In January 2011, French President Nicolas Sarkozy proclaimed that by the end of the year, France was ready to implement a financial transactions tax (FTT) to help poor countries. The German Chancellor, Angela Merkel, also expressed her support.
Sarkozy promised: “My conviction has always been that the FTT is the best form of innovative financing…. France is prepared to implement innovative financing mechanisms even if other countries should choose not to join. Because there is a moment in time where you have to go from discourse to setting an example.”
But, surprisingly, no agreement has yet been reached.
It’s urgent that France and Germany take concrete action to drive this joint proposal forward and to ensure that the revenues will be used to help reach the Millennium Development Goals.
France’s and Germany’s generosity is to be admired and we should do all we can to encourage this initiative, especially in the wake of such momentous upheavals within the Eurozone.
One trusts that our Prime Minister takes the time to gently remind the French and the Germans of this more-than-generous gesture.
The petition is here: http://www.thepetitionsite.com/takeaction/825/474/357/
The Merkozy Love-in.
This week sees yet another meeting of Eurozone leaders. On previous form, I would bet that the only outcome will be a series of half-measures and promises which will be primarily designed to reassure fund managers, investors and to placate the banks. The fate of the Euro will yet again, be postponed as millions of Europeans continue to stand in the fast-growing unemployment queue.
Theoretically, Euroleaders (or should I say Frau Merkel) will be deciding not-only the fate of the Euro but the fate of every economy in what used to be known as the “advanced industrial world”.
Austerity has become the new growth with the INEVITABLE result of ever-lengthening unemployment queues and increasingly turbulent currents of social unrest.
Received wisdom is that deficit reduction is more important than job creation through fiscal stimulus. The downside is that for countries which have already launched themselves on a deficit reduction programme, it is beginning to look as if there can never be quite enough deficit reduction because of rapidly decreasing tax revenue.
There will always be that no-man’s land between deficit reduction and fiscal stimulus. Not a single economy has arrived there yet.
However, what is even more worrying, is that there isn’t a single politician, banker or economist who can even begin to put a time frame on the process. Currently, it looks like an open-ended arrangement.
One thing that the average punter does NOT realise that there are initiatives and money movements within the banking system which he knows nothing about – unless of course, it is such a big move that the banking authorities decide that would be prudent to go public. Last week’s sudden announcement by central banks that they would “assist” European banks which needed US dollars was a case in point.
The coordinated move was so huge that the most likely cause was that one or two major European banks must have made THE phone-call to their own Treasury to say that they were about to go under. The U.S. Federal Reserve Bank, the European Central Bank, the Bank of England, the Bank of Japan, the Swiss National Bank, and the Bank of Canada lowered their rates for borrowing dollars from each other by a 0.5 percentage point to “ease strains in financial markets.” (a meaningless phrase).
They went on: “At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar, but the central banks judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise,”
Even China took steps to stimulate domestic demand by lowering its central bank interest rate.
Make no mistake – there was a crisis.
Every action so far by central banks and politicians has been a temporary fix. They are still trying to figure out the cure – if indeed there is one.
Last week, the central banks merely threw a rope for Eurobanks to cling onto – but that does NOT solve – or even begin to solve the still-spreading sovereign debt crisis.
This week, communiques are being written, meetings are being conducted and financial horse-trading is taking place as under-qualified politicians attempt to put together a package which, in one fell swoop should solve the global financial crisis.
The whole circus will culminate in a December 9th Brussels summit ( another one) during which the 17 Eurozone leaders will be joined by the 10 non-Euro-participants and a series of agreements will be promulgated.
The ONLY agreement that they really need to pull out of the hat is a “contract” to coordinate Eurozone fiscal policies.
Merkel’s dream of a Federal Europe will have taken its first faltering step.
So far , the Markets have tended to play ball with the floundering politicians but even those eternal optimists are fast running out of patience.
The latest rally has no legs because the current assumption is that somehow (for the first time ever), Eurozone leaders will provide a solution.
So, what is the likelihood of a TARP (Toxic Asset Relief Programme)? What is the likelihood of a coordinated programme to recapitalise ALL the banks? What is the likelihood of Germany changing its mind on ever-increasing austerity programmes which are driving weak Euro economies to Depression (these days, mere Stagnation seems like an attractive alternative – an aspiration!)
So far, the Eurointransigence has been destructive: Unemployment, demotivated and desperate countries, amplifying hardship, collapsed governments.
The evidence so far suggests that those believing that this week will provide the Miracle in Brussels will be disappointed.
The weeks events began with today’s meeting between Chancellor Merkel and Nicolas Sarkozy – The Merkozy Meeting. The output was predictable with an early hint of further postponement.
German Chancellor Angela Merkel has called for “structural changes” after the keenly-watched meeting with French President Nicolas Sarkozy in Paris today. The two leaders said that they had agreed on a “comprehensive” agreement to be proposed on Friday at the summit. (What he meant was is that he had agreed with everything that Frau Merkel had proposed)
“This package shows that we are absolutely determined to keep the euro as a stable currency and as an important contributor to European stability,” said Merkel.
Among the proposals were that the European Court of Justice will have a say when countries break the legally established limit for public debt of 3% of GDP. Also, both leaders rejected the need for the joint issuance of European debt by member states, adding that socialising debt burdens is no solution. (Another Merkel victory).
Sarkozy has added that he expects all of the necessary negotiations to be finalised by March (no surprises there!) and that changes to the Treaty will be ratified in France, following the next national elections in March.
The pair indicated that it is yet to be seen if the changes will be adopted by all 27 European nations or simply the 17 Euro states.
Lastly, they also made it clear that it is their intention to continue working with the International Monetary Fund and to bring forward the implementation of the permanent rescue fund by a full year, to 2012.
Here in the United Kingdom, where politicians have recently voiced concerns on how EU treaty changes could affect Britain, Downing Street has said that there will be no referendum on the EU treaty changes.
A spokesman for Prime Minister said, “What is being talked about is a new set of rules for the Eurozone and how those countries that are members of the euro organise themselves on fiscal policy. There is no proposal on the table for a transfer of powers from the UK to Brussels. That is not what is being talked about…No-one has put that on the table and I don’t think it is likely to be on the table.”
At the end of the first day, it seems that we are about to be served-up yet another portion of bland European procrastination – but what an object lesson in Blatant Brinkmanship from the Germans!
The moves by both Greece and Italy towards a Technocratic -style government are both reassuring and frightening. The increased complexity of global economics has really exposed elected politicians as being incapable of making the right decisions, except at the most superficial level. The worrying thing is that Austerity Economics has become a modern Mantra and so has come to be viewed as a modern divine truth. In fact, Stimulus Politics is what is needed. Currently, the cure is killing the patient. The United Kingdom experience is an excellent example of a policy which clearly demonstrates that austerity measures gradually KILL economic growth but that political dogma always wins out. Greece has been an extreme example where austerity has done little more than accelerate economic collapse. Italy has followed and now French austerity economics are set to cause even more economic havoc.
October 2011 Eurozone Output
This is what they said:
1. Over the last three years, we have taken unprecedented steps to combat the effects of the world-wide financial crisis, both in the European Union as such and within the euro area. The strategy we have put into place encompasses determined efforts to ensure fiscal consolidation, support to countries in difficulty, and a strengthening of euro area governance leading to deeper economic integration among us and an ambitious agenda for growth. At our 21 July meeting we took a set of major decisions. The ratification by all 17 Member States of the euro area of the measures related to the EFSF significantly strengthens our capacity to react to the crisis. Agreement by all three institutions on a strong legislative package within the EU structures on better economic governance represents another major achievement. The introduction of the European Semester has fundamentally changed the way our fiscal and economic policies are co-ordinated at European level, with co- ordination at EU level now taking place before national decisions are taken. The euro continues to rest on solid fundamentals.
2. Further action is needed to restore confidence. That is why today we agree on a comprehensive set of additional measures reflecting our strong determination to do whatever is required to overcome the present difficulties and take the necessary steps for the completion of our economic and monetary union. We fully support the ECB in its action to maintain price stability in the euro area. Sustainable public finances and structural reforms for growth
3. The European Union must improve its growth and employment outlook, as outlined in the growth agenda agreed by the European Council on 23 October 2011. We reiterate our full commitment to implement the country specific recommendations made under the first European Semester and on focusing public spending on growth areas.
4. All Member States of the euro area are fully determined to continue their policy of fiscal consolidation and structural reforms. A particular effort will be required of those Member States who are experiencing tensions in sovereign debt markets.
5. We welcome the important steps taken by Spain to reduce its budget deficit, restructure its banking sector and reform product and labour markets, as well as the adoption of a constitutional balanced budget amendment. Strictly implementing budgetary adjustment as planned is key, including at regional level, to fulfil the commitments of the stability and growth Pact and the strengthening of the fiscal framework by developing lower level legislation to make the constitutional amendment fully operative. Further action is needed to increase growth so as to reduce the unacceptable high level of unemployment. Actions should include enhancing labour market changes to increase flexibility at firm level and employability of the labour force and other reforms to improve competitiveness, specially extending the reforms in the service sector.
6. We welcome Italy’s plans for growth enhancing structural reforms and the fiscal consolidation strategy, as set out in the letter sent to the Presidents of the European Council and the Commission and call on Italy to present as a matter of urgency an ambitious timetable for these reforms. We commend Italy’s commitment to achieve a balanced budget by 2013 and a structural budget surplus in 2014, bringing about a reduction in gross government debt to 113% of GDP in 2014, as well as the foreseen introduction of a balanced budget rule in the constitution by mid 2012. Italy will now implement the proposed structural reforms to increase competitiveness by cutting red tape, abolishing minimum tariffs in professional services and further liberalising local public services and utilities. We note Italy’s commitment to reform labour legislation and in particular the dismissal rules and procedures and to review the currently fragmented unemployment benefit system by the end of 2011, taking into account the budgetary constraints. We take note of the plan to increase the retirement age to 67 years by 2026 and recommend the definition by the end of the year of the process to achieve this objective.
We support Italy’s intention to review structural funds programs by reprioritising projects and focussing on education, employment, digital agenda and railways/networks with the aim of improving the conditions to enhance growth and tackle the regional divide. We invite the Commission to provide a detailed assessment of the measures and to monitor their implementation, and the Italian authorities to provide in a timely way all the information necessary for such an assessment. Countries under adjustment programme
7. We reiterate our determination to continue providing support to all countries under programmes until they have regained market access, provided they fully implement those programmes.
8. Concerning the programme countries, we are pleased with the progress made by Ireland in the full implementation of its adjustment programme which is delivering positive results.Portugal is also making good progress with its programme and is determined to continue undertaking measures to underpin fiscal sustainability and improve competitiveness. We invite both countries to keep up their efforts, to stick to the agreed targets and stand ready to take any additional measure required to reach those targets.
9. We welcome the decision by the Eurogroup on the disbursement of the 6th tranche of the EUIMF support programme for Greece. We look forward to the conclusion of a sustainable and credible new EU-IMF multiannual programme by the end of the year.
10. The mechanisms for the monitoring of implementation of the Greek programme must be strengthened, as requested by the Greek government. The ownership of the programme is Greek and its implementation is the responsibility of the Greek authorities. In the context of the new programme, the Commission, in cooperation with the other Troika partners, will establish for the duration of the programme a monitoring capacity on the ground, including with the involvement of national experts, to work in close and continuous cooperation with the Greek government and the Troika to advise and offer assistance in order to ensure the timely and full implementation of the reforms. It will assist the Troika in assessing the conformity of measures which will be taken by the Greek government within the commitments of the programme. This new role will be laid down in the Memorandum of Understanding. To facilitate the efficient use of the sizeable official loans for the recapitalization of Greek banks, the governance of the Hellenic Financial Stability Fund (HFSF) will be strengthened in agreement with the Greek government and the Troika.
11. We fully support the Task Force on technical assistance set up by the Commission.
12. The Private Sector Involvement (PSI) has a vital role in establishing the sustainability of the Greek debt. Therefore we welcome the current discussion between Greece and its private investors to find a solution for a deeper PSI. Together with an ambitious reform programme for the Greek economy, the PSI should secure the decline of the Greek debt to GDP ratio with an objective of reaching 120% by 2020. To this end we invite Greece, private investors and all parties concerned to develop a voluntary bond exchange with a nominal discount of 50% on notional Greek debt held by private investors. The Euro zone Member States would contribute to the PSI package up to 30 bn euro. On that basis, the official sector stands ready to provide additional programme financing of up to 100 bn euro until 2014, including the required recapitalisation of Greek banks. The new programme should be agreed by the end of 2011 and the exchange of bonds should be implemented at the beginning of 2012. We call on the IMF to continue to contribute to the financing of the new Greek programme.
13. Greece commits future cash flows from project Helios or other privatisation revenue in excess of those already included in the adjustment programme to further reduce indebtedness of the Hellenic Republic by up to 15 billion euros with the aim of restoring the lending capacity of the EFSF.
14. Credit enhancement will be provided to underpin the quality of collateral so as to allow its continued use for access to Eurosystem liquidity operations by Greek banks.
15. As far as our general approach to private sector involvement in the euro area is concerned, we reiterate our decision taken on 21 July 2011 that Greece requires an exceptional and unique solution.
16. All other euro area Member States solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms. The euro area Heads of State or Government fully support this determination as the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the euro area as a whole. Stabilisation mechanisms
17. The ratification process of the revised EFSF has now been completed in all euro area Member States and the Eurogroup has agreed on the implementing guidelines on primary and secondary market interventions, precautionary arrangements and bank recapitalisation. The decisions we took concerning the EFSF on 21 July are thus fully operational. All tools available will be used in an effective way to ensure financial stability in the euro area. As stated in the implementing guidelines, strict conditionality will apply in case of new (precautionary) programmes in line with IMF practices. The Commission will carry out enhanced surveillance of the Member States concerned and report regularly to the Eurogroup.
18. We agree that the capacity of the extended EFSF shall be used with a view to maximizing the available resources in the following framework: • the objective is to support market access for euro area Member States faced with market pressures and to ensure the proper functioning of the euro area sovereign debt market, while fully preserving the high credit standing of the EFSF. These measures are needed to ensure financial stability and provide sufficient ringfencing to fight contagion; • this will be done without extending the guarantees underpinning the facility and within the rules of the Treaty and the terms and conditions of the current framework agreement, operating in the context of the agreed instruments, and entailing appropriate conditionality and surveillance.
19. We agree on two basic options to leverage the resources of the EFSF: • providing credit enhancement to new debt issued by Member States, thus reducing the funding cost. Purchasing this risk insurance would be offered to private investors as an option when buying bonds in the primary market; • maximising the funding arrangements of the EFSF with a combination of resources from private and public financial institutions and investors, which can be arranged through Special Purpose Vehicles. This will enlarge the amount of resources available to extend loans, for bank recapitalization and for buying bonds in the primary and secondary markets.
20. The EFSF will have the flexibility to use these two options simultaneously, deploying them depending on the specific objective pursued and on market circumstances. The leverage effect of each option will vary, depending on their specific features and market conditions, but could be up to four or five.
21. We call on the Eurogroup to finalise the terms and conditions for the implementation of these modalities in November, in the form of guidelines and in line with the draft terms and conditions prepared by the EFSF.
22. In addition, further enhancement of the EFSF resources can be achieved by cooperating even more closely with the IMF. The Eurogroup, the Commission and the EFSF will work on all possible options. Banking system
23. We welcome the agreement reached today by the members of the European Council on bank recapitalisation and funding (see Annex 2). Economic and fiscal coordination and surveillance
24. The legislative package on economic governance strengthens economic and fiscal policy coordination and surveillance. After it enters into force in January 2012 it will be strictly implemented as part of the European Semester. We call for rigorous surveillance by the Commission and the Council, including through peer pressure, and the active use of the existing and new instruments available. We also recall our commitments made in the framework of the Euro Plus Pact.
25. Being part of a monetary union has far reaching implications and implies a much closer coordination and surveillance to ensure stability and sustainability of the whole area. The current crisis shows the need to address this much more effectively. Therefore, while strengthening our crisis tools within the euro area, we will make further progress in integrating economic and fiscal policies by reinforcing coordination, surveillance and discipline. We will develop the necessary policies to support the functioning of the single currency area.
26. More specifically, building on the legislative package just adopted, the European Semester and the Euro Plus Pact, we commit to implement the following additional measures at the national level:
a. adoption by each euro area Member State of rules on balanced budget in structural terms translating the Stability and Growth Pact into national legislation, preferably at constitutional level or equivalent, by the end of 2012;
b. reinforcement of national fiscal frameworks beyond the Directive on requirements for budgetary frameworks of the Member States. In particular, national budgets should be based on independent growth forecasts;
c. invitation to national parliaments to take into account recommendations adopted at the EU level on the conduct of economic and budgetary policies;
d. consultation of the Commission and other euro area Member States before the adoption of any major fiscal or economic policy reform plans with potential spillover effects, so as to give the possibility for an assessment of possible impact for the euro area as a whole;
e. commitment to stick to the recommendations of the Commission and the relevant Commissioner regarding the implementation of the Stability and Growth Pact.
27. We also agree that closer monitoring and additional enforcement are warranted along the following lines:
a. for euro area Member States in excessive deficit procedure, the Commission and the Council will be enabled to examine national draft budgets and adopt an opinion on them before their adoption by the relevant national parliaments. In addition, the Commission will monitor budget execution and, if necessary, suggest amendments in the course of the year;
b. in the case of slippages of an adjustment programme closer monitoring and coordination of programme implementation will take place.
28. We look forward to the Commission’s forthcoming proposal on closer monitoring to the Council and the European Parliament under Article 136 of the TFEU. In this context, we welcome the intention of the Commission to strengthen, in the Commission, the role of the competent Commissioner for closer monitoring and additional enforcement.
29. We will further strengthen the economic pillar of the Economic and Monetary Union and better coordinate macro- and micro-economic policies. Building on the Euro Plus Pact, we will improve competitiveness, thereby achieving further convergence of policies to promote growth and employment. Pragmatic coordination of tax policies in the euro area is a necessary element of stronger economic policy coordination to support fiscal consolidation and economic growth. Legislative work on the Commission proposals for a Common Consolidated Corporate Tax Base and for a Financial Transaction Tax is ongoing. Governance structure of the euro area
30. To deal more effectively with the challenges at hand and ensure closer integration, the governance structure for the euro area will be strengthened, while preserving the integrity of the European Union as a whole.
31. We will thus meet regularly – at least twice a year- at our level, in Euro Summits, to provide strategic orientations on the economic and fiscal policies in the euro area. This will allow to better take into account the euro area dimension in our domestic policies.
32. The Eurogroup will, together with the Commission and the ECB, remain at the core of the daily management of the euro area. It will play a central role in the implementation by the euro area Member States of the European Semester. It will rely on a stronger preparatory structure.
33. More detailed arrangements are presented in Annex 1 to this paper. Further integration
34. The euro is at the core of our European project. We will strengthen the economic union to make it commensurate with the monetary union.
35. We ask the President of the European Council, in close collaboration with the President of the Commission and the President of the Eurogroup, to identify possible steps to reach this end. The focus will be on further strengthening economic convergence within the euro area, improving fiscal discipline and deepening economic union, including exploring the possibility of limited Treaty changes. An interim report will be presented in December 2011 so as to agree on first orientations. It will include a roadmap on how to proceed in full respect of the prerogatives of the institutions. A report on how to implement the agreed measures will be finalised by March 2012.
Ten measures to improve the governance of the euro area There is a need to strengthen economic policy coordination and surveillance within the euro area, to improve the effectiveness of decision making and to ensure more consistent communication. To this end, the following ten measures will be taken, while fully respecting the integrity of the EU as a whole:
1. There will be regular Euro Summit meetings bringing together the Heads of State or government (HoSG) of the euro area and the President of the Commission. These meetings will take place at least twice a year, at key moments of the annual economic governance circle; they will if possible take place after European Council meetings. Additional meetings can be called by the President of the Euro Summit if necessary. Euro Summits will define strategic orientations for the conduct of economic policies and for improved competitiveness and increased convergence in the euro area. The President of the Euro Summit will ensure the preparation of the Euro Summit, in close cooperation with the President of the Commission.
2. The President of the Euro Summit will be designated by the HoSG of the euro area at the same time the European Council elects its President and for the same term of office. Pending the next such election, the current President of the European Council will chair the Euro Summit meetings.
3. The President of the Euro Summit will keep the non euro area Member States closely informed of the preparation and outcome of the Summits. The President will also inform the European Parliament of the outcome of the Euro Summits.
4. As is presently the case, the Eurogroup will ensure ever closer coordination of the economic policies and promoting financial stability. Whilst respecting the powers of the EU institutions in that respect, it promotes strengthened surveillance of Member States’ economic and fiscal policies as far as the euro area is concerned. It will also prepare the Euro Summit meetings and ensure their follow up.
5. The President of the Eurogroup is elected in line with Protocol n°14 annexed to the Treaties. A decision on whether he/she should be elected among Members of the Eurogroup or be a full-time President based in Brussels will be taken at the time of the expiry of the mandate of the current incumbent. The President of the Euro Summit will be consulted on the Eurogroup work plan and may invite the President of the Eurogroup to convene a meeting of the Eurogroup, notably to prepare Euro Summits or to follow up on its orientations. Clear lines of responsibility and reporting between the Euro Summit, the Eurogroup and the preparatory bodies will be established.
6. The President of the Euro Summit, the President of the Commission and the President of the Eurogroup will meet regularly, at least once a month. The President of the ECB may be invited to participate. The Presidents of the supervisory agencies and the EFSF CEO / ESM Managing Director may be invited on an ad hoc basis.
7. Work at the preparatory level will continue to be carried out by the Eurogroup Working Group (EWG), drawing on expertise provided by the Commission. The EWG also prepares Eurogroup meetings. It should benefit from a more permanent sub-group consisting of alternates/officials representative of the Finance Ministers, meeting more frequently, working under the authority of the President of the EWG.
8. The EWG will be chaired by a full-time Brussels-based President. In principle, he/she will be elected at the same time as the chair of the Economic and Financial Committee.
9. The existing administrative structures (i.e. the Council General Secretariat and the EFC Secretariat) will be strengthened and co-operate in a well coordinated way to provide adequate support to the Euro Summit President and the President of the Eurogroup, under the guidance of the President of the EFC/EWG. External expertise will be drawn upon as appropriate, on an ad hoc basis.
10. Clear rules and mechanisms will be set up to improve communication and ensure more consistent messages. The President of the Euro Summit and the President of the Eurogroup shall have a special responsibility in this respect. The President of the Euro Summit together with the President of the Commission shall be responsible for communicating the decisions of the Euro Summit and the President of the Eurogroup together with the ECFIN Commissioner shall be responsible for communicating the decisions of the Eurogroup.
Consensus on banking package
1. Measures for restoring confidence in the banking sector (banking package) are urgently needed and are necessary in the context of strengthening prudential control of the EU banking sector. These measures should address: a. The need to ensure the medium-term funding of banks, in order to avoid a credit crunch and to safeguard the flow of credit to the real economy, and to coordinate measures to achieve this. b. The need to enhance the quality and quantity of capital of banks to withstand shocks and to demonstrate this enhancement in a reliable and harmonised way.
2. Guarantees on bank liabilities would be required to provide more direct support for banks in accessing term funding (short- term funding being available at the ECB and relevant national central banks), where appropriate. This is also an essential part of the strategy to limit deleveraging actions.
3. A simple repetition of the 2008 experience with full national discretion in the setting-up of liquidity schemes may not provide a satisfactory solution under current market conditions. Therefore a truly coordinated approach at EU-level is needed regarding entry criteria, pricing and conditions. The Commission should urgently explore together with the EBA, EIB, ECB the options for achieving this objective and report to the EFC.
Capitalisation of banks
4. Capital target: There is broad agreement on requiring a significantly higher capital ratio of 9 % of the highest quality capital and after accounting for market valuation of sovereign debt exposures, both as of 30 September 2011, to create a temporary buffer, which is justified by the exceptional circumstances. This quantitative capital target will have to be attained by 30 June 2012, based on plans agreed with national supervisors and coordinated by EBA. This prudent valuation would not affect the relevant financial reporting rules. National supervisory authorities, under the auspices of the EBA, must ensure that banks’ plans to strengthen capital do not lead to excessive deleveraging, including maintaining the credit flow to the real economy and taking into account current exposure levels of the group including their subsidiaries in all Member States, cognisant of the need to avoid undue pressure on credit extension in host countries or on sovereign debt markets.
5. Financing of capital increase: Banks should first use private sources of capital, including through restructuring and conversion of debt to equity instruments. Banks should be subject to constraints regarding the distribution of dividends and bonus payments until the target has been attained. If necessary, national governments should provide support , and if this support is not available, recapitalisation should be funded via a loan from the EFSF in the case of Eurozone countries. State Aid
6. Any form of public support, whether at a national or EU-level, will be subject to the conditionality of the current special state aid crisis framework, which the Commission has indicated will be applied with the necessary proportionality in view of the systemic character of the crisis
Greece and the Deutschebond
Hopefully, Europe is NOT relying on yesterday’s conference call between Angela Merkel, Nicolas Sarkozy and Greek Prime Minister, George Papandreou.
Lets not beat around the bush. The Greek government lied in order to gain entry to the Eurozone. It did it with the connivance of Goldman Sachs who were paid $190 million for their trouble. CLICK HERE.
Euro auditors ought to be in Athens performing Due Diligence in order to make sure that the numbers stack-up and more importantly, that Athens really is making progress and reducing its budget deficit.
The days of “My word is my Bond” are over.
Greece is an economic Basket Case which will be a drag on the Eurozone economy for ever. Historians will also know that Greece tends to make a habit of going bust and defaulting.
The destructive influence of Greece is now causing rifts within Europe and there is now a very real danger of the German government disintegrating.
Finally, empty pronouncements by senior European officials which are designed to manipulate Stock Market prices MUST stop.
The ONLY morsel of common sense was delivered yesterday by Guido Westerwelle, Germany’s Foreign Minister. He said: “….we believe you can’t fight debt in Europe by making it easier to take up debt.”
We all know that economic GROWTH is the answer. That’s something that Greece will not be capable of for years – if ever.
Dans la merde or in der Scheiße?
I just have a look at the European stock markets and on the surface everything appears to be quite normal.
The banks are doing especially well!
Today’s showing in the markets is the most clear indicator so far, as to the utter confusion generated by the intransigence and incompetence of senior politicians.
Today President Nicolas Sarkozy of France and Chancellor Angela Merkel are involved in pointless discussions with Greek Prime Minister George Papandreou. Why pointless? Because they probably all began their telephone conference chat with this afternoon’s communique already written.
Chancellor Merkel has expressed the schizophrenic views of the Eurozone. She has stated that the Eurozone will not allow Greece to default but on the other hand Greece will not secure access to the next 8 billion euro bailout unless new budget cuts are made.
Greece will be running out of cash in about three weeks.
Everyone, understandably, is beginning to feel frustrated and impotent at the pace of the so-called rescue package.
If the Eurozone is serious about the Greek bailout, the cash should be handed over today. That more than anything will placate the markets which must by now be feeling as if they’re on a bad acid trip. The current situation is certainly a candidate for the old 1960s hippie slogan ‘Stamp out reality’.
In reality though, the politicians will wish to leave all options on the table rather than make a move which could be catastrophic. The fact is that whichever move they make, there is bound to be either a national catastrophe or a pan-European catastrophe. More likely both.
That in turn will generate an American catastrophe ; the U.S has been teetering on the edge for many months.
There is only so much time that we can all just stand staring into the abyss.
Currently we are all keeping an eye on Ben Bernanke and the Federal Reserve, because we fully expect them to start printing money at any minute.
In fact we should be looking at the French because it cannot be too long before they make a similar decision – and they will probably ink their printing presses well ahead of the Americans.
If the French go ahead and print money in order to provide a cushion for the French banks against a Greek default and the Greek default overhead anyway, it will be the equivalent of them having unnecessarily dumped billions of euros.
Unfortunately, that’s the ONLY plan which the French government has.
Today, the United Kingdom has announced another 80,000 unemployed between May and July. That is NOT the sign of an economy in recovery. THAT is the sign of an economy still in recession. The official unemployment figure in now in excess of 2.5 million. In fact, the actual number has probably been in excess of 3 million for quite a while.
In recent months there has been a bit of Schadenfreude-induced gloating from the United Kingdom’s senior politicians and commentators in respect of the Eurozone’s woes. That will stop very soon – as our meagre exports dry up because no-one in Europe has the cash to pay for them.
It is not just the Eurozone which is crumbling, it is EUROPE.
It is NOT just the European Economic Class System which is going to be everyone’s downfall. It is NOT because the “HAVES” dictating to the “HAVE-NOTS”.
On a macro level, the vast socio-economic differences within the Eurozone do no more than reflect socio-economic differences within individual states.
They tried an experiment whereby the poor (countries) were expected to compete with the rich and as we should all know by now, this type of “Faux cross-border Socialism” can never work.
There can always be “liberté” and “fraternité” between such disparate states but there can never ever be anything even vaguely resembling “égalité” between the rich and the poor.
In the Eurozone, some are definitely more “égal” than others.
Currently, the more equal are terrified that the less equal will take them down.
(Personally, I believe that Greece will be allowed to default. Glad I kept those Drachmas!)
The Greek Entry.
Last week I predicted that it was Sarkozy’s turn to deliver yet another mealy-mouthed statement. Looks as if it’s this afternoon!
The question is CAN he save the French Banks whilst convincing an increasingly cynical public and sceptical markets that it’s all about saving Greece?
Money Market Funds have been selling French Bank Shares for about a year, during which time they have reduced their holding in French banks by about 50%.
After Sarkozy (or Angela Merkel) tells us that Greece is “doing the right things” or that ” it is making good progress“, it will be interesting to see what the markets make of it all.
The MOST likely outcome of today’s meeting between Sarkozy, Merkel and Greek Premier Papandreou is a statement indicating that Greece needs more time.
The Euro and the Eurozone both need time – another commodity which is fast disappearing.
Today’s summit has an interesting sub-plot. Rating agency Moody’s has just downgraded France’s two major banks. Credit Agricole has been busted down from Aa1 to Aa2 and Société Générale from Aa2 to Aa3.
Once again, this has come as both a surprise and relief to the experts because the downgrades were “not as bad as expected“. It seems that these days, NOTHING is as expected.
For politicians and most economists, these are indeed The Days of Mystery!
The seriousness of not-only the Greek but the entire Eurozone situation is exemplified by the fact that The US treasury secretary, Tim Geithner, will be attending Friday’s meeting of EU finance ministers.
Even the Americans can see that Greece is the No1 domino!
The hard fact is that Greece ought never have been allowed to join the Euro. It was a predictable accident waiting to happen.
As many politicians will attest – especially those who attended boarding school, the “Greek Entry” was always going to be painful.
States of the economies.
The next economic and banking collapse is going to make the 2008 crash look like a slight adjustment.
Once-powerful Western economies are booking quarterly GDP growths of 1% or less. For the non-mathematicians, that is within a rounding error of ZERO growth. So when you hear a Chancellor deriving solace from an economy achieving a growth of say 1.5% which was “better than the expected” 1.3%, we know that they and we are in trouble.
Politicians and central bankers have exhausted their entire repertoire on a THREE YEAR attempt to put their economies in order whilst at the same time propping-up a broken banking system. None of it has worked!
They all know that the tsunami is coming but there is no high ground to run to.
European politicians are rushing about, turning inaction into an art-form whilst economies and banks are merely standing on the trapdoor and holding hands hoping that somehow all this will go away and the entire system will somehow self-right. Their impotent prevarication can (and will) only result in two things – collapse and bankcrptcy.
Bankruptcy of governments, business and of private individuals.
Last week we had the very first example of a banker who more-or-less threw-in his hand, admitting that there was little-else that money could do. The Federal Reserve’s Ben Bernanke had the choice of either printing more empty dollars or not. The so-called Quantitative Easing 3 would have increased US inflation and made Investment Bankers happy. It would have enabled the bankers to further plunder the markets and create more of those illusory profits. They’ve been operating on that basis for two years now and perhaps Bernanke decided that enough was enough.
Mainlining money is never the long-term solution – it’s too addictive!
However, No U.S Quantitative Easing has simply accelerated the collapse of the United States economy.
Yes! It’s as clear-cut as that.
In the end, Bernanke took a leaf from the politicians’ book and decided to do nothing but sit and wait. NO mention of QE3 and no steps to promote economic growth.
He has decided to kick the the whole thing forward yet another month in the vain hope that Congress can deliver the next promise. THAT’S what you call a long-shot!
For the moment both Europe and the USA appear to be quite content to pause and doze in the middle of their joint economic tightrope until someone else (as yet unknown, probably China) comes along to coax them out of their torpor.
Unfortunately, America and Europe are entwined in such a way that if Europe falls, so will the USA.
We used to dismiss the PIIGS nations as the ones heading for the econo-slaughter house — Portugal, Italy, Ireland, Greece and Spain. Their problem is very simple – they have debts so huge that there is absolutely NO prospect of them ever being repaid. Their politicians are also waiting for something miraculous to happen sometime in the future.
The Euro saviour WAS supposed to have been the “strong man of Europe”, the one with the largest economy – Germany. Unfortunately,Germany has also hit the economic buffers. It’s growth in this year’s second quarter was just 0.1 percent!
France, Europe’s second-largest Euro-economy, has also ground to a halt. President Sarkozy’s has followed the UK route with huge budgetary cuts. That certainly looks good on paper and may lower deficits but will produce an impossible drag on an already-waning economy. THAT will inhibit growth and ultimately lower tax revenues – which will inevitably result in higher taxation.
The United Kingdom’s Chancellor can take the credit for showing everyone else the way to economic stagnation through the triple whammy of Government budget cuts, rising inflation and plunging consumer confidence. EXACTLY the conditions to discourage anyone from risking any sort of entrepreneurial initiative or borrowing from the banks to fund commercial expansion. That is, if the banks weren’t continuing to sulk.
Europe is frantically cutting spending in a desperate attempt to postpone the inevitable debt meltdown. Meanwhile Washington continues to rack-up up its national debt at the eye-watering rate of more than 10 percent per year.
All that America has achieved so far is to have its credit-rating slashed by Standard & Poor’s while its local governments, states and cities frantically try everything from releasing prisoners early to selling off the family silver.
The ENTIRE Western economy has ground to a shuddering halt with the weird unwanted bolt-ons of climbing inflation and consumer confidence at near an all-time low.
So what IS the solution?
The solution is comparatively simple and should be attempted in stages.
The first would be to reconcile ALL sovereign debt.
Secondly, the markets and banks would collapse – but at a controlled rate.
Thirdly, it should be admitted that the Euro and the Eurozone were both very bad ideas which developed into a grotesque sacred cow.
Then we could ALL start again.
The alternatives are greater budget shortfalls, greater deficits, even faster growths in government debt, followed by catastrophic collapses and Depression.
The former all require political decisions of such magnitude that even the politicians have come to realise that we do not have anyone with even remotely the courage to raise his or head above the parapet to take control.
So for the moment, it seems as if we’re knowingly headed for an economic holocaust.
So, unless the politicians wake up soon, we need to create hell and not wait for it.
From “Brother, Can You Spare a Dime,” lyrics by Yip Harburg, music by Jay Gorney (1931)
The Petulant One
“I condemn you, Gaddafi!!”
William Hague briefly came out from behind America’s voluminous skirts a couple of days ago to announce that the Libyan embassy was to be cleared of pro Gaddafi officials and that they would be replaced by rebels.
Has there ever been a more puerile sign of frustration from a grown-up politician?
The thwarted Western powers, represented by NATO have made little progress since the initial Benghazi protests and riots six months ago. The protesters shouted “democracy” and as usual, the politicians came running. Most neutral observers have learned that any Middle Eastern protest is absolutely nothing to do with democracy, free speech or any of the other Western indulgences that we have become used to.
It has always been about power and economics. The poor, the impressionable young and the students riot, whilst the intelligentsia and the military plot behind their king’s back. They are the ones who enjoy the spoils of war. Life doesn’t really change for the poor and the young. Life rarely changes for the poor.
Decisions made by politicians in respect of Libya seem to have been made with one eye on the oil with the other on the opinion polls. In spite of the rhetoric, this has never really been about “The Libyan People”
President Sarkozy of France had hoped to make a victorious announcement on Bastille Day because all that he’s thinking about at the moment is re-election. Hopefully he will soon accept that it is not going to happen for him and that although he somehow made it to the top of the greasy French political pole, his grip has never been that strong and he has been sliding back down ever since. His involvement in the Libya bombing should help him along on his journey south.
William Hague on the other hand has been handed the Foreign Office as a bit of a consolation prize, following the disaster of his leadership and the years spent in comparative obscurity . Rather worryingly though, he remains one of the more talented members of the Cabinet. From the beginning he has looked not only out of sorts but out of his depth when dealing with a soldier-politician as slippery as Col Gaddafi.
Obama has much bigger things on his plate at the moment and his own re-election chances may also have been dealt a fatal blow by Libya – although his advisers seem to have foreseen Gaddafi’s intransigence. A small blessing for Obama is that America went into reverse gear on Libya a few months ago. He had little choice in the matter.
We’ve had sanctions, we’ve had “no fly” zones, we’ve had bombing and we have had strong words. Libya’s assets were frozen, the Gaddafi family’s assets were stolen but still, the mad Col continues to elude all attempts to oust him. Surprisingly, to some, it was predictable from the very beginning. Unlike Mubarak, Gaddafi sees himself as Emperor of Libya – the first of a dynasty. Imperator Muammar l.
One wonders what ever happened to the “that’s up to the Libyan people” mantra? It seems that everything is up to the Libyan people apart from who rules over them. That appears to be in the gift of the West. Even if two-thirds of the 6.4 million population of Libya have abandoned Gaddafi, that still leaves him far more support than Obama, Sarkozy or Cameron enjoy back home.
The propaganda machine has convinced us that Gaddafi is a BAD person. However, it is not Gaddafi who is dropping high-explosive on someone that he does not approve of.
Why is it that whenever we see any sort of conflict, we feel that we (United Kingdom) have to elbow our way nearly to the front of the queue, stand behind the the muscled bully-boy friend that is the United States of America and jump out occasionally to yap like a toothless, castrated old Jack Russell.
This so-called “Arabs Spring” is a headline writer’s nonsense. It is no Solidarność and it is no knocking down of the Berlin Wall. It started with a bunch of vandals and students waving placards believing that the mere act of defiance would be enough to remove Gaddafi. They chanted the “D” word. D E M O C R A C Y!
What they would prefer is a box of food and a TV set.
Yes, they fooled us into thinking and believing that what they want is democracy. In fact all they want is a fair share of the oil spoils, more money in their pockets and a State which cares about them.
There is little doubt that Gaddafi has gone way past his sell-by date and that he’s no longer even fit to run a British Nursing Home. Unfortunately, it usually takes a country a few years to realise that things are better than they were but not as good as they could be.
Gaddafi used to be a hero as he had liberated “his” people from the oppression and the years of Stone Age “nothing” under King Idris. As has been shown in many other states from France to Iran, deposing one set of royals invariably results in a temporary euphoria, followed by the installation another set of unelected “royals”.
Gaddafi ( just like a French President) has developed into their new King, his children are his heirs and his primary method of ensuring the faithfulness of those who matter, is through the medium of the bestowal of money and favours. Nothing unusual in that! That what kings do!
Six months ago, the West’s initial reaction to the Libyan friction was the usual formulaic stuff. It had recently been practiced on Mubarak. Our governments “condemned” Gaddafi’s actions. One day the United Kingdom and others will realise that words such as “we condemn” or “we call upon……” no longer frighten “the natives”.
We fell into a trap similar to the one that Saddam inadvertently sprung (on himself) when he appeared to exaggerate his own military prowess.
Gaddafi, on the other hand, threatened to “kill his own people”.
That is the “Way of the Dictator”!
Dictators always seems to end up behaving just like the has-been heavyweight boxer who craves recognition and needs to reassert his rapidly diminishing masculinity and popularity. It’s “Dictator Trash Talk”. It’s plastic defiance and paper posturing. It’s NOT real!
And we fall for it every time.
Lagarde, IMF and Adidas.
The selection process for the next International Monetary Fund (IMF) Managing Director kicked-off yesterday and will finish on June 10th.
Coincidentally, that is exactly the same date on which the front-runner for the post, France’s Christine Lagarde will learn whether she is to be investigated for “abuse of power”. Currently, Lagarde has not yet confirmed whether she intends to compete for the job but she is already the favourite to replace Dominique Strauss-Kahn.
She has gained a reputation as a “doer” and her decision in 2007 to put a stop to a protracted legal battle could result in her being prosecuted for “abuse of power”.
The former head of Adidas, Bernard Tapie had been waging a court battle for nearly 20 years. He had accused French bank Credit Lyonnais of mishandling the 1993 sale of his company and cheating him. Christine Lagarde stepped-in and ordered that a panel of judges should investigate the case.
A year later, the judges decided in Tapie’s favour and ruled that he should receive £248 in damages.
Credit Lyonnais had gone to the wall and was being administered by a state-operated consortium. That meant that in effect, Tapie’s payout was made from public funds.
Left wing politicians and French Green MEPs have wasted no time in claiming that Lagarde behaved improperly and had exceeded her authority. They have questioned the legality of her actions and there has been suggestion that she may have been acting on orders from ther Elysee Palace. The beneficiary of the judges’ ruling, Bernard Tapie was a well-known Sarkozy supporter. It is that which lends credence to the accusation of Sarkozy having influenced Lagarde’s decision.
Christine Lagarde ought to be lauded for using common sense in ending a legal case which was not showing any sign of being concluded. As usual, it was only the lawyers who were benefiting.
Hopefully, when she is Managing Director of the IMF, she continues to demonstrate the pragmatism and common-sense of a leader and not the stuporous thinking of the average bureaucrat or the furtive back-room well-nigh masonic style of the senior banker.
Cameron, Sarkozy and Obama see themselves as custodians & saviours of democracy.
The Arab States (again) see Christians bombing Muslims.
Presumably, for the sake of consistency, the West/USA/The Coalition/NATO/United Nations – or whichever hat it happens to be wearing at the time, will bomb any leader that it disapproves of. Luckily, that is something which Middle Eastern leaders have just realised in the same “nick of time” that Cameron, Sarkozy and Obama “saved” Benghazi.
The “bomb to protect” strategy is flaky. Blair and Bush were criticised for not having an “exit” strategy in Iraq. Now it seems that The Coalition has made exactly the same mistake with Cameron citing the Law of Unforeseen Consequences in mitigation. What he’s saying is “There’s little point in planning ahead because we have no idea what’s going to happen.”
Today, we are showering Gaddafi with Cruise missiles at about £1 million each (that’s without even factoring-in the generals’ and politicians’ pension schemes or the £35,000 per hour-cost of keeping a plane in the air) – and the Americans are onto a very good thing. They make the missiles, sell them to us and we drop somewhere in North Africa. All in the name of democracy.
Within a few days, The Coalition will have destroyed all of the Libyans’ communications capabilities and airstrips. By then, they will also have damaged Gaddafi’s military capability by blowing-up arms dumps, tanks etc.
That will do and the time to leave will have arrived.
(If Libya’s internal issues continue to bother its neighbours, the neighbours are very well placed to assist them both militarily and economically. After all, we armed them and they will be spending the billions which we gave them for the commodity which is definitely (according to the politicians) what this war is not about.)
Where’s the New World Order?
A twisted fusion of capitalism and socialism is being forged in the white-hot heat of political panic.
No-one should complain because we are all being forced to run blindfold towards a world where profits are privatised and losses are nationalised. We cannot lose.
Competition within financial services will be a quaint throwback to the last century because both the US and UK governments have now demonstrated that if a company is big enough, it will have Federal and Treasury support. It is the smaller companies who will be allowed to go to the wall because it is only then that they can become financial fodder for their fat hungry cousins.
The new financial conglomerates now know that they cannot fail because the State will bail them out.
The lesson that has not been learned is that the sheer size of companies is what makes them difficult to govern. The only way to manage these fiscal behemoths is to impose rules that are so draconian that eventually, the spirit of capitalism will be totally expunged. The State will be calling all the shots.
There has been debate as to who is to blame for the current chaos. The bankers know very well what has happened but they mutter vague generalisations, citing worthless sub-prime bonds and a general lack of confidence.
There is no way that sub-prime (the greatest euphemism ever?) lending is to blame for the entire financial house of cards tumbling down. The real issue is that the banks DID NOT HAVE THE MONEY that they were lending. They have behaved like a banana republic which prints more money in order to pull itself out of the financial quicksand.
Yes, they have been using “pretend” money. Mugabe is doing it now, the Wiemar republic did it 70 years ago and the entire banking system is still doing it.
The banking system has relied on “electronic money” for years. It was not real money and they have probably known for years that they were sprinting towards meltdown. George Soros knew.
The regulators are not to blame because 90% of their efforts are designed to control the “little man”. The big picture eludes them . Last September, the FSA was still issuing statements as to the solidity of HBOS – that’s in spite of the “investigation” that it carried our six months previously on the possible manipulation of HBOS shares.
Now that the financial chaos has moved from “boil” to “simmer”, the Government must take the opportunity not only to take a close look at the regulatory regime but also think about a complete restructure of the financial services industry.
The FSA grew out of a need to control mis-selling in the Pensions and Life Assurance industry. That is still its main thrust.
In spite of the increasingly bureaucratic Pensions and Life industry, the bandits are still out there and always one step ahead – they can never be eradicated.
One hates to agree with Sarkozy but a new global authority must be formed that specifically carries out high-level audits and ensures the implementation of proper business controls within the banking sector.
However, we do have to accept that the ratcatcher can never catch all the rats.
The Brown Delusion
“Now down again. Slowly.”
The G20 conference was the most orchestrated, pre-determined piece of theatre that we have had the privilege of seeing since the 1968 Morecambe and Wise Christmas Show. The primary motivators were to somehow please the banks, instill confidence in both the markets and the voting public and lift Gordon Brown’s approval rating.
The three main devices used were the over-wide smile , the already well-tried method of “let’s throw more money at it” and a long document.
Make no mistake – this amazing show of unity was for the voters back home. Gordon Brown was being so transparently Party Political that the G20 conference should have been funded by the Labour Party. He no doubt he sees himself as some sort of latter-day King Canute in an M&S suit but he does not wear it well – the image or the suit.
Barack Obama and his wife were the undoubted stars of the show – not because they are still new and shiny and unsullied by any of the recent banking shenanigans but because they are stars. Obama’s demeanour throughout was that of a modest thinking man who did not feel the need to stand either in the middle of the picture or at the front. Likewise, Michelle Obama did not put a foot wrong – although there was a moment when the Queen should have sent a flunkey to fetch a stool for her to stand on – such was the height mismatch between her and Michelle.
The communique produced after the meeting is vague in the extreme but there are a few quite interesting items. The first is a sop to the Franco-German alliance – or as I prefer to think of it – Vichy 2. A Financial Stability Board will be established. One presumes that this will develop into the Global Financial Services Gestapo so that if there is any financial naughtiness or even naughtiness-with-intent – “there vill be reprisals!!”. One serious point that has constantly been ignored is the fact that the banking issues are more to do with financial bandits completely confusing incompetent bankers. Any Financial Services Authority will train its beady eye on the incompetent bankers. The bandits will continue to operate but with even more stealth and guile.
The Head of the International Monetary Fund (currently Dominique Strauss-Kahn) will now be elected through “an open, transparent and merit-based selection process”. That simply means that any future encumbents can be non-Europeans of any colour. Progress indeed. Likewise, the President of the World Bank (currently Robert Zoellick) can be non-American! Presumably, however, both will still be required to attend the Bilderberg conference.
Those are just a couple of minor concessions. The rest of the document reads as if it had been written a while back. It is full of non time-stamped “cut and paste” rhetoric, e.g.
” We have today therefore pledged to do whatever is necessary.”
” We believe that the only sure foundation for sustainable globalisation and rising prosperity for all is an open world economy based on market principles.”
“We are determined not-only to restore growth but to lay the foundation for a fair and sustainable world economy”
There is much more of this sort of turgid nonsense and padding which looks as if it was drafted by a Civil Servant from the Ministry of the Bleedin’ Obvious.
The main single item from the whole circus was the agreement to recapitalise the IMF to the tune of $1.1trillion. One could argue that in these times of recession (and extreme poverty), all this could have been achieved through the usual channels without all the showbiz.
Meanwhile, somewhere in the depths of a thousand bank strongrooms, there are “papers” which represent billions of dollars-worth of damaged assets. The surviving hedge fund managers are ready for the new game. Incompetent bankers are still in place. Retailers are being strangled by a lack of credit. Manufacturers are shedding millions of jobs. Governments are printing money that they don’t have and the City screen monkeys are still confused.
And yet today we feel optimistic. All because of several days of fine words and political sleight-of-hand.
“Sorry! That should have read: Monsieur Sarkozy is regarded by many as a cult”
There ought to have been just the one hymn sheet because if there are several hymn sheets, we are in for a very discordant Thursday.
Barack Obama is hoping that: ” G20 countries will do what is necessary to promote trade and growth.”M le President Sarkozy wants to create a Financial Interpol to police the financial services industry. The delusional Gordon Brown’s not-so-hidden agenda is to rescue his image and somehow emerge as King of the World but he persists in spouting inane generalisations such as “clean up of the world banking system” and “more regulation of tax havens”.
Sarkozy is right. A Global Financial Services Authority is what is needed. If there are at least 20 Financial Services Authorities and the only thing that binds them is the hope of “greater co-operation” then all that is being thrown into the heaving fiscal mix are more junkets such as this G20 and more opportunities for the financial bandits to operate between even wider cracks within the world economy.
Somehow, it has been decided that “protectionism” is bad. Perhaps Mr Brown should spend more time thinking about the United Kingdom’s issues rather than constantly trying to put alleconomic problems in the context of the “Global Economy”. Where was the Global Economy during the years that he stood at the Dispatch Box preening and accepting the plaudits? There was little credit given to the Global Economy when the British economy was behaving itself and Brown was self-actualised and not self-delusional . History has already demonstrated that the Iron Chancellor’s image was so frail that it could be shattered and buried by one sentence from Vince Cable.
So the modern-day equivalent of the Tribal Elders will be talking economics but they will be thinking politics. Any summit such as this G20 meeting enables the leaders to discuss world economics but always with one eye on domestic politics.
Brown is very aware – as are all the other G20 leaders that he is a dead man walking and the long-term fallout from the current economic crisis will be managed not by Brown but by the Conservatives led by David Cameron. (Somebody had to say it!)
So is this G20 summit necessary?
Brown is a historian and knows that Chamberlain was the first Prime Minister to engage in the sport of Summitry. Churchill’s meetings with the American and Russian leaders continued this fine tradition and in the 80s, Margaret Thatcher travelled as did Tony Blair in the 90s.
Currently, the technology is in place to make Summitry an obsolete sport but large numbers of politicians sitting round huge tables still seems to be a popular diversion. Each already knows the other’s views and the odds are that there will be more conflict than accord. For instance, M Sarkozy is being backed as the first to flounce out.
The fundamental question is ” What is the problem and how do we sort it out?”. That approach could be a very fundamental error. In recent years, politicians have grown into the habit of putting themselves under tremendous pressure by asking the above question and then feeling the need to produce almost instant solutions – and of course we have become conditioned to expect that approach and more crucially, so have the media.
Brown the historian should know that the real question should not be “What’s the problem?” ( the modern politician’s approach) but ” What’s the story” (the historian’s approach), that is to say – let’s establish 100% how we managed to get into this mess. This approach takes time but in the long term , will produce the correct solutions.
Most Governments have already shown by their random actions of the last six months that they prefer to treat the symptom and not the cause.
In this respect, Gordon Brown should learn from both John Major and Tony Blair who both understood that firstly, the story of the Northern Ireland problem needed to be understood and that the solution would then follow as a by-product of that understanding. The whole process took a very long time but as recent attempts at destabilising the situation have shown, the solution is rock-solid.
This could be a time for reflection and not necessarily the customary politician’s sprint to action.
Those little things…………………….
Carla: ” The most important thing in my life is a penis.”
Sarkozy: ” I think you will find that it is pronounced ‘happiness’ ”
Carla: “I was talking about you.”
Sarkozy: “Espèce de salope.”
Carla: ” Connard. Va te faire …………”
Sarkozy: ” C’est déjà fait.”
Carla: “Faccia di culo!”
Sarkozy: “Et ta soeur.”
Spygun loves the French and in tribute to the nation that still thinks that French is the world’s No 1 language, here are some well-known observations about our little fromage-chomping surrender monkeys:
“France has neither winter nor summer nor morals. Apart from these drawbacks it is a fine country. France has usually been governed by prostitutes.”
‘I would rather have a German division in front of me than a French one behind me.’
General George S. Patton
‘Going to war without France is like going deer hunting without your accordion.’
‘We can stand here like the French, or we can do something about it.’
‘As far as I’m concerned, war always means failure.’
Jacques Chirac, President of France
‘The only time France wants us to go to war is when the German Army is sitting in Paris sipping coffee.’
‘You know, the French remind me a little bit of an aging actress of the 1940s who was still trying to dine out on her looks but doesn’t have the face for it.’
John McCain , U.S. Senator from Arizona
‘The last time the French asked for ‘more proof’ it came marching into Paris under a German flag.’
‘Only thing worse than a Frenchman is a Frenchman who lives in Canada .’
‘War without France would be like …………. World War II.’
‘The favorite bumper sticker in Washington D.C. right now is one that says ‘First Iraq, then France.”
‘What do you expect from a culture and a nation that exerted more of its national will fighting against Disney World and Big Macs than the Nazis?’
‘It is important to remember that the French have always been there when they needed us.’
‘They’ve taken their own precautions against al-Qa’ida. To prepare for an attack, each Frenchman is urged to keep duct tape, a white flag, and a three-day supply of mistresses in the house.’
‘Somebody was telling me about the French Army rifle that was being advertised on eBay the other day –the description was, ‘Never shot. Dropped once.”
Rep. Roy Blunt, MO
‘The French will only agree to go to war when we’ve proven we’ve found truffles in Iraq ‘
Q. What did the mayor of Paris say to the German Army as they entered the city in WWII?
A. Table for 100,000 m’sieur?
‘Do you know how many Frenchmen it takes to defend Paris ? It’s not known, it’s never been tried.’
Rep. R. Blount, MO
‘Do you know it only took Germany three days to conquer France in WWII? And that’s because it was raining.’
John Xereas, Manager, DC Improv
The AP and UPI reported that the French Government announced after the London bombings that it has raised its terror alert level from Run to Hide. The only two higher levels in France are Surrender and Collaborate. The rise in the alert level was precipitated by a recent fire which destroyed France ‘s white flag factory, effectively disabling their military.
French Ban Fireworks at Euro Disney
(AP), Paris , March 5, 2003 The French Government announced today that it is imposing a ban on the use of fireworks at Euro Disney. The decision comes the day after a nightly fireworks display at the park, located just 30 miles outside of Paris , caused the soldiers at a nearby French Army garrison to surrender to a group of Czech tourists.” and finally: