The Children! Think of the Children!

As many of you may know we have a public sector strike coming up on Wednesday. Inevitably the Tory’s are jumping from “well go on strike! See how we care! It’s not as if you work that hard anyway” to “my god! What are you thinking! The country will grind to a halt and be overrun by Immigrants…and Terrorists! AAAAHHHH!”. Inevitably the going on strike of the Passport workers has the Daily Mail types in a tizzy. Think about it, to them this is they’re worst nightmare come true, the UK border door wide open for every Terrorist / Immigrant / Foreigners (all the same think to them!) to walk in (course nearly half the time I go through passport control there’s nobody there!). The Army has been dispatched to airports…thought exactly what they are supposed to do there is unclear!

Meanwhile Louise Mensch (the Tory’s official party bimbo), has suggested that parents be allowed take their kids into work to beat the strikes. I don’t think she’s considered the practicalities of this. Not to put too fine a point on it, but while most parents may well think that little darling Johnny is adorable, to the rest of us he’s a noisy, annoying (and likely smelly) distraction. The last think I need, nor want in work, is to have some little rug rat running around the office. I suspect I’d just take the day off in that case (so effectively, I’d be joining the strike on account of someone’s sprog!) And I don’t see how you’re going to get a kid to sit still through a 1 hour business meeting, or in my line of work, a 2 hour lecture on finite element analysis? And what if I need to go work in the lab…. and fire up my Class 4 laser! “daddy I can’t see out of my left eye & my hair’s on fire!”

In essence what Lousie Mensch and the Tory’s are basically doing is invoking Children’s interests “the Children, the Children, dear god will somebody please think of the Children…who will now suffer do to the evils of these work shy unions!” Its the political equivlent of Godwins law.

The Tory’s need to accept the fact that despite their best efforts, they and the Lib dems have to take some of the blame for these strikes. If there’s one golden rule of management its don’t fuck with people’s pensions, it always causes problems, the social equivalent of shouting paedophile in a parent / teacher meeting. While I think the unions do need to accept that the generous pension plans handed out to past generations are now unsustainable, there are better ways of handling this. And the Tory’s by stonewalling the unions and threatening to change the strike laws hasn’t helped. Indeed they’ve stirred up a hornets nest.

Also these strikes, while officially about pensions are also about the cuts, which will inevitably see many public sector workers rendered unemployed. Now that would be bad enough if it weren’t becoming clear that the Tory’s plan to reward their toff buddies with a generous tax cut. Already they are cooking up the ridiculous suggestion that dropping the 50p tax would help the UK get through the impending Eurozone debt crisis (the nerve of them!). To the unions it looks like their members, plus the working and middle classes in general are going to carry the can for these cuts, while the Tory’s friends get a hand out. And as I’ve pointed out, while raising taxes for the wealthy would help, to be honest, just getting them to pay they’re taxes would be enough! Consider that the report in the Observer that discussed One Hyde Park, a trendy plush London hang out for the super rich (one of the most expensive and exclusive addresses in the world). Of the 62 properties in the development, only 9 have registered to pay council tax, and only two stamp duty.

Strike Breakers
Also this business of changing the strike laws is completely heavy handed and likely to be counter productive. They’ve made it practically impossible to strike these days as it is and such a rule will make the situation worse. It will encourage management to meddle, by getting manager to join unions (or temporarily hiring people off the street!), to stack the deck of unions to make raising a 50% vote in favour of striking impossible (and they won’t even have to vote, by not voting they’d deny the union its quorum). Of course, the unions will likely respond by meddling themselves, restricting membership to only line workers, break up unions into smaller specialised unions (the exact reverse of what managers want as it means more unions to negotiate with and a higher likelihood of strikes as pleasing everyone proves impossible), or by making voting in strike ballot compulsory. This last one would be an obvious way around the government’s strike law. The union arranges for two strike ballot to be held one after another. If they don’t get the 50% in the first ballot, anyone who failed to vote is stuck off the union roll for the second, which likely passes with a good majority.

Worse, if workers lack the means to enforce their rights through a union, then the chances of wild cat strikes and walk outs are greatly increased. It’s worth remembering why we have laws guaranteeing the right to strike. Because back in the bad old days before such rules, strikes tended to be messy, unplanned and often violent affairs. Unions, aware that they would be sacked if caught organising, met in secret. The first management would often know of a strike was when everyone walked off the job. Managers would often hire “scab” labourers to fill in, as well as strike breakers to literally break the strikers by force. Of course the striking workers would respond with violence in kind. This was an era when sabotaging the factory or fire bombing you’re boss’s house was consider a normal part of industrial relations. Next time a Tory talk’s to you about “class warfare” tell him to read a history book.

Indeed it was the lack of effective protections for unionised workers in the US, that drove the Teamsters under Jimmy Hoffa into the arms of the mafia. So my question to Boris Johnson is, which do you prefer, the tube not running for 48 hrs or waking up with a horse’s head in you’re bed …and a couple of senior tories having themselves a little “accident” (why people step into basins of ready mix concrete and then fall in the river all the time!).

“Oh how I wish we’d listened to that man (union organiser)…instead of walling him up in the old cement silo” – Mr Burns

So yes, while Wednesday’s strikes will be a bit inconvenient for everyone, society is not going to come to an end, and it’s a small price to pay given the alternatives.

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Who owes what? The UK’s debts "biggest in the world!"

If you believe all the hype, then it is countries like Spain, Italy and Greece who are the most indebted nations in the western world…not so! Actually, as Robert Peston at the Beeb points out, the UK counts as one of the world’s most indebted nations! The aggregate UK debt – that’s the sum of personal debts (credit cards, etc.), household debts (mortgages), corporate debts, government debts and bank debts – had risen to 492% of UK GDP, or almost five times the value of everything the UK produces in a single year.
http://www.bbc.co.uk/news/business-15820601

And worse, the UK’s debt mountain is growing (it was 481% at the end of 2008) not shrinking. If the country were to lurch into recession again as a consequence of the Tory cuts, we could well see this debt mountain spiral yet further, both due to the depression of tax receipts and the usual belt tightening that we will all be forced to undergo as part of our personal finances, as in any recession.

By comparison the debts of Japan (public and private) are around 491% of GDP, with America on 282% of GDP, Greece 252%, Italy 163%, Germany 176% and Spain 284%. Only Ireland, with a whopping 1,092% of debt to GDP (just a tenth of that public debt) outshines the UK. Again in Ireland as with the UK most of that debt is personal debt rather than government debts.
http://www.bbc.co.uk/news/business-15748696

Now one may well argue that I and Mr Peston are being unfair, after all “only” around a quarter of this debt is held by the UK government, the rest is held by companies (notably the financial services industry), personal debts (credit cards, student loans) and property (mortgages). However, the point is that in many ways government debt is a more stable investment that personal or private debts (as Western governments are statistically less likely to default than you or I or any business). Hence it sees odd that the markets are constantly downgrading the debts of sovereign governments in the Eurozone while ignoring the elephant in the room of the huge private debts held in the countries like the UK.

Least we forget how this entire financial mess started. There was a slow down in the global economy, possibly triggered by the spike in oil prices around 2007 (which was possibly itself sparked by the passage of the world past the point of peak conventional oil in 2006). This caused a global economic slow down, which led to a bursting of the US housing bubble, leading to many Americans defaulting on their mortgages. The rest is history. And many of the Eurozone countries only got into serious difficulty with their debts recently, largely as a result of speculation from “the markets” about the pace of their economies…speculation that, if Peston is to be believed, defies any meaningful analysis.

Similarly, it’s not unrealistic to question what would happen if the UK economy entered into a further recession. One could easily propose a scenario where the UK, of all places, could be the centre of a severe financial tsunami. Firstly either the Tory cuts or a default in Greece causes the UK to lurch into a deep recession (as I pointed out in prior article 60% of the UK trade and 12% of its GDP is with the EU). This triggers a wave of personal insolvencies in the UK. This leads to major losses in the UK’s already vulnerable banks and financial services companies. Inevitably some begin to fail or are forced again to go cap in hand to the government (again!). The government likely responds by either telling them to get lost (in which case several go to the wall and default on their debts) or in order to pay off this new bailout, the UK government is forced into a technical default of some sort (devaluing the pound, a debt “haircut”, deferring payment on its debts for some time period). This triggers a wave of financial contagion spreading across the global markets.

If ultimately the UK were to default on its debts, of course I’d argue that Quantative Easing is all but a defacto default anyway, the consequences for the global economy would make Greece or Italy look like a side show. Consider that the UK owes € 379 Billion to Germany, € 578 Billion to the US, and € 210 Billion to France. By comparison Greece owes a total of € 400 Billion (public and private!), practically a rounding error next to the UK’s total of €7,300 Billion, only £15.9 Billion of Greek debts being owed to Germany and only €15.6 Billion to the UK and America (combined!). The latter figure (€15.6B ) is important as this is the total amount of money that has the markets in a frenzy running around screaming the sky is falling. Even Italy owes a “mere” €120 Billion to Germany, €35 Billion to the US and € 55 Billion to the UK. Thus our UK default would hit certain countries very hard, the US and (ironically) Germany take a severe pounding, as does Ireland (owed a good € 103 Billion by the UK, presumably run up by the brits buying Guinness in Temple Bar!). Inevitably this leads to yet further losses in these nations and further defaults, both private and public, worldwide.

Am I suggesting that the whole capitalism system is now on the verge of collapse? Will it shortly be raining investors on Wall street? Hardly! Actually the danger is that the spiv’s in Wall Street and London will profit quite handsomely from such a crisis (as a trader recently let slip, see my article on that here). As with the last time, they’ll come through the crisis richer than ever, thought they might need to spend most of that money on security as I suspect the public mood will not be terribly tolerant of such traders and their mega profits (its already getting to French revoultion standards, article on that by the Beeb here). Obviously the implications for certain politicians would be severe, Merkel in Germany and her party will likely get wiped next election, being blamed (ironically enough) by the German people with failing to take decisive leadership on the Eurozone debt crisis. The Tory’s in the UK will similarly take a hammering. And we could be looking at a global economic depression on the scale of, if not exceeding that in the 1930’s. The party might truly be over for many of us.

Obviously these stark facts of life immediately tell you that “the markets” don’t have a clue what they’re doing. They are driven, not by smart people who spent hours pouring over complex data and running elaborate computer models, but by herd instincts, and the prejudical opinions of the Bullingdon set good old boys. I recall for example a Brazilian who worked for their finance ministry once lamenting to me that any time the Lefties took over, the US ratting agencies would cut Brazil’s credit rating, even when the socialist went out of their way to try and balance the books! Of course when the right wing took over (or a coup was launched) the rating agencies often raised Brazil’s credit rating, even when the new government began running up huge debts (or buying vast amounts of military hardware)! Go figure!

If Greece and Italy are “Junk” status how is can Britain’s AAA+ rating be justifed? I have this image in my mind of the Rating Agencies working out ratings by going down into the basement and asking a druid to interpret the movements of a flock of headless chickens!…
…Or maybe it has something to do with the fact that “the markets”, largely based in UK and USA, could (as noted) profit quite handsomely from a debt crisis in the eurozone (Money box program on that here).Whereas a similar crisis in the UK/USA (where they live) could cost them dearly (I mention that in prior post here).

The Hedge funds having bet the Euro house would burn down are now determined, with a little help from their golfing buddies in the rating agencies, to light the fire. They have thus startled the market “herd” into stampeding away from the Eurozone. Although the actions of certain Eurozone countries and the failure to get to grips with the present crisis, hardly helps matters. One thing thought is clear, that it would be foolish for governments to pander to “the markets” or assume that we can judge future events by the actions of “the markets”. Another crisis in a different direction (such a severe US recession triggered by those $1.2 Trillion in cuts the Republicans have just forced on the US) could send “the markets” scurrying away in a different direction, with the whole eurozone crisis essentially then just blowing over.

So what should we learn from this? Well firstly, that the constant dithering of politicians, in the Eurozone or in the US, is now unacceptable. Decisive leadership in both cases is needed, quickly! Yes, Germany might take a hit from the various solutions presented to the current Eurozone crisis. But look at the numbers and consider that this will pale in comparison to the hit they’ll take in the event of an unravelling of the Euro, or a default of a Eurozone country destabilising the US or UK. But German savers will be horrified with the idea? Not as horrified as they will be if they loose they’re entire life savings and pension (which is a real possibility if such a financial crisis as I’ve outlined, and this is but one possible scenario, here’s another by documentary film maker). It is the duty of governments to do what is in the best interest of the country – politics is not a high school popularity contest! If Merkel feels unable to take the form of decisive leadership her country (and the EU) now needs she should do everyone a favour, and like Berlusconi, resign at once.

And speaking of popularity contests, similarly the reason for the failure of the US debt deal was an unwillingness of the Republicans to accept tax rises “because we signed pledges”. Of course, as I’ve pointed out before, the biggest and most obvious place to start trimming the US budget, is with the military budget. But this is also off the table for cuts, as far as the Republicans are concerned…largely because it would mean major job losses in Republican districts and hit their special interest sponsors hardest (maybe that pledge the Republicans should have made to voters, should have gone “I pledge not to raise taxes but instead have the lot of you sacked, destroy the economy of this state and force you all to immigrate to Oregon and become car bum’s”). Least we forget only 6% (see here) of the current US debt run up since 2001 is a consequence of Obama’s Stimulus package. Bush’s tax cuts are to blame for 13%, the wars 15% and his two recessions 28%. Obamacare is scheduled to be revenue neutral (indeed it may even run a slight surplus). So the Republican party, after causing this whole US debt crisis are now too spineless to take the actions necessary to solve it. As with the eurozone the fundamental problem with the US debt situation is a failure of leadership and indecisive politicians unwilling to take the decisions required. Again, as with the eurozone, if the Republicans are unable to walk the walk, they should quit trying to talk the talk and make way for someone else.

And it is also unacceptable for governments to be spending half their time second guessing how the fickle herd of startled sheep that we call “the markets” is going to react to anything, particularly where we know that certain forces within “the markets” have a perverse incentive to destablise national economies (wolves in sheep’s clothing!). Constantly politicians and the media worry “what will the markets make of this?”. And when did we have that election putting “the markets” in charge of the world? I don’t remember signing up for that! There is a urgent need for us to break the power of the markets. A number of measures could do that ranging from maximum wages, a financial transaction tax, a super tax for the mega rich, various changes to our currency systems (I discuss that more here) or how about introducing a new hunting season (for bankers!). Either way, there is no good reason why we should tolerate “the markets” unless they can prove they have a positive role to play in the world.

Epic battles of blogger history: Occupy wall street and the 53%

A bit of battle has broken out in cyber space. The supporters of the “occupy wall street” group have established a site called “we are the 99%”, a reference to the fact that 99% of US voters hold but a fraction of the wealth held by the remaining 1%. The site allows people to upload messages in support of their cause and express their grievances with the current status quo. Opposing them is the “we are the 53%”, referring to the 53% of Americans who are taxpayers. This site represents the views of conservative bloggers, tea partiers and others who seem to think the OWS lot should get off their asses and go get a job. Here’s one of their posts (taken from the Beeb site):

“My wife and I decided in 1996 that we were sick of poverty. We went back to school. We earned degrees. We got jobs. No one handed it to us. We earned it. We did it. I didn’t go through all that struggle while raising 5 children so I could support lazy [expletive] people who want nothing but government handouts. You want to ‘occupy’ something? Occupy a job and start contributing”

Let’s pick this one apart. Going back to school (I assume he means university) would require money, lots of money, particularly in America. How exactly is someone on minimum wage, barely earning enough to pay the rent supposed to find the tens of thousands it would take to go to university? And how’s an unemployed disabled military veteran supposed to “earn it?” Crawl around until someone gives him a well paid job? Getting a bank loan to start up a business (or to pay for university)? You’re kidding right! The only way the many Americans who now live in poverty (never mind the now legions of homeless people in the country) could get money out of a bank involves the use of a firearm and a balaclava. I’ve heard of university professors being turned down for credit, so there are no guarantees anymore that anyone will get it. One cannot “occupy a job” if there are no jobs available.

What the “we are the 53%” lot need to realise is that times have changed. They did well for themselves in the boom years of the early 2000’s when the world was awash with cheap credit (read money that we’ve just worked out never existed in the first place) but were now in the mists of “the Bush depression”. Many Americans are seriously struggling. Homeless rates in America have soared. Tent cities or “bushvilles” as I’ll call them are springing up everywhere. Many of their occupants were “middle class” until 2007. Even those who are still working and have a place to live are seriously struggling to make ends meet. Indeed I would note that I’m in the process of moving house right now and remember noting that every single ad I saw for flats stated that (and the first question I was asking when I rang up) they would not rent to anyone who was unemployed (regardless of how much savings you had or if you were in a position to meet rent payments without a guaranteed). In essence if you don’t have a job, then you’re scum and among the great unwashed seem to be the message. One cannot pull themselves up by their boot straps if they can’t afford boots!

In essence much of the “we are the 53%” or indeed Tea Party politics in general amounts to saying is well I’m doing okay why should I change? Because a few twists of fate and you’ll be in the same boat as many others. Simple question to the Tea Party member if you lost you’re job tomorrow, how long before you’d be homeless? And to be fair let’s also apply the provisos to this question that you have to continue to pay all you’re bills and taxes (cos if you don’t pay them you’re not the 53% anymore!), can’t rely on any government handouts (since Tea partiers want “big government off our backs”) nor the bank of Mum and Dad (hardly pulling yourself up if mum & dad bankrolled you, indeed I should include a condition that you repay them for all you’ve got off em, if we’re to be faithful to the Tea Party philosophy). This a good question because there are three realities we all need to face, especially anyone in America (which lacks the welfare safety net of Europe). Firstly, it’s that many people today are only a few pay cheques from destitution and secondly that nobody’s job (or savings or pension plan) is secure in the current climate. If you’re a public sector worker, austerity measures could see you’re job going. If you’re private sector, such austerity measures are already causing a deepening recession here in Europe and what’s the first thing corporations do when a recession strikes? Thirdly, if you do wind up unemployed, there’s no guarantee you’ll get another job. I know people (with degrees or post-grad qualifications and tons of experience) who’ve been unemployed for a year or more (some since 2007) and despite all of their best efforts they still haven’t found anything (some haven’t even gotten an interview!), even after they traded down and went looking for less well paid posts (employers tend to come out then and say you’re overqualified and fear you’ll jump ship once conditions improve, been in this same boat myself!).

Incidentally, as I pointed out in prior posts (see here and here), if the Tea Party had their way and “big government got off America’s back” it would be mostly republicans who’d bare the brunt of that, due to the fact that many republican states take in more money from Uncle Sam than they pay out in taxes! Also its worth remembering that many “self made” members of the so-called 53%/Tea Party owe their success to a “big government” policies (low taxes & interest rates, high deficit spending, the wall street bailout) under the Bush adm. If they we’re true to their principles well they could at least write out Uncle sam a cheque?

I also suspect that this “we are the 53%” may contain an element of astroturfing at work. I found it suspicious when I went on the site how a disproportionate number of the pictures I saw seemed to be of attractive young girls. This blogger seems to think something’s up and Sourcewatch draws a connection between the principle initiator of this site (Erik Eriksson) the Rightroots and the Swiftboaters plus it establishes various connections to shady conservative/republican organisations.

Once we accept all of the above we also have agree that the unbridled greed of Wall Street is about as acceptable in the current climate as an Archbishop at a Tea Party convention. One criticism of the “occupy wall street” group is a lack of decent policies, other than a general down with this sort of thing attitude. Let’s try and sort that one out and suggest a few policies.

The idea of a Tobin tax or as its also called Robin Hood tax or Financial Transaction tax (its technical name) seems to be doing the rounds. I have to say that I believe that this is clearly insufficient; not least because just such a measure is now being championed by Sharkozy and Merkel right now (note to Americans it may surprise you to learn this but both of these politicians are actually right wingers!). While I certainly think it’s a good idea, it would knock Goldman Sachs off their throne (see my thoughts on that here). But no, I would argue that, while supportive of it, this would be little more than a band-aid on a severed limb in the current climate, especially given that it looks like the spiv’s and speculators on Wall Street may be limbering up to profit from the Greek default.

Firstly I would call for a loosing of libel laws to allow firms to try and recoup some of the bonuses that were paid out to the top bankers in the lead up to the recession. Take the former head of RBS here in Scotland, Fre>:XX actually hold up, I can’t name him as I think there’s still a super-injunction out preventing that, I’ll refer to him therefore as Scottish Holder of Indebted Titles :>>. Anyway despite wrecking his company he’s walked away with a £703,000 a year pension. Indeed it would appear that our Mr Banker was a bit of a Bonker, as he was busy sha&$ing some floozy in HR while the bank collapsed around him. Consider a friend of mine who owned shares in RBS. Unfortunately he was abroad when the balloon went up and his shares in the bank are now worth pennies. Is it fair that our Bonker profits at the expense of shareholders who got shafted? And of course we the taxpayer had to bail him out. I would argue that no, shareholders and RBS are within their rights to recoup their losses from the idiot. Indeed the state is entitled to its pound of flesh off of him too. Similarly if we can claw back the bonuses from the ghoul’s gallery of wall street that would send a clear signal to future generations of investors what will happen if they screw up.

I’ve previously discussed the benefits of some form of a PATRIOT Tax (Providing Appropriate Tax Requirements In Our Time) on the super-rich to help states out of the current crisis. I called it a PATRIOT tax because if the super rich were the true patriots they often claim to be surely they would be happy to help rescue they’re country from danger by opening their cheque books? If not then why does Glenn Beck hate America so much?

But I would also propose some form of Carbon tax. This would expose two politicians with the same brown envelope ;). It would raise revenue to solve current woes and encourage the transition towards a carbon free economy. I would favour the gradual integration of a carbon tax with general VAT taxes. This would moderate VAT rates based on the carbon footprint of a product or activity. Thus products with a low carbon impact would pay relatively little VAT, while those with higher impacts would pay more VAT. This would turn current economics on its head and create strong financial incentives for companies and individuals to go green. Furthermore while this current crisis would require such taxes to be paid into state coffers, longer term, post-crisis such money would instead be paid into a “Green Bank” that would lend or grant money to major renewable and Green energy infrastructure projects.

Many talk about raising the minimum wage, I would instead argue instead in favour of a maximum wage (means the wage of the boss is linked to the wage of the lowest paid worker, so a boss can’t earn more than say 20 times the guy who cleans his office). This would have many positive benefits. It would prevent the absurd and excessive wages that many of the MOTU currently command. Try and ask a CEO about his outrageous salary these days and he’ll say oh! I don’t decide salaries, that’s the board of directors, why they said that if I didn’t take it they’d beat me up after school and steal my pencil case (see Bob Diamond interview on the Today program here). It would also lead to some useful scenarios. For example let’s suppose a boss tells the unions he needs to cut salaries by 10% so he’s going to lay off X number of workers. The unions come to him and say, no it’s okay nobody’s loosing their jobs, they’ve had a meeting and all the staff agreed to take a 10% pay cut. No, wait! The boss says, actually we don’t need to cut wages by 10% (if the union followed through on that threat the salary of the boss would also fall by 10%), indeed I’ve “found” a few million (behind the sofa one assumes!) and am planning to put them up by 10% instead!

While many on the left would call for the scraping of bonuses I would argue in favour of them, but I would include a further condition – that all such bonuses can only be paid in the form of shares in the company. Shares than cannot be sold for many decades. If the company grows long term our high flyer will profit handsomely, indeed he’d be better off than under current cash bonus systems (as shares tend to out perform all other long term investments). However, if the company instead went through a spectacular rise only to then crash and burn (like so many banks did recently), then our high flyer would stand to loose everything.

If there’s one reality Americans need to face, its that the “American dream”, where one could arrive off a boat at Ellis Island with a small suitcase and through shear hard work you could eventually become a billionaire, is well and truly dead. We could argue all day about whether it was always a myth to begin with, but it certainly does not hold true today. Most immigrants to America wind up employed in jobs too low paid or too dangerous for Americans to do. And the only way one can succeed in America now is through shear blind luck (win the lottery or become a celebrity of sorts and cash in) or by virtue of being a member of the Plutocratic elite already. America, if not global capitalism in general, has become a massive poverty trap which many find it impossible to escape.

Crisis management and the euro

It’s funny how the G20 we’re meeting in Cannes. It was sort of like a horror film plot, just when you thought it was safe to go into the equity markets, out comes that Greek sea monster Papandreou! >:-[ Beware of Greeks bearing…democracy! Personally I don’t see what the issue was. Its normal for European countries to have referendum’s over controversial issues and this latest bailout would have led to a loss of some sovereignty and a long period of economic austerity for Greece. It would also have resulted in yet further opportunities for the spiv’s and speculators in the markets to profit from Greek’s losses.

Of course “the markets” saw things differently. One can imagine the reaction of the MotU (and their underlings, the leaders of the G8) to the news that the great unwashed of Greece we’re going to get a say in everything 88|. The people? What have they got to do with any of this? Indeed I recall a line in Judge Dredd (apocalypse war series) when East Meg One attacks Mega City one, the East meg judges realise that many millions of their citizens were about to be killed, one of them saws that this is alarming news and they should go on telly to explain to the citizens why this attack is necessary. But the other East Meg Judges, say no, the people (who are about to be on the receiving end of nukes) have nothing to do with this! Life intimidating art I think!

There is also an element of a clash of cultures here. As anyone who has ever been to Greece will know, the Greeks thrive on chaos. Nothing ever goes according to plan, there’s a lot of running around in a panic, frantic phone calls, but they always seem to muddle through in the end (look at the 2004 Olympics, that turned out great in the end, even thought they missed many construction deadlines). Of course the Germans are the complete polar opposite. They always do everything according to a strict schedule and plan. The Russians during WW2 claimed that you could set you’re watch by the Germans (at exactly 6am every morning the artillery started firing, 7am on the dot, the Luftwaffe showed up….). Tell a German friend to meet you somewhere at 18:05 and they will be there at exactly that time (to the second!)…of course you’re Greek buddy will come running in at sometime past seven, but that’s okay because the concert was late starting anyway so he only misses the opening act. So you can imagine the reaction of Merkel to the possibility that the deal struck a few weeks ago mightn’t be the “final solution” to the crisis (okay that was cruel of me! :no:).

Of course the terrible thing about this “Greek Tragedy” is that it is so easily solved, as I point out in prior post and the Beeb discusses here (comparing the Eurozone to a boat at risk of capsizing) this crisis could be easily solved if the eurozone countries chose to do so, by the ECB simply buying European debt, a moderate level of Quantitative Easing (read print more money) or the issuing of Euro bonds. But all of these issues have been ruled out due to the sensitivities of German taxpayers. Unfortunately those German taxpayers need to realise that they are in the same boat as the Greeks and will go down with the ship if the eurozone implodes. Already growth is slowing in Germany as a consequence of this crisis.

I should note that I’m not exactly happy with the idea of any of the options I mentioned above either (I believe I described QE in a prior post as effectively a Default on ones debts by the back door). They would erode some of my savings (in a euro bank account), but its important to get this crisis solved. Given the choice between two scenarios (collapse of the euro and a deep recession with the spiv’s profiting yet again at the expensive of governments or savers winding loosing a tiny portion of their savings) I know which of these two I’d prefer to see happening. The Beeb has a summary of the likely outcomes of a default, or Greek Eurozone exit here. If there’s one thing this crisis has proven it is that the Austrian/Underpants Gnomes school of economics is wrong. Cut public spending at a time of recession and, as we’ve seen in Greece and Ireland, you’ll wind up with an even deeper recession and a bigger deficit due to reduced tax receipts. While some austerity (Greek public sector workers retiring later for example) will inevitably be necessary, the key to solving this crisis is pushing money back into the economy to drive up growth (by governments increasing spending funded by higher taxes on the wealthy). Of course that doesn’t bode well for the UK as its likely that the Tory cuts will force Britain back into recession, although the Tory’s will now inevitably blame the Greeks for that of course!

If the euro fails, it will be a failure of leadership on the part of European governments, rather than anything fundamentally wrong with the economics, deficits or the European style welfare state. And speaking of that leadership, let’s be clear about why Italy is in trouble; one word starts with B, is over sexed, stuffed with brown envelopes, and goes bunga, bunga! One can understand the market scepticism of Italy with someone like that in charge of the country :**:. Berlusconi needs to go now. And if he refuses to go, maybe it might be necessary to do what they did to Caesar. But rather than senators with daggers, just get all his ex-wives and girlfriends to ambush him in parliament and batter him to death with their handbags (et tu Ruby :>> ), that should sort out this crisis!