Eurozone crisis is 'postponed'

Postponed indeed!

The ECB must be 'banking' on a strong recovery in the markets in a years time.

Postponed? indeed it is and the UK is not included in this deal

Taxpayers bail out banks
Countries bail out governments
IMF bail out Countries
??? bail out the IMF

Fairwell to Capitalism with a big "C"

Postponed is the word..thanks for using it

How far in the future do the markets look?

You can not have monetary union without political and cultural union, eventualy the strains will show when amonetary crisis arrives.

How tolerant will the populations of the various dis-advantaged countires be to pay the price of Brussels federal dream.

Maybe our great European President Herman Van ..whats his name..can inspire them all to puff out their chests and ' take it' for Europe?

Yes it will be printing money, Mr Peston, it will be QE

If investors are demanding 20% interest on Greek bonds (5 years purchase) and the ECB buys them at 5% (20 years purchase) it will have paid 4 times their real value.

Ultimately the bonds will have to be written down to their true value. In the interim we have hidden quantitative easing (money printing).

Finally the ECB is reduced to money printing.
Section 104 of the Maastricht Treaty, thrown out of the window along with fiscal prudence and common sense.

How to solve a debt crisis for beginners; print more money!

The more I try and add the figures lately, the less they add up. Fiat currencies only work as long as people believe in them. I used to, but really do not any more! And I am beginning to wonder if - without the slogans or rhetoric - is there, as evidenced in theses blogs, some kind of different 'world view' or 'bigger picture' appearing these days? This is a fascinating place for it as the bloggers here do not miss a half percent detail about anything - but aren't we all talking about symptoms?

I think there is a big bond crisis brewing. It might have postponed the inevitable however there is sense of desperation here. This idea of 'too big to fail' has been debunked after the Lehman failure.
The surprising bit is investors seem still keen to use the ratings agencies as the early warning system. These are the people who are the problem and not the solution. Spain and Italy are the big ones as far as the Euro are concerned. The elephant in our room however, is our debt both government & personal. How on earth are we going to pay this off is just beyond me. Just to put it into perspective if you think the last decade was the boom years we grew at an average of 1.7%. By 2014-15 depending on the gilts market we are going to have to grow by about 2.5-3.0% over the next decade just to stand still and service our debts let alone pay it back.

I would ask just how many "postponements" have there been in the last several years?

Monetarism is in tatters as creative accountancy tries every which way to avoid appearing to be printing money, just as it has done in trying to cover up the traces of inflation.

When you bury the body of someone you murdered on a beach the incoming tide will keep on uncovering it until we try to recover the body, carry out an autopsy, and begin the murder hunt. I will not weep at the funeral of monetarism.

I fully agree with your use of the word 'postponed' Robert.
This debt crisis that started with the banks over-committed to an inflated housing bubble being softened by soverign government debt.
It has now (in Europe) moved to the last defence, the ECB.
From here there is nowhere else to go.
The politicians have tinkered sufficiently to inflate the problem.
If they had allowed the housing market to rightly crash, for losses to be realised, and for insolvent banks to go to the wall, resetting the World of home lending in the U.S, U.K, and E.U, then the nations around the Globe would not be so imbalanced by debt.
Default on a massive scale will only be avoided by inflating away the debt and it is the likes of China that will pay the price by losing their investments.
Wars have been fought for less.

And yet the injustices within our society persist. Bankers now running national banks still suck the marrow of society dry. Those that are not nationalised have taken full advantage of cheap easy soverign monies for which they pay a paltry fee to take advantage of, invest them in equities and bonds, returning a handsome profit. A deliberate plan to syphone our money away and give it back to the banks under the guise of re-inflating the share markets.

This truly is international incompetence like never seen before.

"What the ECB has said is that where there is evidence of markets malfunctioning in that way, it will intervene to buy up the relevant securities, to re-start the markets."

Is it the markets malfunctioning or the application of the rules for people to enter the Euro (or leave it) that is malfunctioning. Whilst the system is at fault throwing money at it will not cure it. Its like calling in the carpenters to repair your fire damaged house whilst the house is still on fire.

And again for Government and IMF loans = The Great British Tax Payer. Open your wallets again folks we will have to start placing an economic value on the moths left in them!

#3 addendum

Postponed only works if there is a 'Plan B' forming in the wings.

There is no evidence of a'Plan B' anywhere in mainstream politics or economic thinking.

think tanks like the New Economics Foundation will need to get some popular intellectual, political, media and (later) democratic traction soon or we will be stuck with a model which relies on 'eternal growth' as its underlying driving force.

'' Only mad men and economists believe in eternal growth''

Anybody noticed the 60% (on average) rise in commodities prices in the last year?

A very good and astute piece.

We are being sold a 3-card trick here. The rule as 'defined' by Brown in February was no uk involvement if the IMF is involved. We are coughing up towards the £60 billion, but the IMF is involved. Why?

It is another EU exercise in pain-postponement. It will settle down the markets for a week at most. Then it'll start again.

The level of EU denial is apparent in the growing use by its leaders of 'wolfpacks' in relation to markets. This is typical of its anti-market attitude, and a ludicrous replacement for the real problem: profligate spending and ECB cheap finance for nearly a decade.

Google nbyslog for more on this and other madness...

Nice piece Robert and thank you for the caveats; although I think it would be helpful if you could develop exactly what behaviour we can now expect from the banks with this kind of spread. In particular, will it create an opportunity similar to the US example where the Fed's cheap low interest rate policy has allowed banks to borrow money almost for free and then make money through buying Treasuries at different points along the curve, but making a tidy sum on each transaction? Also, should this temporarily deliver a surge on the equity markets?
With regard to your caveats, I could not agree more. However, I should throw in my taxpayer's anger at yet again being asked to bail out failing financial institutions, in this case an entire country. But surely, we are really simply bailing out the French, German, and Swiss banks who have a major share of the existing short term Greek debt, along with some UK and US banks who hold smaller proportions of the overall debt?
It is amazing that 750Bn euros may not be enough, although I can quite see why since we are talking about more than just confidence in Greece. As Dempster wrote in #4 above, the Eurocrats have buckled and thrown out another section of the Mastricht Treaty and fallen into the trap of simply printing more money. (They can call it QE or whatever they like, but this is simply smoke and mirrors for money printing).
When will this all end? As you say, it seems to me simply a postponement (as in the US) of the inevitable demise. If Portugal or Spain start to crack then we shall be talking about trillions of euros to stem the bleeding.
I had little respect for these technocrats in Brussels before this crisis along with some of the country Finance ministers; now I have none. We seem to have shifted into a parallel universe where fundamental rules of common sense are thrown away to constantly keep saving the financial system. I fear that the eventual tsunami will be so large that no amount of 'bail-out' funding will save us and our fiat currencies will all suffer enormous devaluation. I am not a 'gold-bug' but I suspect that sometime over the next few years precious metals will have their day, despite an impressive run-up already. This 'kicking the can down the road' behavoiur cannot keep up forever.

Could the banks have been allowed to fail? I keep returning to this in my mind. Where do we (if we can) get off on the train of thought from the banks fail to the vast majority of people in the world don't have a stake in how things have worked for all of our lives?

I believe that the bail out in this country came out of a belief that global markets work and can do so for the benefit of everyone, with more or less government intervention. I think that probably covers the view of all mainstream parties in the UK. But is it a view which is stupidly delusionary?

It is inevitable that the prudent will bail out the feckless and profligate. Within a country it is less visible when, for example, UK savers are being punished by negative real interest rates so that house bubble euphoria gamblers who are in negative equity are saved. The problem in the EU is that between countries the unfairness is more obvious, and the media spot it.

"6. At 08:37am on 10 May 2010, Bebedi wrote:
I think there is a big bond crisis brewing. It might have postponed the inevitable however there is sense of desperation here. This idea of 'too big to fail' has been debunked after the Lehman failure.
The surprising bit is investors seem still keen to use the ratings agencies as the early warning system. These are the people who are the problem and not the solution. Spain and Italy are the big ones as far as the Euro are concerned. The elephant in our room however, is our debt both government & personal. How on earth are we going to pay this off is just beyond me. Just to put it into perspective if you think the last decade was the boom years we grew at an average of 1.7%. By 2014-15 depending on the gilts market we are going to have to grow by about 2.5-3.0% over the next decade just to stand still and service our debts let alone pay it back. "
er, were not going to be able to pay it back, just like anyone who has built up their credit card bill to an unsustainable level. Welcome to chaos. I really cant see any easy way out of this one.

With one bound we are free, or at least with one (more) 'undertaking' ....the parallels that can be drawn with the 1970's and even the 1930's just multiply every day, in terms of high sounding decisions flowing from Governments and Treasuries.

Is this latest from the Eurozone treasury ministers going to be the economic equivalent of the signed undertaking fluttering in the wind brandished by Mr Chamberlain on his return from Munich?

(I don't mean in the political sense that facism or totalitarinism is an imminent possibility, but in the sense of this being an undertaking everyone wants to work....but nobody really, deep down believes will work.)

I just don't see how the Greeks can actually remain in the Eurozone and tackle their problems---but now a pipeline has been designed to allow wages to flow from the North to the South of Europe, exactly what incentives now remain for the Greeks to even try and undertake the cuts in the salaries they pay themselves.

There may also be less resolution shown by governments in Portugal, Spain, Ireland and Italy to be determined in tackling their issues...and just a little bit more readiness to tap the Loan if thinks start getting tough.

Surprised Writingsonthewall wasn't first off here, perhaps he's too busy hiding under his sheets shouting 'Curses, foiled again!' in a Dick Dastardly like manner - but anyway..The 'meltdown' that is supposed to be imminent or at least unavoidable will not happen as long as the financial institutions believe one fundamental axiom. This is that if you plot tax revenues far enough into the future you can essentially call them infinite, therefore there is an infinite amount of capital available to bail out any nation or 'too big too fail' corporation. As long as this belief holds true, then really any debt is regarded as manageable. For those of you who believe this is an asinine assumption, tell me how it is that people in this country can supposedly afford to buy property that is valued at ten times their annual income or more? Because the debt is stretched out over so many years as to make the payment possible. Same thing with national debt, as long as the Chinese don't decide to dump all of their US Treasury Bonds the world can continue to rack up as much debt as it wants because there will always be taxpayers until the sun burns out..

The southern European countries have all borrowed too much, and Greece cannot pay back what it already owes. Lending them more is obviously not a real solution.

But, it is more than just a delay. It is a chance to socialize the losses by having more of the burden fall on governments rather than on the current owners of these bonds.

Right on!
There is also the moral hazard problem, in that if the Greeks see they are getting away with slovenly macro management and get bailed out by the rest of Europe, they will keep on doing it and encourage others to do the same.

Well Robert, I suppose you would say "postponed" rather than "solved" - after all, you always find it hard to relinquish a juicy crisis you can keep talking up and spinning out, don't you ?

What an extraordinary weekend for Europe! Facing the consequences of their own dithering and waffling it looks like Europe's leaders have tried to impress the markets with some large numbers. I tend to agree with your suggestion that this only delays things Robert.
As the notayesmanseconomics web blog says.
"As for the large sums suggested as loans or aid and publicised in the news media only 60 billion Euros plus presumably 30 billion Euros from the IMF would be available in any prompt time span. If you look at that it would not have been enough even to bail out a small economy like Greece. The special purpose vehicle is something of a red herring to my mind as over the timescale they stated it would take to activate they could have set up such a scheme anyway. So it is an attempt to impress people with large numbers.which is a dangerous game as markets have a habit of testing this sort of thing over time."

17. At 09:08am on 10 May 2010, mischievousCheesy101 wrote:if you plot tax revenues far enough into the future you can essentially call them infinite, therefore there is an infinite amount of capital available to bail out any nation or 'too big too fail' corporation

Germany's Chancellor lost an election last night - the idea that the euro camp is a happy family pooling their resource to keep the dream alive is as bonkers as assuming that increasing taxes will provide infinite capital to bail out the fiat system.

The euro experiment will disintegrate within 18 months as countries scamble to protect themselves- not their camp mates

Only one will prevent the collapse unfolding in front of us and that is to increase interest rates massively and reset the over inflated assets.

We were 30 minutes from empty ATM machines on Friday and one day soon that will be a reality because the bail outs wont work anymore

It looks to me like we're living in a new economic era, the bailout era. Colossal sums of money thrown at the first signs of economic stall/decline.

Our bailout has already fuelled another disastrous house price boom and the keeping of rates at 0.5% has eroded living standards as inflation goes completely unchecked.

It's time to stop teaching your kids to save and educate them on living beyond their means safe in the knowledge that savers will pay to bail them out.

In the simplest terms I think think of isn't the ECB doing what all the commercial banks were doing just a few years ago here.

Buy up large quantities of subprime (Greek) debt and repackage it as good ECB debt.

Still one thing this mess has shown is that we can count ourselves reasonably lucky at the moment for not joining the euro originally.

Did I miss a Class somewhere, was it the one when I went to Bendidorm in term time?

.... and was it the one where they taught that Borrowing solved every problem known to man? - When times are good Borrow and make the most of it and when times are bad borrow to get you out of the mess that the borrowing in the good times caused....

I cut my finger this weekend.... will Borrowing help my injury?

Robert,

The problem in the Eurozone is not only economical but also political. It is well known that public spending across the whole of the zone is too high to be sustained by taxes alone. What the EU has offered this week is only a respite. This problem will arise again and again unless drastic measures are taken within the Eurozone to make sure that their public spending is sustainable. Too much public sending is politically orientated (guaranteed to produce votes, but of little value to the population).

What is needed is a top-down re-structuring of the whole Eurozone to ensure its competiveness within the international markets and that fiscal control is maintained by all countries.

Without this then they are only postponing the inevitable.

Chancellor Merkel has sacrificed her own political position in Germany and lost the support of the German people in favour of supporting the EU.

The U.K. is in disarray after the general election.

There are riots on the streets of Athens.

Is there some point that the finance ministers of the Eurozone are missing here?

Future growth?
Recovery?

How many times does it have to be repeated?
There was NO fundamental growth in the entire last decade (UK), so there isn't likely to be any in the future 'til we clear off the debt payments.

The growth we were fooled into believing -was all borrowing and leverage; from personal re-mortgaging and credit cards to corporate re-financing, was all smoke and mirrors.

So how come they think we can bounce tigger-like into 3,4,5% 'growth' again?

17. At 09:08am on 10 May 2010, mischievousCheesy101 wrote:

"Surprised Writingsonthewall wasn't first off here, perhaps he's too busy hiding under his sheets shouting 'Curses, foiled again!' in a Dick Dastardly like manner"

Oh fear not - this is known as "suck 'em up before you suck 'em dry"

There will be many small investors piling back into the market today thinking it's "all over" - meanwhile the big boys who manipulate things will be slowly pulling out (at a profit) - before they pull the plug on the whole shebang.

I worked out that every man, woman and child in Britain has contributed £100 to this bailout - not a bailout of Greece, but as the guy from HSBC put it - "A bailout of the bond markets"

....and before the apologists try to imply that "We're all bond holders through our pensions" - I can assure you the losses of even the most reasonable sized pension fund reaching maturity are tiny compared the the losses faced by banks and other market players.

They have contributed nothing to this bailout - you however have bailed out the bond markets - and will still suffer the hit on your pension when the bailout euphoria receeds.

If you cannot see this by now then you are simply not looking hard enough.
This fixes nothing, a very thin veneer which is going to come off quite quickly I fear.

At least it does prove one thing - the accusation that the electorate had cut Britains throat by producing a hung parliament - was clearly not the cause of the recent declines - it was very much a Europe stability concern fall.

Funny that's not how the 'losing' politicans we playing it on Friday.

I still believe the markets will finish down by the end of this week - simply because bailouts are becoming more and more frequent and their 'stickability' is reducing fast.

For the record (again) - I don't wish for the crash by any means, I'm doing very well thank you under Capitalist tyranny and I will personally lose a lot if it goes belly up - however I do not kid myself that the party will all be over soon - and many people will suffer, which is no laughing matter.

We're still just 1 piece of bad news from collapse. Volatility is a sign of a 'market top' - and the volatility around the world is going mental.

"What the ECB has said is that where there is evidence of markets malfunctioning in that way, it will intervene to buy up the relevant securities, to re-start the markets"

Lets look at the concept of "malfunctioning"

The borrower

(a) has a history of non-payment

(b) fiddles its accounts

(c) has insufficient income to service the debt and its normal day to day commitments

(d) its income is in decline

(e) it is no longer price competitive in its products.

If this was a company very very few banks (probably none) would lend to it.

So why exactly are the markets malfunctioning when they refuse to lend to Greece?

Théâtre de l'Absurde

The day of reckoning hasn,t been postponed.The truth is Greece is the last thing that the politicians or markets care about,all this bail out is designed to save the banks that have given the loans in the first place,who cares if ordinairy Greeks don,t earn enough money to survive,no one.Truth is that the markets and the currencies are becoming a total confidence trick.How much is being spent by the central banks buying shares to give the markets the "illusion" that shares are doing well and public confidence is still there.Look at the huge drop in the Dow Jones last week,on this scale only 2 events come anywhere near,1987 and 1929 "the Great Depression".How much money is being spent depressing the Gold and Silver prices ? Money is being printed out of thin air,and then more printed to pay debt or deficit and then more borrowed, and so the process goes on.Whether politicians admit it or not they are relying on inflation to wipe out their debts and if things carry on it will be hyperinflation.Bad money drives out Good and Good money is flowing into Gold and Silver.Buy some with your soon to be worthless Euro,s,Pounds or Dollars while you still can.The current situation is Banks,Countries, are snowed under with debt they can never repay,the financial system is hopelessly broken and the banks should be allowed to go instead of destroying the futures of billions of people.Monopoly money should have stayed where it belonged in the nursery.

".........EU laws prevent the ECB from buying bonds directly from governments in the way the US Federal Reserve and Bank of England have done. It can get round the restriction by buying debt second-hand from banks......."

Well that takes the biscuit. Some more fat fees for the banks handling the transactions.

Is this whole thing a joke?
Are these idiots for real?
'If the truth is unpalatable, make up some new rules'
We are being had for suckers, and this only ends one way (in revolting peasants). Trouble is it takes a generation for people to get themselves off their sofas.

To all of you who want the Euro and EU to fail...

Please explain how it will help us if our major export market descends into chaos?

None of the anti-Europeans here seem to want, or even to understand, that which is in the best interest of the UK. Why are you so determined to hurt the UK and its people?

"BT to cut 35,000 jobs over two years
From Dow Jones Newswires
Monday 10 May 2010
U.K. incumbent expected to make announcement when it posts results Thursday; pretax profit seen at up to £1.1 billion."

You can not rely on the people left in work to provide enough collatteral to pay down the deficit of those who have borrowed then bailed out and then bailed out again.

Especially when the very people you are going to tax higher have already borowed and indeed trying to bail themselves out and "social" costs of supprting the unemployed start to outway the tax take!

Interest rates must increase - asset prices must be returned to a realistric level

It is now evident to the most simple observer that there is not enough money in all the world to cover all the debt in the world so that interest rates have to increase.

However, whilst governments keep interest rates at low levels on the bogus and very self-interested argument that to allow a return to real money would stifle growth we are never going to escape from this crisis.

The only way to resolve the situation is to quantify the amount of debt and through international agreement restructure those repayments that are sustainable. The alternative is to allow the crisis to work its destructive way through the economies of the world much as the Great Depression did some eighty years ago.

Without a return to concepts of value in money, in investment and in commerce nothing is sustainable not even this elusive thing called growth. Perhaps we should go back to recognising that growth is only a statistical measure of real activity. Policy should focus on the activity rather than the statistic.

> Which takes us to the import third caveat. In the end, there won't be a
> cure for the underlying eurozone strains unless and until the
> record, unsustainable deficits of some eurozone members are reduced
> in a permanent way.

I thought the idea of markets was to trade things at the right price.
So what's all this price fixing about, then? Last time I checked, we
weren't commies.

Please keep the markets for barrow boys, bananas and used cars. In
the meantime, we decide what to pay for things, and we take the hit
or the profit depending on how things go. If Greece can't pay us back
we can take the Acropolis and the Peloponnese in part exchange. I always
fancied a shed by the beach.

It's good to see Democracy in action across Europe.

Curently we have a 'non' chancellor agreeing to a bailout of Greece in the UK, and in Germany they have a bailout which has beed signalled as a big fat NIEN by the people of Westfallia - and which was challenged in the courts - but was brushed aside by 'the law'.

So which part of this is all Democratic again? - can someone remind me when Democratic elections allowed leaders to commit future taxes of the people to prop up the corporations of the world without a mandate?

I know Mussolini did it - but wasn't he a fascist dictator?

Democracy is well and truly dead - don't forget this when the rulers of this country are asking you to be 'reasonable' as they are doing to the Greek protestors over their austerity measures.

The human factor has been all but ignored by the EU - and they are going to find out how much that will cost them very soon...

Now it perhaps the time to remind ourselves who invented the wonderful gift of Central Banks for the whole of Humanity to enjoy - the Rothschilds, the Morgans and others.

Go on, call me a conspiracy theorist -- I don't care -- when the s--t finally hits the fan then the joke will be on you!

It is at least some progress that at last the ECB is to be allowed to act as any normal central bank would against speculation in the eurozone government bond market.

It is really rather ridiculous that there is still an insistence that any purchase of one government's bonds should be matched by the sale of another's, less, horror of horrors, new money is created. There is still a severe shortage of credit and creating new money to alleviate this would help the recovery. Alistair Darling was right to have nothing to do with this arrangement.

Matching purchases of private bonds by sales of government bonds means of course eurozone taxpayers under-writing the private debts of big businesses, particularly banks. We have already seen much to much of governments helping financial institutions avoid the well deserved penalties of their rashness, while imposing the cost on ordinary citizens and small businesses.

It is good to see that the well established central banks are prepared to act to prevent currency speculation, without having put up with the constraints that fiscal and monetary nationalism has imposed on the ECB.

I think the British did well in not joining the Euro.

How should former weak currencies now have the Euro, which allows them to borrow, buy houses, buy consumer goods on credit (as is happening in former rather poor Greece. This applies to very ordinary people in ordinary jobs).
Additional government jobs were created with 14 salaries (they are now reluctant to accept cuts).
Why are these disadvantaged countries?
In Germany we do not see why ordinary working people have to pay higher taxes and social benefits, and year after year the situation seems to be deteriorating. I wish we had our DM back!!
What will happen when shortly all former Eastern countries of the EU want the euro?

It's great, isn't it. Governments bail out the banks and financial institutions. The banks and other financial institutions buy soveriegn debt to fund the bail out. We then have a bond crisis because governments have borrowed so much to bail out the banks. The banks and financial institutions holding the bonds are then at risk so the bond holders need to be bailed out again. Of course there is a problem with this if you can spot it. As I see it, Germany is propping up the rest of the EU - but there will come a point when either the markets will decide not even this is credible (particularly as deficits continue and growth is slow or non-existent) or the German population will say no (and who could blame them).

The irony in all of this for me is that the EEC as it was, was established to prevent war in mainland Europe. I have a feeling that the new arrangements might make it more likely. Let's face it - what happens when Germany evetually says no more to the Greeks, Spanish etc. As Robert says, all that is being done is that the problem is being postponed. In the meantime, will the EU have sufficient cohesion and poiltical will to force through the kind of austerity which is needed in the "delinquent" Eurozone countries? If not, a year or two down the line we are back at square one but the problems are even larger.

The more you look at the facts of this bailout the more insane it becomes.

First we had failed US mortgages - which were bailed out by the banks
Then we had failed banks - bailed out by Governments
Then we had failed Governments - bailed out by bigger Governments

...you can all guess what comes next...

The only 'best case scenario' I can see is that the big countries have deep enough pockets to cover all the debts of the little nations - otherwise the big nations will be the next to fall.

The underlying debt remains the same - I've not even seen a report of any bank, or Government actually reducing their debts - which doesn't include 'bailout reduction'.

I don't need to prove that this will end badly - as it's already being proven.
Both the US and Ireland are on their second round of bank bailouts - mark my words, ours are merely around the corner...

The EU plan of 'buying crud and selling credible' is a repeat of the US sub-prime 'solution'.

Let's just see how that 'solution' is coming along shall we?

"A couple of weeks ago, Moody's downgraded $42.2 billion in subprime RMBS."

https://online.wsj.com/article/BT-CO-20100430-718263.html?mod=WSJ_latestheadlines

This gives you a nosebleed. What is a billion? A billion seconds ago I was still at school and I'm quite old! 750 billion seconds ago this country was in the grip of an ice age...750 billion minutes ago we were barely on two legs. These numbers are truly astonishing and it is their very size that gives you the inevitable feeling that this is slowly, but inevitably running out of control.

I am a Euro (currency) sceptic but I take no pleasure in seeing the currency falling prey to exactly the same structural flaws that were predicted 15 years ago. People, and history are quite hard on John Major but surely his Maastricht opt-out was one of the most prescient pieces of negotiation ever. It was recognised at the time that without control over monetary policy the only macro-economic tool left in a government's box was unemployment. Mass unemployment, in addition to being socially disastrous will ultimately lead to social unrest, especially in countries with a tradition of taking their grievances onto the streets. The risk was, and is still very obvious!

The Eurozone is a fettering together of radically different economies and financial cultures and it's hard to see that it can persist in its current incarnation without a serious bust-up between Northern and Southern Europe. The greatest risk to European prosperity and the future of our children is that incalculable amounts of taxpayers money is pledged to keep a leaking ship afloat. This would be political hubris of the type that we have become used to under the guidance of the "Great Helmsman who Ended Boom and Bust" here in the UK.

The pain is postponed but the structural flaws are there, as big as ever. Whilst it is right for a big statement of commitment to be made to try to stave off the amoral wolves of the banking sector for a while, surely it is time that some discrete efforts were made to actually help some countries leave the Eurozone? Rather than let the whole thing implode a year down the line, why not start planning for an orderly withdrawal, with transitional support, for countries who need space to rebalance their economies i.e. devalue.

In the meantime, we should all, UK especially learn to live within our means. Otherwise we will step back those 750 billion seconds into a new, and very uncomfortable ice-age of our own making!

No.30 Plamski’s got a point.

The whole thing is starting to seem almost farcical.

EU Finance meeting:

‘Mr Darling, can I put you down for £10 billion’…….
‘Course you can’………..
‘Mervyn, another £10 billion if you would’………..
‘Certainly sir’ …………..
‘Work experience boy, type in £10 billion for Mr Darling would you’ ………….
‘No that’s not quite right, it’s 1 followed by ten zeros, not nine’ ….


But at what point does the farce turn sour and belief in a currency evaporate?

Two important lesson for Europe and the World need to be learn from thwe current crisis from the Euro zone.
One we must accelerate to the maximum speed possible the creation of a federal Europe is not possible to have one currency wen different fiscal law apply in different country.
Two the world must re wright the rules and regulations of the current capitalism system.
And must important and to be introduce with immediate effect stop the right of the credit agency to decided on the credit rate of any country in the world.
John

#35 you stated : "It is now evident to the most simple observer that there is not enough money in all the world to cover all the debt in the world so that interest rates have to increase".
If there isn't enough money to cover the debt, how do you suggest that people find the extra money to pay the increased interest ? Borrow it ?

I know some of you don't like to face up to reality. But the "problem" is not with the Euro. Nor with Labour. Nor (sorry to disappoint) with the EU.

Fact:Countries inside and outside of the EU are being affected.

Fact:Conservative countries as much as left-wing countries.

Fact:Non-Euro countries too.

And whatever escapes today, will get it in the neck tomorrow.

The truth is, the worlds finances - indeed the whole financial sector - is monolithic, incestuous and out-of-date. Sooner or later the whole daft system will have to be dismantled.

Other "old" industries have gone.

The time that the financial sector went the same way is long overdue.

Postponed- YES. Because of differential inflation rates throughout the Eurozone and no means of reining it in, the Euro as a currency is surely doomed. I await its death with interest. It may well happen in my lifetime.

Just like the devaluation for us in 1967, somewhere the kissing has to stop.

35. At 10:07am on 10 May 2010, stanilic wrote:

"It is now evident to the most simple observer that there is not enough money in all the world to cover all the debt in the world so that interest rates have to increase."

Absolutely spot on - however this is a no win situation.

On the one side we have low interest rates and world hyperinflation
On the other we have interest rates rises causing world depression.

I'm glad I'm not having to make that decision - however it seems clear that nobody else is prepared to make it either!

45 John

Have you been listening to that nice looking Mr. Clegg? It is a depressing foible amongst Euro Enthusiasts that all difficulties within the European Union can be solved by...increasing the powers of the European Union!

Surely the current problems show us that the headlong rush into a happy-clappy future of fraternal brotherhood might be a little premature? Currency union is a non-starter without political union. Current events, not to mention a 1000 years of history suggest that the cultural fault-lines within Europe cannot and will not be legislated away by simply "wishing it so"! Political union as a result is no nearer than it was 40 years ago when it was first mooted!

European co-operation, even integration is a good thing and a laudable objective, but it's naive and quite possibly dangerous to believe that this can be achieved quickly. Let's go at it over a couple of generations. It might even work then!

PS: If anyone comes back suggesting that the EU has prevented war in mainland Europe I might be forced to call the police. Western European peace was enforced by the shared peril of Soviet Expansion, not by some suits in Brussels no matter what they might claim. After all, when it came down to a real shooting war in the Balkans the EU proved itself to be as effective as the proverbial chocolate fireguard!

44. At 10:26am on 10 May 2010, Dempster wrote:
But at what point does the farce turn sour and belief in a currency evaporate?
---------------------

Dempster, that'll be the day! The day the money dies!
I wish we live long enough!

For ALL people interested in alternatives of the monetary system, this presentation will give you enough food for thoughts.
https://video.google.co.uk/videoplay?docid=3932487043163636261

ENJOY!

49. At 10:41am on 10 May 2010, writingsonthewall wrote:
35. At 10:07am on 10 May 2010, stanilic wrote:

"It is now evident to the most simple observer that there is not enough money in all the world to cover all the debt in the world so that interest rates have to increase."
Absolutely spot on - however this is a no win situation.
-----------------------------

What do you mean spot on? Yes, the total amount of money is less than the total amount of debt but how is the increase of interest rates going to cover the difference -- it will only make it BIGGER!

The monetary system is unsustainable people, how many crisis do we need to figure that one out?

This comment was removed because the moderators found it broke the house rules. Explain.

The remaining functioning economies are going to be bled to keep the undead stumbling on. We're being told that it's for a blood transfusion (taking capital from one body, for another to use as capital to repair itself after a rare injury) but it's clearly going to be consumed as foodstuff (taking capital from one body for another to eat as its regular diet).

To the insufficiently Machiavellian, it may seem that putting vampire economies into the same currency as their victims was crazy. I suspect it was part of the deeper plan by those seeking to set up eventually a post-democratic federation: the bailouts, or the potential for bailouts, buy the votes of the non-functioning economies -- see how it worked with Ireland's second referendum on the Lisbon Treaty.

The only thing that I can imagine would start to shift things would be "no taxation without representation", and I don't expect that would be popular: bailouts in return for sovereignty -- not sovereignty of the federalists, but sovereignity of those fiscally competent enough to have made the money to do the bailout. "We provide you with x% of your GDP this year; we get x% of the seats in your parliament for that period".

However, I do not question the competence of the bankers and the politicians -- at helping themselves to far more than they need for their personal use.

Cac 40 3671.40 278.81 8.22%

Now that is ridiculous fantasy land Economics - oh there are going to be some very sorry people out there when this baby goes pop!

I'm in favour of the old Athenian remedy, debt forgiveness and restructuring the lending and political regimes. It worked for Athens and fired her in to an empire.

I don't like it because people should act responsibly but I think we have gone beyond that now. There needs to be a measure of re-distribution as well but again I don't like that either. But our elite are out of touch and incompetent. They have to go.

BBC executive staff were more concerned with gender and sexual politics than with PFI's at 17.5% interest and mortgages at 6x joint income (thats 80% of joint take home at 6% on a straight repayment mortgage). This was our common people being seriously stuffed. The BBC executives and board are part of the elite. Evidently a useless part.

52. At 10:58am on 10 May 2010, plamski wrote:

"What do you mean spot on? Yes, the total amount of money is less than the total amount of debt but how is the increase of interest rates going to cover the difference -- it will only make it BIGGER!"

True also - but the continued printing of money is merely going to cause a different type of crisis - an inflationary one.

So which is better, eating chalk dust or eating brick dust - you decide.

#31. At 09:51am on 10 May 2010, Electionasap wrote:
"Look at the huge drop in the Dow Jones last week,on this scale only 2 events come anywhere near,1987 and 1929 "the Great Depression"."
_____________
Whilst I agree with your sentiments (see #12 above) I think you should add the sharp spike down (-15%) we had on 4th April 2000 on the NASDAQ, as the Dot.Com. bubble was in its early stages of deflation. The markets recovered over the next few days, before moving well below the lows of that day and then further down.
Of course some will argue that the dot.com bubble was nothing like the current situation; and on issues of specifics this is true. However, the two situations share the unfortunate fact that asset values were greatly inflated and eventually came tumbling down. The dot.com inflation was through greed and speculative pressures on limited stock offerings (volume of shares issued by the companies). In that sense it was a classical speculative bubble as companies that did not even have serious business plans, let alone demonstratable future positive earnings streams were offered up on IPOs making their founders worth tens or hundreds of millions of dollars overnight. Even when this was pretty evident to anyone with their eyes open in the latter half of 1999 the speculators kept on coming. Pure fantasy.
In contrast this immediate European crisis is fueled by a loss of confidence in Greece's ability to repay the bankers for their loans and a fear that such a condition could spread to Portugal, Spain, etc.; although I agree with your comments that there are serious structural problems in the European experiment.
The politicians and Eurocrats fear another Lehman situation creating contagion and so they hit the emergency funds button in the hope that by subsidising the Greek government debt with Euro taxpayers money it will keep the bond markets from imploding and the Euro crashing.
Whilst this might seem admirable if you are sitting in their positions, it is not a policy that can continue ad infinitum.
As with the US response in 2008-2009, the view by our great policymakers appears to be based on a principle of subsidization. Essentially, subsidizing the major banks, which we have seen clearly in both the USA and the UK. Now it is the turn of the Europeans.
By making taxpayers funds available for these bailouts they are of course mortgaging all our futures. They are effectively playing an asset inflation game. In the US this was partly achieved by revoking the accounting rules over the 'mark to market rules' thus allowing banks to inflate their book values. The TARP monies provided a further subsidy, until such time as the banks had made enough money to pay it back. But their profits were not mainly generated by lending to commerce (especially small and medium sized businesses), but rather by taking advantage of the virtually free money available from the Fed and buying government debt for a nice profit spread. In some societies these people would be locked up for robbery!
Now it is our turn of the Europeans to be robbed, no wonder many of the German people voted against this over the weekend in Nord Rhein Westfalen. The change to an SPD/Greens coalition from the past CDU/FDP coalition spells serious trouble for Angela Merkel, since she will lose her majority in the Bundesrat (Senate) and hence be unlikely to pass legislative reforms.
Once the euphoria dies down, I agree with others on this site that we shall continue the slide on the Euro.

'Prevaricated' would be my choice of word as it contains an inherent negative judgement of those involved, which perhaps Peston is too kind to use.

Thank goodness - for a moment there I feared that UK house prices would only go up 20% this year!

As long as the British can buy and sell houses to one another we will have no need of a wider economy. I know this is true - an estate agent told me so.

46

If you read all the way to the bottom of post 35 you will see my reasoning.

We are between a rock and a hard place.

If all the answers to the problem are unacceptable then you have to try to redefine the problem.

Financial journalists have really been gunning for the euro recently. Pleased to see they have been thwarted, hopefully in the long-term and not the short. Good effort by the eurozone finance ministers; give credit where credit's due.

57. At 11:18am on 10 May 2010, writingsonthewall wrote:
52. At 10:58am on 10 May 2010, plamski wrote:
So which is better, eating chalk dust or eating brick dust - you decide.
-------------------

None! ;-)

It's better to accept the inevitable --- this whole system is going. The sooner we accept that, the less the collateral damage will be during the transition.

WOTW, I would really value your opinion on the new proposition - Resource Based Economy. Would watch that presentation when you find the time and tell us what you think? Thank you.
https://video.google.co.uk/videoplay?docid=3932487043163636261

For most Eurozone countries the worst is yet to come. Governments such as France, Germany & Italy are yet to announce the sacrifices that they will expect their citizens to make to shore up this deal. There will need to be dramatic cut backs in social security and government spending in the major Eurozone countries. I believe that this will lead to considerable civil unrest when countries such as France cannot bail out their farmers, fisherman, transport companies, etc, as has become their habit. Yesterday the French minister of agriculture hinted that bailouts have finished and you can expect many more such statements from government ministers in the following days.
So the real danger for the Eurozone is not the markets, but public opinion. Countries such as France have lived beyond their means for many years and their populations have become used to a ‘hand out’ economy where each period of social unrest has resulted in extra government spending and hence debt. Slowly but surely, France will bow to the strict demands of Germany about fiscal policy. For the moment its government is in agreement, but has it got the nerve to make the drastic cuts necessary, I doubt it.

57. At 11:18am on 10 May 2010, writingsonthewall wrote:
'But the continued printing of money is merely going to cause a different type of crisis - an inflationary one'

Inflation is not a crisis, it's just the way the system works.

Inflation, the greatest and most insidious stealth tax of them all.

I get really bored with the anti-EU thing. Lets just talk reality not hypotheticals.

This plan is rubbish and so is the ridiculous austerity package for Greece. I can't wait to see them try this one on the spanish people.

Did no one tell the German's having an empire is very expensive.

It's debt forgiveness, default or printing. Get on with it.

#33 John_from_Hendon The premise of your question is false. It is not a question of wanting the Euro to fail it is merely a question of watching it fail, and understanding that it must fail due to inherent internal contradictions.

Through their issuance of exponential amounts of funny money policy makers are ensuring that substantially all fiat currencies are on their death bed.

There will be no recovery because there can be no recovery. We have entered the end game, and the consequences will be what they are.

If you are really looking for someone to blame - blame the people. It is they that have stood idly by whilst the bankster gangsters have run riot and trampled over common decency. It is they that have hurt the peoples of the world, and it is the responsibility of the people of the world for having allowed themselves to be so greviously abused.

....in other news....buried in the bailout bubble...

Did anyone see that the BoE kept interest rates at the 'unprecidented' 0.5% this month - making it a complete year at 'unprecidented levels'?

This is hugely significant, because despite all the talk of recovery, the BoE's actions do not match the Governments words.

Worse still is the climbing inflation rate has made no difference whatsoever, from which you can conclude that the policy is very much to avoid depression at all costs - even if those costs are hyperinflationary.

Strangely the BoE have cited 'election turmoil' as the reson for keeping rates at record lows - I wonder what excuse they have lined up for next month?

...and here we have 'Democracy in action' - through the eyes of the media.

Don't protest - or defend your democratic rights - stay at home and watch it on Sky news - you plebian slaves.

[Unsuitable/Broken URL removed by Moderator]

Without a free and impartial media - we are a dictatorship.

65. At 11:46am on 10 May 2010, Dempster wrote:

"Inflation is not a crisis, it's just the way the system works.

Inflation, the greatest and most insidious stealth tax of them all."


...only while it's invisible to the 'naked eye' - when it becomes noticeable (i.e. Hyper) - everyone gets their pitchforks sharpened....

"However it will not be creating new money in the eurozone in the process of purchasing such bonds, because for every bond shunned by investors that it buys, it will sell other securities back into the secondary market to remove the additional liquidity it has created."

Now that's a 100 % LIE!

Are we the next shoe to drop

#35 stanilic. Congratulations, you are simultaneously both right and wrong.

You are correct regarding the need for debt restructuring (and presumably debt write off where appropriate), the need to return to real money and the need to focus on activity rather than statistics.

You are wrong if you think that anyone has the remotest intention of doing any of these things. Restructuring and writing off debt would lead to gigantic losses for the rich - so that is an absolute non starter.

If you measure growth by activity you will see catastrophic declines in "growth curves" Given that debt is compared to GDP it follows that one way of increasing debt is to essentially falsify GDP. Consequently this has been done, and absolutely no-one is about to get honest and reverse the trend.

The people should have risen up - but they were bought off with endless cheap burgers and beer and the deranged fantasy that ever rising house prices were the route to economic and spiritual nirvana. They got it as wrong as it is possible to get it wrong and very shortly they are going to start paying the price for their collective stupidity and indolence.

There is no way out and there is no way back. The only question that seemingly cannot be answered is just how did the creators of the Mayan calendar know what they evidently knew.

100% agree with post 66, no amount of faffing about will change the mathematics. Also, If DC gets into power and goes for Austerity, he wont last 1 year - Mark my words, folk have had enough!!!

"It's debt forgiveness, default or printing. Get on with it."

According to the Daily Telegraph the EU rescue package amounts to around €750 billion.

So we have €750 billion more promises to pay, to cover the €750 billion promises to pay by those who can’t pay.

The funny part is this: The latest €750 billion, has been promised by those who haven’t actually got it anyway.

Apparently we’re down for around £10 billion - £13 billion of this, but then who gives a stuff because we haven’t got it either.

Investment tip of the day = Print press manufacturers

We all know that we are looking at the final stages of the largest Ponzi scheme in history, yet again the taxpayers will be footing the bill for the Bankster's that truly run things. How on earth can you pay a debt off by taking out a bigger debt?

It is absolute insanity, and I will not see the can kicked down the road anymore, why the hell should the next generation faced indentured servitude because of the greed and folly of the politicians and bankers.

Default and debt jubilee is the only solution that we makes any sense, funnily enough it's the reckless and the greedy that would stand to loose the most.

The only other option is hyperinflation and possible war.

Obviously our wise leaders and banker's will decide what's in their best interests before they tell us it's good for us too.

Stop the insanity, draw your money out of the bank's let them fail.

63. At 11:42am on 10 May 2010, plamski wrote:

"WOTW, I would really value your opinion on the new proposition - Resource Based Economy. Would watch that presentation when you find the time and tell us what you think? Thank you.
https://video.google.co.uk/videoplay?docid=3932487043163636261"

I've watched the video, and it seems to me this is 'understandable Marxist critique of Capitalism' - with added 'modern features' such as the increasing role of debt but ultimately based on the surplus value theory as laid out by Marx. It's certainly a good video to watch for people who are still unclear what we're all ranting about regularly.

It does seem to support one of my arguments which is "If it weren't for the 'profit chasing' element of our lives - we would produce everything we need by Tuesday afternoon - and we could take the rest of the week off!"

It's also interesting to note that for in order for this system to continue - consumption must keep rising and rising - which means increased waste.

...and they wonder why the planet is dying..

The footsie up by 5%! What a bunch of mugs. They're all sitting on the deck of Titanic watching others leave on boats with the thought in mind that the boat is unsinkable. This bailout fund will the biggest bubble of all time soon to be followed by the worst recession of all time.

Correct, this is merely a postponement. The patient has cancer and the doctors have attempted to cure it with a sticking plaster, albeit a huge one.

There are fundamental issues that need resolving and blaming markets or capitalism is not the answer. Markets are undeniable, naturally occurring phenomena and they will exist and operate unless freedom is totally surpressed.

The corruption of the monetary system by various governments and bankers has created distortions that prevent markets from functioning properly, thus stopping them from allocating resources in accordance with people's wants and needs.

Too many people have swallowed the myth that money is capital. This fallacy will be discovered by all soon enough.

Reading some of the comments on here I am reminded of a scene from the playground, of the glee on the face of the oft-persecuted kid as the school bully picks on another unfortunate. His happiness at not being the one under the kosh is exposed as snide comments from the side lines and a kick in the ribs to try and gain the bully's approval. But underneath it all his stomach twists and turns, knowing that at any second this wolf might smell his fear.

To the aloof commentators here: don't be so smug, your day will come. No matter how much your press try and convince you that you're different, you're not. You're not a spectator here, you're one of the stars.

My dad didn't fight Hitler so that we could just be slaves!

Cease this preoccupation with "the markets". If they cause too
much trouble, take all their money and give it to charity.
At least charity wouldn't threaten us with Armageddon each
time something goes a bit awry.

Look, it's time to sort out _real_ problems, not imagined ones
related to fear or greed. Let's start with climate
change, for example. I couldn't care less about which cretin
chums up with Lord Snooty to form a government, as long as
they don't hunt Basil Brush!

In July I'm off for my annual 3 weeks on the coast below Bordeaux and relaxing knowing that the Lab/Lib-Dem coalition is prudently sliding through the deficit versus recovery minefield and enjoying the Euro equals 75p exchange rate.

Everything on my beach will be lovely.

73 armagediontimes

So there is no hope as we are all caught up in the grinding wheel of an eternal destiny.

What a grim perspective!

Sorry, but I am a child of the journey. There is always hope: nothing is forever. Things can change. If you want things to change you can make them change. All you have to is recognise that you can make that change.

All you are saying is that the rich won't change and that integrity in public affairs is lost. For now that is maybe, but it can't be forever.

Where are these rich to go to enjoy their countless pieces of useless paper? What is the point in accumulating vast riches if you cannot enjoy them? Where in all this world will you go if every nation and every people turn their back on you? By all means trample over the thousand flowers but do not complain if there are no colours and no sweet smells to enjoy.

No: we must not be afraid of those with wealth and power for the simple reason that we are many and they are few. All we have to do is organise ourselves and arrange things in another way. This can be done with our existing institutions and need not require that the world be turned upside down. We just have to think and behave in a different way.

# 79. At 12:28pm on 10 May 2010, Wardy29 wrote:

> Markets are undeniable, naturally occurring phenomena and they will
> exist and operate unless freedom is totally surpressed.

Haemorrhoids are undeniable, naturally occurring phenomena as well, but we don't like them much, do we?

> The corruption of the monetary system by various governments and
> bankers has created distortions that prevent markets from functioning
> properly, thus stopping them from allocating resources in accordance
> with people's wants and needs.

Sentiment, however well expressed, solves nothing in my opinion. The markets are functioning properly for some – look at all those ad for mercs and Ferraris in London etc. Don't mix up a problem with its symptoms - the problem IS the markets, Wardy29. We have to break them up, spread them out and reduce their coupling. We have localise them, take out their cores and distribute them far and wide. Only when the are small, isolated and puny are they safe.

No one knows what the collective EU liabilities and debt obligations are and so the ECB is guessing that the £1 trillion quid package will be enough but at last firm recognition that the serious contagion is well spread beyond Greece and Britain has the largest financial centre and spread of debt in the Eurozone.

EU is concerned as Britain and its banks affect all Eurozone countries and all Eurozone countries affect Britain and will Britain get any money from this new ECB fund if Britain/its banks gets substantially in further debt/deficit?

All eyes now on Britain although the EU will not admit this?

69. At 11:58am on 10 May 2010, writingsonthewall wrote:

[Unsuitable/Broken URL removed by Moderator]

Aw - just go onto you tube and search for 'sack Kay Burley' and filter it for the last 2 days.

There won't be a crisis in the Eurozone because if things get too bad in countries such as Greece then the citizens of such countries will be free to move to European countries with more stable economies. In Britain and Ireland alone there are loads of empty homes. Perhaps the government here should do more to assist people from such countries to move to the UK, as this might help alleviate the skills shortage.

Deepal @ 87#

If everyone on the social housing waiting lists in Ireland were given a new house there would still be several hundred thousand "New Builds" left either finished or mothballed so If these were allocated to the Greeks and they put a tobacco plant and a patio Olive tree out and then as per Greek traditon claimed subsidy from the EU for 5 million Hectares of Olive groves and Tobacco plantations this would soon solve Irelands deficit problem.

The change of the Irish Expletive from "Oh Begorrah" to "Oh Baklava" would cause few problems as no one listens to the Irish anyway.

OMG, Jericoa(8.10). Forgotten the name of our revered Presidente already? It's Dampuy, I think - easy to remember - just remember Damp and Wee - Cos he's quite small - HUGE intellect though, hasn't he...

Bring back the Debtors Prisons!

@ 68

Post-election turmoil.

Mmmm - think I might kit myself out with a good tent and and a load of freeze dried consumables.

Why is there a need for the additional costs assoicated with the middle man (banks). As the banks are going to charge interest on this money this will only burden the taxpayer with additional taxes to pay of the interest. It seems inappropriate at this time to continue to shore up these unethical banks that are the source of the very problems trying to be addressed. These are difficult times and different ideas are needed to resolve the matter and banks are hardly the path to any real solution as it is and has never been in their interest for things to get better.
An additional burden on the taxpayers to maintain the status quo. Foolish at best. Continuation of rewarding failure and no initiatives to provide some substanital change in the system....repeat performance looms in the future.

Its like trying to prop up a bridge with rotten wood, the sad thing is we will all be on it when it comes crashing down

# 5. At 08:20am on 10 May 2010, 24law wrote:

... "And I am beginning to wonder if - without the slogans or rhetoric - is there, as evidenced in theses blogs, some kind of different 'world view' or 'bigger picture' appearing these days? " ...

I think part of the bigger picture is surely going to be a levelling up of people's average material wealth between places like Europe and powerful 'emerged' economies like China and India.

I can't help thinking we need to get used to the fact that the average person's standard of living in the UK (in terms of money) and comparable countries is going to go down and the average person's standard of living in China and India is going to go up, until the two are pretty comparable, maybe it will take several decades but the process is already well underway.

Maybe it's a good thing, in terms of 'world peace' - without wishing to sound too hippyish!

How many more bailouts and 'postponements' do we need?

As I suspected at the time, the best option would have been to let the banks go bust and guarantee savings. This would have meant that some investors may have lost their money but the cost the taxpayer would be much less in the long term because we wouldn't still be trying to cover the losses of investors. In truth, despite pouring billions of pounds into the black hole in an attempt to keep the whole corrupt system propped up (for the good of the wealthy), we still have not addressed the true problem - bad debt.

The only way to deal with this debt is to quantify it and WRITE IT OFF. Unfortunately, banks, governments and now the ECB and IMF don't seem to know what the true extent of this debt is so we are left pouring taxpayers money down the drain in a vain attempt to maintain the system.

What are we doing? If Greece/Portugal/Spain now issues bonds no one wants to buy them as they are toxic so the ECB has now stepped in and is saying they will now buy the bonds and re-issue them under a different name to greedy (and stupid) investors. Is this not similar to what the banks were caught doing not so long ago which started this crisis? All we seem to be doing is moving the problem up to the next level. But the IMF will have no one to bail it out. That is why this short term fix will ultimately fail, taking all of society with it.

84. At 12:46pm on 10 May 2010, Jacques Cartier wrote:

> Markets are undeniable, naturally occurring phenomena and they will
> exist and operate unless freedom is totally surpressed.

Haemorrhoids are undeniable, naturally occurring phenomena as well, but we don't like them much, do we?

-----

I'm talking about markets with a small m: the markets where goods and services are traded between private individuals unfettered by . The distortions include the effects of government policies which have allowed money to be used as a method of political control instead of a genuine means of exchange of fluctuating value, the same as other goods and services.

We will soon see how powerful the markets are (once again, small m) when people realise they have been conned and their money is actually worthless.

In the US in 1920-21 they had a recession that wiped a huge amount from GDP but was over in a matter of months. When they tried to prevent the crash of 1929 by intervening they prolonged the agony for years and years.

Markets set prices and nobody should have the right to tell two market participants what the prices should be. This simply creates distortions.

Just look at the impact of the whole central banking/interest-rate setting/lender-of-last-resort set-up and think about how things would be different without it. Would we be on the verge of a currency crisis without this arrangement?

If we don't have free markets, and I mean free from interference, what would we have? A government dictated planned economy, where we are advised by the political leaders what our wants and desires should be? Would you trust our politicians to get this right?

Still can't believe that democratically elected governments are rolling over to be mugged in our name, and on our behalf - again?

Where are the money market police? If everyone's shop, home and bank account was constantly raided - you expect the law to deal with the robbers?

Imagine these gangs of 'robbers' were in a line-up and clearly identified - then get 'bailed' out of jail? Then, the same 'robbers' continue without challenge?

Isn't this what is actually going on?? Why are forced to tolerate financial anarchy from professional 'bandits'?

77. At 12:23pm on 10 May 2010, writingsonthewall wrote:
I've watched the video, and it seems to me this is 'understandable Marxist critique of Capitalism'
=================

Thank you. I was more interested in your (and everybody's) views on the proposed alternative - Resource Based Economy?

Also how can we successfully plead to the BBC and Robert Preston to make a feature on it?

Once upon a time everyone in the developed world wanted to be rich.

They were desperate to have more and more money so they could buy more and more things that they wanted but did not really need.

And people found that money on computer screens and gave it to everyone so that they could have what they wanted.

And it came to pass that millions, became billions, became trillions, became quadzillions became gargantuillions.

And yet life continued as before.

Until one day someone noticed that there was not enough water left........

And noone lived happily ever after.