By David Vance On March 9th, 2012 at 9:39 am
The notion being spun this morning that Greece has “won” enough support for its debt restructuring to restore some degree of Euro stability is nonsense;
The liquidity of Eurozone banks is no longer an urgent issue, thanks to the European Central Bank’s Long Term Refinancing Operation. But everything else remains as it was: Greece is in crisis (youth unemployment has reached a horrific 51 per cent); several countries and numerous financial institutions are technically bust; Italy’s costs remain far too high; many European economies are cripplingly uncompetitive; the euro remains an unworkable construct. Immediate Armageddon is off the agenda – but it has been replaced by a slow, painful and long-drawn out death.
From a political point of view, this is a victory. The can has been successfully kicked down the road. From an economics point of view, nothing has changed and this train wreck is still hurtling along the tracks …
By David Vance On March 5th, 2012 at 9:14 am
The Greek tragedy, brought to you by those nice folks in Brussels, continues;
Investors in Greek debt have just four days to sign up to the largest debt restructuring in history and save the country from default, with German reports warning that Greece will need a third bailout.
A Third bail out.
To quote Johnny Rotten…“Ever get the feeling you’ve been had”?
Look, Greece is a financial wreck and will stay that way if it remains in the turbulent EU orbit. It HAS to default, it HAS to exit the Eurozone and restore its former currency, the Drachma. The Greeks are incapable of Germanic style austerity, along with most of the rest of the ClubMed EU countries. All this pretense that successive bail outs can save the day will not endure when confronted with the harsh economic reality.
By David Vance On March 1st, 2012 at 9:25 am
Will the Irish people deliver a blunt message to Merkel and the Eurogang or will they quietly submit to the Germanic austerity demanded of them? There is going to be a Referendum in a few months time and although the outcome cannot STOP the Fiscal Compact, it could cause deep embarrassment to the Brussels establishment. Interesting article here on The Commentator
“Like the UK, the Irish people were sold a pup with EEC entrance. Unlike the UK, the Irish constitution allows them to have a say, although this is on the whims of the “experts” in Dublin. When the Irish go to vote, they will be bombarded with pro-treaty sentiment – if you think the BBC is bad, just watch RTE in vote time – and yet even if they agree with the treaty, they must pause and think about what the treaty means to Ireland.
Do the Irish want some bureaucrat to run their budgets for them? Do they want ever-increasing encroachment on their sovereignty? Because that is what will happen in the long run. France and German have announced that they will converge their corporation tax, do you honestly think that they will allow Ireland to continue its highly competitive and successful low corporation tax policy? Of course they won’t.
And the effects could be dramatic. When the Irish government stopped tax credits in the early eighties, companies that had enjoyed the Dublin air simply packed up and moved to London, it was nigh-catastrophic for the economy and presided over a mass emigration not seen since the 1950s.”
Things is, whilst I fully agree with all of the above, I believe the Irish will say YES to the new Treaty. I wish they wouldn’t but fear will be used as the key weapon that will be engaged todeliver the desired result.
Already, the Irish PM Enda Kenny has declared that this is all about staying or leaving the Euro. Fear will triumph and the Europhiles in the Irish Government will remain comfortably seated on the gravy train whilst a generation or two of Irish people endure severe economic hardship as the consequence.
By David Vance On February 27th, 2012 at 8:41 am
Here is Josep Borrell, ex-president of the European Parliament and the voice of Spain’s pro-European establishment;
“We have reached the point where `taxes kill taxation’. The therapy is turning fatal and is starting to take on a highly political tone. Sixty years after the end of the war, Germany is again coming to be seen as an overbearing enemy, and an atmosphere of hostility is building up in a Continent divided between a rich and flourishing North and a South in danger of being reduced to a protectorate. If we carry on like this we are going to destroy the European project,” he said.
This from a PRO-EUROPEAN!
If you read the article what clearly comes across is the chasm that has now emerged between Northern and Southern European economies and in particular a brooding ClubMed sense of hostility shown towards Germany.
Borrell is not the only one to speak like this and yet, in truth, Germany has been propping up bankrupt economies like Spain. In the final analysis, I believe the “project” is doomed because you just cannot contain such differing economies in one Union unless you make that Union a fixed political one that eclipses the Nation State and run it with ruthless control from Brussels. Even then, you will get revolution on the streets. Rearmament often comes before a battle….
By David Vance On February 20th, 2012 at 8:55 am
Interesting article by Charles Moore here. It concerns itself with the central role Germany has played in the Euro crisis and asks some hard questions of Merkel.
“Today there is hardly a country in the eurozone whose credit has not been downgraded or threatened with it. The price of bail-out imposed on the sinning countries has been austerity – reparations, in effect. The result of austerity, most notably in Greece, is slump. Recovery is made impossible. Even democracy is threatened. The debtor nations have leaders imposed on them by the EU, and now Greece is told that it will not get its money unless all its political parties sign the terms of surrender. As the Financial Commission of the defeated Germany protested in 1919: “German democracy is now annihilated… by the very people who throughout the war never tired of maintaining that they sought to bring democracy to us… Germany is no longer a people and a state, but has become a mere trade concern placed by its creditors in the hands of a receiver.” For Germany then, read Greece (and Portugal and Spain and Italy?) today.
And who has done this? Who is oppressing weak European nations with demands that it must know cannot be met? Who is sacrificing the harmony of the continent on the altar of its next election? Who will not forgive? Germany! Germany, the country which is the great power it is today only because, in the middle of the last century, it was, economically, forgiven.
Keynes was right in 1919 to attack the cry “Make Germany pay”. That was because it had lost, and couldn’t. But today, thanks very largely to his wisdom, Germany has won. So, if anyone wants to preserve the European Union to which it owes its modern respectability, make Germany pay”
Is it possible that Germany should leave the EU? It is perfectly obvious that the ClubMed economies are incapable of co-existing in economic union with Germany so either they leave of Germany exits.
By David Vance On February 19th, 2012 at 10:48 am
I’ve been forecasting this for ages but now it seems the inevitable is being contemplated by the Iron Chancellor;
Plans for Greece to default, potentially leaving the euro, have been drafted in Germany as the European Union begins to face up to the fact that Greek debt is spiralling out of control – with or without a second bailout.
Of course Greece will exit the EU. That is not the issue anymore. What concerns Merkel and her associates is stopping other EU countries in financial peril such as Spain, Portugal, Ireland, Italy from following the Greeks into the sunset and thus derailing the project.
There IS the argument that some make, but which you rarely hear on the MSM, that Germany has been actively seeking the exit of Greece. Why? Because in the process, a much tougher Germanic control over the Eurozone is put in place and Merkel achieves that which the Kaiser and Hitler could not.
By David Vance On February 17th, 2012 at 7:21 pm
Poor old Marie Antionette, she never knew the half of it.
Grasping Euro MPs sparked fury last night by demanding a pay rise of up to three per cent. As the eurozone teeters on the brink of catastrophe and Britain is forced to tighten its belt, the shameless demand added to the growing clamour for us to pull out of the EU. The basic salary of an MEP is already £82,915 a year, compared with £64,766 for an MP at Westminster. Euro MPs can also rake in £360,000 in expenses. If the three per cent budget increase is ratified in Brussels next month, MEPs would receive an extra £2,500 in pay and more lucrative expenses and pension entitlements. It would also add the equivalent of an extra £45million a year to the hugely inflated parliamentary budget, just as debt-ravaged Greece faces financial ruin. The increase would bring the total cost of the army of MEPs and their hangers-on to a staggering £1.55billion next year.
£1.55 BILLION. Well worth it, right?
By David Vance On February 13th, 2012 at 8:45 am
Greece. Monday 13th February 2012.
The Parliament passes the austerity bill even as Athens burns. 40 politicians are expelled from their respective Parties because they refused to support the Bill and the unelected technocrat who presides over all of this – Lucas Papademos – says that in a democracy there is no place for violence. He’s right – but IS Greece in any sense a democracy? Just think about what is happening. Greek politicians are imposing policies AGAINST the will of the people. There’s a name for that and it is tyranny. Greek politicians are doing their bidding of their mistress – Angela Merkel – in order to get a second tranche of Euro cash to keep the gravy train rolling as best as possible. Does Anybody ACTUALLY believe that Greece will now settle down and put up with the harshness of what is being imposed?
For example, the austerity bill envisages a 20% pay cut. In the private sector. Who thinks that one will work?
There is a terrible reality here that needs spelt out. Greeks, politicians and citizens, joined the Eurozone in order to avail of the easy credit and cash that came with membership. It pretended to adopt strict standards of economic management – but these never materialised. People lived beyond their means, infrastructure was built on Euro-roubles, tax was avoided at all costs. And then…reality dawned. It became obvious that Greece was a financial basket-case and that if it was to be stopped from defaulting on vast loans from French and German Banks – “bail outs” were needed. The price of the “Bail Out” is essentially moving Greek standards of living back in time at least a few decades. That is what has caused the riots. Now another “Bail Out” is required and so more adjustment is sought. At this point, the politicians now act against the will of those who elected them. And Athens burns.
What to do? No easy answers but there are at least some fundamentals that could be put right;
1. Greece must default on its debt and leave the Eurozone in an orderly manner. This can be managed.
2. Greece must bring back its own currency – the Drachma. This will bring prices down, help tourism, and also ensure that the debtors are given a massive shave.
3. Greece must end its dangerous flirtation with socialism.
We get the word democracy from Greece. We also get the word tyranny from Greece. At the moment, the latter has been on the rise, driven on by the Eurozone.
By David Vance On February 11th, 2012 at 10:16 am
Greece has started to go up in flames as the chasm between the political class and the demos widens;
ATHENS exploded into violence yesterday as the Greek people reacted furiously to the rejection of the country’s austerity plans by eurozone finance ministers. Greek political leaders had agreed a dealincluding £2.5billion cuts but Brussels said it was not enough. Riots raged through the capital while mass demonstrations gripped Greece’s next biggest city, Thessaloniki. Some 20,000 protesters gathered in Syntagma Square, outside the parliament in Athens, during a general strike. Hooded youths hurled firebombs and stones at police, who responded with tear gas. The turmoil hit global markets with the FTSE 100 in London down 43.08 points at 5852.39. Greece now has less than a week to meet three conditions in return for £107billion in aid to stave off bankruptcy.
One of the little commented upon conditions of the Bail Out is that PRIVATE SECTOR salaries be shrunk by 20%. Is it any wonder the people are on the streets? Greek politicians have mostly agreed it is better to be a serf to Germany than to be an Independent nation. The people beg to differ. This will end when Greece leaves the Eurozone, brings back a new Drachma, and starts to live within what it can afford.