Greece on the slide

Nothing can contain my disgust with the EU at their complicity and indeed authorship of the continued stresses in Greece, among other southern countries. Paul Mason offers a telling account of the Greek predicament:


On the walls somebody has spray-canned "Love or Nothing". Right now there is a heck of a lot of nothing: shops closed, stripped, barred, graffitied, the fascias chipped off as ammunition in riots, burned out, gone.

I am no fan of Mason, but like all true socialists he takes things seriously. Only he cannot- one assumes because he has other kinds of revolutionary solution in mind- come to the only sensible conclusion that will help Greece out of its hole: leaving the Euro. The only argument I could ever see in favour of the European Union was that it helped less-developed nations to integrate into the developed core. Now that process is reversing, and far from despairing over it, the Euro elite, from Germany to Spain, actually rejoices that 'necessary' 'reforms' are underway. As Mason illustrates, this is not reform any more than punishment beatings are justice. It's just beyond belief that the pols of Europe, so used to pivoting whole elections around a couple of percent of unemployment and a couple of percent of benefits or taxes, are merrily going along with changes in the tens of percent- unemployment, benefits, taxes. All the while it is verboten to consider the essential ground of currency which is normally a powerful tool available to the politicians who have been voted by their electorate. Mason's sense of foreboding is wise, even if the socialist in him cannot bring himself to undermine the essentially socialist construct of the Euro.

and the key metric is...

No, not the bond yields for Spain, or the value of the Euro, or how the markets have risen on the news of Mario Draghi's promise of unlimited bond buying. No, the fact that matters is this - Greek unemployment rose by 1% in July. In July. In July alone! At 24.4% it's 7% higher than it was this time last year. It hasn't surpassed Spain's, but you can see the trend. Quantitative easing has decoupled the markets from the economy; government debt shielded by this has decoupled the populace from economic reality. Nevertheless the real weight of the economic uncertainty is being felt by the economic decisionmakers on the high street, in manufacturing and construction, and reality bites as the taxman goes hungry.

The big emphasis of Mario Draghi's announcement was 'conditionality' ie. the PIIGS can have the money IF they cut Government spending. This emphasis was for Merkel. The trouble is, that puts the population of Greece ever more into the position of rabbits in the EU headlights- pensioners paralysed, students pessimistic, everyone in between grasping for everything they can hold on to. It's not reform any more than the surgeons in the Middle Ages were carers. It's blood-letting, and the patient merely blanches ever whiter.

Crazy Rajoy

This summer I spent my holidays in Spain. My moderate Spanish was tested and exposed from time to time, but travelling the country as I did from North to South was a great experience. Everywhere people were glad to see tourists; everywhere there were plenty of rooms available. Most areas it was very quiet, not at all like the highest of high seasons. On getting back I read that Spain had enjoyed a record-breaking number of tourists, according to official figures. Mmmm. I wonder how they are compiled?

Here's a great article on the current situation of Spain on ZeroHedge. What it emphasises is the relative difference of Spain,, especially that they evolved for themselves a special kind of finance model called 'dynamic provisioning' which basically allows them to fix the asset values of banks until favourable. This means that, according to ZeroHedge, the banks in Spain have their solvency underwritten by assets which are 40% overvalued. Perhaps a better word for the system could be 'static provisioning', maybe 'price fixing' or simply just 'fraud'.

Anyhow, with my Spanish and a little free time, I watched Mariano Rajoy and Herman Van Rompuoy face the press today. Once upon a time I had hopes that Rajoy, unencumbered by the burden of responsibility which was Zapatero's, would be able to take a fresh approach. Uh oh. Rajoy's a gung-ho Charge of the Light Brigade type. He ranted in practically every single answer, despite the questions being far from challenging. No-one wanted to ask something simple like 'how much unemployment is unbearable for a country?' No, they knew that practically the only thing Rajoy would say is 'the Euro is forever''. Much like love. And we know how that usually turns out. The more you have to say it, the less it means and the more it signifies. 

balls

Thinking about the Libor scandal and the possible role of Ed Balls in this fiasco today, I reminisced a little in writing, as follows...

I was standing on some steps in London, not far from Grey's Inn- the legal college. It had been a fairly eventful visit to a friend who was just starting his career in the Foreign Office. It was about 2002. His fiancee had just given me a tour of the Inn where she was pupilled. At least, I think that's how it was. It's funny that when you say aloud to someone that you both should remember this moment and what was said and where, it should become so hazy. Yet in my mind at the time there was a sort of desperate certainty that made this act of conscious marking both necessary and seemingly futile. By saying 'remember this moment' I made the moment a haze, but I remember the content of what I wanted to say; it was a nice round package then and remains so now, as dumb as an improvised explosive device.

The content of it was not related directly either to law or to foreign affairs. Inapt was a word I could use for it. It was a statement out of synchronization with the times we were living in or the people we then were. I was criticising bankers; I was criticising Gordon Brown. I said that together they would make a disaster from the City and bring the country to economic catastrophe. House prices were pumped, interest rates sedated, profits on steroids and bonuses on Red Bull. It was all a word which I didn't yet know- a FUBAR. If I had known the word FUBAR in the sense of understanding what it meant I would have applied it to Brown's Britain, which was led by Blair but underwritten by the crazy gold selling interest rate calming end of boom and bust great moderation nonsense espoused most notably by Gordon Brown, Chancellor and master doom-distiller from Kirkaldy.

And I was right. The End.

we are all swivel-eyed xenophobic extremist anti-Maastricht bastards now

Love the intro from Norman Tebbit's lovely blogpost:

I post just as the first Spailout is being digested (and pretty thin stuff it seems). We've moved on from Grexit to Spailout, in terms of the latest flutterings. Germany is still growing, looking suspiciously like an undertaker booming as the front-line casualties mount. I'm also learning German (true, actually, but unrelated- I think).

 Eurofail#

Ok, it's been a while. Mostly I've been observing rather than commenting anywhere- just the occasional tweet from me - @Edtho in case you'd  like to follow. But what a lot to observe. From where I sit the view of the Eurocrisis is just fascinating. It's all a question of to what extent anyone's in control and whether this is a "beneficial crisis" or a crisis of real proportions.

As I see it now it's a bit of both. Germany's Merkel clearly is in the best position and looks like the director, but it suddenly occurred to me that she's like Elsa in Indiana Jones and the Last Crusade. The ground opens up and the grail slips down and lodges on a ledge below. That's German Euro-hegemony, in my analogy. Elsa (Alison Doody- Mrs Merkel) is reaching down for the Grail- stretching, stretching and she just can't reach while holding firmly to the floor above her. Well, the Germans don't actually have what it takes to solve the crisis without help, do they? They can bail out Greece but how about Spain? However, the idea of German virtue conquering all in Europe is so attractive to Elsa (Merkel) that she defies reality and keeps on stretching. Meanwhile, Indiana Jones (Cameron- ha) would like to dissuade her from the unrealistic over-reach. In the end, the grail is more attactive than the solid ground and Elsa's grasp of the latter slips as she pursues the former. And there you have it- a prediction for 2012, I suppose.

The divergence from the analogy is that it isn't Elsa (Merkel) who is lowering herself over the abyss for the grail, but the PIIGS who are being lowered- that's why the grail is so overwhelmingly attractive- because Germany doesn't appear to be in the forefront of risk. I think that could be somewhat illusory though, which is the exciting twist in the tail. To be continued....