Tuesday, November 01, 2011

The end of the euro is nigh

Beware of Greeks bearing referendums. They might just be inclined to vote for liberty, for sanity, for social harmony. This will not be without pain, for they come with default on the nation’s debt, the re-birth of the drachma, and an awful lot of inflation and unemployment. But, the Greeks might say, at least it’s their drachma, their inflation and their unemployment: they will own it, because they are sovereign once again.

The EU’s political élite have wanted to avoid a plebiscite at any cost - literally. EU politicians have spent months assuring us that the bailouts are working; that Greece will not default. We, of course, knew otherwise. Greece is insolvent, broke, bankrupt: its government cannot repay its debts and will never be able to do so. Pumping in bailouts of billions of euros may make the country liquid for a time, but it is nothing but political sticking plaster. It will not improve solvency; it merely delays the inevitable.

And the inevitable duly came: Greece defaulted, 50 per cent of her debt was written off, and a trillion euros were dedicated to bank recapitalisation to prevent the contagion spreading to Portugal, Italy or Spain. As the world teetered on the edge of fiscal oblivion, the EU political élite and economic technocrats thrashed out a deal to save the euro. The bailouts were not to save Greece, but to delay the inevitable default. The élite expected the Greeks to be eternally grateful: Prime Minister Papandreou should have been proclaiming the Teutonic gospel of fiscal rectitude and bowing in adoration at the feet of his Madonna of Berlin.

But what does go and do?

He releases the Kraken. (Or, if you prefer).

The shadowy tentacles of a referendum now lurk under the Aegean. And it will thunder to millennial growth and height, battering upon the EU élite until the fire shall heat the deep. In roaring it shall rise and slaughter all oppression.

And that’s just a bit demotivational for the powers that be in Brussels and Berlin. Today (and for months to come) there will be apoplexy in the Bundestag.

If you were a Greek, what would you choose? A German austerity package which involved a 30 per cent reduction in your salary; cuts in your tax-free allowances; massive increases in indirect taxation; an extension of the retirement age; windfall taxes on every business; public sector strikes; soaring unemployment and civil unrest. Or a Greek package – not without its own pain – but which meant liberation from German oppression, ditching the euro and reprinting drachmas – the ancient symbol of Greek national sovereignty?

When you remove from a nation the right to set its own interest rates to suit its own domestic economy, in times of turmoil it is left either to tinker with taxation or slash spending. Since the people are not particularly disposed either to high rates of taxation or to cuts in their public services, disquiet turns into protests; protests become marches; marches become riots; riots become social turmoil. And social turmoil slips easily into civil war, which is precisely what Prime Minister Papandreou needs to avert.

To preserve the political peace and national security, he had no choice. Which is why, for the euro to survive, there must be a diminution of the sovereign autonomy of the nation state: you can’t have élite philosopher-kings beholden to hoi polloi. And so there must be fiscal union – a United States of Europe – with a single currency, a single bank, a single interest rate, a single taxation policy, a single economic policy, all under the ultimate authority of a single president who won't be accountable to the people or subject to the inconveniences of democracy.

And we await the man of sufficient stature to hold the allegiance of all people; the one who will lift us out of the economic morass in which we are sinking. Send us such a man and, be he god or the devil, we will receive him. As His Grace prophesied long ago, we are witnessing the birth of the euromark and the rise of a 10-nation euro-confederacy. The end is indeed nigh.


Blogger Peter Jackson said...

Where's Will Hutton when you need him?

1 November 2011 at 10:34  
Blogger English Pensioner said...

Between now and the referendum I imagine that the EU will be spending billions of Taxpayers' Euros on propaganda and threats in Greece, contrary to the UN principle of not interfering in the internal affairs of countries. And if the Greeks vote the "wrong" way, not doubt they will be made to vote again, as happened in Ireland. I imagine that they will vote against, as it is a German inspired proposal, and from my visits to the Greek islands, it is quite clear that most Greeks still hate the Germans in spite of it being some 65 years since the end of the war.
Meanwhile, all the brave statements by the EU leaders last week now become meaningless, as all they said (for what it was worth) will only be able to take effect if the Greeks vote in favour in January.

At least the Greek Prime Minister considers this is the right time for a referendum, unlike ours who feels one would be a distraction.

Nevertheless I still feel you are premature to consider that the "End of the Euro is nigh". The unwilling German people will pay whatever their government considers necessary to save it.

1 November 2011 at 10:43  
Blogger Edward Spalton said...

I understand that Papandreou launched his referendum proposal after a little publicised visit to Berlin. So I am more apprehensive than excited. Information available from the Seventies shows how a 60% majority of British people in favour of independence was converted into a similar majority in favour of EEC membership by a clever PR campaign.

The pro-EU faction will have the benefit of the experience of their Irish campaign in the second Lisbon referendum - something our own pro-referendum campaigners seem not to want to know about. Massive PR, backed by deep market research was able to swing the vote.

If I were the EU's man in Athens, I would be dropping hints that it would be very unfortunate for Greece to leave the European family whilst Turkey is a candidate for EU membership. I would also have suitcases full of euros -especially some for the General Staff - just in case!

1 November 2011 at 10:48  
Blogger The Gray Monk said...

Methinks the death of the Euro is being prematurely predicted here. Greece may leave it and revert to the Drachma, if they can refloat it, but so what? If anything that will improve the value of the Euro by removing the major cause of instability.

In fact, there is something far more important happening in the US where another major financial trader has just filed for bankruptcy. The ripples from that are likely to do considerable damage - yet again - to the Pound as well.

As I have repeatedly pointed out on these comment threads, you constantly blame Brussels for "imposing" regulations and laws, but in fact it is in the interpretation and application in the UK by your very own unelected and unchecked Civil Service which is the root of the problem. I could name an entire raft of legislation passed by the Sovereign British Parliament at the behest of the Civil Service to "comply" with EU Directives which are regarded with astonishment in Europe where they are applied with nothing like the same vigour.

Put Whitehall in order and you will soon discover who the real thieves of democracy are - and they are right in the heart of London. Believe me, I know, I had the misfortune to work for them for far longer than I should have!

1 November 2011 at 11:06  
Blogger Hereward said...

It is fitting that as the birthplace of democracy it should be the Greeks that have thrown the democratic spanner into the totalitarian works of the EU. Anyway its a diversionary assault that might take EU minds off the real attack which will come courtesy of unsustainable interest on Italian debt.

Its all starting to slide and this could be the scenario:
Italian debt on top of the Greek default exceeds the bailout fund and renders highly leveraged European banks insolvent.
Other PIIGS economies start to fall apart.
The EU cannot raise the size of the bailout fund to at least 3 trillion Euros so the bond market abandons Europe.
Governments scramble to save their banks with taxpayers money but lose their AAA credit ratings putting a contagious debt spiral firmly into the core of the eurozone.
Germany switches into self preservation mode and turns off the tap.
The Euro collapses in the face of a German decision to reintroduce the Mark.
Total economic mayhem with a disorderly return to domestic currencies or attempts to join the new German currency.
Widespread unemployment, civil unrest and riots against EU institutions and personnel.

1 November 2011 at 11:20  
Blogger C.Law said...

I fully share YG's sentiments, however the English Pensioner and Edward Spalton make very pertinent points and I fear that the factors they mention will carry the day.

I voted against the EU in the British referendum and do remember the United Front tactics which were used to produce the pro EU result. There is no reason to suppose that the same tactics will not be used on the Greeks.

One can always live in hope, though.

1 November 2011 at 11:25  
Blogger len said...

There will be a one World currency and that will come out of the current turmoil.
We are being steered towards that event.
There is a'ruling elite' who have been engineering this event for Centuries.
And united with the Political/economic system which will raise(like a phoenix)from this chaos will a false religious system (just like it states in the Bible)

Time to seek Christ and discard all that is not of Him.

1 November 2011 at 11:42  
Blogger Arden Forester said...

The Greeks don't want the drachma back but they won't help the euro. What do they want?

1 November 2011 at 12:36  
Blogger Gnostic said...

Reaches for the popcorn...

1 November 2011 at 13:11  
Blogger James Reade said...

Erm, what sovereignty exactly? Will it be able to, once again as a small fry currency in a global market, defy interest parity and have its interest rates deviate from what global interest rates are doing? Didn't think so. But sure, wax on about the supposed sovereignty the Greeks will have - it's a sham, and any basic studying of economics would have told you that.

Then, bemoaning the lack of democracy in policymaking. Well, do we elect Bank of England officials? Do we elect the members of the MPC? We're outside the Eurozone though, so surely we have democratic policy, don't we?

Dammit, it's annoying when simple facts get in the way of a good prejudiced rant.

1 November 2011 at 14:38  
Blogger Jon said...

I wrote a very long post about the possible implications for Euro and Euromark countries but blogger lost it.

Oh well, it boiled down to something like, the economic cost of the Euromark's creation would appear to fall mostly on the Euromark countries, since it would likely lead to a very rapid appreciation of their currency (as well as insolvency for their banks), and would dramatically improve the terms of trade for the UK and Euro- remnant countries against Euromark exporters.

The social costs of this project would appear to fall mostly on the Euro- remnants, who could expect default and enforced austerity, galloping inflation, massive social unrest and widespread corporate bankruptcy and joblessness.

Aside from any exposures we have to the banking systems of the Euro-remnants, it would appear that this would benefit the UK overall, since it would improve our terms of trade with the bits of the EU that we export most to anyway.

1 November 2011 at 14:46  
Blogger Roy said...

A few days ago one newspaper, I forget which one, compared Cameron's return from the summit meeting at which the Euro was "saved" with Neville Chamberlain returning from Munich and waving his piece of paper with Hitler's signature and proclaiming "piece in our time."

It was an interesting comparison but there is one big difference. The Czechs could do little to prevent their country being sacrificed by the British and French leaders on the alter of appeasement. The Greek population, in contrast, can vote to cast off their chains.

Ironically if the Greeks do break free they might do more to save the Euro than they would by agreeing to the terms dictated mainly by the German chancellor.

1 November 2011 at 17:54  
Blogger Hereward said...

Athens News is reporting that the Greek Minister of Defence is proposing to replace all the military top brass.

Will he stop a coup or start one?


1 November 2011 at 18:05  
Blogger Office of Inspector General said...

Your Grace The Inspector has never been one to shy away from what must be done, unlike current Greek Prime Ministers...

His considered opinion as follows: Cut public expenditure, and when you’ve finished that, cut again. When you think you’ve cut as much as you can, cut one more time.
Declare martial law, and a 9 pm curfew. Inform the population that rioters will be shot at with live ammunition. Explain to all that Greeks are going to have to live within their means. Oh, almost forgot – leave the EU (...before you’re booted out, or under EU ‘occupation’...)

1 November 2011 at 18:38  
Blogger len said...


Isn`t that what Gadafi did?.

1 November 2011 at 18:53  
Blogger Shacklefree said...

Your Grace your comments are very serious

"And we await the man of sufficient stature to hold the allegiance of all people; the one who will lift us out of the economic morass in which we are sinking. Send us such a man and, be he god or the devil, we will receive him. ... The end is indeed nigh.

Could this person in fact be the anti-christ? Only when the chips are truly down will people invest such power and authority in a man and when they do he will exceed the ravages of Hitler 100 fold and it won't take much imagination to guess who his main targets will be..

1 November 2011 at 19:24  
Blogger Office of Inspector General said...

Len. Possibly, and if so a coincidence. The rule of law MUST be maintained. Lose that and you will have a revolution...

1 November 2011 at 19:34  
Blogger Office of Inspector General said...

Shacklefree. Thanks for the worst case scenario, but if there is someone out there, lets give him a chance...

1 November 2011 at 19:37  
Blogger Shacklefree said...

Inspector, As len says, there is planning of a higher order going on and when we read the signs of the times Jesus told us about, I'm not sure that I will be prepared to give allegiance to the great ruler who will solve all our problems.

1 November 2011 at 19:48  
Blogger Office of Inspector General said...

Shacklefree. Courage man – look through history for worse moments in time than this.

1 November 2011 at 19:53  
Blogger bluedog said...

Your Grace, we are saved.

The Greeks will vote for the drachma rather than be impoverished by EU diktat. In a wave of Schumperterian creative destruction the other economies of southern Europe will break free from the new Continental System that is the Eurozone. As the lira, peseta and escudo re-emerge at rates 40 or 50% below that of the rump-Euro, these economies will boom. Britain will be able to conduct a virtual withdrawal from the EU in the ensuing chaos, retaining just a free-trade agreement and recovering the lost fisheries as well as sovereignty.

Mr James Reade @ 14.38, you seem to be unaware that it's easier to conduct exonomic analysis on the basis of comparing like with like. The BoE is owned by the Government Solicitor as trustee for HM Treasury. The Treasury therefore has reserve powers to control the BoE board and the MPC in the event that it should be necessary. The underlying assumption is that the Chancellor of the Exchequer, as minister responsible for HM Treasury, is a member of a democratically elected government. Faux outrage that the MPC is not democratically elected is true in a simplistic sense but not in fact.

As to the viability of small countries, may this communicant offer two for your consideration? Take for example Taiwan and New Zwaland. Both are currently protected by the US security umbrella and both are democracies with vibrant and highly successful economies.

An independent Greece within NATO would thrive too.

1 November 2011 at 19:58  
Blogger Corrigan1 said...

Greece is not a country, it is a protectorate of the EU. So is Ireland (and there is no racism involved here - I'm Irish myself). But the 'crash-and-burn' scenario is crazy. A controlled, Europe-wide default, followed by a cililized euthenasia of the European project is surely the best way out. I know that most 'Little Englanders' won't like that, but they need to get it into their heads that this crisis won't stop at the White Cliffs of Dover. If the euro goes down, you lot will think you were hit by a train. Sterling is already tottering and Britain is running a dangerously high deficit, and that's without the Scots buggering off with their oil (yeah, didn't think of that one, did you? Referendums can be very awkward things). It isn't just Johnnie Foreigner who's going to get his fundament burnt on this one, so maybe you should but the crowing on hold.

1 November 2011 at 21:52  
Blogger bluedog said...

Mr Corrigan @ 21.51, Greece is a protectorate of the USA, so are Ireland and the United Kingdom. All three nations above, and many others both within NATO and without (Japan, Australia), are members of the Western power structure which was established in 1945. The EU gendarmerie couldn't even fight off the Evzones in Athens in the face of a hostile Greek population, EU hard power projection simply doesn't exist. Complying with EU diktats is entirely optional. Unfortunately the political elite is easily lead and believes anything it is told to do by Brussels.

Of course the economic crisis doesn't stop at the White Cliffs of Dover, and the UK has provided fraternal assistance to Ireland. But once the Euro-spell is broken and sovereign nations manage their own economies and their own sovereign currencies there is every chance that economic recovery will be rapid.

While Scotland would have suffered the same economic fate as Ireland if it had become independent and joined the Eurozone, the demise of the Euro will paradoxically provide an opportunity for an independent Scottish statelet to emerge, if the Scottish people so wish.

Maybe Ireland and Scotland will form a Federation.

1 November 2011 at 22:13  
Blogger Corrigan1 said...

Bluedog, it's not that we don't appreciate the 'fraternal assistance' young Master Cameron sent, but you do realize, don't you, that that money didn't even touch the side of the pipeline here in Ireland before it shot straight back into the vaults of the British banks who loaned out to us as rashly as they had to the Greeks - which, of course, was what Cameron always intended? I mean he couldn't be seen to just GIVE your taxes to the City of London, so he routes it through Dublin and Robert is your mother's sibling. Come on, now, you didn't really think he was being THAT nice to us, surely?

And yes, I entirely agree with you about ending the European hegemony; we just differ about how to do it.

1 November 2011 at 22:26  
Blogger Office of Inspector General said...

Let the Greeks go to blazes. They got themselves into their mess by treating EU membership as a cash cow. Whatever happens it won’t be as bad as Germany in 1945, when a chap could have a good time for a packet of cigarettes and a pair of tights...

1 November 2011 at 22:43  
Blogger Oswin said...

''Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning''

We will have to suffer greatly before we win through, but we will survive, and we WILL be free!

1 November 2011 at 23:05  
Blogger Shacklefree said...

I think Scotland should vote for independance, then England should vote themselves out of the Euro, then we should get together with Canada, Nigeria, Jamaica, New Zealand etc. and re-establish the Commonwealth. It should never have been broken in the first place.

2 November 2011 at 03:11  
Blogger Corrigan1 said...

Englad isn't IN the euro. And I have my doubts the Canadians and Kiwis would have you anyway. No offence, I'm just stating a fact as I see it. The time for closer integration of the Empire/Commonwealth was 100 years ago when Joseph Chamberlain was pushing it. Unfortunately, the colonials were almost as much 'bloody foreigners' to the English as the French and Germans and you weren't having it. As the Americans say, a day late and a dollar short.

2 November 2011 at 12:12  
Blogger The Way of the Dodo said...

The Greeks want to keep their cake (the Euro) and eat it (continue spending regardless).

Lets see what they decide. The majority want to stay in the Eurozone yet not comply with the discipline and central control this demands.

Democracy is difficult, isn't it!

2 November 2011 at 15:05  
Blogger E.xtra S.ensory Blofeld + Tiddles said...

Your Grace

It appears that the greeks will get their referendum but us poor mites here will not. Democracy in action?

As our British banks appear to be heavily exposed to French and German banks, which could all go under if Greece defaults, is this now the time for the EU (Cameron, Sarkozy and Merkel) to declare some action must be taken to stop that Papandreou chap acting democratically by offering the plebes a referendum, vis a vis Gadaffi and Libya moment.

Nato nations, under the guise of EU expediency, in action against a Nato heretic.
Democracy, referendums..this will never do?
When I think of those poor EU banks not knowing where their next millions are coming from unless its QE given as here or the governments smarming for the next bailout to waste on more rubbish, Ernst wonders what's it all come to?

It appears to Ernst that it looks like the Greeks still have real democracy unlike us non entities, who have a 3 party political ruling Junta.

Long Live the REVOLUTION.

E S Blofeld

2 November 2011 at 15:14  
Blogger The Way of the Dodo said...


Remind me not to seek your support when the real revolution begins!

The 'European Spring' looks like it may have been short lived. The Greeks do want it both ways.

4 November 2011 at 00:50  
Blogger E.xtra S.ensory Blofeld + Tiddles said...

Dodo not canvassing 4 Ernst's support


Remind me not to seek your support when the real revolution begins!

The 'European Spring' looks like it may have been short lived. The Greeks do want it both ways."

Dear bird, think you will find that those nice EU chaps have twisted some arms, tad undemocraticlly, to achieve their aims.
Must be based on that nice Catholic Social Teaching WestCountryman was thumping on about? *Chortles madly*

Ernsty, my crazed birdie

4 November 2011 at 09:39  

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