Sad day, if you are Greek!

Comment : Greece has promised to “fully clarify” its austerity measures, a day after eurozone chiefs demanded further cuts.
Finance Minister Evangelos Venizelos said 325m euros (£270m; $430m) of extra savings had been made with cuts from defence, health and local government budgets in return for 130bn-euro bailout with the EU and IMF.
Even with Greece close to complete social unrest Parliament approved a package of austerity measures on Sunday.
Ministers insisted that the major Greek political parties committed to implementing the cuts, regardless of who wins a general election scheduled for April.
Tell the average Greek in the street that another325m euros of cuts are needed and you can see why they believe Greek politicians have failed. Not that these politicians really do care as they are not the ones unemployed or can’t find enough money to buy food. Soup kitchens in the heart of one Europe’s capitals are now common place and demand is growing.
Greek politicians have failed to see the negotiating power they have in the outcome Germany and France don’t want, a messy default, is their biggest bargaining power. Both countries France are running scarred that if Greece defaults so would Spain, Portugal and most likely Ireland ending the Euro project. Some many call this economic blackmail but when times are bad, and for Greece they are really bad, sometimes you need to do what is best for your country.
What is hard to understand is why Greek Politicians have swallowed the hook and line argument from Germany and France? Both these countries are less concerned about Greece, it economy, and its people than their own. It’s about time Greek politicians stood up for Greece. 

Austerity could last Greece 10 to 15 years which will bring untold hardship of normal Greeks which in the end will lead to a total collapse of the Greek social system.


All alone!

Comment: David Cameron and theUKare left at the Euro Table all alone without any friends.

Guy Verhofstadt, the Belgian former prime minister and leader of the Liberal group, piled condemnation on the British prime minister’s position at the summit.

Jose Manuel Barroso says “David Cameron will come to the conclusion that he has made the blunder of a lifetime,” he told MEPs.

Last week, most heads of state or government of the member states showed their willingness to move ahead with European integration towards a fiscal stability union. They showed that they want more Europe, not less.”

The future holds a two speed Europe in its hands but it’s yet to be seen which part of Europe will come out of this crises in the best position? Time will tell which leader made the most sensible decision early December 2011.

Twenty years ago policy makers stated the initial design of the eurozone was defective and today’s crises really only just begun. Some policymakers now question the value of the eurozone stating: “We gave up the old safety valves of inflation and devaluation in return for lower interest rates, but now we do not even have the low interest rates.” You only need to look at the interest rates ofGreece, Italy and Spain.

Angela Merkel has yet to tell the real truth to the German people that being the guardian of the eurozone its market must provide for less buoyant markets in less creditworthy countries. Currently the problem is not helped by private companies are paying down their debt and are unwilling to invest or expand. If private markets will not provide the cash then the public sector will have to. This spending use to be in large government infrastructure projects creating jobs which increased public spending and consumption yet this cycle has been broken and it will boil down to hard cash.  If Germany opts out of these important decisions by not providing then a series of European government defaults will occur. Ms Merkel, of course, does not see that this is the role of Germany as such moves could decreaseGermany’s competiveness, exports and drag Germany into recession. Whatever the outcome the deal reached last week has consigned many euro countries to years of austerity which will drag the rest of Europe into the largest and longest recession for decades including Germany.

Socially this is going put great strain on society and no-one should be surprised if 2012 or beyond there will be more social unrest, riots and demonstrations in European capitals.

So there is anger at Mr Cameron by pro-European MPs inBritain, anger at Mr Cameron by other European leaders.  Yet Mr Cameron could have made the most sensible decision any European leader has made in the last decade in that he has foreseen the end of the European project and the collapse of the Euro. Many European leaders still falsely dream of its survival and future glory days.  

If Mr Cameron is right then Britain will be in a better position than any other European country to re-build markets after its collapse, if not then there will be many tough times ahead for the UK.

Death of the Euro

Britain will again be seen as the wrecker of European dreams as David Cameron vetoes an EU-wide treaty to tackle the eurozone crises. An agreement involving all 27 countries is now dead leaving the 17 euro counties to sort out the problem. Not finding a deal will now put British/Euro relations to an all-time low and possible create a two-speed Europe.

A two-speed Europe is however not guaranteed, and which part of this two-speed Europe will grow the fastest? Mr Cameron’s insistences that the UK financial services should have exemptions show the UK government faith that the financial sector will lead to future stronger growth in Britain.

To be fair Mr Cameron was in a ‘rock and hard’ place. Signing up to a treaty that many in his own party would have voted against would have left his leadership in tatters. Many in his own party agree with the statement by Boris Johnson this week that we are in danger of saving the cancer and not the patient’ concerning the Euro. Many MPs in the Conservative party would like the whole European project to die a horrible death and once and for all be put to bed. France and Germany in protecting their own interests are trying desperately to keep the Euro and European project life-support switched on.

At the end the life line of the whole European project may depend on the markets. With a compressive Euro deal now off markets are act very nervously that the Euro can be saved. Credit agency Moody has responded by downgrading French credit rating to A1. It is very possible other Euro countries will follow making borrowing for these countries more expensive.

Comment: Germany and France are fogging a dead horse. I can see why, the idea of a ‘European Super State’ was always their dream. They will fight for the survival of Euro and European dream with every last drop of German and French money even if that bankrupts their own country and leaves Europein tatters. It now up to other countries to save Europe!

The problem for all countries in the Euro is that they can’t de-value or print money to help their economy and any countries thinking of joining have to be fools. It is completely clear that those countries outside the Euro are in a better position the weather the global financial storm. The solution of France and Germany and tighter controls and more legislation on national governments that can’t or should not even be in the Euro. Punishing them may seem good in the eyes of the markets but does little to help the problem country.

Amongst some economists there is a growing realisation that the European project and the Euro are not worth saving. Deep down many agree with Boris that the Euro is the cancer and that both Germany and France should be looking for a way countries can exit in an orderly manner. I believe that this will not happen and we will get a disorderly and chaotic breakup more damaging for every country involved.

The British people have never been a fan of European integration, we like our Spanish holidays, our Belgium beer, our French wine but we don’t want the share our currency, our borders, most Brits will be happy the see the end of the European project.