The Euro masquerade

David Lindsay

If the Eurozone countries want to set up new institutions in order to pursue the fiscal union necessary to monetary union, then why need that involve us in any way? They are not coming along to this week's Commonwealth Heads of Government Conference. So why are we in Brussels this week? They should be told that if they want this, then they can have it, so long as they pay for it. Why not?

Dennis Churchill

Mr. Nelson they believe in political will because they are politicians. In fact that is all they are and it is all they understand.
That is the problem.
It is the curse of having a political class.
As I wrote in a previous Blog the Commonwealth ,you write about, like the Anglsphere owes its success to minimising the interference of politicians in peoples’ lives.

RKing

So nice to read an article which reflects my views.

The euro is busted and the sooner the Greeks, Italians, Portugese etc the better.

They should have done it over a year ago.

Six months at the most!!

Rhoda Klapp

Good post.

They have to give up on the project. The euro has to go or be split up somehow. Even then the problem will not go away, we are all in for a pasting, except those who owe the most. But, as Fraser says, (I paraphrase) as long as they hang on to the dream we can't get on with the reality.

startledcod

Good post.

If there was a simple way to 'solve' this crisis it is beyond the bounds of probability that it wouldn't have been found already. Anything that is proposed that doesn't accept that the Euro cannot continue in anything approaching its current form is testing the Micawber principle - something will turn up - to destruction. It won't.

Herbert Thornton

"Britain, thank God (and Jimmy Goldsmith), is a spectator rather than an actor in Europe’s grim pantomime."

That sounds comforting, but is it true?

The European ship is sinking, but with Nick Clegg and David Camshaft in the same lifeboat boat in what direction are they likely to row?

Will they row away from the sinking ship towards safety or will they to row towards the doomed vessel - and for all they(and we) are worth too, with Milliband shouting encouragement, to try to help - and be sucked down with it?

Boudicca

"The choice is not between Europe and insularity: the Eurosceptics are not Little Englanders, but people very keen for us to think on a global — not just a continental — scale."

-------------

Glad to see someone in the MSM has finally woken up to this fact.

The UK's interests would be far better served if we adopted an arms length relationship with the EU and a much closer one with the Commmonwealth, Anglosphere in general and used that to improve our trading relationship with the emerging economies.

The EU is an inward-looking, protectionist, bankrupt oligarchy that is only going to be dragged further and further down by the PIGS. We are well out of the Eurozone and we would be well out of the EU, if only we could find a PM with the guts to do it.

Sadly, with the current trio of cowardly socialists leading the 3 main parties it doesn't look like we will be permitted to 'look to the open seas' again any time soon.

Andy H

We would be much better of investing money in new banks.

The old banks tried their luck - lend to Greece at 15% and make load of money.

These would have been private profits, so I do not see why we should nationalize the losses.

I am fed up with hearing that they are too big to fail. The warnings were there in 2007.

Our Governments priority should be to safeguard the tax payers money - NOT to safe guard the banks profits.

We need the government to do three things.

1. Split the big banks into smaller banks, and enact the firebreak between commercial and retail banking.
2. Enable the easier creation of new banks
3. Create a nationalised bank service using the post office), that will support the financial systems in the country so that we cannot be held ransom.

It is time the Government stopped spending our money on useless bailouts, that just increase the problems, and started to put correct safeguards in place.

Alex Withey

It is hard to summarise in a few words the stupidity of EU governments. Getting the EFSF to hand out "certificates" promising first loss protection on the debt issuance of obligors, each with a high default correlation to the others, is insanity on a crack pipe. The cost as this unravels will be high, perhaps to include democracy.

frosty the polar bear

As a mere bear,
the whole circus reminds me of an old ursine neighbour called ponzi,
some years ago.
he used to sell refridgerators to eskimos, paid for by them raising funds by mortgaging their tents/igloos, on the ice floes, and bergs.
Now any bear, other than dear old Ponzi, knew the ice would melt, and therefore the mortgages would prove to be worthless bits of soggy paper, but he sold thousands of fridges, to many eskimos.
Inevitably, several banks suffered a literal meltdown, but once the bankers had all been drowned, or eaten by hungry, homeless, bears, life carried on much as before.
I hear that old Ponzi is now running some pension thingy, for the National Insurance bods, in London.
So it appears that much like old dogs, old bears, don't easily take to new tricks.
toodle pip,

whatawaste

Fraser

The real question is why the banks have to always be in a win win situation. In every other commercial endeavour you take the rough with the smooth i.e. you win some and lose some.

As in the case of HBOS risk management seems does not just take a back seat, but is sometimes ignored altogether. If the European banking authorities took as tough a stance as the US on risky dealing maybe such vast sums would never have been lent to Greece in the first place.

commentator

The behaviour of Clegg and Cameron increasingly looks like the first siting of people trying to board the Titanic after it had hit the iceberg.

Magnolia

That's better, more honest fighting talk.
"Stiffen your sinews and summon up the blood".
I voted for The Referendem Party in 1997 when everyone else was rushing to one Tony Blair, so you've got me to thank as well.
I remembered Labour's last bust during the seventies, when I had to do my homework by candlelight because of the power cuts.
The EU is a socialist construct and it's heading for the next big bust. Large currency areas are very dangerous because uniformity of populations is unheard of. Greece has different needs to the Germans etc. We are all different, thank God. The socialists think equality is all being the same which is absolute rot.
I wonder how it will go out.

David Ossitt

It is all very interesting the dwarf Sarkozy must now be feeling the hot breath of Marine Le Pen on the back of his neck.

Herbert Thornton

David Osset -

I think the French establishment will stop at nothing to try to prevent Marine Le Pan being elected.

But if (please God) she is, I hope that Sarcozy will thereafter have to travel around using a Gnome de Plume.

adrian drummond

Alleluia!

By George, I think he's got it!

In2minds

Today -

"What is certain is that the EU does not resemble a prosperity club that Britain should work more closely with"

But just days ago -

"I have defended our EU membership and place a huge value on the free movement of goods, services and people".

Confused?

James Murphy

At last! A mainstream (well, almost) magazine telling it like it is! "These crisis talks are about bail-outs for banks, not bail-outs for Greeks..." But another secret needs to be revealed: this 'crisis' need not be a crisis at all: we simply need to let the banks fail. Do it. Let them go to the wall. Let the wide-boys and girls with their fraudulent CDS and CDO fiscal engineering, go hang - and the self-satisfied old pin-stripes who let them loose on the West too. Ironically, insodoing we would liberate real Capitalism again. Indeed, in a properly capitalist culture the banks would all have gone bust in 2008. Because diabolically mismanaged companies go to the wall. It's called market forces. The reason this is not happening - not being allowed to happen - is because we are being run by an oligarchical kleptocracy who will see us all at each others' throats before they relax their greasy grasp on our wallets. Once more: the banks are NOT to big to fail: private chequeing and deposit accounts are all government-guaranteed to the tune of £35K for each person: all that will happen if the banks fail is that the aforementioned crooks and politicians in bed with them will lose their wealth overnight - and SO IT SHOULD BE. The Middle-classes need to rise up, wrest the protests from the hands of the grubby 'Occupy' Marxists and fight back: withdraw our money, close our accounts. Do it Europe: let the banks fail!

Simon Stephenson.

"Greece is bust and several French, German and Dutch banks were stupid enough to lend 130 billion to the Greek government that they're not going to get back."

I fear, if you look at the situation like this, you'll see neither the root nor the complexity of the problem. You need to understand why massive international banks chose to lend money to Greece. French banks in particular are very much seen as being an arm of the State - how much of their decision to lend such amounts to Greece was due to political pressure to support and look uncritically on the Euro project? How much freedom of action did the boards of these banks have?

You see, I just don't think that the difficulties we are in are the result of the poor decisions of a small number of influential people. Certainly there have been some shysters who haven't helped matters, but I think that the culture of much of Western society has been far from neutral in all this. We are where we are because it has become impossible within our short-term democratic systems to do anything different - and this is chiefly because we have turned our back on honesty, fact and good faith as the backbones of political decision-making, and instead immersed ourselves in the world of fantasy and marketing (Thanks very much, Messrs Clinton and Blair).

There's no way out that doesn't involve jettisoning this nonsense, and if we're too far down the road to do it voluntarily ourselves, then we'll soon be given a very rude awakening by those people of the world who aren't living in cloud-cuckoo-land.

david1

Magnolia

remembered Labour's last bust during the seventies, when I had to do my homework by candlelight because of the power cuts.

Errrr I seem to remember that Ted Heath was PM at the time, I know he's been written out of Tory history but think he may not have been a Labour PM.

The worse thing about this Euro business is that moron Cameron, 'We've made good progress' whats it got to do with him, we aren't in the Euro, still we might have been if Ken Clarke had been chancellor after '97.

Hexhamgeezer

Mr N,

This beneficial crisis should be used to benefit us.

Jon Stack

The problem isn't necessarily the euro itself, it's the politicians, who spend too much, create a huge state sector and welfare system to buy votes, and fail to do what they should have done from the start: cut taxes to free private enterprise to produce growth. Greece wouldn't have had a problem if this had happened. Under that scenario a stable, strong currency has massive benefits.

GarryK

As a Leftie (one who supports a an EU based on just free-trade and friendly co-operation) I find myself in full support of this article.

The Eurozone seems happy to carry on with it's dance of death. It's like watching a slow motion car crash.

Andy Leeds

Simon makes a very valid, and often overlooked point, but I would go slightly further. The 'banks' were told by their respective political classes that a Greek bond was of the same value and integrity as a German bund. It wasn't and never was. Some of us who know Greece extremely well (I had a residence there) knew full well that the figures used by Greece for entry to the Euro in the first place were a tissue of lies, just like so much else in Greek public life. Now the banks are being told 'well sorry lads, but those Greek bonds we all told you to buy were really duff rubbish'. Its called a false prospectus in the business. So it rather begs the question of why should the Greek State be able to simply walk away from 60% of its debt ? It shouldn't.

Boudicca

Magnolia
October 26th, 2011 7:17pm

We are obviously of similar ages and followed the same political path. I too voted for Sir James' (RIP) Referendum Party and not once for the shyster Blair.

I will also not be voting for the slimball Cameron.

Walter Ellis

No one could deny that the EU is in deep trouble. The euro was introduced in haste and, rather like the invasion of Iraq, without thought for what might happen next. The present crisis may not fully resolve itself for at least five years.

But the EU is not, and never was intended to be, a world unto itself. The plan was to build a pan-European construct that could compete with the United States, the Soviet Union, Japan and whichever other power blocks developed in the course of the late twentieth century. Time has moved on, but that central idea has not dated.

Britain can elect to go it alone in the future, acting as the transatlantic echo of a fading America, or it can choose to be one of the leading members of a more cohesive, more rational – and more democratically accountable – EU. I know which I would choose.

bojimbo

It's all about how much money they can get away with .

daniel maris

Amazing Fraser! Your analysis is way off. What was the bank rescue in the UK if not a political act? Why can politics trump economics in the UK but not Europe?

I think you underestimate the political will in Europe to make the Euro work.

I work out 130billion to be something like
300 Euros per person in a union of 400 million. Difficult but not impossible to cover through a combination of various bits of fiscal jiggery pokery.

One good idea I have seen is that Greece should develop its solar power industry and sell electricity to Germany and other central European countries.

TomTom

Before we get carried away with our own magnificence let us not forget Britain has EXTERNAL liabilities equal to 500% GDP.

Greece may be a disaster but Britain is not a long way behind and that was without the Euro. Greenspan helped the US get a 100% GDP Debt level and BoA with $53 Trillion in Derivatives exposure........it was Goldman Sachs that fiddled Greek accounts to meet Maastricht Criteria..........

The I-Banks played fast and loose with credibility and honest accounts just as the banks did with sweep programs and repos.

The Criminality was not restricted to banks trading in Euros; it was Global Grand Larceny and it is simply TOO BIG for politicians - COLLAPSE is inevitable

Magnolia

@David1
David I must have been remembering the three day week or the oil crisis.
You are right that Ted Heath was PM from 70-74 but he never managed to get control of the country away from the unions.
Harold Wilson's Labour Party was in government during the latter half of the sixties and then again after Ted Heath in the seventies and then we suffered the ultimate disgrace of an IMF bailout in 1976 under Labour's James Callaghan.
So from 1966 until 1979, there were only 4 Conservative years.
I think it's fair to say that Labour caused the country to go bust in the 1970s with a lot of help from the unions.

I S

Thanks, Fraser, for a thoughtful, well-considered post.
I agree with James Murphy's point that, in a purely capitalist sysytem, the banks should have been allowed to fail. I do not know what the fallout would have been, but it could not have been much worse than the current global crisis. By saving them, we nationalised their losses and privatised their profits. And how did the greedy, money-grubbing bastards show their gratitude? By using our funds to further reward themselves with the usual obscene sums. There is something deeply sick at the heart of the financial industry. Is it maybe 'the love of money which is the root of all evil'?

Cogito Ergosum

Fraser - I liked your reference to the European Co-Prosperity Sphere.

London Calling

The Euro Mask a Raid…

The Euro crisis could destabilise Peace, claims Merkel ... Sarkozy responds that she’s already had a Piece…Berlusconi states he loves a Pissa. Cameron cries out “ Nurofem…I have a sinking headache”…

Great a Highlander…

IPhone 4Scots…

http://www.youtube.com/watch?v=My40XgYEvLM&feature=related

Verity

Herbert Thornton 7:31. "gnome de plume"!

Inspired.

And the only editor who could blue pencil his pieces would, of course, be Marine Le Pen.

London Calling

.......:)

Verity

Walter Ellis ... "The plan was to build a pan-European construct that could compete with the United States, the Soviet Union, Japan and whichever other power blocks developed in the course of the late twentieth century ...".

A "pan-European construct" that could compete with Japan???? Japan, the size of Britain, was a "power bloc"? Wha'?

They thought they needed a pan-European construct to compete with a country the population the then-size of the then-Britain? What?

(Of course, like a Strasbourg goose, Britain has been force-fed population since then.)

And what was this compelling need to compete with the United States, as though it was some consuming monster, when most of what the US produced was consumed in the US and Canada? How many Chevrolets were sold in Britain or Portugal around that time? Or ever?

France has actually harmed its wine business by directing customers elsewhere with its inflated EU prices. Even when I still lived in Britain, I'd switched to Aussie or Chile, because the EU had priced France out of the market.

This whole argument is gruesome and abnormal.

Malfleur

The function of the political class is to provide the grease between the masters and the mastered.

Malfleur

Walter Ellis

"...a fading America"?

You may not have taken into account this view: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8844646/World-power-swings-back-to-America.html

I go with Boudicca at 6.41pm above.

TomTom

"we suffered the ultimate disgrace of an IMF bailout in 1976 "

Twaddle. Healey invited them in to force The Cabinet to accept his cuts programme, but it has since transpired the Treasury figures were cooked. Healey imposed much more savage spending cuts than Thatcher ever managed - she had North Sea Oil to cushion.

Wilson attempted to deal with the Unions - In Place of Strife 1969. Thatcher encouraged Ford Unions to break Callaghan's Incomes Policy and promised NO controls on free collective bargaining by Unions when in Opposition

TomTom

BTW Fraser, I was surprised that noone has commented that in the Bundestag Debate specific mention was made of the British desire to Cooperate.....and it was suggested full implementation of a Financial Transactions Tax was the necessary British contribution.

So interesting that Cameron will be acquiescing in this proposal "for the good of the Union"

daniel maris

So I was right - there has been a political fix of the economics. And now the Eurozone is edging even closer to superstatehood with mutual management of each other budget deficits. The trust system has been abandoned.

And now what will we see - the Eurozone continuing to grow faster than the UK? I think so.

Clanger62

I note this morning that the Chancellor was making great play of the fact that the British taxpayer will not 'directly' be liable for any of the Greek bailout. When asked by a perceptive reporter if that meant we would be contributing indirectly, eg through the IMF, he ignored the question and spoke about something else. In other words, yes, we will still be contributing billions of British taxpayers' money to help solve a problem not of our making.

EC

Malfleur, October 27th, 2011 3:10am

"The function of the political class is to provide the grease between the masters and the mastered."

Reportedly, they are not all self-lubricating.

*ttp://www.dailymail.co.uk/news/article-1394383/Whitehall-farce-police-probe-chewing-gum-theft.html

Simon Stephenson.

Walter Ellis : 9.04pm

The principal aim of the EU has always been the dismantling of Westphalian sovereignty - the supposed commercial/economic benefits are the selling point, not the goal. What has been brushed under the carpet for 50+ years has been the thought that the vast majority of the commercial/economic benefits could be achieved by negotiation and agreement between nation-states, and that therefore the economic advances are not dependent on the replacement of national sovereignty with supra-national bureaucracy.

What I'd like the pro-EU camp to admit is that their economic argument for us remaining in an unreconstructed EU is no more than a half- or quarter-truth, and that the jewel they are really seeking is the demolition of nation-states, however this may be achieved.

Yam Yam

"The choice is not between Europe and insularity: the Eurosceptics are not Little Englanders, but people very keen for us to think on a global — not just a continental — scale".

In which case, Fraser, it's time to stop being a Nicodemus-like 'secret disciple' and publicly declare once and for all that the EU is done for and that Britain should leave.

Take it from me, you'll feel so much better once you do.

Rhoda Klapp

Simon, cue a bunch of comments calling you a loony. You have revealed the ccurx of the matter, that a whole lot of people, for whatever motives misguided or not, are engaged in a process of dismantling the nation state and installing some (as yet undefined) from of wider governance. Now, they are entitled so to do, but by democratic means. They know that will not fly, so they have resorted to stealth and salami-slicing. And they can never admit it.

The problem being that there can be no debate. THEY have to call us conspiracy thoey nutters, we have to call them secret conspirators. Let there be no doubt. Our position ought to be, if you say there is no conspircay, fine. Now, to prove it, get the approval of the people, properly informed, before you make the changes you want. OK. Now we don't have to descend to finger-pointing and name-calling. Just ask the people. If you don't want to do that, my case is proven.

prziloczek

What would happen if Greece simply left the euro?
What would be the effect on France exactly?
What would be the effect on the UK exactly?

Can you enlighten us?

TomTom

"What would happen if Greece simply left the euro?"

If they can leave their Euro Debts behind they would prosper. The ECB would probably be insolvent as would most French, German banks plus RBS and Morgan Stanley and a few US banks.

Noone would want to lend to Euro States again and interest rates would increase. Greece would have zero borrowing capacity and go into protracted Slump with its population moving to London

The Remittance Man

Okay, so Angular and Sarko have bought themselves a couple of years' grace before everything goes pear shaped. Theoretically this means they have two years to sort out the structural problems within the euro and the eu. But let's face it, that ain't going to happen.

Fortunatley they have also bought Britain 2 years. That's 24 months to put as much distance between ourselves and the eu/eurozone, 24 months to realign the country's economy with the other 130 or so countries in the world outside the eu and 24 months to unlock the country from the political union.

Cameron - there you have it - you have 24 months to prevent the country going down in a disaster more likely to resemble the sinking of the Wilhelm Gustloff [http://en.wikipedia.org/wiki/Wilhelm_Gustloff_(ship)]than that of the Titanic.

Simon Stephenson.

Rhoda Klapp : 10.16am

What you write is true, but I think what also needs to be taken into consideration is that two thirds of adults have what is called "socialised" minds (*). The trigger for their opinion-formation is what they think others want to hear, and so the best political strategy for the unscrupulous dogmatist is to portray that all opponents of his ideology are nutcases, and that their opinions are definitely not what the average (herd-dwelling) citizen should be agreeing with.

It's no more than corruption of the process of reason to exploit, personally, the fact that two thirds of people don't think reasonably anyway. Politics based on this can have no future, surely?

*
http://integral-options.blogspot.com/2009/10/robert-kegan-lisa-lahey-three-stages-of.html

Simon Stephenson.

"What would happen if Greece simply left the euro?"

Wrong question, really. The most significant problem with the euro isn't Greece, it's Germany. Without Germany the value of the euro would plummet and Club Med would be given the chance to re-establish their economies. The reinstated Deutschmark would soar and without such an artificially low trading currency, Germany would find it much more difficult to follow the world-trade threatening, mercantilist, economic policy that being in the euro makes easy-peasy.

There is no answer to the problem that doesn't involve stemming Germany's obsession with maintaining a huge, permanent surplus in its balance of trade.

TomTom

"Without Germany the value of the euro would plummet "

And Banks globally would have to write down their Assets to Market and Corporations would need to implement IAS36.

It would cause corporations throughout the world to breach banking covenants and wipe out Stockmarkets and Pension Funds.

You must use General Equilibrium rather than Statics Simon

Walter Ellis

Verity: You're just being silly. Japan in the 1950s-1960s was perceived as an economic rival not just to Europe, but to America. Bear in mind, it has a population more than twice that of the UK. The Soviet Union and the U.S., neither of which you mention, were obvious great powers. The EU was conceived not only as a means of sustaining the peace in a warlike continent, but as a means of aggregating Europe's economic might and driving it in a single direction to the benefit of all. the fact that things have often gone wrong is a separate argument. Something that ambitious was never going to be easy.

Simon Stephenson: Nation states are in most instances just a few hundred years old. Italy and Germany both appeared as such only in the middle of the nineteenth century. Britain may well lose Scotland over the next 10-20 years, then Northern Ireland, possibly even Wales. Belgium is breaking up. Spain could yet be stripped of Catalonia and the Basque Country. What matters is that Europe, which is physically (if not demographically) immutable, should continue to advance the wealth and liberties of its people. I am strongly in favour of local democracy and national identity. I expect Italy to be Italian and Germany to be German. I like the fact that the Swiss, in spite of their different languages, remain proud to be Swiss. But we are all – including proud Brits – part of the great European family.

Simon Stephenson.

TomTom : 1.04pm

What you write may be true, but what's the alternative? What happens to the value of the euro when the measures necessary for its continuation are put in place? Is there actually a realistic and workable outcome that doesn't involve someone, somewhere taking massive real value write-downs of credit balances so that those who are over-indebted are given a chance to rebuild their economies?

Rhoda Klapp

Walter, you are possibly the first inkling of a coherent voive for the EU, if indeed that is your position. Now, is it your personal ideal aim that we are an ever-closer union? Why do they tackle the noble aim of keeping Europe competitive by regulating cucumbers and offal tubes, landfill and carbon dioxide usage? How does that help. Or would you agree with me that it has lost its way. That it has a democratic deficit which precludes further integtration before a long period of calm to settle things down. Is it, as some would say, a metaphorical shark which must keep moving? What is the final aim? Am I not allowed answers to those questions before I allow it to proceed? Or should I not be consulted?

Take your time, no rush, but no ducking.

TomTom

"Is there actually a realistic and workable outcome that doesn't involve someone, somewhere taking massive real value write-downs "

NO ! There is NO Alternative but to build an ever-bigger funeral pyre and destroy our whole economic system and society.....it is just how big a bust you want.

Brown set us on the path to destruction in 2008 by underwriting global lending positions of banks based in London....for loans across the planet using loans imported onto UK computer screens.

He played fast and loose like Goodwin and Fuld and turned the UK into a Hedge Fund.....now the EuroZone is trying the same trick 3 years later

Herbert Thornton

The USA imports more goods from China than it has the ready money for. So it gives China IOUs instead. They're called "bonds".

China collects more and more such IOUs. The pile gets higher and higher - positively enormous. I think they're part of what's called China's "Currency reserves". The US may be having problems honouring all the IOUs so it will have to either impose severe austerity on itself to enable it to meet its obligations or weasel out by printing huge amounts of dollars, thus cheating China by diluting what they'd been led to believe was a sound investment in the U.S. paper. At the same time the US wants China to allow the Chinese currency to RISE in value - which of course makes the US dollar less valuable in comparison, so presumably the US bonds will become worth even less to China.

As well, various countries in the EEC have been spending far more than they can afford. They've done it by borrowing. I presume that they've been issuing IOUs like the U.S has been doing. Gordon Brown did it by creating more money - he called it Quantitative Easing but whatever it's called it really amounts to debasing the currency - making it worth less. Even more bluntly it amounts, among other things, to stealing value from the savings of ordinary people.

In the case of the overspending European countries I don't know who IOUs were given to, but I have the impression that they were given to European Banks. Now things have got to the point where the IOUs or "bonds" are turning out to be worthless, and European politicians are trying to solve the banks' problems. It seems that somebody - anybody - has to either issue more IOUs - or else agree that the IOUs are worth far less than they were represented to be worth when they were issued. So somebody has to take a loss. But who? Not the banks, apparently that idea terrifies all the European politicians. What to do? Print more Euros? Issue more IOUs? Issue more bonds? Aren't they all really much the same thing? And anyway who should do what?

Ah a solution. Borrow money from China! China has such huge currency reserves it's certain to be able to help out. Give European IOUs to China and China will in return lend part of it's currency reserves to Europe. Oh, and tell David Camshaft to give lots of British currency to the International Monetary Fraud Fund or some such body to increase it's currency reserves so that the IMFF or whoever can in turn pass the British "currency" over to European banks (or somebody). And Messrs Camshaft and Clegg are determined to save Europe, so they'll either print more British currency or make entries in ledgers to show that it has been created and then - with Milliband nodding approval - put it at Europe's disposal.

Most politicians of course won't admit that it's all utterly dishonest smoke and mirrors.

I wonder what the Chinese think of all this. Maybe they will look at the US bonds they hold and conclude that since they're getting more and more worthless, they may as well dump them on the Europeans who can then go on pretending, for a while, that all is well.......

I've already likened Camshaft & Clegg to people rowing a lifeboat from the Titanic. This time I have an image of their seeing the Titanic of Europe actually going down and, as an act of solidarity, pulling the plug from the lifeboat named U.K. so that it can sink too.

Walter Ellis

Rhoda: Governments do silly things. But the sausage/cucumber/banana sagas (interestingly all phallic) played out long ago and never amounted to a hill of beans. When I look ahead, I see two possibilitie. The first is a Europe of failing nation states, none of them, not even Germany, large enough to be a driving force in the world of the 21st century. The second is a Europe of the regions, in which individual cultures and lifestyles continue to thrive, with at its hub a powerful, pan-European government that regulates our economy, our currency and our taxes and operates a collective foreign and defence policy that makes the EU a respected force for good in the world. This is a noble aim, and perfectly realisable. Britain should be part of it. then, if Brussels decides to codify our sausages, we can all get cross about it.

Malfluer: I have lived in the U.S. for the last ten years, though I spend four months of each year in France. I believe the U.S. will recover from its present malaise and regain its old composure. But I do not believe that it will ever again be pre-eminent in the world. In the future, it will be North America, the Russian Federation, the EU, India and China that will govern the world between them – though Brazil may also be in with a shout. If this sounds somewhat Orwellian, let us hope that Europe will be known best for its progressive libertarianism, social justice, culture (both high and popular) and innovative industry.

Richard of Moscow

“This is an economic problem and it can’t be solved by political will.” – very true, Fraser, but a truth which is ûåøää unpalatable to those in La-La-Land. Only this morning, some clown on BBC News 24 said, “I think the Euro will be saved – there’s too much political will to let it fail.” – and he was introduced an an expert.

The recent “solution” replies, in the end, on the Eurozone being bailed out by the BRICs, especially China, as Herbert Thornton says above.

“I wonder what the Chinese think of all this.” – It seems they share the view of most of us on here:

http://www.telegraph.co.uk/finance/comment/liamhalligan/8843230/China-signals-irritation-as-Europe-stares-into-the-financial-abyss.html

Daniel Maris: “And now what will we see - the Eurozone continuing to grow faster than the UK? I think so.”

There’ll be little or no growth in the west due to the high oil and commodity prices and incompetent politicians, and this has been obvious for over a year. Sadly, our ‘establishment’ thinks you can’t handle this, so on your BS Bingo cards add the following phrases, “disappointing inflation / unemployment figures” and “lower than expected growth” and “surprise leap in govt borrowing” and so on.

Rhoda Klapp

Walter, the point about the sausages is not how they regulate the sausages/cucumbers/whatever, but why they feel the need to do so. And the most evident (but not necessarily correct) explanation is that they do it as a way os salami-slicing their way to a position where the EU makes all the rules and th national governments are de facto powerless. That is not the honest way to a united Europe. If that is what you want (and I can see it as an ideal, though not one I share) then you ought to aspire to reach the position demcratically, constitutionally, by a vote of each constituent nation. If you do not, you are imposing an empire by stealth. The EU does not in fact have a structure in place to do it honestly.

Walter Ellis

Rhoda: There is truth in what you say (though I think we need to move on beyond the sausages). Lots of Europeans, including the French, are worried that Brussels has become overbearing and that change is imposed by diktat. This needs to be worked out. In fact, however, big votes are taken using weighted votes, so that Germany has the most power, then Britain and France, then Italy and Spain, and so on. and the power of veto remains as a nuclear option. The European Pariament was supposed to redress the democratic deficit, but hasn't really done so because the member states won't agree to any significant increase in its powers. Britain, in particular, scorns the Parliament, yet continues to call for greater EU democracy. It needs to make up its mind. In the end, however, if the UK doesn't want to go along with the rest, it doesn't have to. It can always say no and withdraw, at which point it will be free to explore its own irrelevance in a rapidly changing world.

Rhoda Klapp

Maybe i'd rather drive a car myself, albeit a little car, and go where I want, rather than be on board a big powerful bus with 26 others, everybody with a hand on the wheel, and only three or four paying their fare. It doesn't matter whose foot is on the accelerator, because that doesn't seem to be connected to anything.

Rhoda, metaphor stretching a speciality.

Rhoda Klapp

and after a little more thought, Walter doesn't like the EU, as it is. He likes it for what it could be. I don't like the EU as it is, but I have a distrust of the concept. I am not sure ANY utopian EU, no matter how economically successful or wondeful to live in, would be worth giving up freedom for. But I doubt whether the thing we have now is capable of being altered or reformed into the thing Walter wants, much less a paradise. The mechanism for reform does not exist. The thing is a bureaucracy captured by regulators, fantasists, interfering nannies, corporate lobbies, financial cheats and national self-interest. It is incapable of improvement, and yet those who run it are scared to face that fact, because they are the reason.

As an aside, I wonder why we are finally reaching the essence of the EU problem 60 comments down in a page 2 post, after so many posts here and everywhere else going over the same old ground with abuse and deceit, pary posing and short-term politicking. Walter, and I hope I, are showing here that you can have a polite discussion of something closer to the actual issues.

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daniel maris
October 26th, 2011 9:26pm

"One good idea I have seen is that Greece should develop its solar power industry and sell electricity to Germany and other central European countries."

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This is a line from a stand-up comic's act, surely?

Simon Stephenson.

Rhoda Klapp/Walter Ellis

There's what I think is a splendid article by Ed West in yesterday's Telegraph:-

http://blogs.telegraph.co.uk/news/edwest/100114017/how-george-orwell-could-have-predicted-the-euro-folly/