Bollitics - Ireland, the Euro and the future of the EU

[PIW]

*Unnamed Source in Scaremongering Shock*

[Awol]

It's from the Guardian, not the Sun. Not exactly well known for scaremongering on the EU and immigration, are they?

[PIW]

The source is the person they are quoting not who has printed it. Plus, there is no empirical evidence as to the actual numbers being dispersed. There are those coming over, yes, but why do you not think the quote hasn't been attributed to anyone?

[Awol]

Seems the ECB are getting pretty scared that Greece are going to bring the whole game of European fantasy finance crashing down.

ECB's G.Paramo-Greek default may do irreversible damage

MADRID, May 12 (Reuters) - A debt default would do extreme and perhaps irreversible damage to Greece's economy and banking sector, European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo, warned on Thursday. "Far from being a convenient means of minimising economic losses and dissipating uncertainty, a default would have extreme adverse consequences, many of an irreversible nature, for the Greek economy," Gonzalez Paramo said in a speech at an RBC Capital Markets central bank conference. As Greece is not an emerging economy, studies showing defaults can turn out better than feared were not relevant in this case, he said. "Those basing their arguments on past experiences in emerging economies fail to take into consideration the many differences in the case at hand: Greece is an advanced economy sharing a single currency." He said the debate on whether a debt restructuring or reprofiling constituted a default may be irrelevant. "Such a step (debt restructuring) should not be taken lightly, since it may be tantamount to a sovereign default," he said.

Also a good piece on this from Oborne today:

Britain will no longer foot the bill for the EU’s bankrupts

George Osborne faced two major crises when he became Chancellor of the Exchequer exactly one year ago. The first of these was national. Britain was close to broke, and so he announced credible plans to tame the deficit. He deserves nothing but praise for this prompt action.

The second crisis was international, and here Osborne has been more cautious and less sure-footed. The origins of this second crisis lie in the collapse of the eurozone. A number of countries, notably Greece, Portugal and Ireland, are in effect bankrupt. Their spending commitments are far greater than their revenues, yet they are unable to raise money in the capital markets to make up the difference. As a result, their only hope of survival is the humiliation of economic bail-out.

Theoretically, none of this should matter to Britain one jot – at least not directly. Mercifully, we did not sign up to the single currency, and are therefore completely independent of the common economic government imposed upon eurozone countries by the European Central Bank from its Frankfurt HQ.

Unfortunately, in practice it matters very much indeed. This is because of the recklessly expensive error made by the outgoing chancellor Alistair Darling around this time last year. Darling’s disaster came on Monday May 10, 2010, when a meeting of European leaders took the momentous decision to launch a 750 billion euro fund, paid for by all European taxpayers, to rescue eurozone countries who met with financial difficulties.

In an action that was entirely characteristic of New Labour’s free and easy way with British taxpayers’ money when it came to the European Union, Darling committed Britain to the bail-out. It was to be his final act as Chancellor. The following day, David Cameron and Nick Clegg reached their historic agreement, and the Coalition was formed.

To be fair to Osborne, he did his best to protest by making clear his opposition to British involvement in the bail-out in a telephone call to Darling. However, critics of the Chancellor, including some in the Conservative Party, feel that he should have been tougher and made clear that when he took over at the Treasury he would have nothing to do with any deal signed by Darling.

But it is easy to understand why Osborne did not take that step. He may have felt that he did not wish to define his Chancellorship by starting off with a blazing row with Brussels. He may well have feared that taking such a drastic measure would have jeopardised the coalition deal with the notoriously europhile Liberal Democrats, then at an especially delicate stage. He may have felt powerless to act. Whatever the reason, Osborne did not attempt to overturn the Darling agreement when he became Chancellor, and we are living with the consequences today.

The first Greek bail-out had already been arranged by the time Darling wrote his blank cheque. But the consequences of his profligacy have since been felt. The Irish bail-out has so far cost Britain some £7 billion (more, in fact, as we also loaned them money on a bilateral basis) while Portugal has cost a further £4.2 billion, though the final sum has yet to be agreed. It is highly unlikely that the British taxpayer will ever again see more than a small fraction of the money we have committed to these two bankrupt countries.

To sum up, so far we have unloaded some £11 billion on the eurozone crisis. This represents a very significant percentage of the so-called cuts which Osborne imposed in last year’s Budget, and which brought hundreds of thousands of protesters on to the streets of London, some of them violent.

Indeed, it is surely surprising that more anger is not felt about the heavy cost of our eurozone commitment. One answer may lie with the BBC’s semi-monopoly of news coverage. On the one hand, its presenters have gone out of their way to emphasise the severity of the Osborne “cuts”, rarely missing an opportunity to give maximum airtime to anti-Government campaigners. On the other, the BBC has consistently minimised the extent of British exposure to the eurozone bail-outs.

But now comes a fresh crisis. It is clear that last year’s Greek bail-out has failed. As could readily have been predicted at the time, the 110 billion euros handed to Greece by the European taxpayer is now lost money. To give credit to George Papandreou, the Greek prime minister, he has struggled manfully to impose the deep cuts he promised. But state revenues have collapsed, in large part because membership of the single currency dooms poor Greece to permanent stagnation and decay. The country has gone beyond recession into depression. Gross domestic product, down 4 per cent last year, is forecast to drop a further 3 per cent in 2011. The authority of the state is in freefall, and many parts of Greece are now lawless. It would be hard to exaggerate the sheer horror of the situation, or the scale of the national suffering.

In dire circumstances such as these, the sensible decision would be to renege on its debts and set the currency free to find a level where economic activity can resume, which in the case of Greece is about one third of where it stands today. Sadly, the European Union has now acquired a demented logic of its own. It is calling for a fresh economic package to enable this unhappy, godforsaken country to remain theoretically solvent. The best estimate I have seen suggests that Greece will need a further 150 billion euros to keep it afloat over the next three or four years.

The reason why the EU is set on this frankly lunatic course is terrifying. The sad truth is that most European banks, including the ECB, are now technically bankrupt. The only way they can stay afloat is by lying about the state of their accounts. So long as Greece, Portugal and Ireland are theoretically solvent, their debt can be marked at par on the banks’ balance sheets. The moment that they acknowledge reality by rescheduling their debt (going bankrupt, in ordinary discourse), the ECB and the rest will be forced into large write‑offs and provisions.

The situation is so serious that one executive board member of the ECB, Jürgen Stark, has warned that Greek debt restructuring could cause a financial disaster that would put the devastation that followed the collapse of Lehman Brothers in 2008 “in the shade”.

This is the hideous background to the meeting of European finance ministers that takes place on Monday and Tuesday in Brussels. As with Portugal and Ireland, Britain will once again be asked to throw good money after bad in order to maintain the blatant fiction that the Greek state – and the rest of the eurozone – is financially sound.

This will give George Osborne an opportunity to remedy Alistair Darling’s mistake of 12 months ago. I understand that he will take it. The Chancellor will argue next week that Britain played no role in the first Greek bail-out, and so the rescue mechanism to which his predecessor mistakenly subscribed does not apply. This is only sensible. Osborne’s fundamental duty is not to ingratiate himself with European leaders – it is to guard the national finances. That means refusing to commit a penny more of British taxpayers’ money to the costly and doomed fight to save the euro.

[PIW]

Although no-one wants to see us throwing good money after bad it should be recognised that a weakened Eurozone economy will have dire consequences for us also. I'm not saying here that we should bail out every country every time, but just shrugging our shoulders and saying its not our problem is as naive as it is stupid.

It was in our own interests to help out in Ireland and the same with Greece. If they fail then not only will one of our most important trading partners potentially collapse in a domino effect, but it will strengthen even further Germany's economy which is now growing strongly. We cannot compete with such a huge market on our doorstep as they will be competing directly with us. The Eurozone does not compete with us but works with us which is why its survival is of paramount importance.

[Awol]

The source is the person they are quoting not who has printed it.

Yes, I'm aware of that thanks, my point was that the Guardian are not generally in the business of printing potentially inflamatory statements on issues that represent their own pet projects.

Plus, there is no empirical evidence as to the actual numbers being dispersed.

You don't think the Italians may have counted them in, or maybe made an estimate based on the number of boat trips made to transport them to the mainland?

why do you not think the quote hasn't been attributed to anyone?

Er...

EU Official: "This is the score"

Journo: "Can I quote you on that?"

EU Official: "No way, more than my jobs' worth!"

[PIW]

You can't make a policy based on estimates and expect it to work. 'EU Official' can mean anyone. Could be the tea lady who has an opinion. Means absolutely nothing.

[CVByrne]

I dislike non eurozone people like you English championing the possible demise of the euro. You are not in the single currency, so to be perfectly honest it's not your problem nor your business. Bailouts of your european partners is in your interest, otherwise you wouldn't do it. Britain is a euro sceptic country you need to get it into your heads that the rest of us don't think like you. Irish people know our prosperity was thanks to europe.

[PIW]

I dislike non eurozone people like you English championing the possible demise of the euro. You are not in the single currency, so to be perfectly honest it's not your problem nor your business. Bailouts of your european partners is in your interest, otherwise you wouldn't do it. Britain is a euro sceptic country you need to get it into your heads that the rest of us don't think like you. Irish people know our prosperity was thanks to europe.

Really? So championing the Celtic tiger was about how great Europe was rather than pushing the strengths of the Irish economy?

[Danwichmann]

I dislike non eurozone people like you English championing the possible demise of the euro. You are not in the single currency, so to be perfectly honest it's not your problem nor your business. Bailouts of your european partners is in your interest, otherwise you wouldn't do it. Britain is a euro sceptic country you need to get it into your heads that the rest of us don't think like you. Irish people know our prosperity was thanks to europe.

[Awol]

Although no-one wants to see us throwing good money after bad it should be recognised that a weakened Eurozone economy will have dire consequences for us also. I'm not saying here that we should bail out every country every time, but just shrugging our shoulders and saying its not our problem is as naive as it is stupid.

My Bold: Quite an ironic statement really. The problem is so big that it can't simply be solved by bailouts. The banks and now many nations are basically insolvent and membership of the Euro is preventing them from recovering. Failure to recognise this and continuing to repeat the same mistakes again and again is a strategy Douglas Haig would be proud of.

The debts are not serviceable, even if politicans are prepared to beggar their people in order to try.

It was in our own interests to help out in Ireland and the same with Greece. If they fail then not only will one of our most important trading partners potentially collapse in a domino effect, but it will strengthen even further Germany's economy which is now growing strongly.

How will German banks smashed up by defaulting nations strengthen their economy??!

'EU Official' can mean anyone. Could be the tea lady who has an opinion. Means absolutely nothing.

Right, the tea lady is it? Although I don't subscribe to their politics I have a little more respect for the standard of journalism in the Guardian than that.

I dislike non eurozone people like you English championing the possible demise of the euro. You are not in the single currency, so to be perfectly honest it's not your problem nor your business. Bailouts of your european partners is in your interest, otherwise you wouldn't do it. Britain is a euro sceptic country you need to get it into your heads that the rest of us don't think like you. Irish people know our prosperity was thanks to europe.

As the man from the IMF said of the Irish negotiators: "Stockholm syndrome".

[bickster]

I dislike non eurozone people like you English championing the possible demise of the euro. You are not in the single currency, so to be perfectly honest it's not your problem nor your business. Bailouts of your european partners is in your interest, otherwise you wouldn't do it. Britain is a euro sceptic country you need to get it into your heads that the rest of us don't think like you. Irish people know our prosperity was thanks to europe.

So Ireland will give us the loan back then?

So we wont have to help bail out the euro either?

That gives us certain rights, we aren't removed, we are involved.

Oh and I dislike people lumping the whole of the country together with phrases like "you English"

[VillaEire]

.

Also this nonsense that banks pushed mortgages on people, the weren't ringing up like a phone company does, they weren't pushing their wares in the streets. They didn't need to. No the government pushed the country to the property obsession and the media made a fortune off selling it too.

That's nonsense, full page ads in newspapers and tv ads in every break. It's not like they weren't putting themselves out there.

[CVByrne]

I dislike non eurozone people like you English championing the possible demise of the euro. You are not in the single currency, so to be perfectly honest it's not your problem nor your business. Bailouts of your european partners is in your interest, otherwise you wouldn't do it. Britain is a euro sceptic country you need to get it into your heads that the rest of us don't think like you. Irish people know our prosperity was thanks to europe.

So Ireland will give us the loan back then?

So we wont have to help bail out the euro either?

That gives us certain rights, we aren't removed, we are involved.

Oh and I dislike people lumping the whole of the country together with phrases like "you English"

Please read my whole post. I said bailing out your european partners is in your interest. Ireland does a huge amount of business with Britain. It was in your interest to help bail us out. It's nothing to do with the euro. It's to do with trade partner. But the euro zone problem is separate, so I dislike euro sceptic country championing the demise of something you didn't join. It's like going haha, you failed.

Stick to the issue, it's ecb money running our banks is not british money., british money helps run our country and bridge our defect.

[CVByrne]

.

Also this nonsense that banks pushed mortgages on people, the weren't ringing up like a phone company does, they weren't pushing their wares in the streets. They didn't need to. No the government pushed the country to the property obsession and the media made a fortune off selling it too.

That's nonsense, full page ads in newspapers and tv ads in every break. It's not like they weren't putting themselves out there.

That's advertising, they weren't going round forcing people to take out mortgages. I get rung by upc asking me to get all my tv and internet with them and I say no. O2 know when I'm almost out of contract and ring me offering a shit deal to lock me in for another year. I say no.

People won't accept responsibility for their actions. I think hard before buying a 500 pound phone yet people sign up for half a million loan to but a house. Then moan as if they were forced into it all and they are victims.

[snowychap]

That's advertising, they weren't going round forcing people to take out mortgages.

Again, I can't speak for what was happening over there but I can't imagine that it was too different to over here.

People were being sold a dream by more than governments.

They have been told for years that bricks and mortar are an investment for the future; that renting is 'dead money', and that one should 'get on the property ladder' at the earliest opportunity.

They've had TV programmes selling them the idea that things could only go up and that making money was merely a matter of either buying a property and sitting on it for some time or splashing a bit of paint around (from Allsopp and her sidekick to the other hundred and one programmes).

They've had tellers asking them whether they'd like mortgage advice when they're just trying to deposit a cheque in to an account; they've had advisors mis-selling the mortgages to them when they have sought advice, and they've had (supposedly professional) people offering to fiddle mortgage applications on their behalf by lying about their income in order that they might join in on this dream.

They have, in their own way, helped to fuel the apparent economic booms which have been enjoyed by more than just them (i.e. by those who didn't get themselves in to that level of debt).

And it's still being 'sold'. The movements in the housing market are still reported on as of crucial importance to the well-being (and future well-being) of the economy and we are supposed to be pleased with the description of the housing market 'stabilizing' when it conjures up nothing more to me than the moment before Mr Creosote gives in to the wafer-thin mint.

[CVByrne]

You are 100% correct with that post snowy.

But over here it was worse. Everything was bet on property. The government actively pushed people away from renting into home ownership. The papers championed the crooks lining their pockets from this. I have had people, like my mother tell me I'll never be able to buy a home if I don't get on the ladder now. Madness.

This was a collective mania, everyone was saying buy a home, buy, another home, buy a home in bulgaria. Then the same papers, even same journalists have the gall to turn around and start pointing fingers, the economists who said there will be a soft landing now try to give advice that the house prices are levelling off now.

Hypocrits, covering their asses to keep their well paid jobs.

In the world of horse racing we call this aftertiming. Like saying you fancy this horse, he's defo gonna win and after he loses you say, thank god I didn't bet on him.

You see we post our bets for that day before racing starts, then when racing is over we can't hide from our opinions, but we don't try to. You man the **** up and accept if you got it right or wrong and don't try blame someone else.

That's what I want from people here, accept your part and then you can blame the people who ruined this place. But at least accept your part in your own problems

[snowychap]

Unless I've missed it, in your previous posts you aren't complaining about journalists and commentators and you aren't complaining about those companies who made their money (and are still making that money) out of those caught up in this collective mania (indeed, taken with your other posts on economic matters, it comes across as though you are implicitly lauding them for taking advantage of people indulging in this behaviour).

You are complaining about the people who were sold on that dream, the government and regulators.

If you want to further the betting analogy, you seem to be blaming the mug punter for putting at risk your present and future winnings when the bookie has taken him (the mug) for all he has and more. All the while, he has probably earnt you a fair few quid in the process by pushing out the price of the winners that you managed to select and back.

[CVByrne]

You got the gambling analogy completely wrong also I can't see any reason to engage with you on these forums. You are an antagonist. So it's best of I simply ignore you.

I'm happy to engage with others on this topic. As long it's on topic.

[CVByrne]

You got the gambling analogy completely wrong also I can't see any reason to engage with you on these forums. You are an antagonist. So it's best of I simply ignore you.

I'm happy to engage with others on this topic. As long it's on topic.