was a bit stuck rumour has it. As you are on many such of your absurd right wing beliefs lifelogic.

          • lifelogic
            Posted November 17, 2011 at 8:49 pm | Permalink

            The AGW exaggeration is clearly a classic religion, basic appeals to simple childish emotions and polar bears and little real science for the absurdly exaggerated claims.

            Be good today for jam tomorrow or hell will descend.

            Most sensible scientists know it is a huge, scare mungering exaggeration, tax justification and money making scheme.

      • Bazman
        Posted November 15, 2011 at 9:21 pm | Permalink

        Most of your views on the economy and society are based on emotion and a religious belief in the power of the markets and companies to solve all economic and social problems, so what is the problem of the BBC not selling episodes of a series that a TV company does not want to buy? All episodes will be available on the DVD release.

        • lifelogic
          Posted November 16, 2011 at 8:09 am | Permalink

          The problem is they use taxes to do it and have a silly agenda. They take money off people then to use it to then indoctrinate them with political nonsense.

          • Bazman
            Posted November 16, 2011 at 7:59 pm | Permalink

            As in mainstream ideas and theories often shared by many TV channels and internet sources.
            Just because fruitcakes believe something does not make it true. When anti BBC commentators are asked to climb out from under their stones for a debate they often refuse. Right wing nutters no less.

    • lifelogic
      Posted November 15, 2011 at 6:04 pm | Permalink

      Watching Mandelson on Newsnight last night was very funny indeed. Whenever he was asked about his past (in recommending EURO entry) he went on about Paxman relishing and rejoicing in the problems of the EURO!

      He has missed his calling. He would be much better cast as an evil, slimy James Bond villain.

      Rather than just the same thing in reality.

      It would be quite easy to programme a computer to do such interviews. Any difficult questions just say “When the economic conditions are/were right” or “you should not rejoice at the difficulties of the EURO” or “50% of our trade” or “no seat and the decision making table”.

      The BBC should be in the dock too though over the Euro/EU/and the AGW exaggeration.

  2. Mick Anderson
    Posted November 15, 2011 at 7:15 am | Permalink

    I’m coming to the conclusion that it is really April 1st. I keep hearing a man on the radio news who sounds just like Mr Cameron, but asserting that he is a Euro-sceptic.

    As for the Markets rising on the imposition of a new administrator in Italy, that was to be expected. They rise on any change on the basis that “it can’t be any worse”, before realising that very shortly, it will be. The conditions surrounding southern Europe have not changed substantially, so neither will the path that they are on.

    Another SW1 mouthpiece is complaining about the high cost of fuel and demanding that the oil companies lower prices. This ignores the minor detail that road fuel in much of the UK is the cheapest in Europe if you strip out the taxes – it’s the Government that makes fuel expensive. I’m not surprised to hear that there is a three-line Whip, just in case a rebellious MP has any thought of sympathising with the proles. More power to your elbow, JR.

    • lifelogic
      Posted November 15, 2011 at 8:55 am | Permalink

      Indeed the markets, this morning, already seem to have ended his brief honeymoon period with a touch or reality.

    • Bazman
      Posted November 15, 2011 at 9:47 pm | Permalink

      Just wait until travel is so expensive the ‘proles’ cannot afford to travel to work in their their six quid an hour jobs and tradesman are adding fuel costs directly to your bills.
      How will London’s rich get their cheap labour when they are being told to ram it because of the travel costs? Then what will you propose? Walking? Special buses at the taxpayers expense?
      Where do the massive oil company profits come from Mick when the oil companies are selling petrol so cheap? They make billions from the motorist. You cannot just blame the government.

  3. Mike Stallard
    Posted November 15, 2011 at 7:25 am | Permalink

    How do you do it? What a clear and thorough outline of Super Mario! Thank you. I often wonder where you get all the facts from. I wish you would tell the BBC……

    I would really like to know the answer to this question, though: Parliaments are meant to be the centre of a democracy. I suspect, however, that the real power (as you hint yourself above) lies in the well established links between the Brussels bureaucrats and the bureaucrats of each different nation. Directives, regulations and decisions seem to flow effortlessly down into Wisbech, Cambs, without touching the sides.

    I wondered if any of your readers had any experience of British Civil Servants working closely with Brussels?

    Reply: Thanks for the kind words. The BBC and most media rely on Spin doctors comments and casual remarks by people they talk to. I read the deeds and words of these people for myself, and try to form a view of what they have done and what they believe. Mr Monti has recently authored an important report,which tells you much about his approach to government. As you say there is now a powerful official network throughout the EU, with much decided or constructed in official working groups. The politicians often fail to rewrite or direct these activities.

    • StevenL
      Posted November 16, 2011 at 1:36 am | Permalink

      A civil servant took me to an EU working group in 2008. I’ve only seen the one, but in this instance it seemed to be some of the other member states (rather than the Commission) that were insisting on some very precautionary rules that the industry didn’t want.

      The level of scientific expertise (what was on the table were updated consumer protection rules in the remit of hazardous, potentially hazardous and possibly hazardous but probably not hazardous chemicals) at the table really varied from member state to member state.

      In this instance the Commission didn’t get it’s way, the people who wanted very precautionary rules on chemicals did. It wasn’t subversive or corrupt or anything, the whole process just seemed a bit bonkers. Some of the member states insisting on stringent regulations also have a reputation in the affected industry for not actually doing much about enforcing them.

      The civil servant that kindly took me along and explained how it all worked had a theory. It was that ‘chemicals’ has taken over from the Soviets as the enemy some European politicians were trying to save their grateful voters from basically.

      The funniest thing was that the rooms were designed for when there were 12 members, so they were 15 translation booths short. The translators managed around that (even though officially there was a rota for which countries could speak but not be translated) and were easily the most impressive part of the whole process bar the smoking room and decent shots of coffee at 20c a cup (believe me you needed it to stay awake with some of them).

  4. Antisthenes
    Posted November 15, 2011 at 7:25 am | Permalink

    His report sounds like a dogs breakfast much like the EU a receipt for disaster full of conflicting measures. Either you are a social democrat or a free marketeer you cannot be both not unless social democracy hangs on to the coat tails of free markets. Social democracy without the wealth and means of wealth creation to underpin it as we all now know much to our cost is the road to ruinous social and economic structures. Free markets leads to prosperity and social content it has it’s failings and there are winners and losers but once wealth creation is constant and assured that problem can better be addressed.

  5. Peter van Leeuwen
    Posted November 15, 2011 at 7:26 am | Permalink

    Allow me to rephrase:
    People are rightly alarmed at the easy way two European democracies have been pushed over by the financial markets. The ever tightening grip of the financial markets over the EU should be the concern of any real democrat.

    • Brian Tomkinson
      Posted November 15, 2011 at 8:29 am | Permalink

      You typify the “head in the clouds” attitude of EU and Euro fanatics. Your super heroes can do no wrong. You would have us believe that Merkel and Sarkozy didn’t fire the elected leaders of Greece and Italy and insist on appointing their unelected placemen, it was the horrid financial markets. Three points for you to ponder:
      1. Why didn’t your heroes stop these actions instead of enforcing them?
      2. Is it democratic for such actions to be taken by the leaders of a foreign political organisation against a so-called sovereign state?
      3. Isn’t it the ever tightening grip of the EU over its member countries that should be of concern to any real democrat?

      • Peter van Leeuwen
        Posted November 15, 2011 at 12:45 pm | Permalink

        @Brian Tomkinson: I switched off at the word euro fanatic. Try different language next time Brian.

        • lifelogic
          Posted November 15, 2011 at 5:13 pm | Permalink

          Clearly you seem switched off all logic and reason anyway. Do you really believe what you write?

          • Peter van Leeuwen
            Posted November 15, 2011 at 11:23 pm | Permalink

            @lifelogic: Why such a cheap comment?
            This must be an emotional issue for eurosceptics.
            Reuters too switched off all logic and reason?

          • lifelogic
            Posted November 16, 2011 at 8:15 am | Permalink

            Is a ship sunk by a mine or by the water rushing in through the hole caused by the mine?

            The Euro structure was always the mine the markets are just the inevitable water rushing in.

        • Brian Tomkinson
          Posted November 15, 2011 at 9:54 pm | Permalink

          Pity you can’t think of a better excuse for being unable to answer my questions.

      • Tad Davison
        Posted November 15, 2011 at 2:27 pm | Permalink

        Brian, you beat me to it!

        tad davison


      • uanime5
        Posted November 15, 2011 at 11:19 pm | Permalink

        Given that Greece and Italy still have Parliaments that have to approve everything the new heads of state propose and these new heads of state will have to win the next election if they want to remain in power it’s hardly a loss of democracy.

        Given that Mario Monti was appointed a Lifetime Senator by the Italian president who asked him to form a new government and Lucas Papademos was approved by the major political parties in the Greek Parliament this is a clear example of the Greeks and Italians choosing their own leaders, not the EU force leaders upon them.

    • Liz
      Posted November 15, 2011 at 8:44 am | Permalink

      No- if they had not been in the EU/Eurozone the usual market solutions would have applied. They would still have had their democracy and their currency -even though devalued. Germany has profited and still profits by being in the Eurozone and knew full well that some of the Southern Med countries’ economies did not qualify for memberhip, preferring to let them join the Euro anyway. She will not now take responsibility for the ensuing results.

      • Peter van Leeuwen
        Posted November 15, 2011 at 12:47 pm | Permalink

        @Liz: I don’t necessarily disagree with you. I only point out the role of the markets in this.

    • Steve Cox
      Posted November 15, 2011 at 8:52 am | Permalink

      Do you really believe that the ECB had nothing to do with the spike in Italian bond yields that led to Berlusconi’s downfall? It has been purchasing vast amounts of Italian government debt recently, and all it had to do was to put the brakes on its purchases to get rid of a politician who was perceived as a thorn in the side of the Eurozone.

      It’s also not difficult to see why David Cameron is frothing at the mouth about Europe in front of British cameras, but quietly bending over backwards in reality to accommodate the EU. With dedicated Europhile Clegg vacillating each day about the Coalition, it’s easy to construct a scenario in which Mr. Cameron could be replaced by, say, Peter Mandelson, if Clegg was given the order by his masters in Brussels.

      • A different Simon
        Posted November 15, 2011 at 11:44 am | Permalink

        “quietly bending over backwards in reality to accommodate the EU”

        I’m finding it hard not to visualise it .

        “it’s easy to construct a scenario in which Mr. Cameron could be replaced by, say, Peter Mandelson, if Clegg was given the order by his masters in Brussels.”

        Peter Mandelson has been prime minister before . You can see why Cameron is anxious to behave himself .

        • Steve Cox
          Posted November 15, 2011 at 1:48 pm | Permalink

          “Peter Mandelson has been prime minister before . You can see why Cameron is anxious to behave himself .”

          Now that’s both funny and, sadly, true! 🙂

      • Tad Davison
        Posted November 15, 2011 at 2:34 pm | Permalink

        Mandelson was absolutely minced by Jeremy Paxman on Newsnight last night! Sometimes the BBC do get it right.

        Mandelson has shown a huge error of judgement, and Paxman held him too account. Mandelson isn’t fit to run a knocking-shop, so I guess he’ll be first choice for the European Union.

        Tad Davison


    • Luke Jones
      Posted November 15, 2011 at 9:04 am | Permalink

      Sorry Peter but thats nonsense. Its disingenuous, distracting and deeply unhelpful to heap this mess at the feet of the markets when the real culprit is the creeping miasma of EU bureaucracy and the failed European socialist experiment which is smothering Europe with its disasterous debt mountain. The Eu Experiment will put Europe at a disadvantage to the East for generations to come and still we persist with this catastrophic folly and brinkmanship.

      • Peter van Leeuwen
        Posted November 15, 2011 at 12:51 pm | Permalink

        @Luke Jones: Whatever your opinion about the EU and its failing, it’s still the markets that acted as executioners.

        • Mark
          Posted November 15, 2011 at 10:11 pm | Permalink

          Or in other words “you can’t buck the market”. Perhaps EU politicians would have been wisisto listen to the warning from our celebrated PM.

          • Mark
            Posted November 15, 2011 at 10:13 pm | Permalink

            that should read “wise to”

    • Amanda
      Posted November 15, 2011 at 9:07 am | Permalink

      There is none so blind, as those who ‘will not see’ Peter !!! You think people should lend money just because EU autocrats say it is OK? Rather, than thinking through the basic tenets of economics, human behaviour and risk? The EU daily shows it has delusions of being able to ‘walk on water’ – do you remember the parable of the apostles and Jesus on just the same subject???

      I have faith in human nature here Mr Redwood, especially Italian human nature. I found a fascinating article on the internet last night about the new EU Governor for Italy’s political task. If he get’s through that barrier, that alone would be amazing – I have every confidence we will not do it !!

    • Mick Anderson
      Posted November 15, 2011 at 9:09 am | Permalink

      I’m not sure that I agree with the rephrasing.

      If the various Governments didn’t spend so much money, they wouldn’t be so dependant on borrowing from the markets. Any issues with the markets are a symptom of the problems, not the cause.

      Equally, if a Government is in trouble, it should be dissolved and stand for re-election. Simply replacing the leader with a Man from Brussels means that the countries in question are no longer democratically lead, thus should no longer be called democracies.

      • Peter van Leeuwen
        Posted November 15, 2011 at 12:25 pm | Permalink

        WHen Margaret Thatcher@Mick Anderson: It is quite simple: The debt situation in Italy has been relatively the same for many years. Only when the markets recently decided to turn on Italy, without a particular Italian development to point the blame at, did the situation become untenable.
        If markets were to turn massively against another country, even Germany or Britain, governments might not survive.
        New governments aren’t always the result of elections. There are several examples in the Netherlands, but also in the UK you may look at John Major taking over from Margaret Thatcher, or Douglas Home replacing Macmillan. In all cases the democratic mandate is derived from support in parliament, without which a government wouldn’t survive for a day. Do realise that the intervention in Italy happened by a directly elected head of state. I don’t think that the appointment of Douglas Home was made by a democratically elected head of state. The fact that he then was hurriedly pushed through a by-election in a safe Tory seat hasn’t got anything to do with countrywide elections.

        • Mick Anderson
          Posted November 15, 2011 at 5:23 pm | Permalink

          Only when the markets recently decided to turn on Italy, without a particular Italian development to point the blame at

          Consider the possibility that the markets were using the situation in Greece as a guide to what was likely to happen in Italy and reacted to that. There was no chance of a 50% Greek “haircut” until it actually happened, forced through by the EU, and the markets have simply priced that into the subsequent business.

          If markets were to turn massively against another country, even Germany or Britain, governments might not survive

          True, but why would they turn against Germany? The German tax payer is expected to pay much of the debt being run up in the EU, so there are lots of other countries which would have to fall first. As for UK borrowing failing, it’s currently unlikely, but is why so many of us want Mr Osborne to take more effective action and cut UK expenditure.

          New governments aren’t always the result of elections

          You forgot to mention the more recent coronation of Mr Brown, a staggeringly unpopular PM. It’s a valid point, but just because something similar (to Italy and Greece) happened in the UK still doesn’t make it either right or democratic. There should have been General Elections on all these occasions. If the new incumbents in Greece and Italy want legitimacy, they need the support of the electorate.

          • Peter van Leeuwen
            Posted November 16, 2011 at 10:51 am | Permalink

            @Mick Anderson: Mick, I largely agree with you. I just don’t buy it that EU countries or institutions had such a large role in the downfall of e.g. Berlusconi as the eurosceptic’s conspiracy narrative would make us believe.
            I also tend to get a little irritated when, of all people, British start lecturing about democracy: Of course a government needs the support of the electorate, but do you realise that for decades British government only had the support of between 30 and 45% of the electorate? From a continental perspective that really doesn’t look very good.

        • Tad Davison
          Posted November 15, 2011 at 10:04 pm | Permalink

          Sir Alec DH, was kicked out shortly afterwards, as were two others you omitted to mention – Callaghan, and Brown. The lesson there, is the British people prefer to have democratic control of their political representatives. Little wonder we’re so against the EU, in that iniquitous place, we can’t even remove most of the decision-makers via the ballot box!

          The EU is prescriptive in its authority, and that is akin to totalitarianism. Pro-EU lefties say they’re against fascism, but I can’t see much of a difference between that, and the grand European model.

          Tad Davison


          • Peter van Leeuwen
            Posted November 16, 2011 at 8:13 am | Permalink

            @Tad Davison: Your rational makes the Italians more democratic than the British (their history shows many more elections and sent home governments). Majorities in the European parliament have brougth down commisioners and national representatives in the European Council are brought down regularly. Much of what you call prescriptive authority is in fact refereeing on pre-agreed rules and treaties. Simply change the rules together. The only thing not possible to ordain that the British constitute the majority in every EU decision. That wouldn’t be very democratic, would it?

        • uanime5
          Posted November 15, 2011 at 11:25 pm | Permalink

          Don’t forget the US President Gerald Ford who wasn’t elected as President or Vice President.

    • NickW
      Posted November 15, 2011 at 9:12 am | Permalink

      I take it from what you say that you, yourself would willingly invest all your savings in the Bonds of Greece and Italy, and that furthermore, you would see no objection whatever to the EU compelling you to invest all your money in these markets?

      The “Market” is not an abstract monster; it is people like you and me, who need to look after their families and protect their savings, in order to educate their children and look after themselves when they are no longer able to work.

      By the way, it was my understanding that Merkel had Berlusconi removed from office because he made an unflattering comment about her derriere.
      This must at some level have been a contributory factor to the decision making process.

      The markets had nothing to do with either the removal of the Greek or Italian leaders or the choice of successors. Italian Bond prices were manipulated not by the markets, but by the ECB deliberately and suddenly curtailing its purchase of Italian Bonds. You will note that Italian yields went back as soon as the ECB resumed its “normal” operations regarding Italian debt.

      • Peter van Leeuwen
        Posted November 15, 2011 at 12:32 pm | Permalink

        @NickW: Apart from in conspiracy theories, Mrs Merkel or her derierre have no lever on the bond yields. Those are determined by what you call “people like you and me”, i.e. the market.

      • NickW
        Posted November 15, 2011 at 3:32 pm | Permalink

        It was, by the way, a very foolish thing to do.

        The genie refuses to go back in the bottle, and yields are once more above 7%, despite ECB intervention.

    • oldtimer
      Posted November 15, 2011 at 9:21 am | Permalink

      That grip exists because the democracies in question have over-borrowed. Sovereign states are no more immune from the consequences of squanderbug policies than businesses or individuals. Why should lenders, many of whom represent the interests of savers and pensioners, continue to lend when they told they must volunteer 50% haircuts on past lending to countries like Greece?

      • Peter van Leeuwen
        Posted November 15, 2011 at 1:47 pm | Permalink

        @oldtimer: That may be the case, but global financial markets have grown so much that they have much more power than individual countries. That should still be a concern to any democrat.

    • Kevin Ronald Lohse
      Posted November 15, 2011 at 9:57 am | Permalink

      Dear Peter. Recent events have highlighted the lack of a democratic ethos within the EU. 2 elected PM’s have been toppled, not by the markets but by the panicing autocracy of the EU who have themselves no clear plan for dealing with the mountain of public and private debt created by their own policies of monetary union without full political union first. To elevate politicians ingenuous excuses for catastrophic economic failure into dogma is unintelligent.

      • Peter van Leeuwen
        Posted November 15, 2011 at 12:40 pm | Permalink

        @Kevin Ronald Lohse: That is a bit like a chicken and egg story. There may still be a lack of direction in the eurozone, but that in turn made the markets panic, which made the Italians parties panic, and caused Berlusconi to lose his majority in parliament.

    • libertarian
      Posted November 15, 2011 at 10:44 am | Permalink

      Total nonsense from you as normal Peter, the EU is now a totalitarian state that is attempting to suppress free GLOBAL markets.

      The hint here is that no matter who the EU APPOINTS to run countries the markets ( that is the people of the world who’s pensions, savings and businesses are at stake) don’t like the tax, spend , borrow, waste, borrow spend model.

      Have you seen Belgian spreads this morning? Who are the EU going to kick out there as they dont have a government?

    • The Realist
      Posted November 15, 2011 at 11:16 am | Permalink

      No Peter, it is the markets that are shining the light on the huge irrationality and illogical nature of the present policies or lack of them of the autocratic EU project. Markets , if free, behave in the end rationally, despite the human emotions of fear and greed.

      • Peter van Leeuwen
        Posted November 15, 2011 at 12:56 pm | Permalink

        @The Realist: Few peole still believe that markets will behave rationally.

    • figurewizard
      Posted November 15, 2011 at 11:35 am | Permalink

      If a nations’ political leadership spends more than its income; making up the difference by using other people’s money, it is the job of the market which has taken responsibility for that money to make that nation pay in order to cover the risk. If the risk becomes too great, the cost will rise to a point where the borrower must start to work towards solvency. That is not undemocratic it’s commonsense.

    • lifelogic
      Posted November 15, 2011 at 1:12 pm | Permalink

      Peter – how can you really think that?

    • lojolondon
      Posted November 15, 2011 at 4:22 pm | Permalink

      Yes, Peter, we know you are not at all concerned about democratically elected leaders being replaced by EU-apparatchiks, that is business as usual in EUSSR.

      What concerns you is that ‘the markets’ are unfriendly to socialism.

      Please not that being ‘against the markets’ is like being ‘against the force of gravity’ or the sun. It is also very 1960’s.

  6. Simon 123
    Posted November 15, 2011 at 7:39 am | Permalink

    I have just returned from Italy and was shocked by the high prices and the lack of customers in the numerous designer shops. I think it will take more than a dream coalition of the left, sponsored by Brussels and led by an academic and ex-member of the Brussels elite, a to sort out the mess.

    The Italians will also have a problem if they hold elections. You never know with the public – it cannot be relied on to vote in a way that delivers the result which the Brussels elite wants.

    • uanime5
      Posted November 15, 2011 at 11:30 pm | Permalink

      The Coalition is still right wing. Berlusconi’s party didn’t suddenly become left wing just because he left Parliament.

  7. barnacle bill
    Posted November 15, 2011 at 7:49 am | Permalink

    People should be even more alarmed at the increasing number of EU fifth columnists we seem to have in Westminster.
    One of whom I believe was spouting off after dinner in the City last night!

    • Mike Stallard
      Posted November 15, 2011 at 4:19 pm | Permalink

      From what I can gather, the entire parliament, left and right, is totally in favour of staying within the framework of the EU. OK, one or two mavericks, like our host, have seen the light. But they are in a tiny (and virtuous!) minority.

    • Alan Wheatley
      Posted November 15, 2011 at 5:58 pm | Permalink

      I wonder how many of the major donors to the Conservative Party could be described as “EU fifth columnists”.

  8. Alan Radford
    Posted November 15, 2011 at 7:51 am | Permalink

    Compete with China, India and Brazil? Don’t be silly. Le Grand Projet, L’es Etats Unis EU will compete within itself whilst the elite become Grand Emperors of a new European Dynasty. They do not need to concern themselves with petty issues like being price competitive. Haven’t you seen how they live!?

  9. Richard
    Posted November 15, 2011 at 7:55 am | Permalink

    Peter, the “markets” only have any power over Governments because these spendthrift Governments want to borrow more and more money off them to keep themselves popular.
    If they were depositing money with the markets the relationship would be very different.

    The recent change in leader of these two nations is a PR trick, is not going to make any real difference to the way they will carry on.
    Looking at their financial statistics I am amazed any financial institition still wants to lend them anything.

  10. lojolondon
    Posted November 15, 2011 at 8:04 am | Permalink

    John, the Italian economy is history, we can lend them money, but that is like lending an addict £1,000 to see him through the next week of his addiction. The result is that a week later he owes £1000 more than he did, and he is certainly worse off in every way.

    However, your last paragraph is the most important. Democratically elected Presidents and Prime Ministers are being replaced with long-term EU apparatchiks, steeped in the system over many years, who will rather see their country go to hell in a handbasket than break the European bond. This ‘parachuting in’ of people is the real problem here, that tells us we no longer live in a democracy.

    One can see that if the UK has a crisis we will end up with Andrew Duff or Edward McMillan-Scott as our PM, as the parliament is forcefully shown who would be acceptable to Merkel and Sarkozy, and the explanation is that the person is ‘well connected’ in the EU and ‘able to achieve things’.

    Ironically, if we really want to achieve things in Europe, the best lever would be a referendum, so Cameron could go to the EU with a real motivation to negotiate, but that will never happen.

    • uanime5
      Posted November 15, 2011 at 11:33 pm | Permalink

      Given that Mario Monti was appointed a Lifetime Senator by the Italian president who asked him to form a new government and Lucas Papademos was approved by the major political parties in the Greek Parliament this is a clear example of the Greeks and Italians choosing their own leaders, not the EU force leaders upon them.

  11. Pete the Bike
    Posted November 15, 2011 at 8:13 am | Permalink

    Of course he won’t be able to sort the Italian economy. The elites have only two policies, regulation and money printing. They have caused the problems and continue to make them worse. Painful as it will be the best outcome for democracy and freedom is for the Euro and the whole EU to collapse as soon as possible taking with it the paper based currencies that make this big government system possible.
    After the chcollapse we just might stand a chance of having a free market that would improve peoples lives. Also possible is chaos leading to riots, war and disaster. Either way the politicians and bureaucrats have put us on a course to find out one way or the other.

    • Disaffected
      Posted November 15, 2011 at 11:11 am | Permalink

      No the EU will not collapse, Germany has the financial might to step in at any time it chooses to stop market activity. The market activity can also be manipulated to help achieve the aims of the GdF. Without the current market activity could two democratically elected governments have been overthrown by the GdF? This is a very good plan to create a pan European state without the public becoming involved.

  12. Gary
    Posted November 15, 2011 at 8:15 am | Permalink

    ECB Cut Debt Purchases To A Trickle As Operation “Kick Silvio Out” Proceeded

    We all have a central bank.

  13. javelin
    Posted November 15, 2011 at 8:50 am | Permalink


    That of course requires renegotiation of our membership with the EU at every level on every aspect. You cannot have fiscal union with all the liablities and controls involved and give the EZ states any control over the UK.

    For example what if a fiscal situation arises that requires changed the CAP argicultural payments, or any other financial or fiscal aspect of the EU. Given the CAP forms the VAST majority of the EU spending then how will this be effected by fiscal integration? It is an absolutely financial necessity to renegotiate the payments we make and the CAP policy with the UK. This involves all aspects of the CAP, farming and fishing – because this is the bulk of the EU fiscal spending.

    The UK would be pulled from pillar to post by the EU thrashing around in its death throws. The EZ cannot argue it has not seen desperate times and taken desperate measures. Supposing the Human Rights Act needs modify to collect EZ taxes, supposing fishing grounds need to be plundered to raise taxes? What about border controls if the EZ collapses. We need to be able to stop the EZ decanting to the UK. There are no ends to the measures taken by the desperate.

    As you know Im not a Euro sceptic. I’ve never been one on this site to criticise the EU without very good reason. I think they make excellent trading partners and they have brought 50 years of peace. I now think it is an absolute necessity that we need to have a very serious discussion over the EU contract. It needs a complete overhaul and probably completely removing so we have a veto over more or less everything. I don’t take the approach of a little bit here or there – the whole thing needs to be stepped back from and the EU needs to be treated as a trading partner rather than a house share.

    • The Realist
      Posted November 15, 2011 at 12:44 pm | Permalink

      NATO brought 50 years of peace dear boy!

    • Martyn
      Posted November 15, 2011 at 4:20 pm | Permalink

      Excellent trading partners they may be, but it was NATO, largely held together money-wise by the USA that has maintained peace in central Europe since WWII. It is strange how this is so often forgotten as the EU claims the fame for keeping the peace….

    • Mike Stallard
      Posted November 15, 2011 at 4:26 pm | Permalink

      I can see where you are coming from.
      The whole problem is this: why is France in the EU? Because it depends on the CAP to keep its many agricultural (wine, cheese, gastronomie) products in business when they are clearly out of date. If not, there will be another revolution. and, of course, France is on the brink too.
      Why is Germany in the EU? With the Euro, German exports and banking are secure and edging towards pushing London out of the top slot. Greece, Italy, Spain are reduced to being places where the Germans can enjoy their wealth. They are never going to be economic rivals.
      And you want to negotiate that?
      Have you ever tried negotiating the Trinity at the Vatican?

    • Denis Cooper
      Posted November 15, 2011 at 8:42 pm | Permalink

      “ALLOW”, eh?

      What, by some kind of EU treaty change starting with words such as:

      “The Member States whose currency is the euro may …” ?

      Article 1 here:

  14. English Pensioner
    Posted November 15, 2011 at 9:03 am | Permalink

    I’m sure that the previous prime ministers in both Italy and Greece knew what needed to be done to get their countries on their feet, which is to actually collect the tax revenue that should be paid by their citizens. If everyone had paid their correct taxes, the problems in these countries would have been no more than in most other EU countries.
    Instead you have two countries where it would be difficult to find anyone who didn’t fiddle their tax, where officials have no reason to disturb the status quo, and in Italy considerable corruption compounded by Mafia influence.
    Putting a technocrat financier in charge doesn’t alter this situation one bit, all attempts to balance the books will thwarted by the fact that the actual taxation income is a fraction of what it should be. How they solve that problem, when the MPs will vote against anything that interferes with their own interests, is a mystery! By their standards our MPs involved in the expenses fiddles, even those who went to prison, are models of rectitude compared with large numbers of senior public officials and MPs in Italy!

  15. John Page
    Posted November 15, 2011 at 9:06 am | Permalink

    The Greek and Italian technocrats have to get their measures past fractious domestic politicians. But that’s worthless if they don’t stick. How can one man make unpopular measures effective in a chronically misgoverned country within the few months before another election?

    We debated yesterday how important implementation is, compared to policy making.

    What chance, then, do Monti & Papademos have of making their policies stick?


    Meanwhile, Matt offers some light relief.

  16. Brian Tomkinson
    Posted November 15, 2011 at 9:13 am | Permalink

    The EU launched the euro as part of its relentless drive towards its dream (nightmare!) of a United States of Europe. As usual they were too keen to force the pace of development of their “project” and instead of beginning with a smaller grouping of countries with similar economies they wanted to make it as large as possible. They have since insisted that any new members of the EU will be “required” to adopt the euro in due course. This Euro fanaticism (is fascism a better term?) has driven not just its own eurozone economy into crisis but threatens the rest of the world’s economies. Instead of recognising the failure of their ill-conceived project EU officialdom demands more of it. Not surprising perhaps as they seem to think that the only problem they have is too little power over the members of their wretched union. They have shown repeatedly their contempt for democracy by the way they ignore referenda by demanding repeats until the “correct” result is obtained. This has since moved to the removal of elected political leaders and governments all to serve their own anti-democratic plan. We will still be told that our future lies in the EU not least by those who wanted us to join the ill-fated eurozone – they were wrong then and they are still wrong.

  17. javelin
    Posted November 15, 2011 at 9:23 am | Permalink

    As I have been saying for the past 18 months the Italian banks are the weak point in the system. (Alleges financial weakness in a bank raising rights issue money where leading players did not want to buy)

  18. lola
    Posted November 15, 2011 at 9:47 am | Permalink

    Monti is just another smug entitlement junkie. Clever enough to max his own career by smoothly working with the EU zeitgeist and oiling his way up the ranks of EU fellow travellers, much as in the same way that the USSR Communist Party gained new leaders.

    He also talks nonsense, litterally. Consider this:- “highly competitive social market economy That is pure Newspeak. It’s also tautological. All ‘markets’ are by definition ‘social’. Society and markets are synonymous. What he is not saying , but what he means is a ‘social-IST market economy’. This is not at all tautological; it is simply impossible. It is New Liebours failed ‘third way’; that is financing socialism with capitalism. That again is an absolute impossibility since as there is no method of economising under socialism, all it can do is to undermine ‘capitalism’. Even then he and the other ‘social[IST] democratic’ nutters can’t leave ‘capitalism’ alone but seek to proto-nationalise it by interventionist, tick box regulation by capricious bureaucrats. In the process they turn it into cronyism.

    Since these are his roots he will fail in Itlay. But his failure will be endured and paid for by the Italian people. They will see their economy wrecked and their living standards decimated. None of which will affect Snr Monti as he drifts smoothly through life on a featherbed of entitlements leached from those whose lives he will wreck. And when the people realise this they won’t be able to see him off democratically, since he was never voted in. And as they cannot get him out democratically the chance of civil disorder in Itlay has now risen thanks to his appointment as a the EU’s placeman puppet.

    It’s an absolute disgrace and don’t say I didn’t warn you.

  19. javelin
    Posted November 15, 2011 at 10:24 am | Permalink

    As Spain sinks looks like another ex-ECB technocrat (aka Viceroy Jose Manuel Gonzalez-Paramo) is being lined up by the EU to run Spain.

  20. sm
    Posted November 15, 2011 at 10:31 am | Permalink

    It is a concern.

    Democracies have been pushed over by financial markets?

    Perhaps the possibility of a democratic election triggered- fear- a fear the taxpayer bailouts may end? The ‘technocrats’ then seize power the fear then dissipates for a while – why is that?

    Perhaps democracies have been pushed over by a unhealthy combination of financial , political and EU bureaucratic fiat?

    • A different Simon
      Posted November 15, 2011 at 11:57 am | Permalink

      Remember when the Irish were told that it was an inconvenient time to hold a general election ?

      I wonder whether Brussels have compiled the results of our 2015 General Election yet ?

      Should be interesting to see what happens when elections come round .

    • Disaffected
      Posted November 15, 2011 at 3:07 pm | Permalink

      No the markets were manipulated by the EU and ECB to get their way. Germany and the ECB could have stepped in by now if they had wished. At the moment they have two countries and want a few more ie Spain, Portugal and Ireland. These will be easy pickings for the new pan European state. All the while germany financially benefits from the mess it created. a good plan, you have to give them that. The others were not an even match for the game. When is Cameron going to wake up and understand the game?

  21. Disaffected
    Posted November 15, 2011 at 11:05 am | Permalink

    Mrs Merkel made it clear yesterday that there will be closer economic and political union in the EU. Cameron was put in his place last week when the German official dismissed any claims that Cameron could repatriate powers from the EU. The GdF have decided the fate of Europe and it will allow the markets to help them achieve their goal of taking over countries to make a pan European state. If Germany wanted to stem the market activity it could have done so already. It is better for the GdF to install their people in wayward economies because they could not rely on the incumbents in Greece or Italy to do so.

    Cameron’s inactivity at the moment will only serve to box the UK into a corner by the markets as the GdF take over the UK’s main source of income, the City. The UK will then be forced to submit any sceptic talk and forced to comply with Germany’s wishes and the terms it allows the UK to be part of the pan European state.

    John, has made the point on this blog many times before that the WTO will allow the UK to trade with whomever it wishes. The language of fear by Cameron, that it is in the national interest to stay in the EU because it is a large trading partner, shows the flaw in his sceptic credentials. The UK will continue to trade with EU countries whether it is in or out of the EU. Is Germany going to stop selling its cars to the UK- I think not. However, Germany ought to stop selling submarines to Greece that it cannot afford to buy nor are needed to defend the country. The economic lunacy being the UK will give billions of pounds to Greece via the IMF so it can continue to buy submarines from Germany that will help to boost Germany’s economy.

    We have witnessed the takeover of two democratically elected governments because they might not comply with the wishes of a, mainly unelected, GdF group whose political ideology is to form a pan European state. Where was the protest from the UK? What about democracy that we hear so much about from politicians? Or is this the new political order where we have witnessed in our own country political leaders denying the public the right to determine how we wish to be governed or live our lives?

    Cameron is arrogant, pompous, showed complete contempt for the public and his own backbenchers. He has already tried to dictate what candidates should be elected as MPs to the Tory party, he narrowly shied away from changing the 1922 Committee, for now, but clearly thinks he “knows best” above the public opinion. Again, his stance is flawed when the question is posed: What has he achieved since he has been in office? Grandstanding, enjoying the kudos of his position to flatter himself, strong one line quips to grab headlines, but he has not achieved anything or changed the fortunes of the country. He has filled his cabinet with liberal wet Conservatives and let the Lib Dems have a disproportionate say on policy. His weakness in government is reflected with his weakness in and over Europe. A year and a half of lost opportunity.

    • The Realist
      Posted November 15, 2011 at 12:48 pm | Permalink

      Totally agree! Well said sir!

  22. Lindsay McDougall
    Posted November 15, 2011 at 11:07 am | Permalink

    Italy may be a bridge too far for the Euro. Germany declared itself unwilling and unable to weaken the Euro in order to bail out Greece ‘the easy way’. How, then, will it come to pass that Germany bails out Italy, with an economy roughly ten times as great as Greece’s?

    And if Italy defaults, it will be one more nail in the coffin of the doctrine that sovereign debt is safe debt.

    • Mike Stallard
      Posted November 15, 2011 at 4:29 pm | Permalink

      Wait for Spain and France!

  23. Steve S
    Posted November 15, 2011 at 11:11 am | Permalink

    Looks like the ECB purchases have failed to prevent yields exceeding 7% again. Perhaps Silvio wasn’t the problem after all. Is that the sound of alarm bells ringing again?

    • Gary
      Posted November 15, 2011 at 1:08 pm | Permalink

      Precisely. What bureaucrats of all stripes cannot seem to see, is that the market, the interaction of millions of people making billions of transactions per day, will kill all the attempts to rig the market. Sooner or later.

      The problem here is not a currency union. The United States is a currency union of states that were once mostly independent. The rich states subsidize the poor. States and cities have been going bust for years, NYC, in the 1970’s was at death’s door, as an example. The sky did not fall, they reorganised , reformed and got back on their feet. You don’t even need a fiscal union. The Bretton Woods gold standard was a global currency union. The world had stellar growth during this period 1948-1970. There was no global fiscal authority.

      Under a currency union you have two choices if you cannot honor your debtors. If there is a fiat central bank , the bank must supply liquidity(print) if required when members refuse to default and reorganise. Under a gold standard monetary union, the members have no choice , they MUST get their economic house in order and reorganise. You cannot print gold. The advantage of a hard gold standard(not a notional gold standard where you just print paper in any case), is that you can never have too-big-to-fail credit bubbles(unsustainable boom) in the first place.

      The problem we have is the systemic rigging of the markets globally using debt based fiat. Inside and outside the EU. The EU has just become the canary that sang first, because its structure precipitated failure first. Instead of just printing like all the other failed states OUTSIDE the EU are doing and mask their problems for later, they prevaricated and demanded austerity. That is fine, but they were not willing to see it through. If you demand austerity then you MUST have an accompaying bankruptcy reorganisation and creditors MUST take a hit. The EU demanded the first but refuse to touch the second. All sorts of crises erupted.

      This does not mean that everyone else has things under control. They don’t. NOBODY, at least in the so-called west, has their economic house under control, they are all in deep unsustainable debt, and they all seek to print their way out. ie they seek a hyperinflation default, rather than an austerity default. The hyperinflation default masks the problem for a while, but is the more insidious and ultimately more destructive. Those usually end in complete collapse further down the road..

      So, lets gloat and get angry at the EU, they have made a mess, but don’t pop the champagne just yet. Mr Market is still stalking us all, and there is nothing we can do about it , except carry on rigging and make the ultimate reckoning even worse..IMO

  24. Martin
    Posted November 15, 2011 at 1:01 pm | Permalink

    If a government spends too much it gets told to spend less by its creditors – this now called undemocratic.

    If the local council spends or taxes too much or provides too little service (in the opinion of somebody in Whitehall) it gets hammered – is this also undemocratic?

    • uanime5
      Posted November 15, 2011 at 11:41 pm | Permalink

      Next thing you know people on this blog will be complaining that democratically elected councillors are being forced to resign because they’ve mismanaged their budget.

  25. norman
    Posted November 15, 2011 at 1:17 pm | Permalink

    I get the feeling the move from farce into tragedy can’t be too far away now.

    Whilst I’ve enjoyed watching politicians repeatedly making fools of themselves so far I think the next phase won’t be as pleasing.

    Let’s hope common sense at some point will prevail and the lunacy of the ‘preserve the Euro in its current state at all costs’ bunker mentality recedes before any serious rifts develop.

  26. Phil A. Grey
    Posted November 15, 2011 at 1:20 pm | Permalink

    Hello Redders. A very well reasoned article as usual, but I don’t suppose you could have resisted using the phrases ‘super Mario’ and the ‘full Monti’ ? I expect such puns to appear in front page headlines of the Sun and not in a serious article written by one of the few MPs I actually have a lot of respect for. Please desist.

    • Mark
      Posted November 15, 2011 at 10:49 pm | Permalink

      I’m waiting for the spin from Monty Panesar. I think he bowls a good Chinaman and a few googlies.

  27. pete
    Posted November 15, 2011 at 2:02 pm | Permalink

    He sounds like a brighter and more competent version of Gordon Brown to me. Tentacles in every pie, more regulation and burecraucy…….

    He is clearly a very bright individual but is in effect part of the problem because of the institution he has come from.

    Maybe seeing the issues caused by Europe in stifling the EU will make him wake up and see what a disadvantage the whole of Europe is being put at compared with the flying economies and put this to the European elite who he no doubt has strong ties with.

    Give him 6 months and they’ll bring back bunga bunga

  28. Tad Davison
    Posted November 15, 2011 at 3:16 pm | Permalink

    I get so frustrated with the arrogance of the political classes who have delivered this mess, who look upon the rest of us as mere plebs, to be scorned and dismissed with their ‘we know best, you stay in your place’ attitude. These pages in themselves show how well-informed people are (but sadly, not exclusively). I really can’t understand what the Europhiles find so difficult to comprehend when to the rest of us, it’s glaringly obvious.

    When Cameron announced yesterday that he was a Euro-sceptic, I almost fell of my chair laughing! I immediately e-mailed one of my old friends, a former rebel against the Maastricht treaty, and he found it just as incredible.

    Obama once said, ‘You can put lipstick on a pig, but it’s still a pig.’ Euro-sceptics are measured by what they say and do, not what they claim to be. Cameron is the new Mr Balls it seems! I deplore the duplicity that tries to cash-in on public opinion, by trying to con the electorate, that they stand for one thing, but quietly espouse a different position entirely.

    If Cameron was anything other than a Europhile, he would be using this opportunity to, at the very least, re-negotiate Britain’s terms of membership – as a first step – but we have seen nothing at all, just more vacuous words, ineptitude and cowardice.

    Surely, Cameron can look elsewhere within the EU, to Greece and to Italy, and see the creeping tide of endemic, bureaucratic socialism and that concomitant lack of democratic accountability. Churchill must be turning in his grave to witness such a wimpish, gutless leader standing on the sidelines, letting this move towards totalitarianism go unchallenged. The evidence is there. It is glaringly obvious. We TRUE Euro-sceptics have been warning of it for years!

    We have also been warning that civil unrest would ensue, as a result of the cuts and draconian measures now in place, to rein-in public spending, after the orgy of profligacy for the past thirty years. This moment sees but the lighting of the fuse, and maybe Merkel knows it. If some of the EU countries now descend into chaos and violence, I wonder who might sort it out, an EU army maybe?

    Strangely, Berlusconi could be a useful ally.

    Tad Davison


  29. javelin
    Posted November 15, 2011 at 4:44 pm | Permalink

    It’s war without bullets.

  30. Ian
    Posted November 15, 2011 at 6:09 pm | Permalink

    Now the Italians will have a dose of what Kommissar Monti, a true stooge of Berlin, gave us when he was in charge of “competitiveness” in Brussels. Remember the Major government’s “brownfield reclamation grants”. They were needed to made the redevelopment of toxic, derelict industrial sites economically feasible. And they worked! So Monti – who has never had a problem with Germany doing the same for the former Ostdeutschland – banned them. He said they were giving British industry an unfair advantage, if you please. So let us sit back and watch der Kommissar make a mess of his own country now. Wonder if the’ve still got a piano-wire industry – they sure had one in 1945…..

  31. Gary
    Posted November 15, 2011 at 7:38 pm | Permalink

    Further to my last post that you censored by omission, it was probably on the basis that it is too inconvenient, or disagreeable, to label the USA a currency union, and the gold standard , in that case Bretton Woods, also as a currency union.

    The USA is self evident. Bretton Woods a little more obscure, but if the main features of a currency union are :

    1. Nations under a currency union (Bretton Woods) have no control over the value or amount of their local currency , Bretton Woods was determined by a fixed exchange wrt ,

    2. the common UNDERLYING currency among nations in the union ie gold.

    Then Bretton Woods operated as an effective currency union.

  32. BobE
    Posted November 15, 2011 at 9:02 pm | Permalink

    “It’s war without bullets.”

    The third European War. Leading to a Fourth Reich.

  33. Anne Palmer
    Posted November 15, 2011 at 9:37 pm | Permalink

    As we watch the EU going one by one through the once sovereign Countries in the EU, slowly replacing Heads of Government by ‘their own ‘place’ Man’ or woman as the case may be re the IMF, perhaps we should also look further a field.

    Remember 16 Mediterranean partner countries from North Africa, the Middle East and the Balkans and “The Arab Spring” in various Newspapers. The Arab Spring, “SPRING”, (“Support for Partnership, Reform, and Inclusive Growth.”) And how the same thing seems to be on people’s minds there replacing certain Leaders?
    Why are we letting it happen eh? Are they still calling themselves Sovereign Countries? Which is the next Head of State that is going to be replaced eh? We fought two world wars, one of which I remember vividly-TO PREVENT THIS FROM HAPPENING. So why is it being allowed? Exactly WHY?

    Why are other Governments in the European Union not preventing this from happening. Is it a NEW KIND OF DEMOCRACY? Should we get used to it in time for it to happen here in the UK. Who pays these helicoptered in Politicians the EU or the Country?

  34. uanime5
    Posted November 15, 2011 at 11:47 pm | Permalink

    “His Report did not, however, set out how the EU could start to compete more successfully with China, Brazil, India or the USA.”

    To compete with China, Brazil, or India we’d need to adopt their living standards, low pay, and lack of care for their workforce. Alternatively we can convince they to adopt our higher standards of care so outsourcing isn’t so profitable.

    To compete with the USA we’d need to increase the prison population to 6 million and pay them £2 per hour to perform all the UK’s manufacturing. This may lead to a drop in non-slave labour manufacturing due to the low cost of prison labour.

  • 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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