Monday, November 14, 2011

Catastrophic for whom?

Seems phoney Tony was spouting a lot of nonsense about the collapse of the €uro being a catastrophe for Europe, though I suspect he really meant it would be a catastrophe for the politicians who backed the €uro and back the EU.
Former prime minister Tony Blair has told the BBC the collapse of the euro would be "catastrophic" - and Europe must get behind it.

Mr Blair said he hoped it would not collapse, but European leaders faced "very difficult and painful" choices.

A "long-term framework of credibility" was needed, he said, which included "strong fiscal co-ordination".

Chancellor George Osborne told the BBC there must be more co-operation on tax and spending in eurozone countries.
Don't know why Osborne thinks co-operation on tax and spending will help either, it was co-operation on tax and spending that caused the €uro to come about in the first place. Not that it was helped by certain EU members lying about their GDP to get into the €uro, but that's what politicians tend to do when they are in pursuit of a pet project. I doubt very much that a collapse of the €uro would affect ordinary people too much either as we'd have politicians scrambling to save their hides by reintroducing "old" currencies very quickly to prevent them from being lynched, though admittedly it depends on just how badly they try to stave off what seems inevitable. I suspect crops will still be grown, people will make things and industry will continue, international industry will probably do reasonably well as they'll simply switch the currency they use for transactions, Swiss Franc anyone?
Blair also went on to say...
"The myth that the Italian and German economies were the same - that ten-year myth has now evaporated."
The only people who appeared to believe that myth were politicians, certainly no economists, I'm fairly sure the ordinary guy in the street didn't either, though they appear to be the ones stuck with paying back for political incompetence and ruinous borrowing by the various Eurozone governments.
Rule 1) in (my understanding of) economics is that you cannot buck the market, something that seems to be wiped from the memories of politicians, bureaucrats and various apparatchiks of the political classes. You can certainly ramp up your credit and borrow against future growth, but like all forms of gambling you also have to take the chance that prices can go up or down in other words if you bet the family silver against a sure thing, you'd better have a plan B if the nag loses the race and that's where the political classes of the EU have failed woefully. They did not believe they could fail despite the warnings, despite the accounts not being signed off, they literally thought wishful thinking would buck market trends. Well now the bailiffs are sniffing around after their money back and guess who's being stiffed with the bill.
It's going to be a little bit like one of those domino rallies now as one country topples taking the next with it and who knows where it will end.
But a catastrophe, well only if you believe in or work for the EU perhaps.

2 annotations:

DerekP said...

Maybe a large contribution from raiding the fatter pensions and payoffs of people who have been in public office and public 'service', seeing as they are directly responsible for this and other failings within our society, yet they never seem to have to be brought to account?

Why should anyone have a rich pension from the public purse? Any individual's public pension (including any EU or government backed pension, or payoff) currently totalling over £25K pa seems extravagant to me, though I am not a lawyer or economist (so maybe I'm trustworthy?).

Likewise, when any financial penalties have to be imposed on a business or governmental organisation such penalties should be deducted from the pensions and pay of those who made the penalised decisions. Why should the public pay for their criminality or incompetence? For any counter-argument that this would stifle ideas and actions I say 'good' - we've had too many unaccountable and stupid decisions imposed upon us.

James Higham said...

Meanwhile, we yawn and wait for the end.