Greece

Tuesday

David Blackburn

The pernicious myth of powerlessness

‘Corruption,’ wrote Edward Gibbon in his peerless Decline and Fall of the Roman Empire, is ‘the most infallible symptom of constitutional liberty.’ I was reminded of this phrase when thinking about the Eurozone crisis. Commentators present a dichotomy between the discipline of northern Europe and the frivolity of southern Europe, which is characterised by bureaucratic, judicial and political corruption. Brussels has already imposed technocratic governments on Italy and Greece, and seeks to force Teutonic virtues on those economies. Constitutional liberty is to be limited in the hope of eradicating corruption (both in a literal and figurative sense) in southern Europe. Unsurprisingly, this new imperium is not universally popular: witness the

Monday

Kwasi Kwarteng MP

Kicking the can down the road

There has been a lot written about Greece’s elections. The outcome, a narrow victory for the New Democracy party, was the most widely expected result. Paradoxically, this result will lead to even more uncertainty. It is simply, to adopt a common American phrase of the moment, ‘kicking the can down the road.’ To most commentators, the Greek electorate had a simple choice. Do you want to stay in the Euro, or not? In reality, Syriza, the left wing radicals, had always maintained that they wanted to stay within the single currency. They simply wanted to renegotiate the terms of the bailout. It was rather like a madman holding a gun

Vincenzo Scarpetta

A turning point in Greece? Think again

Things in Greece could have been worse after yesterday’s election, but that fact can’t be hailed as a ‘turning point’. Assuming that Greek political leaders form a coalition and push ahead with EU-mandated reforms, which is a very likely outcome given that Greece may only have enough cash in its coffers to soldier on for another month, any such government will inevitably include parties that completely disagree on how to resolve the crisis. The only glue would be the fear of economic catastrophe. This uneasy government would be ill-suited to withstand pressure from Syriza and the rest, who will spare no effort in blaming it for the inevitable economic pain.

David Blackburn

The morning after the night before

This morning’s front pages are devoted to Greece, and the consensus is that the result of yesterday’s election amounts to little more than a stay of execution for Greece and the euro. At the time of writing, markets have responded to the news positively; but, fundamentally, nothing appears to have changed, so expect further turmoil. The formation of a Greek government is the foremost problem. James explained last night that the pro-bailout party New Democracy is unlikely to form a coalition with the centre-left PASOK party, which had indicated that it would only join a coalition that included radical leftists Syriza. This impasse persists for the moment, but there is

Sunday

David Blackburn

Make or break in Europe?

‘I think we are at a make or break place in Europe,’ said former Greek Prime Minister George Papandreou on the Andrew Marr Show. Europe is holding its breath for the results of today’s election, which, should the radical leftists Syriza win, threatens to open a new chapter in the euro’s unhappy history. Germany remains adamant that Greek cannot renege on its bailout deal. But rumours that Germany would welcome Greece’s exit persist; indeed, the Sunday Times reports (£) that the European Union is, collectively, preparing emergency aid packages for Athens, should the country withdraw. These preparations are the sort of coherent and complete action that the euro-crisis has demanded.

James Forsyth James Forsyth

The worst of all possible worlds

The Greek election has, in terms of the Eurozone crisis, produced the worst possible result. If the Interior Ministry’s initial projections are accurate, New Democracy has come first. But it is hard to see how they can form a coalition given that PASOK, the party of the establishment left, have said they won’t go into coalition without Syriza, the anti-bailout party. PASOK’s ambivalence is understandable given that any party that goes in with New Democracy is likely to be wiped out at the next election. But the coming Greek stalemate is likely to make life particularly difficult for central bankers: do they act before tomorrow morning or wait for the

Thursday

Sebastian Payne

The View from 22 – is HS2 the rail to nowhere?

Is High Speed 2 headed for the sidings? In our cover feature this week, Ross Clark examines why the ambitious infrastructure project — designed to boost Northern cities — has all but disappeared from the government’s agenda. Despite the chancellor’s ‘boyish enthusiasm for fast trains’, the project has lacked the essential support from private business. Now, more pressing issues have taken charge.   In our View from 22 podcast this week, Ross explains why the Tories were once so enthusiastic about the High Speed link to the North: ‘It was a way for the Tories to say — as part of their decontamination  of the Tory brand — look, we’re

Monday

James Forsyth

Who wins as Spain stutters?

The news that matters today isn’t what was said at Leveson, it’s becoming increasingly clear that the government won’t act on the inquiry’s report if it suggests anything big, but that the Spanish bailout is failing. Indeed, Spanish bank stocks are lower this evening than they were this morning and the yield on Spain’s 10 year bonds is back above six percent. But one group who will benefit from the Spanish bailout is Syriza, the Greek anti-bailout party. The decision to bailout Spain without fiscal conditions is a major boost to Syriza’s pitch that ultimately the rest of the Eurozone will blink if Greece demands changes to the terms of

Wednesday

James Forsyth

Storms over the continent

Whitehall sits and waits. Normal politics is continuing, squalls over whether the apprentice stewards at the Jubilee were taken advantage of and the next stage in the Warsi saga have dominated today, but everyone knows that the big story is unfolding — albeit, at an unpredictable pace — on the continent. There are, at the moment, two big questions. The first is how will Spain, which has essentially admitted that it will struggle to sell any more bonds, recapitalise its banks. Once again, we see the president of the ECB, the Commission and most of the other Eurozone members badgering the Germans to bend the rules and allow a quick

David Blackburn

Tyrie’s ‘only plausible’ solution to the euro-crisis

The European melodrama continues. The European Commission is to publish draft legislation to insulate taxpayers from bailing-out Europe’s sclerotic banks in the future. The plan is to give governments the power to reduce the claims of shareholders and bondholders so that any losses are born by creditors not taxpayers. These changes, if enacted, would ease Mario Draghi’s design for a European banking union. But, as ever with Europe, these changes will come later rather than sooner, as late as 2018 in fact. These discussions are taking place while another Mediterranean storm appears to be gathering. Moody’s is the latest credit rating agency to sound the alarm: downgrading 6 German banking

Saturday

Peter Hoskin

The IMF is losing patience with Greece

Much ado about Christine Lagarde’s interview with the Guardian this morning — and understandably so. After all, the head of the IMF is normally so restrained and delicate, yet here she lets that drop. When it comes to Greece, she says, ‘I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education… I think they need even more help than the people in Athens.’ And she also stresses that the Greek people should ‘help themselves collectively… By all paying their tax.’ Common

Friday

Jonathan Jones

Will a Greek exit mean an EU referendum?

A couple of weeks ago, James revealed that the promise of an EU referendum is almost certain to feature in the 2015 Tory manifesto. But might we actually have one before then? If the speculation by ‘senior government sources’ in today’s Times is to be believed, we might indeed. According to No.10 and the Foreign Office, a Greek exit from the euro — which could follow soon after the country’s new round of elections on 17 June — would necessitate a rewriting of EU treaties. And that, the Times says, ‘would trigger “aggressive” demands by Tory MPs to hold a referendum on Britain’s EU membership.’ Meanwhile, over on the other

Thursday

James Forsyth

Leveson continues, but it is a sideshow to the Euro drama

Fred Michel’s testimony this morning at the Leveson Inquiry was embarrassing but not devastating. The texts between him and Jeremy Hunt are cringe-worthy but my read is that the Culture Secretary is not in a weaker position than he was this morning. More important for Hunt’s survival prospect is the appearance of his former spad Adam Smith this afternoon. The question is, did Hunt not know of the extent of contact between Smith and Michel? Everything going on at Leveson, though, is a sideshow compared to the economic news and the storm brewing on the continent. On that note, it does seem odd that Nick Clegg is suggesting that the

Monday

Clarissa Tan

Bondholders are sheep — and they’re flocking out of the euro pen

Sweden’s Anders Borg (Fraser’s favourite finance minister) is wrong, says Citigroup. Bondholders and deposit holders are not like wolves, as Borg has made them out to be. They’re more like sheep — and currently they’re baa-a-a-cking out of the eurozone pretty quickly. We all know that money’s leaving the Continent — but how much and how rapidly? Citi’s credit strategist Matt King, basing his analysis on imbalances in TARGET2 (the euro area’s main payment settlement system) relative to eurozone countries’ current accounts, has come up with a few interesting observations. — Since mid-2011, Spain has suffered private-sector outflows of €100 billion, and Italy €160 billion (or a tenth of their

Saturday

Fraser Nelson

Why reason doesn’t apply to the Eurozone

The Eurozone is a kind of lunacy if you look at it as an economic project. But this isn’t about economics, or rationality — it’s about emotion, as the leader in today’s Telegraph says. The Brits and Americans often fail to understand this fully because we judge a currency union in terms of its economic merits. But many European nations see it as part of another, wider, agenda. For the Spanish and Portuguese it’s about not going back to dictatorship. For Greece it’s about being Western rather than Eastern (and not being run by the military). As John O’Sullivan wrote for The Spectator recently, Eastern European states still — even

Friday

James Forsyth

Merkel heads to the G8

I doubt that Angela Merkel is looking forward to the G8 summit very much. It will mostly consist of the other world leaders telling her to give ground on austerity. But I suspect that Merkel won’t budge much, if at all. She clearly believes that the Greeks can be whipped into line by telling them that the election is really a referendum on euro membership. Hence both her suggestion of a simultaneous referendum on election-day and her backing for the European Central Bank cutting off support to Greek banks which shows that while there’s no formal mechanism for ejecting a country from the single currency there are ways of doing

Clarissa Tan

UK banknote printer is ready for any drachma call

Even in the most economically tumultuous of times, there are people who stand to make money — some of them literally. British money printer De La Rue has told Reuters it’s made contingency plans to print drachma notes, in case Greece makes a euro exit. If Greece leaves the common-currency zone, there’d be such a huge demand for drachmas that Athens may have to outsource its money-making to companies abroad, says the unnamed industry source (one assumes hopefully). ‘It will be a huge job which the state printing works will do, but they will probably pull in some additional volume from outside and De La Rue will be in with

Thursday

James Forsyth

Cameron vents his euro frustration

David Cameron’s speech today is a sign of his frustration with the eurozone. Numbers 10 and 11 are increasingly irritated by how eurozone leaders are refusing to accept the logic of their project. What Downing Street is keen to avoid is another wasted year as Angela Merkel gears up for her reelection campaign. So, intriguingly, we see Britain throwing her weight behind Hollande’s support for project bonds. Cameron also uses the speech to again back eurobonds, which Merkel is firmly opposed to as she knows that this would mean Germany effectively standing behind everyone else’s debt. I can’t see a resolution to this crisis coming anytime soon, though. The economics

Sebastian Payne

The View from 22: Greece is burning

The upcoming Greek elections will push the nation into a confrontation with the European authorities, reports Faisal Islam, the economics editor of Channel 4 News, in his cover feature for the latest issue of The Spectator. And in this week’s episode of The View from 22 podcast he provides an insight into the changing attitudes he witnessed during his most recent visit to Athens last week: ‘Six months back, there was certainly a high stakes game of poker. But to me, it was pretty clear 6 months ago that the Greek people would do what was necessary to stay in the Euro. When you asked people on the streets, politicians,

Wednesday

James Forsyth

Cameron gets tough with the eurozone

Today’s PMQs will be remembered for one thing, Cameron saying that the eurozone had to ‘make up or it is looking at a potential break-up’. This is a distinct hardening of the government’s line on the single currency. Cameron’s comment was particularly striking coming just days after George Osborne said that ‘open speculation’ about whether or not Greece would leave the euro was ‘doing real damage across the whole European economy’. However those close to Cameron are not resiling from the remark. Instead, I understand that we can expect more from the Prime Minister on this subject when he makes a speech on the economy tomorrow. The break-up of the