Euroland is not working

Yesterday Italian unemployment figures came in at 8.6%. That is bad news for many Italians, but by Euro area standards it was a good performance.An astonishing 23% of the Spanish workforce is unemployed, including 45% of young people. 18% of the Greeks of working age, 14% of the Irish and 13% of the Portuguese rely on out of work benefits for their living. Even in France almost 10% of the workforce is without a job.

The Euro area chiefs do not seem to worry unduly about this waste. They seem unconcerned that their currency scheme is one of the main reasons why unemployment is so high in these countries. The Euro has delivered a series of uncompetitive economies in the south. It delivered a credit and property bubble in Ireland and Spain which is proving painful now it has burst. It has created a very weak banking system throughout the Euro area. The currency requires countries in trouble to follow mutually assured deflation as their prime policy.

Yesterday was another bad day for the Euro in other ways. Uni Credit bank shares fell another 14% on the back of their deeply discounted issue of new shares to buttress their capital position. In sympathy Euro area bank shares generally fell by around 5% on average in just one day, after a prolonged period of weakness. Investors worried about the volume of new bank shares the other banks will need to issue, and assume they will be able to buy those at well below current prices, as UniCredit shareholders have now discovered.

Hungary, a candidate to become a member of the Euro saw her bond rates forced up to almost 10% and is now seeking help from the IMF. Italian state 10 year borrowing rates went above the magic 7% again, whilst Spanish 10 year rates also rose to 5.63%.

The ECB’s giant injection of more cash has not injected the confidence in the system that all hoped. Mr Monti, the new technician PM of Italy, has had to travel to Brussels for more talks. Sarkozy and Merkel will be back together attempting another package to save the Euro, probably next week. The truth is the Euro system has unleashed a banking crisis on the back of a sovereign debt crisis. They failed to keep banks’ capital up to sensible levels in the better days, and are now behind the curve in the bad days. Meanwhile the overborrowed governments are struggling to raise the collosal sums they need to keep going.

If they were at all worried about the unacceptably high unemployment, they would be plannning and early and orderly exit from the currency of the weakest economies. They would also be sorting out the banks in need of state support, deciding which bits to back and keep and which to put into orderly administration. Spain announced this week another 50 billion Euro hole in its banks and related property market.

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  1. john w
    Posted January 6, 2012 at 7:07 am | Permalink

    John,i wonder how much proof the lib dems require before they change their tune on the EU.Clegg was at it again yesterday with the 3million jobs at stake routine.I compare the EU to a 15 year old washing machine.It makes lots of noise,it is going to break and is beyond economic repair.

    • Disaffected
      Posted January 6, 2012 at 10:14 am | Permalink

      It has been announced today that social housing rent is capped at £400 per week. That is £1600 per month, £19200 a year. How many workers could afford rent or mortgage this???? Then these people are then given free elderly care and live in the same care homes as their neighbours who worked all their lives and had to sell their homes to live in the same care home as their idle neighbour. The EU economics is not working nor is the Coalition’s.
      The Lib Dems are an absolute joke on the taxpayer. On top of this they insisted on giving welfare lifers a 5.2% pay rise!! Socialist Lib Dems create a system where it does NOT pay to work. No wonder there are 370,000 households where no one since the age of 16yrs has never worked. And no wonder why Johnny Foreigner wants to live here and also get free health care for all their family, living in the UK or not, and free education.

      Cameron said the economy is his priority this year, is not about time he realised that all his failed policies promoted by stupid LibDems act contrary to his goal? And the government still has the cheek to say we are all in it together or that they are doing all they can. If this is the best they can do after two years they need to step down.

      Wipe socialist LibDems off the map we simply cannot afford them

      • lifelogic
        Posted January 6, 2012 at 2:48 pm | Permalink

        Indeed one would need to earn about £50,000, as a minimum gross, to afford to pay 400PW in rent with council tax, BBC tax, income tax, national insurance, travel to work, lunches and heat/light and feed your family not to mention child care. Why bother if the state pays you not to?

        • Bob
          Posted January 6, 2012 at 6:59 pm | Permalink

          So the system is designed to punish effort and reward idleness.
          Will this result in:
          a) A viable productive economy?
          b) Economic collapse?

          • lifelogic
            Posted January 7, 2012 at 8:19 am | Permalink

            Clearly the latter most of these people would never be able to obtain work or salaries that would make them better off by working. The state is telling them do not to bother to work – using other, often poorer taxpayers, money to do it.

        • Bazman
          Posted January 6, 2012 at 7:18 pm | Permalink

          Why bother working if you have five children a difficult question that has been ongoing for decades. Your answers lie fundamentally in lowering the standards of living of the recipient to balance this and force then to work by threatening their children. What makes you think they would work even with this. The Income is just that. Income. They do not differentiate between money for themselves and their children. Beer money in some cases yes. What landlord deserves 20k a year in rent from the state? Not rebuilding the council houses turned out to be a fatal error. Maybe they should not get any help with housing or income just tax cuts? Do say this if this is what you think.

          • alan jutson
            Posted January 7, 2012 at 9:01 am | Permalink


            “Not rebuilding the Council houses turned out to be a fatal error”.

            Selling them off in the first place was also an error.

            As I understand it, having sold them off, Councils were not allowed to reinvest the money in housing, also an error.

            Whatever happened to fair rents control ?

            I am for private enterprise and the market finding its own levels, but when those markets rely upon the taxpayer funding a false market rate (which in my opinion Housing Benefit in it present form does) it is time for a major re-think.

            Reply: Not so. Selling a Council house to its long term tenant does not damage housing supply – the home is still lived in by the same people after the transaction.Under the old Conservative rules the proceeds from the sale had first to be applied to repaying the debt incurred in building the property, and the balance left over could be spent on building new. It is a pity subsequently we weren’t equally concerned with public sector debt.

          • alan jutson
            Posted January 7, 2012 at 2:15 pm | Permalink

            Reply to Reply

            Sorry John do not agree.

            Once a council, house was sold, it was one council house less availble to be rented.

            Those who had been in Council Houses for a long time could have purchased houses on the open market if they wished to be owners, there were plenty available, then the developer having sold his “houses for sale stock”, could build more with the full income.

            Council house sales at huge discounts, in my opinion were only offered for one reason, to try and encourage people to vote conservative, thus it was for political purposes.

            Labour have been just as guilty with their Public sector non jobs, and increased range of benefits and tax credits.

            Many who purchased their council houses did so with funds/deposits from their children, who saw an opportunity to purchase a property at a below market rate, to inherit it through death, and thus make a large profit without any capital gains tax liability.

      • uanime5
        Posted January 6, 2012 at 4:11 pm | Permalink

        People need this much assistance from the Government because they can’t afford to work low paid jobs in high cost areas. The Government needs to raise minimum wage to a living wage so that those who work can afford to live near their work without needing the support of the tax payer.

        • Bob
          Posted January 6, 2012 at 10:18 pm | Permalink

          If people can’t afford to take low paid jobs in high cost areas the employers should pay more, rather than depending on the tax payer to make up the salary/rent deficit ?

        • Richard
          Posted January 6, 2012 at 10:57 pm | Permalink

          Why not campaign to raise the minimum wage to say £1000 per week and then we could all live happily ever after

          • Bob
            Posted January 8, 2012 at 12:55 pm | Permalink

            I’m not talking about minimum wage I’m talking about a market rate.

            If a company wants to do business in an increasingly high cost area such as London, then they should either pay their staff sufficiently to work in that location, or move. They should not expect their staff to be subsidised through the welfare system. It’s called “the free market”.

      • A.Sedgwick
        Posted January 6, 2012 at 4:40 pm | Permalink

        From DC’s early days as LOTO I saw him as a closet Libdem, full of unworkable ideas, climate change, green taxes, match Brown’s spending, let’s have longwinded reviews to hide the policy void. Then there was the cast iron clanger when he was told revoking Lisbon was tantamount to EU exit, a quick bit of PR and political semantics, which cost the Conservatives an outright majority, then allowing Clegg into the TV debates and then the coalition. I rest my case.

    • lifelogic
      Posted January 6, 2012 at 5:44 pm | Permalink

      I think I would rather have the 15 year old washing machine anyday – at least it would not force you to do stupid things, use expensive green energy, tax you or pass undemocratic laws to handicap you.

      Also being an old washing machine it would use more water than a “new regulations” one. So it would probably do a better washing job, last longer and be easier to repair.

      • Bob
        Posted January 6, 2012 at 10:20 pm | Permalink

        My washer/dryer is twenty years old and on it’s third pump.
        Believe it or not.

      • Bazman
        Posted January 6, 2012 at 11:09 pm | Permalink

        A 15 year old washing machine? Oh really! What brand? How many repairs in 15 years? Original cost? Facts. Energy and costs? Lets find out. I have one called an ISE10. cost a grand after a 300 quid run of the mill grandfathers axe. Interesting!

  2. Robert K
    Posted January 6, 2012 at 7:13 am | Permalink

    If the weak euro countries were to exit it would hardly solve their problems. Their government debt would remain, but would be re-priced to astronomically high levels as their currencies devalued, causing another downward spiral. The solution is for Germany and France to acknowledge that the euro has failed and for them to start the break up – Germany should exit first, then France – to allow their currencies to revalue relative to a devalued euro. Trouble is, this won’t happen, because the euro elite refuses to accept that it has created an economic doomsday machine.

    • uanime5
      Posted January 6, 2012 at 4:19 pm | Permalink

      If Germany and France leave then you’ll have the same problem with the Euro massively devaluing, causing the remaining countries’ debt to be re-priced at astronomically high levels. You need the stronger economies to support the weaker ones or the weaker ones will collapse.

      • Bob
        Posted January 6, 2012 at 10:24 pm | Permalink

        “You need the stronger economies to support the weaker ones or the weaker ones will collapse.”

        The stronger ones will become weaker, and then what?

  3. Sue
    Posted January 6, 2012 at 7:20 am | Permalink

    Apparently, the answer to all their woes is the Tobin Tax. Mr Cameron will do another of his famous “U-turns” and comply, thus ensuring that the United Kingdom will be completely finished.

    Reply: I trust not. Many Conservative MPs are strongly opposed to such a tax.

    • John Wilkinson
      Posted January 6, 2012 at 9:08 am | Permalink

      “many conservatives are strongly opposed to such a tax”
      But surely if the rules have been agreed by QMV and will be effective later this year what can anyone, let alone conservatives, do about it? Will DC advise parliament and propose we ignore those directives?
      John, the only way is to stop paying our £’s to the E.U. and thus force our exit.

      Reply: Parliament needs to approve a new tax, and there will be MPs like me who vote against.

      • alan jutson
        Posted January 6, 2012 at 11:12 am | Permalink

        Reply to Reply

        John, let us hope that many more join you !

        I think we are getting close to the tipping point now, where vast numbers of people are at last begining to wake up to the excessive funding of all things EU, that is an absolute disaster.

        • Disaffected
          Posted January 6, 2012 at 6:18 pm | Permalink

          MEPs approved £150 million to improve buildings in Brussels and Strasbourg. Weak Cameron stopped his challenge to the spending because it might have upset the French. Why should the UK care what they think, it has gone beyond that point.

        • APL
          Posted January 7, 2012 at 10:46 am | Permalink

          “John, let us hope that many more join you !”

          Eustace and his cohort of Tory Eurosceptics are very quiet.

      • Morvan
        Posted January 6, 2012 at 7:25 pm | Permalink


        There are 650 MPs and the chances of you getting over 325 of them to join you are nil. Call-me-dave will capitulate as usual and you will find yourself out-voted by about 500 to 100.

        The Brussels Sprouts and their UK fellow travellers will not give up without a fight, so that is what it will eventually come down to.


    • backofanenvelope
      Posted January 6, 2012 at 9:29 am | Permalink

      In the bad-tempered discussion between Toady and Mr Cameron this morning; he gave his answer to this. Such a tax would require a treaty and such a treaty would require a referendum. What we will see now is a series of attempts to introduce the FTT without inducing another treaty. There is a lot of wriggling and jiggling still to endure.

      • Tedgo
        Posted January 6, 2012 at 11:36 am | Permalink

        Doesn’t Evan Davis like to hear his own voice, I laughed when Cameron went silent then asked Davis is he had finished.

        Besides making long speeches Davis other annoying trait is those little summaries for the dumb listeners.

        He is worse than Humphries.

        • A.Sedgwick
          Posted January 6, 2012 at 4:30 pm | Permalink

          Another BBC programme I now avoid but JH is the last of the old brigade and excellent. By chance I was listening to the BBC Radio News at 1 and was pleased to hear the measured and ultra professional Edward Stourton, who for some inexplicable reason was booted off the dawn show.

    • Disaffected
      Posted January 6, 2012 at 4:09 pm | Permalink

      John, As I blogged earlier this week, it appears the draft Treaty commented upon in the DT at the moment is side lining the UK irrespective of Cameron’s comments. It appears clear that a transaction tax will be in law by the end of the year if the Treaty goes ahead.

      Do you still have faith in Cameron sticking to what he said?? I suggest you and the other Eurosceptics start making moves to oust Cameron before it is too late.

      • Bob
        Posted January 6, 2012 at 10:30 pm | Permalink

        There is a tide in the affairs of men, which, taken at the flood, leads on to fortune; omitted, all the voyage of their life is bound in shallows and in miseries.

      • Christopher Ekstrom
        Posted January 7, 2012 at 6:34 am | Permalink

        Rejecting a fading Gauls invective to destroy ones realm is not exactly VC material.

        Obviously JR is not prepared to join in open war to exit most of the vile euro diktats. And so, when even the good accept perfidy: Finis Britanicus…

    • Timaction
      Posted January 6, 2012 at 7:45 pm | Permalink

      News released today from Europe would suggest that Mr Cameron has no longer blocked the EU institutions from working on the new”financial union treaty” in exchange for protection for the “City”, indeed when he was asked about this on the Today programme he waffled and wouldn’t give a precise answer.
      Commonsense says now that the veto was no such thing but a mechanism to prevent us from having our long awaited “In/out” referendum. The Tobin tax is promised by our European cousins by the end of the year. I don’t believe Mr Cameron is a Eurosceptic at all. In fact the opposite is true as his actions will show in due course. Its time for backbench Tory MP’s to ask him direct questions on this issue and want a straight answer. Where does he stand or is he just another unpatriotic Blair spinmaster?

  4. Freeborn John
    Posted January 6, 2012 at 7:23 am | Permalink

    The immediate concern for the UK is that Merkozy would like to raid the Uk for £30bn of ‘IMF contributions’ towards those colossal sums to keep the euro going. And cast-iron Cameron and Osborne show every sign of caving in and agree to providing this sum even though other non-eurozone countries like the USA say they won’t pay a dime.

    The EU is also looking to raid our financial services industry for colossal sums  via a Tobin tax. Thanks to the Lisbon Treaty (which William Hague seems prepared to ‘let rest’) there is now a fundamental asymmetry in the EU where 9+ countries can fragment the single market with punitive measures against our most successful industries in their countries while we cannot get powers back from Brussels without their unanimous agreement. What benefit is there to the UK in being part of a ‘single market’ in which the ‘enhanced co-operation’ procedure means that the Merkozy-led  eurozone bloc has the votes to impose punitive measures on our industry in a significant subset of the EU market? We have a single market in manufactured goods made by Germany, a (heavily subsided and protected by Eu external tarrifs) single market in agricultural goods that France produces and now a ‘single market’ in the services in which the Uk excels that can be fragmented at will by Merkozy.

    • Disaffected
      Posted January 6, 2012 at 4:11 pm | Permalink

      Good post. This will be the way forward unless the Eurosceptic MPs start to act against Cameron. The Uk needs to be out of the EU straight away and it should not pay a single penny more into the coffers until this is sorted out. It might just show Markosy that we are serious in what we say.

    • uanime5
      Posted January 6, 2012 at 4:24 pm | Permalink

      The reason is simple. Germany and France aren’t run by Europhobes so they can negotiate and get the support of enough European countries to pass anything they want. By contrast the UK makes it clear that it hates everyone else in the EU, so none of these countries support us. If the UK wants to benefit from the EU we have to learn to work with other countries in the EU.

      • Bob
        Posted January 6, 2012 at 10:44 pm | Permalink

        “working with” means paying over lots of money which we don’t have, unless we sell the rest of our gold reserves, raid what’s left of the pension funds and lumber posterity with another gigantic tranche of debt. And what do we get in return? There will be no return – the money is already spent and there is no prospect of repayment.

        The financial services will relocate to a more business friendly jurisdiction with less government interference, better weather and better food, and the UK will be left high and dry.

      • Disaffected
        Posted January 7, 2012 at 6:09 pm | Permalink

        Drivel once again uanime5, you would be good as a Clegg adviser.

  5. Antisthenes
    Posted January 6, 2012 at 7:35 am | Permalink

    In western nations nothing is really working and is going to continue not to work until such time when political strategy is pointed in a quite different direction and that is to move from left to right. Until radical reform of the role and size of the state by returning to personal responsibility, self reliance and by letting the private sector provide much of what the public sector does. Until the EU becomes a vehicle just for trade and stops being a monolithic, undemocratic layer of governance. Until the euro is abandoned and sovereignty is returned to national governments. The current crisis has all the hallmarks of being the crisis as it appears to be without a credible solution the one to bring about the demise of most western economies to a point were recovery will be long and arduous at best and not at all at worst.

  6. lifelogic
    Posted January 6, 2012 at 7:47 am | Permalink

    Indeed this unemployment is not only a huge waste of a resource but the damage done carries forwards for generations. These people are not even learning how to work, any trade or what work even is. The EU is training and encouraging people to live off others. Or get a cushy job in the state sector (often only available if they have the right “connections”).

    The solutions are very clear but, just like Major’s ERM, they are still hooked an absurd and damaging religious agenda and unable to turn round.

    • lifelogic
      Posted January 6, 2012 at 8:56 am | Permalink

      I see that Cameron was questioned yesterday by someone over the loss of many jobs caused by Huhne’s clumsy reductions in the Photo Voltaic subsidy.

      What Cameron should have said was “These were always pointless government subsidy “non jobs” anyway. PV in the UK clearly makes no economic, Co2 or other sense whatsoever. I am very sorry the government ever put such a mad subsidy in place and wasted your companies time and money. We will now abolish all these pointless subsidies so people can get real and productive jobs instead.

      Needless to say he said no such thing.

      • lifelogic
        Posted January 6, 2012 at 11:45 am | Permalink

        Now Cameron seems to be going rebalancing the economy, but when is he going to actually start this? Will it be while he is still actually in power?

        • Disaffected
          Posted January 7, 2012 at 6:10 pm | Permalink

          Let us hope not. I want him gone ASAP before he sinks the UK further into the EU grasp with his fanatical EU mate Clegg.

  7. Pete the Bike
    Posted January 6, 2012 at 7:52 am | Permalink

    A pretty much perfect summing up with only one point I’d like to make. Mr Monti isn’t a prime minister, they have to be elected. He is an ex Goldman Sachs bankster now promoted to Brussels “Gauleiter” with responsibility to loot whatever he can from the Italian state and transfer it to the big banks to keep the show rolling for a few more months. In doing so he will be above the law just as all his co conspirators are throughout the European and American elites.

    • Sebastian Weetabix
      Posted January 6, 2012 at 12:52 pm | Permalink

      Just as we do not directly elect Prime Ministers in this country, we just vote for our MPs, the same happens in Italy. (I suppose if we directly elected PMs we would never have suffered Gordon Brown, or Jim Callaghan, or Alec Douglas-Home for example.) In Italy the PM is appointed by the President. So although it stinks like a fish, he has been properly appointed in a way entirely in keeping with the Italian constitution. My Italian friends to a man were happy to see the back of Berlusconi and they are witholding judgement on Monti. We’ll see how long he gets away with it.

  8. Peter van Leeuwen
    Posted January 6, 2012 at 7:52 am | Permalink

    If the euro area chiefs were so unconcerned about the huge employment problems, would they have decided last year to dedicate the January summit to employment? I don’t think so. They may focus though at labour market reforms rather than the monetary policies this article suggests.

    • APL
      Posted January 6, 2012 at 10:58 am | Permalink

      Peter van Leeuwen: “would they have decided last year to dedicate the January summit to employment?”

      That is a relief, unemployment problem sorted. The extremely comfortable state funded political class are going to talk about employment. No doubt in the process doing their bit to alleviate the crisis by employing some of the best chefs and sommeliers in the catering business to assist them during this onerous process.

      I was worried for a while, but I can see it is all going to be OK, now.

      • Peter van Leeuwen
        Posted January 6, 2012 at 1:43 pm | Permalink

        @APL: It brings a smile to my face, because you’re really going from one extreme to the other. Reforming labor markets when there is little or no growth will prove very difficult and time-consuming.
        I heard the Dutch minister of finance say last year that the youth minimum wage in Spain is higher than in Holland. It doesn’t require leaving the euro to redress that. Breaking through the many protected professions in some countries (not just in Greece) doesn’t require leaving the euro. Corruption, tax collection, and many more areas require looking at, and actually, these countries have started addressing them. Competitive devaluations outside the eurozone do nothing to address these structural deficiencies.

        • APL
          Posted January 6, 2012 at 4:18 pm | Permalink

          Peter van Leeuwen: “because you’re really going from one extreme to the other ..”

          Not really Peter. I simply doubt that these people who are going to ‘talk’ about the situation, will be able to undo the thirty years worth of restrictions and petty regulations in a time frame that will make a difference to the, for example 20% of unemployed Spanniards.

          I doubt such an item (deregulation*) will even be on their agenda, nor even occur individually to many of them.

          One thing you can be sure of, they won’t be cutting back on their grand feasts nor their prevelidged subsidized lifestyles.

          Marie Antoinette was nothing compared to this new Aristocracy.

          * My definition: removing regulations rather than passing new regulations to compensate for the utter failure of the previous regulations to achieve the desired effect.

          • Peter van Leeuwen
            Posted January 6, 2012 at 10:56 pm | Permalink

            @APL: Do realise though, that we’re mainly talking about redressing national imbalances, national regulations and not just in the eurozone. Why otherwise would the UK have a youth unemployment of 22% and the Netherlands 8.6% (see eurostat dd 6-1-2012)

          • APL
            Posted January 7, 2012 at 10:52 am | Permalink

            Peter van Leeuwen: “Why otherwise would the UK have a youth unemployment of 22% and the Netherlands 8.6% ”

            I don’t know Peter, perhaps it is due to the better quality of Education in the Netherlands turning out educated young people.

            I don’t know how education is organized in NL, but I do know it has been a ‘political football’ for the last thirty years in the UK.

            On the face of it this would tend to suggest ( to me anyway ) at least two things.

            1. Political interference in education is a bad thing.

            2. Educating your children to speak more than one language fluently, means you have the option of exporting your youth unemployment.


    • Sebastian Weetabix
      Posted January 6, 2012 at 12:54 pm | Permalink

      How reassuring! Talking is so much more important than actually doing something about it.

  9. ian wragg
    Posted January 6, 2012 at 7:56 am | Permalink

    Indirectly on post, I see China is refusing to pay the EU carbon tax. Good for them and let many more join them. The EU can only think of ever increasing taxes which destroy growth and jobs.
    Lets be rid of this socialist experiment as soon as possible, it’s bankrupting all (almost) its members.

    • alan jutson
      Posted January 6, 2012 at 8:34 am | Permalink


      The USA have also said they will not comply.

      The World is waking up to Euro policy madness.

      Never mind the EU will propose to Fine them all !!!
      Yeh that would be a good move !!!!

      • lifelogic
        Posted January 6, 2012 at 11:47 am | Permalink

        Only the EU, Huhne and the Libdems seem still to believe in the alternative energy religion now.

        • Morvan
          Posted January 6, 2012 at 7:33 pm | Permalink


          I think that Cameron’s father-in-law is still in favour.


          • lifelogic
            Posted January 6, 2012 at 10:19 pm | Permalink

            He might well enjoy the subsidy but do even the beneficiaries (if asked in private) really think these subsidies makes any sense whatsoever, I rather doubt it?

          • APL
            Posted January 7, 2012 at 10:00 am | Permalink

            Morvan: “I think that Cameron’s father-in-law is still in favour.”

            Ha ha. [sarcasm] Gosh! I wonder why?

    • Morvan
      Posted January 6, 2012 at 7:31 pm | Permalink


      That’s OK, as Cameron will offer to pay it for them.


  10. Javelin
    Posted January 6, 2012 at 8:16 am | Permalink

    The EuroZone is a DisasterZone.

  11. Christian Spence
    Posted January 6, 2012 at 8:40 am | Permalink

    Is Hungary’s bond coupon of 10% really a problem when that is only 250bps above its central bank base rate?

    • Sebastian Weetabix
      Posted January 6, 2012 at 12:55 pm | Permalink

      It is when their economic growth is less than that. But their biggest problem is an awful lot of them have mortgages in Swiss Francs and the forex rate is killing them.

  12. figurewizard
    Posted January 6, 2012 at 8:47 am | Permalink

    The Euro creating a series of uncompetitive states has been the unacknowledged consequence of it creating a series of client states for German exports at the expense of their economies.

  13. oldtimer
    Posted January 6, 2012 at 9:41 am | Permalink

    The EU appears to be institutionally incapable of reforming itself by changing the course on which it is set, not least because the EUligarchy in charge are themselves apparently blinkered. The only question is what event will cause the whole edifice to crash, a market driven failure to raise money or a state driven decision to exit the EZ.

    In all of this mayhem, the duty of the UK government is to protect the interests of the UK. It is not to help sustain the failed EZ. I trust that Conservative backbenchers will remain on full alert to the risks of any potential Coalition sell-outs of UK interests and will have the gumption to do what is necessary in the event of any weakness by its leadership.

    • uanime5
      Posted January 6, 2012 at 4:33 pm | Permalink

      Given that the EUligarchy can change every time a country has an election I doubt they’re incapable of reform.

      The problem with the EZ is that maintaining it is in the interest of the UK as the countries that purchase most of our exports to use this currency. If the Euro devalues if will make products from the UK much more expensive, consequently reducing demand.

      • Kenvar
        Posted January 7, 2012 at 12:03 am | Permalink

        If the euro devalues UK exports to Euroland may become apparently more expensive. However the 70% of Euroland built cars used on UK roads will become correspondingly cheaper.

      • APL
        Posted January 7, 2012 at 9:02 am | Permalink

        uanime5: “Given that the EUligarchy can change every time a country has an election I doubt they’re incapable of reform.”


        The commissioners may change when there is an election, but the huge bureaucracy doesn’t change. Given that a policy might take five or ten years from inception to implementation. The newly appointed commissioners simply carry on with the policies that are already advanced along the pipeline.

        In fact, the democratic process* impinges hardly at all on the activities of the commission.

        *apart from the fact that the EU commissioners are appointed by the National governments after a cozy ‘tete a tete’ between the National civil service, the New national administration and the EU bureaucracy. Real democracy doesn’t get a look in!

      • Disaffected
        Posted January 7, 2012 at 6:13 pm | Permalink

        Drivel once more. Fiction not fact. Do you also want to use language of fear to point out the 3 million lost jobs if the UK leaves the EU? Your remarks are as credible as Cleggs.

  14. Iain Gill
    Posted January 6, 2012 at 9:42 am | Permalink

    Re “It delivered a credit and property bubble in Ireland and Spain which is proving painful now it has burst.” fairly clear there is a bubble in the UK which is yet to burst and will be painful when it does, property prices here are unsustainable without the jerry rigged market we currently have – as interest rates rise there will be trouble

    Also unemployment needs to take account of the immigration situation, you more than most John as the blogger of the year should acknowledge that the voters are correct when then mention immigration as their 2nd biggest issue in poll after poll! we cannot continue with the sitution where it is cheaper to bring in 2 Indian nationals on work visas than it is to employ one Brit! we cannot continue the situation where companies bringing in immigrant workforces from outside of Europe are given tax perks to do so. Employment and UK wealth generating capacity will not get fixed until we address these issues.

    • Iain Gill
      Posted January 6, 2012 at 9:59 am | Permalink

      conservative home backbencher of the year i meant of course…

    • uanime5
      Posted January 6, 2012 at 4:35 pm | Permalink

      This is unlikely to change under a Conservative dominated government as many of the large donors to the Conservative party rely on a cheap workforce to maintain their profit levels.

      • Bob
        Posted January 6, 2012 at 10:50 pm | Permalink

        Who are you referring to?

  15. Brian Tomkinson
    Posted January 6, 2012 at 9:48 am | Permalink

    Politicians, dreaming of a country called Europe, are unwilling to face the realities of the euro monster they have created to help achieve their goal. The damage they are inflicting on their own people, and potentially the rest of the world, in a futile attempt to fulfil their ambition is unacceptable. They should be held personally accountable and punished for their malfeasance and I don’t just mean loss of office.

    • lifelogic
      Posted January 6, 2012 at 11:49 am | Permalink

      All these pleasant BBC and Shirley Williams types taking us all on the road to a, non democratic, socialist disaster zone. But why?

      • Bob
        Posted January 6, 2012 at 11:07 pm | Permalink

        Useful idiots, being manipulated by a Fabian fifth column with a propaganda machine funded by a legal requirement to licence television sets to the tune of £3.6 billion, and beamed into millions of homes through TV, Radio and internet.

        BTW, I read on Wiki that Shirley Williams (managed-ed) to get her daughter into a selective school – no bog standard comp for her. No Sir!

        So Williams believes in inclusiveness and Diane Abbott is not racist.
        Welcome to Little Britain!

  16. Alan
    Posted January 6, 2012 at 9:54 am | Permalink

    I enjoy seeing the Eurosceptics gloating over the Eurozone’s troubles. It makes entertaining reading, but I worry that it distracts us from the problems of our own economy.

    It remains to be seen whether our policy, of devaluation followed by austerity, is more successful than the Eurozone policy, which seems to be austerity, maybe to be followed by devaluation. Or maybe both will succeed (I hope so, very much), or both will fail. We haven’t reached the end of the crisis yet and, in my view, it is still too early to forecast how it will be resolved. Or whether it will be resolved…

    • lola
      Posted January 6, 2012 at 11:44 am | Permalink

      Erm, even as an absolutist Eurosceptic I do not gloat at the chaos and misery the Euro Elite is creating for its peoples. I do not descend into schadenfreude. I am deeply sympathetic to the plight of the peoples of Europe (and the Irish Free State). What does hack me off is the knowledge that the British and our Commonwealth and our allies spent huge amounts of blood and treasure in the 20th Century trying to keep them free of this sort of universal totalitarianism. The fact that the Euro Elite do not see just how their ‘project’ is developing is a disgrace, and when that development fails, yes I do gloat.

      • Sebastian Weetabix
        Posted January 6, 2012 at 12:57 pm | Permalink

        “Irish Free State”? Not since 1948. Irish Republicans everywhere will be polishing the chips on their shoulders when they read that…

      • Argus
        Posted January 6, 2012 at 6:55 pm | Permalink

        Yes, from where I sit on the other side of the Atlantic it is truly frightening to see how the freedoms and sovereignty that my British father sacrificed so miuch for in WWII is being eroded by stealth. Economics aside, that is the outstanding concern in this Euro-created mess.

  17. javelin
    Posted January 6, 2012 at 10:06 am | Permalink

    Have a read of these. First the credit people saying the only way a voluntary haircut will work is if the alternative is nastier.

    “The only sensible take I have seen on the voluntary/involuntary dance: creditors will take a deep haircut voluntarily if they think the alternative is worse. The alternative could be a default, or another restructuring soon, and on nastier terms.”

    but “… according to CMA, the default recovery on Greece is now 20%”

    and in addition “Greece΄s entire planned schedule of emergency loans from the European Union and International Monetary Fund is being pushed back by three months because of a delay in the payout of a tranche in 2011, the European Commission said on Thursday.”

    So whats going on ?? – the credit people say time needs to be given for a nastier restructuring in order to get a voluntary restructuring. But the current deal on the table is 20% – can it get any worse? A default has been ruled off the table by politicians. But the can is being kicked down the road to the last second.

    So all thats left is the threat of a 10% redemption on the last day. This really is taking it down to the wire. Unbelieveable.

    And to make things worse!!!

    Unicredit has put a clause in their prospectus (page 63) saying “Furthermore, any decision by the ECB to suspend or revise the terms that apply to buying back the sovereign debt of certain European countries, as well as the failure of the initiatives implemented by supranational institutions to resolve the debt crisis, could have a negative impact on the value of sovereign debt securities, resulting in major negative effects on the operating results and capital and financial position of the UniCredit Group.”

    • javelin
      Posted January 6, 2012 at 4:48 pm | Permalink

      Lots of rumours in the markets that Greece is preparing to exit the Euro – mainly based on a old article from early November.

      For me the ex-PM resigning earlier in the week was the moment the decision was made behind closed doors.

      What will this do for Unicredit. As predicted.

  18. Peter van Leeuwen
    Posted January 6, 2012 at 10:10 am | Permalink

    For the “sick man of Europe” to become the current “powerhouse of Europe”, Germany went through years of structural reforms, mainly of its labour markets. It didn’t have to take up the weapons of “currency wars” which were laid down by all those who joined the eurozone. Other countries (Spain, Italy) will now go through the same process. Like it or not from a UK perspective, It will be done within the euro.

    • Sebastian Weetabix
      Posted January 6, 2012 at 12:59 pm | Permalink

      Germany has been greatly helped by an an undervalued currency for the last 10 years, a small side benefit which is not open to Greece, Spain, Portugal etc.

    • Mark
      Posted January 6, 2012 at 1:04 pm | Permalink


      Modern Germany was built on the strict monetary discipline of the Bundesbank, long before the Euro or even the EMS appeared. That followed the second German hyperinflation of the twentieth century. It has repeatedly sought to lock countries in at uncompetitive exchange rates – including the re-unified East, and the UK during ERM, as well as most of the Eurozone. That’s a real currency war. The consequences are either colonisation (currently being attempted by EU institutions), or rebellion and secession.

      • Peter van Leeuwen
        Posted January 6, 2012 at 4:25 pm | Permalink

        @Mark: As recently as 2005, Germany was derided as the “sick man” of Europe, with high unemployment and sluggish domestic demand (although its exort was growing)

        • APL
          Posted January 7, 2012 at 9:07 am | Permalink

          Peter van Leeuwen: “Germany was derided as the “sick man” of Europe .. ”

          Who by?

          Any one who was aware of the German situation knew they were expending huge resources on ‘reunification’ and dragging East Germany out of the malaise brought on by fifty years of ‘far left’ Socialist extremism.

      • zorro
        Posted January 6, 2012 at 6:52 pm | Permalink

        Modern Germany was built on the back of it not having to pay war reparations and being granted debt forgiveness…..

        **During the 20th century, Germany was responsible for what were the biggest national bankruptcies in recent history.

        **The USA wrote off huge sums of money after both World War I and World War II, in order to allow Germany to be financially stable today

        **From 1924 to 1929, the Weimar Republic printed and borrowed from USA in order to pay its WW1 reparations. We all know what happened in 1931….and the effects on the global economy of loose credit and money printing.

        **After WW2, the USA tried to avoid that problem by ensuring that high reparations would not be immediately enforced on Germany. Most demand for payment was suspended until reunification. This helped lay the initial groundwork for their ability to create the ‘economic miracle’ in the 1950’s…..It also meant that countries which suffered loss in the war had to wait for payment (as the Greeks will let you know….).

        **When compared to relative economic performance, Germany was the biggest debt transgressor of the 20th century.

        **After WW2 (and based on past performance), the USA gave Germany a ‘haircut’ in 1953, reducing its debt problem significantly. Germany has been fortunate not to have struggled with the consequences of that war (German occupation) unlike certain other European countries.

        **Germany even had a period of non-payment in 1990, when Kohl refused at the time to implement changes to the London Agreement on German External Debts of 1953 (new regulation of German reparations in the case of reunification). With the exception of compensation paid out to forced laborers, Germany did not pay any reparations after 1990….nor the loans or occupation costs owed to countries it had occupied during World War II.

        **Germany’s ‘economic miracle’ was only possible through waiving extensive debt payments and stopping reparations to its World War II victims.

        **After starting two world wars, having its debts and war reparations waived by its victims, Germany is now the most prosperous of nations in Europe – well done Germany…..

        **Now it is preaching to other countries, perhaps Germany should look at itself a bit more closely…..


    • Christopher Ekstrom
      Posted January 7, 2012 at 6:59 am | Permalink

      Have you any direct experience of Spain? I challenge you to affirm your belief that labor market reform of the German sort would have even faint impact. Of course the fairly soft reforms undertaken by an exiting politician en route to Russian enrichment (brave Herr S allows German middle managers to defy “union” bans on burning the midnight oil) were so obviously due to a healthy nation being strangled by mindless regulation. Spain is populated by (word left out-ed) young people expecting an easy passage through a state sanctioned existence. Most would opt for Franco in the early 70’s if a job at the power company was guaranteed .

      • Peter van Leeuwen
        Posted January 7, 2012 at 10:57 am | Permalink

        @Christopher Ekstrom: Our Dutch minister of finance is on record, stating that the Spanish youth – minimum wage is higher than in the Netherlands. In the Netherlands youth unemployment now stands at 8.6% , in Germany at 8.1% and in Spain 48%. Lowering that minimum wage would be quite a simple labour reform and there must be others that could be made. My experience with SPain is as a tourist, I haven’t lived or worked there.

  19. oldtimer
    Posted January 6, 2012 at 10:12 am | Permalink

    Another area where EU policy is not working is that of environmental policy. Conservative Home today publishes a devastating critique by David Merlin-Jones of Civitas. He says it produces crime, corruption and profiteering. It has also succeeded in uniting China, India, Russia and the USA in opposition to its ETS (cap and trade scheme) for aviation. The article is here:

    • Martyn
      Posted January 6, 2012 at 2:01 pm | Permalink

      Thanks for the link. I have just read it and what springs to mind is that Alice in Wonderland and the Mad Hatter are now firmly in control of the EU.

      There is a out of the mess to keep the Mad Hatter’s tea party going, which is for the EU to instruct China, India, Russia and the USA and anyone else not complying with the ETS to either comply with it, or risk being classified as non-trading partners and persona non grata. That ought to work, surely?

  20. Jim (Spain)
    Posted January 6, 2012 at 10:50 am | Permalink

    “Mistakes are opportunities to learn … ”

    But only if you acknowledge that you have made a mistake. Is there any sign of the Euroland élite acknowledging that the euro may not have been such a good idea after all?

    If there isn’t – if they are still in denial – then things will continue to get worse …

  21. sm
    Posted January 6, 2012 at 11:39 am | Permalink

    Unemployment numbers and economic inactivity very pertinent points.


    The Euro is a dead duck as in the current union structure.

    We should be planning for full collapse/exit.Ensuring we minimize all risks associated.Can we get on with repatriating powers?

    Can we introduce retentions on or suspend our EU contributions to ensure when the collapse comes we are not dumped on, start paying in arrears and start netting off.

    Should we bring in temporary restrictions on the movement of people into the UK from the EU and elsewhere? Should we temporarily cease UK membership, pending the EU deciding to fully federalize .

  22. Ruth
    Posted January 6, 2012 at 1:17 pm | Permalink

    The exchange rate is now reflecting the fall of the Euro. Four years ago my stock deliveries from Germany (priced in Euros and converted) came with a courier charge of £8.75, at their worst following the devaluation of sterling the charge was over £12. This morning the charge was £9.93. So good for me, clearly the markets are revaluing the currencies. But this is a big change from a few months ago, so clearly the Euro is looking to be toast. Don’t know how this will affect employment in Europe, will it help or make things worse?

  23. john w
    Posted January 6, 2012 at 1:54 pm | Permalink

    John,the peoples pledge has been signed by 250000 people and another 2 labour mps have joined the campaign.The bloggers seem to be furious today,and rightly so.I cant understand how people who are so highly educated can be so thick.15 years to decide what chocolate is, chuck all the dead fish away and standardise everything.They want to have a look at their own standards before giving us directives.They seem to want to tax everything and everyone.Mr van rumpoy doesnt pay tax because he is far too important and the eu gravy is too tasty for the rest of them to give up.Selfishness,greed and stupidity seem to pour out of the eu on a daily basis.I am not fit to taste the eu gravy yet i am fit to pay for it.

  24. startledcod
    Posted January 6, 2012 at 2:02 pm | Permalink

    Close your eyes and imagine just where the EU member countries would be if the Euro had never been; yes you’re right, not one single country would be worse off by any accepted measure with the possible exception of Germany who would not have sold so many BMWs, Audis or Mercedes.

    It is a tragic, in the true sense of the word, that whether it be unemployment or anything else there seems to be no price too high to attempt to ensure the survival of the accursed Euro; and in all likelihood it will fail.

    • James Reade
      Posted January 6, 2012 at 4:36 pm | Permalink

      Utterly brilliant, unpredujiced, reasoned, scientific analysis of the situation here.

      I’ll just again treat you to Greece outside the eurozone over the last decade (I wrote something similar below). It would instead of borrowing in its own currency have borrowed in foreign (non-drachma) currencies. It would have borrowed probably less than it did in the eurozone since it was fortunate enough to have low interest rates in the eurozone for a while.

      But once things started to go wrong, once the bubble burst, it would have been hit by a rather significant problem – the drachma would have depreciated dramatically as everyone lost all confidence in the Greek economy (as they did). The euro at least held up since there has always been the rest of the eurozone which wasn’t as bankrupt.

      So all that debt would have all of a sudden, foreign denominated, increased dramatically, leaving Greece even more bankrupt, if that was possible.

      Perhaps it might have benefitted from a quicker resolution of its problems outside the eurozone since there would have been none of the endless eurozone crisis meetings to postpone the default to a time more convenient for the rest of the zone (if that were possible).

      But Greece would certainly not (ok, in all likelihood not) have been any better off had it not joined the eurozone.

      If you were interested, I could argue the toss on all the other eurozone members too. There’s always more than one side to a story, and blinkered politically prejudiced accounts are usually just that, and generally wrong.

      • zorro
        Posted January 6, 2012 at 10:30 pm | Permalink

        It would have had control over its finances, budgets, and interest rates. With regards to those who lend…caveat emptor….the Greeks might have defaulted or be in a similar situation to Iceland….after all, it hasn’t done Germany any harm in the past.

        Now Greece is no longer economically free, and is a vassal nation.


      • Rebecca Hanson
        Posted January 7, 2012 at 9:31 am | Permalink

        I really appreciate your efforts to imagine alternative realities James. Our collective inability to even try to do that worries me.

      • APL
        Posted January 7, 2012 at 9:53 am | Permalink

        James Reade: “It would instead of borrowing in its own currency have borrowed in foreign (non-drachma) currencies.”

        You don’t really explain why they would have done this? One might have thought that the idea of a governments debts being denominated in a foreign currency had been discredited by the example of the Weimar Republic.

        Was Greece borrowing in a foreign currency before it joined the EMS/Euro?

        James Reade: “the drachma would have depreciated dramatically as everyone lost all confidence in the Greek economy (as they did).”

        Yes, and then Greece would have defaulted on its obligation. Not a new experience for Greece by the way, but something it cannot easily do in the Euro.

        James Reade: “Perhaps it might have benefitted from a quicker resolution of its problems outside the eurozone .. ”

        Yes, because the issue would have been brought to the fore sooner. It wouldn’t have coincided with all the other sovereign debt crisises in Europe.

        In fact one could be forgiven for thinking, the only convergence we have seen under the Euro regiem is that of crises occurring in a coordinated fashion.

  25. Atlas
    Posted January 6, 2012 at 2:22 pm | Permalink

    All these thoughts here concerning the EU – if only Politicians were logical then things might be a lot better. However the concept of a (Harold Wilson style) Sacred Cow means that something terrible will happen because of the sacred nature of the Euro.

    EU politics seems to be “the art of the impossible” – in this case, defying economic gravity.

  26. Barbara Stevens
    Posted January 6, 2012 at 2:49 pm | Permalink

    Mr Redwood, Mr Cameron is going to need a back of steel against this lot over the water. I do believe he will come up to the mark, the UK depends upon him. If he fails us we are in for a rough ride. The Tobin tax is to pay for the eurozone’s debts, we all know it so why does not Mr Cameron come out and say it, and make them answer. I am against the committment to the IMF as well, we have already committed far to much, a lot more than others over the Channel. Are we not broke too? I just hope some Conservative MPs will muster together and save this country before it’s to late, what we need now is Churchillian observers who don’t let the government off the hook. As for Clegg, this man is now really in an untenable position, and who really listens to him anymore. I certainly don’t. Is it time we had another election and really gave us a good government with a majority, a Conservative one. Do we wait till the euro falls until we do anything? It won’t be an orderly collapse all can see that, which would be the preferable one. These are dangerous times, with Iran shaking it’s arms in rage, the USA, cutting it’s defences, and our own navy in dire circumstances, I’m very worried. Is it not time for supporting and investing more in defences and the navy, we cannot afford not to, can we? There are lots of areas we can cut, and cutting us from the EU would save us £50 million per day, now that’s a start. We could use this to boost our defences in urgent. What do you think?

    Reply: I along with some colleagues voted against more UK money forthe IMF, and am against all Euro bail outs for the UK. We are trying to persuade the PM to move on from his veto of a new Treaty to define a new relationship for the UK with the EU.

  27. Richard
    Posted January 6, 2012 at 3:10 pm | Permalink

    I did not realise just how bad unemployment is in nations like Spain Greece and Italy.
    The European elite are looking more and more like a Royal family from centuries ago gorging on the wealth of their nations and ignoring the plight of their people and it amazes me how any socialist minded person can still support their increasingly unequal dynasty.
    What a tragic waste of talent this huge level of unemployment is and it appears to be the young who are suffering the most.

    We need radical action to encourage growth in Europe.
    First the public sector in Europe needs to reduce its size and cost, then we can use these savings to lower taxes for citizens of Europe leaving them with more of the money they earn each week to spend for themselves.
    We need to enourage the small businesses and self employment with reductions in regulations and lower tax rates for them.
    All politicians, quangocrats and eurocrats and those in the public sector should volunteer to reduce their salaries by 10% (20% if you earn over £100,000) and then all this money could be split between paying down the deficit and encouraging employment.
    Or perhaps just go on borrowing and over spending until it all runs out?

    • uanime5
      Posted January 6, 2012 at 4:43 pm | Permalink

      Why do you think that reducing the public sector in various European countries is going to fix any of their problems?

      What evidence do you have that the lack of private sector businesses in these countries is due to their tax levels, especially when most of these countries have lower tax levels than the UK?

      Assuming that everywhere in Europe has similar problems to the UK is a deeply flawed assumption.

      • Richard
        Posted January 6, 2012 at 10:44 pm | Permalink

        By your logic then… if we all worked for the state we would all be fully employed.
        As usual you fail to make your own argument prefering only to criticise.

      • APL
        Posted January 7, 2012 at 10:06 am | Permalink

        uanime5: “Assuming that everywhere in Europe has similar problems to the UK is a deeply flawed assumption.”

        Quite so, we’ll make a Euro sceptic of you yet.

        So the solution for each country is best tailored by the people and government of that country, rather than an organization which can only conceive of grand plans for the unification of pan European policies, AKA the European Union.

        Another area where the EU unification policy seems to have had unintended consequences, the harmonization of high unemployment rates among the European citizenry.

    • Max Dunbar
      Posted January 6, 2012 at 6:56 pm | Permalink

      We are told that unemployment in Spain, Greece and Italy is worse than here but do they measure unemployment using the same methods as us? To give an example; I checked the statistics for the council ward of Drumchapel in Glasgow recently and the number of people on long term incapacity benefit far exceeds the number on “unemployment” benefit. The reason for this discrepancy is obvious.

      • APL
        Posted January 7, 2012 at 11:46 am | Permalink

        Max Dunbar: “the number of people on long term incapacity benefit far exceeds the number on “unemployment” benefit. The reason for this discrepancy is obvious.”

        A year or so ago John Redwood posted the number of long term sick or disabled on the government payroll. I hope he will correct me but I recall it was something like 15% of the workforce.

        Max Dunbar: “obvious”


    • zorro
      Posted January 6, 2012 at 7:19 pm | Permalink

      ….makes you wonder if the real reason for creating a single European superstate was as charitable and philanthropic as claimed.


  28. theyenguy
    Posted January 6, 2012 at 3:45 pm | Permalink

    You are correct, Euroland is not working, and we are hearing news reports that raise fears of European sovereign insolvency and banking insolvency. These turned currencies, stocks, commodities, and bonds lower January 5, and 6, 2011.

    Business Week reports Spain Leads Rise In Sovereign Bond Risk On Bailout Speculation ….. Atlantic reports Every Single Economic Indicator in Spain Looks Disastrous: Spain Is In Free Fall ….. Bloomberg reports ECB Cash Averts Funding Crisis For Italy And Spain ….. Zero Hedge reports EURUSD Dips Below 1.28 As All Hell Breaks Loose In Italian Financials ….. Zero Hedge reports Unicredit Lost 30% Of Its Market Cap In Two Days ….. Financial Times reports Italian Bond Yields Jump Back Above 7%

    The Sovereign Lord God, Psalm 2:4-5, and not any human action, will open the curtains, and the most credible leader, Europe’s New Charlemagne, Revelation 13:5-10, together with his banking partner, Revelation 13:11-18, will step onto Europe’s stage, to provide order out of chaos. They will not be elected; rather God’s Sovereign Will, Ephesians 3:1-11, will bring them forth in a Eurozone coup d etat, Revelation 6:1-2, to provide order out of chaos. These sovereigns will develop the Eurzone into a type of revived Roman Empire. The word, will and way of these two will provide a new seigniorage, and the people will be amazed and follow after it, placing their confidence and trust in it, giving it their full allegiance, Revelation 13:3-4.

    • zorro
      Posted January 6, 2012 at 7:30 pm | Permalink

      Let’s hope those in the Eurozone read this blog and they’ll be forewarned then….

      Julius Zorro

  29. NickW
    Posted January 6, 2012 at 3:50 pm | Permalink

    Any attempt to impose a Tobin tax on the UK would automatically trigger a referendum.

    If the EU forced taxation on us that would constitute a very significant transfer of power to Brussels, and a referendum would be legally unavoidable.

    I do not see how it is possible for countries with high unemployment, (Spain in particular) to reduce their deficits, because of the cost of unemployment benefit.

    My six year old son could explain the maths to the European leaders.

    Benefits have risen very sharply since the 1930s and high unemployment is simply no longer affordable at current benefit levels. Countries in recession are completely trapped by rising unemployment benefits and falling tax revenues.

    Reply: A new tax would need Parliamentary approval. This MP has no intention of voting for one – which MPs would?

    • Brian Tomkinson
      Posted January 6, 2012 at 4:42 pm | Permalink

      Reply to reply:
      Clegg would, obeying orders from his bosses in Brussels, and most of the LibDems who seem to see the EU through rose tinted spectacles.

      • APL
        Posted January 7, 2012 at 9:58 am | Permalink

        So would our Cameron, obeying the puppet masters in Brussels.

    • uanime5
      Posted January 6, 2012 at 4:46 pm | Permalink

      Nothing in the UK automatically triggers a referendum, so a referendum is always legally avoidable.

      Spain has low welfare costs because welfare only lasts for 6 months. They also have a much larger black market than the UK.

      Benefits have risen because the cost of living has risen. Rising house prices have been the one of the main reasons why welfare costs keep increasing.

    • Morvan
      Posted January 6, 2012 at 7:46 pm | Permalink

      Mr Redwood

      I suspect about 400 of them would – including the PM, his deputy, and Justice Minister amongst others.


    • Robert Christopher
      Posted January 6, 2012 at 10:00 pm | Permalink

      A Tobin CHARGE could be applied without a murmur.

  30. uanime5
    Posted January 6, 2012 at 4:26 pm | Permalink

    For comparison the UK’s rate of unemployment in December 2011 was 8.3% (2.64 million). As 1 million 18-24 year olds are unemployed this means 38% of the unemployed are between 18-24.

    John how will leaving the Euro help countries reduce unemployment? If anything it will make unemployment worse as companies are unlikely to expand in a country that is reforming its currency or has a currency that is devaluing.

  31. James Reade
    Posted January 6, 2012 at 4:30 pm | Permalink

    Cite a few unemployment records, and state it’s all the fault of the eurozone. Another fine bit of empirical analysis. You forgot to note unemployment in Germany (5.5%), the Netherlands (4.8%), Austria (4.1%) and Belgium (6.6%). All somewhat below the UK, that bastion of fine economic management under the Coalition, with unemployment at near 9%.

    “If they were at all worried about the unacceptably high unemployment, they would be plannning and early and orderly exit from the currency of the weakest economies.”

    Er, no they wouldn’t. To set up a currency zone in which members come and go depending on whether they are weak or not is to set up a currency zone which doesn’t work. Parts of Britain that have unacceptably high unemployment don’t plan to get out of the poundzone – for obvious reasons. But of course you know that – the suggestion is clearly disingenuous.

    The bottom line is that a number of countries have long been less competitive than the major eurozone nations, and they have suffered as a result. But they would have suffered too outside the eurozone from that lack of competitiveness in a global economy, just in different ways.

    For example, Iceland has done really well for being outside the eurozone, hasn’t it?

    And Greece, had it been outside the eurozone, would have fared much better wouldn’t it? It would have instead of being inside a strong and stable currency have borrowed in foreign denominations, and of course would have been hammered when its drachma depreciated dramatically. That it would have borrowed less as its interest rate would have been a bit higher would have mattered not a jot as the drachma was decimated. Asian crisis again, anyone?

    But I know. I’m beating a pointless path. You’re all hopelessly prejudiced against this thing called the euro to the point where everything is distorted and twisted in whatever way is necessary to suit your prior prejudice. You’re all blinkered that somebody who tries to propose a slightly less prejudiced rendering of the facts is dismissed as a crackpot left-wing europhile without ever even an attempt to actually address the points being made.

    Reply: You constant contrarian attitude usually ends up with deliberate falsification of my argument. As you should know from reading my blog I think a currency union also needs a political union to back it up. The poorer parts of the UK do not seek to pull out of the pound zone because they receive large transfer payments from the more successful parts of the zone to compensate them for their lack of competitiveness. This is not happening in the Eurozone because the successful parts of the zone do not wish to finance the deficits of the poorer parts by either grants or internal loans. Nor does it look likely Germany is about to become generous enough, so it would be better to break it up. Of course I accept that the successful parts of the Eurozone have a better set of economic figures than the average of the pound zone. The true comparison would be between Germany and London and the South East, as the richest parts of their respective zones, where the comparison is less one sided than the false one you make. The argument is over unemployment in the large areas of the Eurozone which are suffering. I have made other proposasls for faster growth and more jobs in the UK. Joining the Euro would not be a route to those worthy aims for the UK, and is certainly not proving to be a success for Greece, Portugal, Ireland and Spain.

    • APL
      Posted January 7, 2012 at 12:24 pm | Permalink

      James Reade: “Germany (5.5%), the Netherlands (4.8%), Austria (4.1%) and Belgium (6.6%). All somewhat below the UK, that bastion of fine economic management under the Coalition, with unemployment at near 9%.”

      Has somebody stumbled on an unemployment statistic pamphlet recently?

      1. The Netherlands. A relativity small geographic country with a well educated multilingual population can easily export its surplus youth to it’s neighbors!

      I have worked with more than one or two very decent Dutch folk in London.
      Likewise the French, Italians, Spanish and a cutie from Newcastle who was South American.

      2. Belgium. A relatively small geographic country with a well educated multilingual population and a very significant proportion of the EU budged spent within it’s borders. It is any surprise that the EU institutions will happily employ well educated Belgians?

      3. Austria and Germany, well Germany has low employment because it exports to the rest of Europe.

      James Reade: ” with unemployment at near 9%.”

      I’ll suggest it is higher, but also that the rate of unemployment is largely due to our inability to properly educate approximately 20% of those who go through state schools in the UK. 20% of school pupils leave state education functionally illiterate and with little to no understanding of basic Math.

      Consequently, no one wants to employ them.

      • APL
        Posted January 7, 2012 at 3:19 pm | Permalink

        ” . well Germany has low employment . ”

        low unemployment.

  32. Alan Radford
    Posted January 6, 2012 at 5:20 pm | Permalink

    No price is too great for the people of Europe to pay in order to keep the elites in the manner to which they have become accustomed – as far as the elite is concerned. Meanwhile in Britain, EVERYBODY is waking up to the fact that we cannot and WILL not afford expensive elites, welfarism, ‘green’ energy, excessive numbers of useless politicians, scrounging immigrants and layabouts on benefits. We would rather keep, and spend, our own money.

  33. Viv Evans
    Posted January 6, 2012 at 5:24 pm | Permalink

    John, you replied thus to Barbara Stevens above:
    “Reply: I along with some colleagues voted against more UK money forthe IMF, and am against all Euro bail outs for the UK. We are trying to persuade the PM to move on from his veto of a new Treaty to define a new relationship for the UK with the EU.”

    In view of the EU proposals out today (see DT), you do have your work cut out.
    Time is fast running out – I cannot see how persuading Cameron will help when the 26 agree to that Tobin Tax, over our heads. Voting against that in Parliament won’t make a blind bit of difference to the EU or Sarkozy.
    Give Cameron some titanium injections in his spine and make him see that this is the crunch point. If this goes ahead, we must have a referendum. Cameron can even threaten those EUrocrats with that – provided he will run the referendum. And it is your job to see that he does. Else you will have to replace him a.s.a.p.
    You know the mood in the country: anew Tory Leader, going to the Nation, with an in/out referendum platform, would win hands down.
    Let this chance slip, and you are making way for a LibLab coalition, God forbid, or, with luck scrape in to form a coalition with UKIP.
    In either case, it’ll be the end of the Tory Party.
    Yes – things are that bad, and they won’t get better if you all let cameron weasel out, with the help of his europhile Clegg.

  34. Mike Stallard
    Posted January 6, 2012 at 5:51 pm | Permalink

    In the 1950s you could quite safely take production for granted – and we did. Everyone was in a job and you needed stamps for unemployment benefit. Also, of course, everywhere was covered in a thick layer of grime as the coal era was still in full swing.

    Today you just cannot take it for granted that new firms will start up and industry will keep powering on. We are still behaving, though, as if they will. They need a lot of encouragement in the way of simple, low taxes, government holding off with the regulations, lots and lots of rewards and success, and bosses who are prepared to take risks. More occupational stress, of course – far less managerial stress.

    People running industry and business are not saints and they are not expected to be saints either. At the moment, they rank well below the X factor and Strictly come dancing and light years behind nice safe (government) jobs like lawyer, doctor and political servant.

    The Euro, of course, being on a really good gravy train arrogantly disregards all these truths.

  35. David Williams
    Posted January 6, 2012 at 6:54 pm | Permalink

    Here in southern Spain, it is sometimes difficult to believe that there is an economic crisis. Restaurants and shops are still busy and there is an abundance of 200 euro and 500 euro notes in circulation. The “unemployment” figures are based on numbers of benefit claimants and do not take into account work in the vast black economy.

  36. Rebecca Hanson
    Posted January 6, 2012 at 7:06 pm | Permalink

    The figures are horrifying.

    In order to engage with unemployment in the 21st century it’s worth standing back from it and looking at it as being two problems.

    The first is the economic cost to the country. People who are unemployed are not contributing to tax and are costing the country for benefits.

    The second is the personal cost to the individual who is not only losing out on their quality of life but is also not getting the opportunities for personal development and the acquisition of business skills being part of the workforce brings.

    Its worth separating the two because we need to address both and they are better addressed separately. This government is starting to pay attention to the first but it needs to pay much more attention to the second, because there is a great deal more we could do with modern ICT to empower those who are out of work to develop their skills and engage with society in ways which are not possible in the 20th century. The more people who are able to take positive personal journeys during their periods of unemployment, the more self sufficient entrepreneurs we will get. Good for them, good for the country.

  37. Max Dunbar
    Posted January 6, 2012 at 7:16 pm | Permalink

    It certainly looks at the moment as if Euroland will continue to head for the buffers at full speed. The driver must be getting ready to throw himself from the cab of the loco but are the passengers still ordering champagne in the dining car?
    If as expected the politicians can only react, not anticipate, then I guess that there may be a big shake-up of all the worn-out “democratic” arrangements and a polarising of opinion as the Gravy Express sheds it’s load in a messy pile-up. Maybe blowing the rails now would be less painful than a shunt at the buffers.

  38. Denis Cooper
    Posted January 6, 2012 at 7:48 pm | Permalink

    JR, please do you have any information on the Bill required for Parliament to approve the major EU treaty change agreed by EU leaders on March 25th 2011?


    “A March summit of European Union leaders will discuss increasing the firepower of the bloc’s permanent rescue fund, the European Stability Mechanism, to cope with an upcoming glut of sovereign debt maturities, French Prime Minister Francois Fillon said on Thursday.

    “We need to ratify the treaty establishing the European Stability Mechanism and the corresponding revision of the European treaty so that this fund can enter into service from the month of July 2012,” Fillon told a conference.”

    That “corresponding revision of the European treaty” to grant the eurozone states the legal right to have their intra-eurozone ESM treaty is this, European Council Decision 2011/199/EU agreed by EU leaders on March 25th 2011:

    Which Decision cannot enter into legal force unless and until it has been ratified by all 27 EU member states – its Article 2 sets January 1st 2013 as the target date for that – and surely Cameron should not even introduce the Bill for the UK Parliament to approve it until a few other little matters have been sorted out?

  39. john w
    Posted January 6, 2012 at 8:05 pm | Permalink

    John,i was not inclined to pass any remarks about Diane Abbott but she has insulted taxi drivers today.I dont want to be rude but who does she think she is?.(words left out-ed)She should resign or be fired

  40. Chris
    Posted January 6, 2012 at 8:43 pm | Permalink

    An extraordinarily frank assessment about the role of the Greeks in the Euroland project was provided in Presswatch Jan. 4 of the Athens News.
    “The troika is determined, many in the press believe, to transform Greeks into the new helots, the third and lowest social class in ancient Sparta. This kind of postmodern slave labour is familiar in many parts of the world, but Greece is the pilot project for the European continent.

    The daily headlines in the Athens News are bleak and one wonders how the EU can justify subjecting a country to this sort of fate knowing that Greece was never a suitable candidate for Euroland membership. Recently Juncker apparently decreed that a return to the drachma was not an option.

    • Christopher Ekstrom
      Posted January 7, 2012 at 7:13 am | Permalink

      If only today’s “greeks” could aspire to useful employment as helots…they are The Last Man of euro history. Ever whinnying never working. Helots work.

  41. Mark
    Posted January 6, 2012 at 11:08 pm | Permalink
  42. Joe James B
    Posted January 7, 2012 at 12:46 am | Permalink

    The Euro needs to be dismantled – except could probably remain for a core of countries, including Germany.

    It can be done in an orderly way, but shouldn’t be delayed.

    The trouble is they won’t do it, because of politicals – so there’s a serious risk it will hit the buffers.

  43. Javelin
    Posted January 7, 2012 at 7:49 am | Permalink

    My partner is a psychotherapist and she would call it “projection”

    I’m talking about Sarkozy saying that the breakup of the Euro would lead to the “end of peace [war]”

    Can the man not see the chaos and stresses that the Euro is putting on European leaders. The theory says internal deflation in the only way to rebalance a euro economy (ie austerity and job cuts), but the research shows that will lead to social unrest. Western Europe has never been so unpeaceful – since WW2.

  44. Chris
    Posted January 8, 2012 at 2:16 pm | Permalink

    The RT interview Jan 7 in Brussels with Daniel Hannan is excellent: “The Euro, the debt crisis, and the future of the EU (the EU can”t compete with global players)”

  45. Lindsay McDougall
    Posted January 11, 2012 at 9:41 pm | Permalink

    What about our own country? Leaks from Civil Servants suggest that the unified welfare benefit that Iain Duncan Smith proposes to introduce will not be low enough to encourage people back to work.

    Then pitch it 10% lower, Iain. Help to get a grip on public expenditure and encourage employment. You could spend part of the saving on reducing NI, our very own payroll tax.

  • 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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