At the End of the Day

Nobody’s future is what it used to be

I’ve spent much of the day listening to various examples of – and opinions about – what a ‘decent’ pension is. Quotes have been forthcoming about teachers, nurses, dinner ladies and all the other folks that the Ed Miller Band think are so hard done by.

For me, this is the bottom line from what I heard: only a nurse’s pension was lower than mine. And even then, by a mere £870 per annum.

Because I spent roughly 40% of my working life being an entrepreneur (with my house on the line, but still two kids to educate and a whopping mortgage to pay off) my pension got neglected. I never trusted company pensions, because I worked for the likes of the Saatchi brothers. I had friends who, after 23 years service, had to start all over again thanks to the Maxwell House of Cards.

What this meant was that I had only a private pension to which I contributed as and when there were funds available.

At the age of 44, my wife ran off with another bloke, and took half of that pension in a lump sum…as was her right.

My income outside this meagre pension now consists of lump sums I made by being successful in business, and choosing cheap areas in which to buy properties that, over time, increased in value…partly because I worked at improving them most weekends.

In 2001, I retired from full-time work with the help of an Income Bond mis-sold to me by Scottish Widows. That cost me £50,000 – a quarter of its value – with no redress. Since then, my second wife and I have suffered zero interest rates, increasingly censorious DSS rules about how much pension I can draw, and a rising rate of inflation.

Neither of us can afford private health care any more.

We have to devote several hours a week to finding investments that will give some kind of return. Some of these have done well for us….but a guaranteed index-linked public sector annuity pension (and banks paying interest) would’ve been much better, and a lot less brain-ache.

Of course we are better off than most. But this didn’t happen because I took a teaching job aged 22, and never had to worry again about the results of my efforts, or where the pension was coming from. And to be frank here, I’m a lot brighter and more use to the economy than the average dinner lady. (Nurses are an entirely different matter: I have nothing but admiration for the good ones).

But were you to ask me if, sometimes, I feel f**ked over by the public sector, feminist ideas of unqualified entitlement, financial services sharks, government waste, investment banker lunacy, and Union leaders destined to retire on £40,000 a year, then the answer is yes. Not all the time, but sometimes.

This isn’t how I feel about senior Whitehall mandarins, who illegally awarded themselves (with no elected body’s approval) an eye-popping £1.3 trillion in additional pension emoluments between 2005 and 2009. Them, I feel f**ked over by 24/7.

In the next 18 months, I’ll be getting the State pension. It won’t be life-changing, but I’ll be grateful for it. It will, however, be 13% lower than I was led to expect, thanks to Iain Duncan-Smith’s pension reforms, and the desire to give people who only came to this country twenty years ago more than I will get. (ID-S has done a wonderful job under onerous circumstances: this isn’t his fault. He has tried to be fair, and largely succeeded.)

So no, I didn’t support the strike today. Great teachers like my late friend Linda and my sister-in-law deserve every penny in pension they got, dealing as they did with the dysfunctional offspring of feckless pillocks who will get exactly the same pension payments at 65 as I will: such is the nature of Labour ‘equality’. But did I have sympathy with these cosseted fluffies waltzing up and down bearing their mindless banners and illiterate placards while singing ‘Solidarity Forever’? No, I didn’t. I suspect that, by and large, they have had a financial peace of mind others would’ve killed for over the last five decades.

What most of these demonstrating strikers are being asked to do is contribute some more to their pensions. How wonderful it would be if the cafe waitresses, secretaries, delivery drivers, forecourt attendants, supermarket shelf-stackers, small shopkeepers, garage mechanics, lavatory cleaners, receptionists, sales forces, call centre drones and unemployed students had only that to worry about.

 

CRASH 2: Central Bank intervention is just a ‘let’s try it again’ maneouvre.

Coordinated alchemy doesn’t turn it into science

Sub-atomic theory (or some versions of it) maintain that doing the same experiment over and over again can indeed produce different results. Everywhere else above that level, you get the same result every time; and Einstein thought that even the ‘different results’ syndrome at the sub-atomic level was merely a misunderstanding of the various effects in play.

CERN collider particles or not, I’m with Einstein. Especially when it comes to fiscal and financial trickery. We’ve tried, since 2008, zero rates, quantitative easing, monetarist fiscal discipline, fiscal easing, and endless variations on stability facilities. They’ve all failed, because none of them addressed the fundamental problem: the banking system is intrinsically unstable, and run by mad people who think borrowing is the answer to everything.

Yet still the alchemists in charge insist that, with just One Last Heave, all will be well: that repeating the experiment will, in the end, give us the result we want. This may work in EU referendums when you’re twisting all the right arms. But it doesn’t in fiscal economics.

With today’s news about global central bank intervention now splashed right across the MSM, I am left once again wondering if journalists today have a severe medium-term memory problem….or simply can’t be bothered to look up the history surrounding all this hyperbollocks. Several sites this afternoon GMT referred to the action as ‘unprecedented’.

A little over two months ago – September 15th to be precise – the CBs did the exact same thing as they’ve done today. At the time, it was positioned by many commentators (including this site) as an emergency measure showing just how serious things were. Now, suddenly – ten weeks later – it is our salvation.

Well, it isn’t. The surge in the stock markets is pure speculation, driven by a billion opportunistic trades the minute the central banks released the nature of their liquidity/CD swap loosening intentions. Ten weeks ago, precisely the same thing happened; the effect lasted five days. And what good anyone thinks a surge in stock markets will do for the eurocrisis – apart from enrich those plumbing the depths of liquidity pools around the world – is beyond me. Foreign currency liquidity swap lines are only ever provided when those in charge of the global banking fantasy fear the intrusion of reality. It’s a stopgap measure – nothing more, nothing less: a bit of breathing space for the eurobunglers.

Those dealing with the actual problem are edging forward towards an accommodation with the lenders/bankers/bondholders/markets/headcases. Wolfgang Schauble said in an interview with ARD television in Berlin that the “decisive” answer remains budget discipline enforced by means of European Union treaty change, but he really isn’t that stupid: he knows perfectly well that a guarantor of last resort is what the bondholders seek. This will turn out to be the EU citizen, but as The Slog predicted yesterday, reaching that stage will require obfuscation wrapped in a fig-leaf of dissembling – rebranded as the IMF: finance chiefs of the 17 eurozone members agreed yesterday “to work on boosting the resources of the IMF so it might cooperate more closely with the European Financial Stability Facility”, Luxembourg’s Jean-Claude Juncker lied to reporters late yesterday in Brussels. Or put another way, “we blur the lines such that nobody but us understands WTF is really going on”.

Fifteen months into the so-called ‘critical’ stage of  Europe’s sovereign debt crisis, investors are rushing to leave the eurozone bond market, eurobanks are dumping government debt, south European banks are bleeding deposits….and the economy is descending into a slump. Nobody has run faster from the Black Death than American banks. Now the Fed and others are stepping in to ‘save the eurozone’ – as the FT ludicrously suggested his afternoon. I am not impressed.

CRASH 2 ANALYSIS: This is a poker game about who runs the world

Time for the suits to get a haircut?

With the world’s Sovereigns divided by fear and greed, it’s hard to see how the lenders can lose

While the euro funding crisis has zig-zagged this way and that, one thing has remained consistent throughout: the bondholding banks have not contributed a penny towards any solution.

Now some would argue, “They’re the creditors – why should they?” but it’s pointless going through all the reasons why again. It takes two to tango, as they say, and the banks have form in the 21st century when it comes to lending money to people they know can’t pay it back. They must know, a lot of the time, that the borrowers won’t repay; but they figure that’s OK, because other taxpayers will.

I’ve lost count of the number of false dawns we’ve had on this issue. Haircuts and percentages have come and gone, forgiveness deals have been under, on, and then off the table, and bailouts have been announced as “more than enough to settle the markets” time and time again. But there have been no haircuts, no forgiveness, and not a single effective bailout. The situation in Greece is a farce whereby everyone pretends in public that the lenders might take 40, 50 or even 60% haircuts. Five weeks ago, 35% was a done deal: the BBI gave its word on behalf of the credit community. But today, we are no further on….and every day, that unsolved dilemma threatens to blow down one or more of the French leading banks.

I spoke with two well-informed managers yesterday, both of whom felt a French downgrade was only a week or so away – and inevitable, unless something happened. But the lenders show no sign of cutting this leading-rank nation some slack. More to the point, they show no sign of delivering on the much-heralded BBI pledge. (If they did in relation to Greece, France’s problems would be decimated overnight).

If another self-styled ‘expert’ tells me I ‘don’t understand’ the logistics involved, I think violence might be in order. Were a meteorite heading for the planet this morning, logistics wouldn’t be allowed to get in the way. The biggest financial missile ever to hit Paris is probably 6-9 working days away: if it hits, it’s game over for the world economy for years to come. I shouldn’t be – but it will be, because those same lenders, bondholders and markets will panic. Not about the economies about to go belly up, but about the money they’re owed.

Yesterday evening, something occurred to me about public opinion: I wouldn’t mind betting that a majority of the ordinary folks out there think that banks, bondholders, and markets are all different elements in this incredibly complex jigsaw of debt. They aren’t of course, but to read media reports on a daily basis, you’d think they were. RBS invests in bonds, trades in bonds, lends too much credit, and demands higher yields when things get sticky on the repayment front. It’s all the same people. When Reuters writes ‘Now markets target Germany’, what that means is that lender-bondholders want a guarantor, and they’ll make life hairy for Berlin until they get it. Every pusher in the world knows that trick: get the buggers hooked, and then start giving them less of it, more expensively.

How high one takes the helicopter before deciding on a viewpoint about this depends on your personal bent. Mine is and always has been to get as much horizon in the lens as I possibly can. The economies of the world are being held to ransom by those who were supposed to be fuelling capitalism. They have in reality given almost nothing to real capitalism, but instead fed vast funds into multinational monopolists wanting to eat each other. When not doing that, the financial community has traded with itself. And as all little boys know, if you trade with yourself too much, you go blind.

If the Slog’s report of earlier this week is even half accurate, the ransom demand is working. Berlin is weakening, and under the table (on it actually, but we’re not allowed to say that) is a plan via which the bankers will get all their money back, a large amount of ClubMed debt will be forgiven, and around 40% of the money to do all this will come from stealth taxes on the EU citizenry. Even as the idea develops, there is no talk of haircuts any more. Taxes are the new haircuts: the banks will come out of it dripping with rose-water again.

“They have to,” said a valued friend to me a fortnight ago, “because if they collapse, we’re all in the sh*t. Don’t forget John, the lenders are the banks, but they’re also the Sovereigns and the pension providers”. He’s right of course: markets wanting a debt guarantor are often the same folks whose collapse in the absence of that sugar-daddy will mean the collapse of a sovereign economy. Round and round the circle goes…but my point is a simple one: this is a game of poker here, and the stakes couldn’t be higher. However, it seems to me that the financial sector holds all the aces.

Let’s say Merkel just keeps on saying, “No – take a haircut”. If the banks say no, some of their membership go under, but the entire Western economy collapses into a trough of pigswill. The remaining banks will be richer than ever….and the Sovereigns will be broke.

Let’s say Schauble finally agrees, “OK – you win, we’ll disguise the facts and let both lenders and debtors off”. All the banks survive – even more powerful than they were before. But the Western economic world remains frightened of them….and the remaining sovereign debts haven’t got any smaller.

This isn’t conspiracy theory, by the way, before anyone accuses me of it. It’s the reality unfolding before our eyes: as I wrote last year, there is a wealth transfer likely to take place, and it has nothing to do with West and East: this is a transfer of power from Sovereign governments powered by vibrant capitalism, to Sovereign banks serving the needs of big monopolists. In Greece and Italy, it’s already in place in a de facto sense. Last year, Bob Diamond as good as told David Cameron to go f**k himself when it came to bank bonuses, since when Camerlot as a whole hasn’t uttered so much as a squeak about controlling the banks. Diamond now talks gaily about being happy to dispose of his retail network: it’s a cost centre, and the People have been bled dry….so who needs them any more?

This is the primary reasoning behind what The Slog has said from Day One: the only answer (through which Sovereign democratic governance can survive even partly intact, and dismantle the financial system as it exists today) is controlled, global debt forgiveness. The financial community will have to take a much bigger hit – but across the board, so most of the players survive…greatly chastened. And yes, savings and pensions will suffer for a while. But debt forgiveness on an averaged, monitored scale is the only way we can beat the banks.

They are highly unlikely to be beaten. Although the banks don’t trust each other, their actions have been far more concerted and focused than the response of national Sovereign governments. The sting being applied is working in the same way all stings work: by appealing first to selfish greed, and then to fear. There is no political leader out there today capable of saying, “The only thing we have to fear is fear itself”. Whether they really want to or not, the money-suits are on target to run the world.

Related: Black Death in the eurozone

And on a lighter note – George Osborne, Fall Statement Guy

AUTUMN STATEMENT SKETCH: Now I know why Americans call it The Fall.

Westminster fails to find a new leaf for the turning over of.

Those who complain about the size of the BBC license fee were given more damning evidence of cash-squandering today, when the Beeb’s Autumn Statement coverage involved the hiring of a helicopter. I’m all for the Helicopter View, but five seconds of George Osborne crossing an inner Palace of Westminster quadrangle didn’t really make for what you’d call added value. However, it was at least real – which is more than one could say for the rest of the Commons exchanges.

It says a lot about the state of Britain (and Channel Four’s sense of humour) that C4′s chosen weapon to drag people away from this spectacle was the archaic David Niven epic A matter of Life and Death. It is a classic movie – indeed, my Dutch chum Leo Jacobs’ favourite film of all time – but for me the sight of Bomber Command’s plucky resistance to the Nazis would’ve been too much irony on such an inauspicious day. So I stayed with Andrew Neill and friends to watch events unfolding.

Talking of the War, there was a famous comic monologue at its outset by the inimitable Robb Wilton, called The Day War Broke Out. It starts like this:

The day war broke out, my missus looked at me and she said, “What good are you?”
I said, “How d’y’ mean, what good am I?”
“Well,” she said, “you’re too old for the army, you couldn’t get into the navy and they wouldn’t have you in the Air Force, so what good are you?”

I am reminded of the routine every time I see Robert Peston on the telly. In the whole five years I’ve been listening to his words, he has but once surprised me – when he up and splashed the news about Cable saying he would “get Murdoch”. This turned out to be a tip he was given on a plate by another hack he lives close to in Muswell Hill.

As Osborne’s reality rearrangement got going today, Bobby tweeted away a few minutes behind the music, basically telling us what the Draper had already said. In fact, exactly what the Draper had said. We call Peston ‘John Lewis’ in our house, because he was Never Knowingly Underrated.

It would, in turn, be hard to underrate the folks writing the script for UK politics at the moment. Like Eastenders, Westminsters is so predictable – and the characters so two-dimensional – it is truly tedious to watch….a fact that seems to remain unknown to all the players, with the exception of Speaker Bercow. Little John interrupts at regular intervals to say things like “will be heard”, “not what the public expects of this house” and so forth; but what this odious man should be saying is “I John Bercow am going to interrupt now, in order to grab some TV coverage, and distract attention from the worrying height and insane publicity-obsession of my wife”.

The Tories proclaim, and Labour shakes its collective head – or in Ed Miliband’s case, his nose. The Labour Shadow stands up to put the other viewpoint, and the Tories laugh. Or in Theresa May’s case, smile. Mrs May’s smile too is predictable, the sort of smile one reserves for despicable but rich clients. There is something about Theresa that makes me wonder if she might one day get up and machine gun the entire Front Bench. The jury’s out on which one she might choose.

Osborne’s speech had been billed as The Statement George never Wanted to Make, but within three minutes it became The Drone Nobody wanted to Hear. The folks behind him didn’t want to be reminded that Plan A wasn’t working, the rows opposite didn’t want to have it convincingly explained that they were around 30-45% to blame for leaving only Plan A to work with, and the rest of us were bored as soon as the Chancellor said the dread word ‘unexpected’. He said it five times in those first three minutes. It’s not a record, but the needle is very badly stuck on it. Readers under 35, see Wikipedia under ‘Gramophone Records’. (US readers should opt for the ‘Phonograph’ alternative.)

On the whole, Unexpected right now is not good. “We’ve got this mother well and truly taped” would be better. Instead, George Osborne gave us specious nonsense about our low cost of borrowing, and how no new money would be required to stay on track. This was pure Gordon Brown, as within seconds the Chancellor said the deficit would be up by £112bn come 2015. Even more Gordonesque was, “The OBR has established that youth unemployment is down to lack of jobs”. It was a rare chance for the benches opposite to roar with laughter, but it does make one wonder if Osborne’s proof-reader might be the love-child of Mr Magoo and Jo Brand.

The only reason the UK is still afloat, it seems to me, is that we’re not actually attached to the Continent as such, and can thus pretend we’re a little bit of nothing terribly significant perched innocently on the Continental Shelf. A cormorant, perhaps, or a stray seal. You do get the feeling Osborne hopes that, if he stays away from all the EU summits – or says as little as possible – the markets will forget all about us. Not a chance, chummy: our turn will come. More than anything else, this certainty is what makes Autumn statements beyond academic.

There were more initiatives to sweeten the cyanide pill – all of which were needed because our banks aren’t fulfilling their accepted economic role – after which George moved on to the renewal of the A380 outside Bristol, and the idea of another lane on the A14 in Suffolk. Just when I thought he might make reference to Mr & Mrs Nerd’s new kitchen extension in Chesterfield, Osborne sat down. It was time for the Morley Mauler to reply.

Ed Balls told us we had to be clear. The Government strategy was in tatters. It just wasn’t working. It was in disarray. The Man opposite was out of touch. He didn’t get it. We weren’t all in this together at all. The only departure from wooden cliche was when Ed said that Plan A was “flailing”, and the Chancellor would now have to “borrow more borrowing”. These pronouncements  held my attention by making me laugh, an outcome that struck me as entirely inappropriate given the disaster under discussion.

I’d like to feel sorry for Edward Balls MP, but I don’t. I don’t feel sorry for any of these third-rate extras in history, but I feel particularly unsorry for Mr Balls. It might be because he manages to make Robert Peston seem creative, it might be because his top lip sweats like Hitler’s did, and it might conceivably be because – when you strip away the polemic drivel – he has absolutely no alternative policy of any credibility either here or abroad with which to bash the Draper. But I suspect it’s mainly because, were he ever to take the ultimate reins of power, Britain would be a bankrupt concentration camp within five years. When it comes to lack of respect for freedom of speech, Ed Balls is every bit as much a threat as Boris Johnson and Harriet Harman.

Hattie was seated to Ed’s left during the debate, and I wonder if I was the only one who noticed that she talked to herself non-stop throughout the proceedings. This may be partly due to the fact that she’s something of a Billie No-Mates these days; but perhaps there is also a hint in there of the descent into madness. If you can bear to watch the BBC IPlayer rerun, I suggest you focus on the omnidirectional nature of her comments. She looks for all the world like the sort of tertiary unfortunate that Thatcher’s lot used to consign to Care in the Community. It is relatively easy for the privileged elite to remain this side of the asylum walls: Stalin achieved it by killing the psychiatrists, Gadaffi by levelling the asylums. I’m agog with anticipation as to how Harriet Harman will manage the process if and when her time comes.

——————————————

So there it was: an Autumnal Statement, followed by a Wintry response. Yet they are – all of these featherweights – nothing but dead leaves being blown about by the random breezes of global economics, and the rapacious wheezes of investment banking. Soon to come is the nuclear hurricane of EU fallout. It will flatten everything here, sweeping a great deal of the UK’s political structures in directions as yet unknown. Five years from now, we may well look back on today’s tableau, and weep with nostalgia.

 

 

CRASH 2: “The eurozone is now a plague village” claims German banking source.

But the eurozone’s leaders continue to work on The Big Idea

The Slog’s Bankfurt ‘Maulwurf’ insisted late yesterday afternoon EST that “The money is pulling out of Europe so fast now, the ECB will have to act within days, or we will be cut off like a mediaeval plague village. The eurozone has endemic Black Death, and nobody beyond our borders wants to catch it.”

Surfing across a variety of columns and new items this morning, it’s hard to not to accept his opinion. Polish Foreign Minister Radoslaw Sikorski made a dramatic appeal to Germany in Berlin yesterday, calling for more leadership in the euro zone crisis, and insisting “You know full well that nobody else can do it”. On Sunday the world’s greatest europhile Wolfgang Munchau talked of liquidity in the EU ‘grinding to a halt’, and yesterday evening Ambrose Evans-Pritchard at the Telegraph =gave some terrifying figures in the same vein.

But otherwise, in the first chance I’ve had in ten days to pump the Frankfurt mole about the developing ‘zero bank haircut’ plan, the man was not for pumping. Some of what he had to say, however, was quite intriguing:

“I think there has been some shift in opinion in Germany, that it is time for Berlin to show some leadership. But the German public are being kept in the dark about much of this. If they knew how much commitment Angela Merkel is drifting towards right now, the situation there would be very different. [Finance Minister] Schauble is always one step ahead of the media….nobody can keep up – not even the Chancellor at times.”

Where, I asked, did he stand now?

“Where I have since late 2010 – we should leave the eurozone and move to another arrangement. Had we done so earlier, the markets would not now be able to hound us as they do. It is utterly ridiculous that Germany is being treated as if she had a pressing debt problem, and it is all down to the Merkel Government’s indecision.”

But is he representative of German banking?

“I know [Jens] Weidmann [at the German Bundesbank] is fully behind my viewpoint that no more debt should be bought by either our Central Bank or the ECB. I know of many people in senior positions in private banking who remain wary of what Merkel will end up doing. If we knew what this will be, mind you, it would be helpful. Schauble remains an unknown, but he is one for the big idea. This has many professionals deeply concerned in Germany.”

And the ‘zero bank haircut’ proposition?

“I can’t comment about that. What I can tell you is that this [ESM/EFSF Summit] session over the next two days is yet another waste of time. What other ideas are under the table, well, it wouldn’t be constructive to say right now”.

The Slog’s Maulwurf is, at the end of the day, a banker. But first and foremost he is a eurosceptic who thinks Germany should cut her losses. My own view – firming up as time goes on – is that the Summitry is at least partly designed to muddy the waters in relation to the Big Idea originally hatched by France’s Sorbonniers.

For those late into the game, the plan is ingenious – but very bad for EU taxpayers. Basically, if the banks agree to strict new eurobanking rules, higher minimal capital defences, (and importantly, call off the markets) the eurozone authorities will forgive ClubMed debt, and pay the banks back in lieu.

Now this ‘payback’ monetisation cannot be anywhere near fully achieved via the EFSF as it stands. Despite the grandiose claims being made at the Summit this morning, nobody wants to invest in it via the Spiv – not even the G20. The leveraging of the EFSF remains a fantasy. Equally, it cannot involve the ECB’s resources, because such would be way beyond its legal remit. Also it cannot come from the IMF, because the Fund’s articles do not allow it to ‘forgive’ debt. It can write off debt as 100% gone – but it has never had to do this in over 65 years.

This leaves only three sources: taxes on EU citizens, such monies as do wind up in the EFSF, and printing money.

All are possible, although the last is highly unlikely. Further, none of it is at all palatable to Angela Merkel. But further plans are developing (via Brussels, Paris and Wolfgang Schauble) to save her face by obfuscation of what’s really happening….what I referred to earlier as muddying the waters.

I understand that the following proposal has been prepared for private consideration today, and possible public airing tomorrow:

1. As further tax income-funded bailouts are politically unacceptable, the IMF will pile in with $500bn of ClubMed ‘bailout’ – widely rumoured in the mainstream press yesterday as earmarked for Italy, although whether it really is or not remains uncertain. The IMF’s funds (and all boosts) are taxpayer funded, but this will be rapidly skipped over….and probably ignored by the ignorant.

2. A ‘leveraged’ EFSF will then be used to back up the ‘Big Deal’ between the lenders and the eurozone. There is roughly $500bn in it at the moment: another, say, $350bn would be raised via a series of stealth taxes across the EU as a whole.

Although $850bn wouldn’t be enough to allow the banks a zero haircut, it would be if the following happened:

(a) Greece, Portugal and Ireland’s debts were reduced rather than completely forgiven; and

(b) The IMF’s $500bn input was positioned as being all for Italy, but then got partially siphoned off to buy up the remaining eurobank bad debt.

This is a further development of the ‘Big Idea’ reported by The Slog yesterday, but in principle it remains the same: partial forgiveness of sovereign debt, partial stinging of the citizen (again) and total forgiveness of banking recklessness (as always).

There are – as most technicians will recognise – some highly illegal, devious, and downright misleading elements in this package. But it wouldn’t be the first time that desperate EU, banking and national authorities had done such a thing in the last fifteen months. Perhaps it will be impossible for Schauble and friends to push it through. Perhaps the Bankfurt mole’s view will prevail.

As Bloomberg reports this afternoon GMT, Simon Derrick, head of currency research at Bank of New York Mellon in London, saw an ending in which Berlin voluntarily quits the euro in order to protect the credibility of its own sovereign debt. A revived German mark would rapidly increase in value, but in a note to Mellon clients, Derrick argued that German manufacturers had coped with a strong currency in the past. Berlin might find it more cost-effective to rescue its domestic lenders than to bail out the rest of the euro zone, he said. The Slog’s Frankfurt Maulwurf would agree 100%…..as would most German voters.

 

OSBORNE AUTUMN STATEMENT: Deficit outlook six times worse than it was last March

In his March budget, the chancellor projected a current structural surplus of £6bn for 2014-15. But he now concedes that the position will be £30bn worse in that year.

The Office of Budget Responsibility’s (OBR) revised outlook will move the official forecasts into line with those of others, such as the Organisation for Economic Co-operation and Development (OECD), which yesterday declared the UK economy already to be in recession. It also predicted Britain’s underlying government borrowing was set to be worse in 2013 than in the ClubMeds – Italy, Spain, Portugal, and Greece.

The Chancellor insisted he would still hit his deficit rules, but to do this he will be extending the public spending cuts well beyond the current end-date of 2014-15. If Gideon keeps on hitting his deficit rules at the current rate, the UK will be suffering austerity until around 2030.

Crucially, Osborne’s Budget statement will make a massive switch to capital spending only. Downing Street refused to comment tonight on what effect that enormous decision would have on Government services.

Today’s UK airwaves will be full of hot air and bollocks about what George Osborne’s words  mean. But the reality will remain the same whatever words are spoken: Britain is falling behind in its debt management at an alarming rate.

None of this will come as a surprise to realists. The factors in play have always been these: Labour overspent after 2002, the bank bailouts cost us dearly because of our economic bias, the cutting began five years too late, we haven’t done anything to substantively restructure the economy, and vested interests (from trade unions to senior Whitehall mandarins) have done everything in their power to undermine the austerity programme.

Still to come are the economic effects of our main trading partner’s implosion, and banking collapses in the light of EU sovereign insolvency. And to top it all, I’ve got a stinking cold.

At the End of the Day

The worst ideas in history were CNN and investment banking

Life is all about ups and downs, but having them every few minutes can be tiring after a while. ‘US stocks rise on EU solution hopes’ headlined Reuters this afternoon GMT, but one click away was the Bloomberg site telling us ‘Bank warnings of EU unraveling intensify’. It must be hell living with a stocks trader. He goes into the kitchen and the headline is ‘Drink futures up on fridge sighting’. He opens the fridge door, and there’s a new headline: ‘Bears in play on negative can sighting’.

Investment banking ideas are mad, but 24/7 news makes them mad, bad and dangerous to read.

Would so much have gone wrong in the last four years if we didn’t have 24/7 news, and tickertape hadn’t been replaced by pc screens telling us the price of shrimps in Manila? Indeed, how much ‘news’ is actually just following events around – while completely failing to understand WTF is going on?

An example at the minute is Gary Speed’s tragic death. I say tragic, because he was a nice, talented and genuine man whose mind was troubled – but nobody noticed. That latter sentence is, on the big canvas, more central than his death – although of course, not for his family. Equally fulfilling would be a piece about why Gary felt he couldn’t discuss his depression with anyone. For the conspiracy theorists, an investigative piece about why such a jolly bloke couldn’t have killed himself might also illuminate things still more.

Talk to hacks about this these days, and they will often wax lyrical about the speed of events and the stark truth that sensational breaking events generate more hits than analyses. I would have two answers to that argument: it is far from true; and the existence of round-the-clock news is what helps generate the speed in the first place.

Speed as a market dictate not only reduces analysis, it also puts pressure on key decision-makers in public life. Speed in the context of media obsession becomes haste. My own view for years has been that most decisions taken in haste are bad ones. If you look at the eurocrisis for much of this year, while the general picture seems to be one of snail’s pace progress and empty spin, a great deal of the process has consisted of pointless attempts to keep the media quiet….from fear that they in turn will wind up the markets. Never in the field of human bollocks did so much haste cause so much anxiety to so many – to so little effect on on so few problems.

And there are – oh yes there are – far fewer problems than we imagine. The difficulties come when people suggest these problems are (a) many and (b) intractable. But they aren’t really. I can now exclusively reveal that that there are but three problems in the world:

1. Bankers

2. Politicians in the pockets of bankers

3. 24/7 news

That’s it. Take out 1 & 3, and life suddenly becomes so much simpler. Because with far less wealth and the minimum of news, all we’re left with is a few fabulously rich politicians with a guilty sense of social responsibility – and the sense that they might have the best part of a century to sort society’s problems out.

From 1215 to 1965 in Britain – a period of 750 years, aka 37 generations – this produced a stable culture which (despite the minute size of our island) had a ridiculously massive effect on planetary affairs, and produced a stability here at home that we would die to have today. For 95% of that period, bankers were boring people called Mainwaring, and breaking news concerned the relief of Mullah strongholds several weeks earlier.

So we need only abolish television, satellites, computers and digital technology in order to reduce our problems as a species to just one: politicians.

That’s not too difficult to achieve, is it?

(Trolls please note: this bulletin contains flash irony)

CRASH 2: More evidence of a bonkers system eating itself

Cyborgs never question

Here’s a corker for you all to think about: lenders buy bonds, but banks – many of whom are lenders – also sell them on. “Well of course they do,” I hear you cry, “We all knew that”. Fine, but there’s a conflict of interest there, is there not….as Goldman Sachs highlights in almost everything it does. Worse still, however, it pokes something of a hole in the business model when things turn as nasty as they are at the moment.

European banks have sold $413bn worth of bonds this year, equivalent to just two-thirds of the $654bn that is due to be returned to investors in 2011 as the debts mature. Simple maths show that this leaves the banks with a $241bn funding gap in 2011, because nobody wants EU junk any more. So because the banks lent silly money to the issuers of the bonds, not only do they find themselves owed a lot of money….they also find there’s less coming in. Igle oggle ungle bingle umble dangle.

I think this goes some way to explaining why the markets are desperately putting pressure on Berlin to stop playing dominatrix games, and start showing them where the repayments are coming from. Debt repayment quite clearly isn’t going to come from economic growth: reduced banking income exacerbates a lending squeeze – which would drive the eurozone deeper into recession. So as The Slog reported yesterday, the Sprouts, Krauts and Frogs are coming round to the view that zero-haircuts for lenders are what’s required.

But you can see, I hope, how everything at the moment seems to turn back in on itself and, somehow, make everything even worse than it was before. Were I still in business and discovered such a syndrome in my systems, you know what? I think I’d almost certainly decide that there was a fundamental – unfixable even – flaw in the system. But don’t hold your breath waiting for anyone out there to reach the same conclusion.

We might at least expect warning signs on the radar to attract some serious systemic attention, but this doesn’t seem to be happening either. Interbank lending has dried up due to mistrust between the sharks. America’s money markets are no longer willing to lend to over-leveraged Euroland banks: $7 out of $10 previously extended from the US to French banks have disappeared over the last five months. The amount of money parked by frightened eurobankers is creating a cash mountain at the ECB. (No wonder Draghi doesn’t want to let the French anywhere near it)**.

I see very little difference between the zealots unable to grasp that the euro was a mistake, and the fundamentalists unable to see that Friedman was an idiot. But what’s most disturbing at the moment is capitalism’s inability to see that this globalist, bourse-driven, neo-con form of credit-fuelled capitalism is a crock. A crock which, I fear, gives permission to the loonies to pitch camp inside and outside every capitalist icon.

**Having re-read that observation, I think there would nevertheless be a delicious irony in Mario Draghi simply embezzling the bankers’ money and spraying it down on any genuine enterpreneur he could find.

STRAUSS-KAHN:’NOT A SEX-STING, BUT A BLACK OPS PHONE-HACK’.

J’accuse!

Over the last three days, there has been more than enough reportage of events in and around Dominique Strauss-Kahn’s malign treatment in New York, and the minute dissection of what happened from one minute to the next – from a sexual encounter with Nafissatou Diallo, all the way through to his return to France with rape charges against him dropped. In this piece, The Slog focuses on what may have been ‘mistaken identity’ in relation to the entire operation against DSK.

Does Dominique Strauss-Kahn know exactly when he lost his Blackberry on the fateful day of his encounter with Nafissatou Diallo? We know that he first missed it after lunch with his daughter. And we know that the daughter – almost literally – ransacked the restaurant trying to find it. But to this date, it is still missing.

Over the last two days, I’ve been putting together views and testimony from those involved across three continents. Towards the end of the US part of the saga, I confess that I was coming round to the view that while there were some lessons for US justice to learn – and the Sofitel maid herself (plus her brother) were talking things up well beyond the truth) – a lot of the events seemed too random for there to have been an organised sex-sting against the IMF boss.

The assumption all along was of a sex set-up. But the new evidence (a lot of which, by the way, is hearsay and supposition) points more towards a hacking operation about which DSK had been tipped off. The fact that he was in New York when he found out (having already become suspicious) is probably irrelevant: what does however seem very likely is that the phone was being hacked by French security and/or the UMP.

Nafissatou Diallo continues to press her civil case against Strauss-Kahn today, much to his irritation. I cannot believe that a woman employed as a temptress – when the hour of need for her ‘employers’ to embarrass DSK had long since passed – would continue to press charges. She may well still be motivated by money – but if American intelligence was running her, she’d have been paid off long ago….or disappeared. And anyway, I doubt the CIA would employ such a loose cannon.

I think that the maid may well have blundered into (or been co-opted into) an attempt to steal DSK’s phone.

If you’re a political spook and you intercept a call suggesting you’ve been rumbled (and the phone is going away for analysis) then the first priority becomes getting hold of the phone and destroying it.

Telephone records at the time confirm what DSK said: that he had phoned his wife Anne-Sinclair in Paris earlier that day, and asked her to have analysts lined up to check his phone. A diplomat had allegedly told him that calls to Ms Sinclair had been seen in Elysees Palace intelligence records. Further, we already know that (a) the Elysees Palace knew within ten minutes of the IMF boss’s arrest that he was in custody; and (b) several calls were exchanged between the Sofitel and its owners in France on the subject of DSK’s discomfiture.

Sofitel is owned by a French group with some political connections, but nothing you’d call conclusive. However, phone (and now video) evidence has suggested that the staff were somehow involved in keeping the Elysees at the very least informed. It remains possible that Nafissatou Diallo spent a suspicious amount of time hanging around the area close to his suite as part of an amateur surveillance role. What has always struck me as odd, however, is a maid coming to clean a room on the last day of a guest’s stay….when he’s about to leave anyway. The same is true of another player who has now appeared from nowhere: Syed Haque, a hotel waiter, entered DSK’s room just two minutes before Diallo did. A bright spotlight of suspicion now falls on this man, who has – for no apparent reason – run scared from being interviewed by lawyers acting for Strauss-Kahn.

There is a real possibility that Diallo’s role was to distract DSK while Haque (ironic name) pilfered the evidence of a plot against the Frenchman: his Blackberry.

Is there anything else that might support this speculation in particular, and a botched French operation in general?

Well, equally intriguing is the story of two of Haque’s hotel bosses allegedly on video “high-fiving each other and doing what looks like an extraordinary dance of celebration lasting some three minutes”. I’ve yet to establish the tape’s existence or the identity of the ‘bosses’, but two senior managers celebrating a guest’s demise while being in constant touch with French politicians/spooks would look very odd indeed….if proven.

“It looks to us like Syed Haque holds some of the answers to this,” a DSK supporter told me on Saturday, adding, “Dominique didn’t use the IMF Blackberry at all between ringing Anne first thing,  and leaving the restaurant where he had lunch with his daughter. The device was obviously stolen.”

I’d love to pen the headline ‘Slog solves DSK riddle’, but I’m nowhere near that at the moment. I have revisited the original New York financial district contact (who had doubts from Day One about the arrest) and that person finds the theft motive compelling…but remains convinced that the US was involved in some form.

“I think if the French were into phone-hacking for purely domestic political reasons, then I think that makes sense,” the informant told me, “but some big hitters in the US cottoned on pretty fast to the existence of something or other. And Vance kept on delaying things while he looked into what was going on”.

New York DA Cyrus T. Vance did, it’s true, delay DSK’s return to France for no reason as yet apparent. But another NYC source in turn sticks to his belief that the NYPD ,Vance and the FBI were looking for some kind of sting against DSK throughout that period:

“At first they [the DA's office] were full of it,” says the informant, “but then it all started to go wrong. Next thing we know, you can’t get anything out of these guys. There’s a lot of burrowing, and the Feds are everywhere. Then the whole thing is dropped. It was obvious something they didn’t want to talk about had come to light”.

You may have noticed thus far the regular use of the word ‘obvious’ in all this. But then, some things look obvious and turn out to be something completely different – as this case seems to have revealed over the last four days. By this time, Geithner was involved – whether directly or in the background is hard to say – but he was quick to insist that the waters should close over the IMF Chief. Most observers find it odd that the Federal Reserve Secretary intervened in this manner. As my long-time (and much trusted) Washington mole concludes:

“I think it’s highly likely that there was a desire by us and the French to get Strauss-Kahn out of the IMF game and French politics respectively. I never thought Diallo made any sense as an agent, but the Blackberry theft rings true for me. The French tapped his phone, screwed up, then got lucky. So we got lucky too – and made the most of it”.

This seems a reasonable summation as far as it goes: but as I posted exclusively earlier this year, there is evidence that both Nicolas Sarkozy and the US had Christine Lagarde lined up for the IMF job (and gave her all the help they could to get it) long before DSK’s arrest and subsequent disgrace. This doesn’t prove they were involved in the events at the Sofitel, but the intent is there.

Meanwhile, in Paris this morning the allegations get wilder still from the DSK camp. My informant is, to be honest, on the outer fringes of the Strauss-Kahn supporters club, but he remains firm about black ops against his hero:

“You will have noticed that [DSK] has started a civil suit against the prostitute ring story. He still maintains that most of it was made up and planted by the Elysees. There are also trails leading back to Berlin. There’s a lot more to come out yet.”

We shall see.

Follow the whole saga at The Slog’s designated Page

 

At the End of the Day

The strange case of the anti-social Coconut

When very small puppies sit down, being still at that age when they look to the owner ‘s face for reassurance, they have to  stare  almost straight up when one stands. I was in the garden with our new addition Coco yesterday, saying “Dooweez” (the way you do) and she looked up at me with that familiar gape of incomprehension. Then, trying to focus, she fell over backwards. Oh how we laughed.

Brand new creatures don’t worry about dignity very much. She gave a shake, sniffed at a twig, and then returned to her previous occupation of chasing the crisp Autumn leaves, being startled by everything, and running around a great deal.

I have never known a puppy run everywhere in quite the way Coco does. Her full name is Coconut, and she’s certainly living up to the suffix. It exhausts me just watching her; and indeed, it does her too. At this age puppies are like clockwork toys – when the spring is fully unwound, they fall over. Then they sleep. Then they wee, poo, and eat some more eukanuba. Getting them to excrete the bodily wastes in the right places is, of course, the main challenge. Our house is now one long series of newspaper lavatories, most of which the puppy ignores in favour of Persian carpets and polished wood. I am become the human pooper-scooper.

There are half-chewed toys on the floor everywhere. They used to squeak, but dogs have a zero tolerance policy when it comes to squeaky toys. All our shoes, spectacles and headphones are on high surfaces. For like all terriers, Coco is a great believer in dental hygiene, and the method of choice for maintaining that is chewing everything that doesn’t object to being chewed. Then shaking it about until the predator is entirely sure it’s extinct. This process often takes several months, as slippers can take forever to die.

Manic chewing includes one’s fingers, and also other dogs’ legs. The technique when they bite your digits is to scream in a high-pitched voice. This terrifies the canine, deafens the neighbours, but teaches them that chewing people is wrong. Usually. Coco takes the response to be a sign of enjoyment. This isn’t going down well with me. But it’s going down like a cup of cold sick with our other two dogs.

Middle dog Tiggs is only three anyway, so having initially backed off when she saw the new baby – as if Coconut might be an alien hedgehog – she’s delighted to have something that likes being chased, and demonstrates this by going “Yup” with enjoyment whenever it happens. As Tiggs has a habit of going “Erp”, when they’re doing that maypole thing just as the fun is about to start, it’s hilarious to listen to the erp-yup-erp as things get going.

The problem with Coco is that she has no sense of when enough is enough. Working on the encouraging principle that Tiggs hasn’t as yet eaten her, the latest gambit is biting the end of the older dog’s tail, and then being dragged along on a short sledging trip. Tiggy now has her back to the wall at all times of puppy wakefulness. But the new girl is on thinner ice with Foxie.

Foxie greeted the new arrival with a menacing snarl, and a disdainful retreat upstairs. She is the undisputed Alpha, and a firm believer in the do-it-to-them-before-they-do-it-to-you principle. She’s reduced the snarl down to a glare now, but is way past all the chasing pa-lava. As for having her legs eaten, that was never something she would tolerate anyway.

Now when the Alpha finally snaps, growls and goes in briefly for the face, 99% of puppies squeak in panic and sprint for the nearest sanctuary. We have lucked into the 1% that doesn’t. Instead, she does an amazing all-fours off the ground backwards jump, and goes “Yup” again. Then she goes back for some more. This is how Arab border wars start.

In short, Coco is fearless. There are up and down sides to this: on the one hand, her only danger with Foxie is being gummed to death, as most of her teeth fell out years ago. On the other, who knows what troubles might lie ahead once the new pack member reaches truculent adolescence?

The good news is that they’re all three sleeping together quite happily now. I find this an enormous relief, as giving new puppies their space at night means our bed becomes a terrier treat for three weeks. I retreat to the middle bedroom in search of tranquility. Lack of bloke and presence of dogs on the bed is as close to nirvana as Jan could get. A horse in there too would add the perfect touch for my wife, but even she recognises that this would be a tad extreme.

Like all goody-two-shoes owners, we are still waiting for the pup’s injections to mature before taking her out to meet other dogs. At that time, we shall have the joy of watching her fail to understand that the lead isn’t something to climb up, enormous bull mastiffs are not vegetarians, and squirrels cannot be caught. Then it’ll be down the vet for socialisation classes. My two key conclusions from undergoing this ordeal are that first, it’s the owners who mainly need socialising; and second, there’s a great deal of urine involved – which is why the vets put an enormous plastic sheet down, and then retreat immediately. Once things get lively, it isn’t really what you’d call a class. It looks to me more like a canine reconstruction of the Battle of Little Bighorn. I’m always relieved when it ends.

As I write, Coco is going twelve rounds with one of Jan’s Crocs. More news in due course.

EU CRISIS BOMBSHELL: HOW THE EUROZONE PLANS TO SELL US OUT TO THE BANKS

Yes Wolfie, we can smell it too.

Ever so quietly, with the acquiescence of Berlin, Brussels is planning to let the bankers off.

Scared by market attacks on northern Europe, and still lacking any bazooka money, the EU’s key players are secretly putting together a plan to ensure the electors pick up the debt-crisis tab. The plan – which first emanated from Paris – is being scoped out and sold to the major member States by Wolfgang Schauble. It will be discussed at the ESM summit this week.

When I was first given this lead last Friday, my initial reaction was that it was unlikely to be true – because none of the majors had picked it up. But I’ve been fooled that way before. If you hunt hard enough, both Reuters and Bloomberg have reported it: but I don’t see any sign that they’ve grasped its full significance.

The spin technique has been to smother it with what appears to be this morning’s ‘big’ story – that Merkel and Sarkozy have agreed to set up an ‘instant austerity pact’ between all eurozone members….including themselves. Bild Am Sonntag pre-released it onto the wires last night, billing the idea as, basically, bringing the ESM bailout mechanism forward from 2013 and applying it de facto right away. In fact it’s nothing of the sort: it’s just another “look we’re applying discipline” stunt. More disturbing than the ham-fisted cynicism of this is that yet again here, we have a clear sign here of how Merkel is completely misreading what the markets are trying to get through her dull Osti head: they want action now on guarantees, not more signs of the dominatrix wielding her leather whip. But others are addressing this with a cunning approach to getting the markets off their backs.

Basically, the nugget that has gone largely undiscovered is this: although a number of sources know and have reported about tighter lending discipline being forced upon all the banks operating in the euro area, Brussels is secretly dangling a quid pro quo in front of investment bankers – who should be scoring loans properly as part of their commercial duty anyway.

Staggeringly, the deal is this: agree to these new banking rules in full, and we’ll let you off taking any haircut when it comes to ClubMed debt.

I understand the ClubMeds are all for it. Imagine that. The northern Europeans are less keen, because they see this for what it is: looney lender forgiveness as well as sovereign debt forgiveness. The exception (and why are we not surprised?) is German Finance Minister Woflgang Schauble.

The way this would span out, the fat guys in the tall buildings – who have not suffered at all in the past – will not suffer anything at all in the future either. Those who have wound up sleeping on the streets because of their foolhardy agreement to the cheap loans pushed their way will be let off….courtesy of the EU taxpayer. In a phrase, the banks would be off the hook. As always in Wonderland, however, there is the small matter of who picks up the tab.

I suppose one always imagined it would end up like this…but somehow I’d hoped that this time, the banks might get theirs. That now looks more doubtful than it did a week ago. Also unsurprising is that I am reliably informed the idea came from….France. Having knocked at the doors of the EFSF, the ECB and the IMF, Sarko is now knocking on our doors. If this thing flies, we the People will be bailing out the banks all over again.

I suspect that quite a few folks have missed the significance of the leaks and briefings because they are couched in the usual obfuscation about ‘private sector involvement in the region’s permanent bailout fund’, ‘preconditions for deeper integration among euro zone states’, ‘changing the statutes of the European Stability Mechanism’, ‘restructuring debts that undermine market confidence in the currency zone’ and other related bollocks. But the bottom line, I am assured, is exactly as I’ve described it.

Now of course, this is far from being a done deal – and if we get this news around the blogosphere (especially on the European mainland) as quickly as possible, it might turn into a self-denying prophecy. The disturbing element is how attractive it is going to look to all those about to be pardoned for their arrogant idiocies – even Berlin. It is, let’s face it, a piece of lateral thinking: we can stop the lenders looking for a last-stop Sugar Daddy by letting them off the haircuts, and using the bailout mechanisms to pay the money back. And then we can quietly sneak through a 100 million small tax changes and personal allowance mechanisms, while upping everything from parking charges to healthcare contributions.

It is much easier to convince the distracted citizenry that they’re not really going to pay for this mess than it is to fool a bunch of hard-bitten lenders – whose allies in the markets can hound you unto death’s door if they don’t get what they want.

And bear in mind anyway, to remove the ESM Statutes about lender involvement in debt reduction would require only a majority vote of the eurozone countries.

“There are a few pointers here and there suggesting some movement in Berlin on the question of banks taking their full share of responsibility,” a trusted Parisian source told me yesterday afternoon. (As it happens, this source is on the outer fringes of DSK’s circle. Given that he thinks Sarkozy is an arse and Merkel is mad, I think we can rely to some extent on the provenance of the information: this is very bad news for all those French Socialists expecting the banks to get at least some comeuppance. More to the point, Sarko will without doubt use this scam – if it comes off – to present himself as the man who saved the French banking system.)

So then, surprise surprise – in the end, the europols take the easy way out. But it doesn’t end there.

Germany is also under pressure to soften its opposition to the European Central Bank (ECB) playing a more direct role in combating the debt crisis. It would be a simplification to say that the ECB capital and liquidity which isn’t junk bonds and parked bank cash belongs to us. Technically it doesn’t, because we paid for that through another million hidden taxes. But morally, central banks are there to ensure that the viability of citizen savings and currency valuation remains intact, and free from the machiavellian short-termism of the private financial sector.

So it will be our money that’s at risk. Still not convinced that we’re being sold out? Well, there is yet more: Reuters reported on Friday evening that ‘The European Commission will publish rules on state aid for lenders that may dilute the effect of turmoil in the euro area on the fees that banks have to pay for guarantees on their loans and bonds’. It’s another sweetener: call off your dogs guys and, one way or another, we’ll make it easy for you.

Officials in Berlin were yesterday calmly denying any involvement in a ‘Big Deal’ to solve the debt crisis. But as Bloomberg reported late last night GMT, ‘officials in other euro zone capitals, including Brussels, say such a deal is taking shape and suggest Berlin will move when it has the commitments it is seeking’. As I’ve now had the initial lead from Brussels, and a convincing confirmation from Paris, I have to believe that the talks are for real. In fact, I know the issue will be discussed at the Tuesday/Wednesday ESM meeting in Brussels this week. And I know that Schauble has been persuading reluctant Finns and the Dutch to buy into it.

The Dr Strangelove look-alike might yet have to persuade Chancellor Merkel to go along with this. But as always with unser geliebter Wolfie, yesterday he was using the cover of the Merkel-Sarkozy ‘pact’ to get some hints out there into the environment. This remark was, for me, something of a clincher:

“Basically, we agreed on the principle for the ESM already in July,” he said, “If we now manage to move toward a stability union, we’ll see how one might possibly adjust responsibilities within the agreement.”

——————————————–

You don’t really need me to sum up what all of the above means. And to be frank, even when the truth comes out, a lot of EU citizens will accept the solution. So brainwashed have we all been over the last decade into believing that damage to the banking system means the planet will explode, it won’t be hard to bamboozle, cajole and spin this ‘answer’ to the electorates concerned. It is, in all senses except those involving morality and ethics, a very clever idea indeed.

The ClubMed debtors have welcomed the scheme with open arms, and I don’t doubt their peoples will too. The obvious ethical flaw in the idea – that the banks win again – will appear esoteric to the Spanish estate agent whose credit line stays in place. But the ethical bombshell is nothing compared to what is once more being kicked down the road: how to get the real economies of Europe going again. The higher taxes and falling living standards that must follow the enactment of this grubby plan will turn a depression into a slump. I no longer have any real idea whether this bothers the banks, but I very much doubt it: their activities seem to take place more and more in a nether world far away from the rest of us – be that socially or economically.

Update/Corroboration: Some Sloggers seem to think I’m either making this up or making it too complex. Either way, there is an eminently clear version to be read here at Mish’s blog.

As you know, I rarely ask Sloggers to do my marcoms for me, but this is probably one of the most important posts I’ve ever done at The Slog. I would ask all who agree with the analysis – and fear this plan coming to pass – to broaden awareness of it as quickly as possible. As you know, the Guardian and the US are particular problems for me, as my comments are largely banned there. But any help anywhere with anyone to get this scam out there would be good. Thanks in advance.

Learn more about The Slog here

Related posts: The vulnerability of the banks.

The closed mind of the Europhile

Arab Spring: How Egypt’s military is keeping the revolution at bay….but storing up something worse down the line.

The first election, and already things are looking wobbly

Egyptian protesters demanding an end to army rule clashed with police firing tear gas in central Cairo on Saturday in a flare-up that cast another shadow over a parliamentary election billed as a free vote. But as November gets closer to December, the Arab Spring – in Egypt and elsewhere – is turning to ice as far as any concept of democracy is concerned. Military interference is creating tensions that might drag the country towards civil war.

While sensible heads in the West may be glad that, if nothing else, the Military is keeping the Muslim Brotherhood out of power, the Egyptian government’s legitimacy is becoming ever more doubtful and under attack. The announcement last Tuesday of a “National Salvation Government” may stem the violence for now, but the election is highly unlikely to lead to stability. This is because the rules cleverly designed by Egypt’s military leaders almost ensure that the Parliament elected will not reflect the views of the voters. Those who were at the forefront of the revolution have been kept from access to the secretive election-planning process. And unlike the example of the Tunisian election, access has been denied to UN election planners. The whole thing reeks of a stitch-up.

Unlike Tunisia, where a simple across-the-board proportional system to include many voices in the country’s legislative assembly was employed, the Egyptian military’s preferred system will marginalise new progressive, secular and liberal groups that lack grass-roots networks across the country.

But the military is playing upon a real fear: Egyptian liberals are sympathetic to the military’s attempt to dominate the constitution-writing process, being rightly fearful of Muslim Brotherhood dominance. Such is the nature of the ‘Arab Spring’ so naively expected by the West: fear of the lunatics getting the popular vote leads democrats to try and keep things dangerously elitist. In the long run, this will only aid the more extreme end of the Islamic spectrum: but self-styled ‘reasonable’ Egyptians argue that there is little alternative.

Some voices in the West argue that the Islamists are secretly in cahoots with military disciplinarians, and that in fact they have more in common with each other than with liberal democrats. But a Slogger close to events inside Egypt poo-poohs this idea.

“The old regime apparatus is fully intact and running the country without any deals," he writes, "Habib al Adli - Mubarak's brutal interior minister - is still running the police."