At the End of the Day

You will only understand the complexity of the public/private health provision dilemma once you’ve experienced both for yourself. Yelling Lefties and bellicose Righties will pontificate forever on the subject, but only the experience of being a patient (and carer of the patient) will give any citizen the complete and honest picture of the task facing whatever real reformers come after the robotic idiot Lansley.

The key dimensions are these:

1. Both services contain hospitals, and hospital doctors. The former are Kafkaesque prisons, and the latter suffer from mild to acute idiot savantism. 

2. Both services have woefully undertrained nursing staff, and organisational communications so hopeless as to be black holes into which vital information is sucked and then never seen again.

3. In the NHS, you will be patronised at primary care level, and forgotten once in hospital. In the private sector, you will be admitted to hospital with difficulty from primary care, treated like royalty while you are in hospital, and forgotten once you leave.

4. The NHS provides affordable health care which, with luck, won’t kill and might cure. The private sector offers affordable health care to the super-rich 3%, top corporates, and those who can afford private health cover on account of rarely if ever being ill. The flaws in both systems should be obvious to any pre-pubertal teenager, but represent a baffling enigma for all civil servants, politicians, and health provision managers.

5. Healthcare demand is infinite, but cannot be rationed. Nobody in public life has yet fessed up to this reality, let alone tried to deal with it.

6. The answer at five is to switch from trying to do everything (up to and including the secret of Eternal Life) over instead to a system designed – within strict limits – to improve quality of life during our allotted span.

7. Expenditure priorities as set by civil servants, hospital/practice managers and medical staff are job-creatingly complex, insane and Utopian respectively. Giving all three groups a say results in car parks with impenetrable payment machines, pay TV for every bed, and IVF on the National Health.

8. Government pussy-foots around poor diet, without baring its teeth at the sociopaths who sell double-size Mars Bars and megacheap 37.5% white spirits.

The answer is twofold:

a. Take the problem away from the Sir Humphreys and the Ed Milibands – and forever out of insurer/profit-driven hands – by mutualising health services on a regionally mutualised basis…complete with savings provision, like the old building societies.

b. Make food manufacturer levies part of the funding model.

That’s it. Thank you, goodnight, and enjoy the weekend.

EUROBLOWN: Stalemate spikes Draghi’s guns as Weidmann threatens to quit

Francois Hollande: Is there a point to this bloke?

Germany 1 Italy 1

(After far too much time. Penalties to be taken by Spain & Greece)

Apologies if this reads like a cross between news item and opinion-piece, but many if us here in Europe are beginning to wonder where this mutual exhibitionist onanism between Berlin, Frankfurt and Rome is going to end…and when something practical to help EU citizens might start happening.

We are now at Friday afternoon over here (early-bird Americans are just getting up) and so far there have been no big-gun interventions from Mario Draghi in terms of either serious bond-buying or – more urgently – Spanish banking and regional liquidity. There are two simple reasons for this: Jens Weidmann (the Bundesbank version of Jurgen Klinsmann) keeps threatening to fall on his sword, and Angela Merkel keeps alternately egging him on and holding him back. My apologies to Jurgen for placing him unwillingly in this parallel: he has more native intelligence in his highly-prized feet than all of these unaccountable poseurs put together.

To the understandable boredom of veteran Sloggers, let me just reiterate the eurozone’s central problem: The Franco-Italian-Spanish axis wants to take the largest shovel possible, and empty the ECB via the EFSF in order to save itself; the Germans want everyone who opposes austere nihilism to do as they’re told and starve with dignity; and Mario Draghi wants to stabilise the eurozone by reluctantly accepting that disguised debt forgiveness plus currency-printing is the only option left.

Some would call this an Eternal Triangle, but I increasingly see it as a Bermuda Triangle: into which good ideas are fired, only to disappear in a cacophony of fruitless debate between deadly moralists, dangerous pragmatists, and parachuted Goldmanists.

I spoke to market opinion-formers earlier this week. None of these guys have changed their view: Spain needs help yesterday, isn’t getting it today, and – if the politico-banking axis gets its way – next week is looking doubtful too. The markets are wavering somewhere between dashed ECB expectations, Bernankerology divining on QE3, and growing fear of the Chinese deceleration. ‘Anxious’ doesn’t begin to describe their assessment of this grand-scale abrogation of responsibility stretching from Berlin via Brussels and Paris to Madrid and Athens.

The questions that need to be addressed as of this moment are:

1. Francois Hollande has just spent time with Spain’s Rajoy: is M. Hollande going to do anything to resolve the triangular traffic-jam, or is he going to do on the European stage what he has so far achieved at home – nothing?

2. Mario Monti has vented his spleen with Merkel, and been told to calm down and see if that bailout will really be necessary after Spain’s banks and regions have been saved….always assuming Jens Weidmann doesn’t have an epi. As with Francois Hollande, is Monti just going to huff and puff, or is he going to restrain himself and, with Hollande, wake up to the fact that Draghi has far more genuine help to offer than the Merkeschäuble?

3. WTF is Berlin up to? I mean, how long does it take to make two choices: first, fall in and cooperate as an equal member of the eurozone to solve its problems; or second, accept that Germany isn’t going to get its own way – and bugger off?

Memo to the Chancellery: to keep trotting out lofty moral fables, insouciant vetoes, hypocritical spin, tabloid hysteria, and trips to Beijing isn’t going to produce a good result for anyone. As the saying goes, sh*t or get off the pot.

There is nothing the US Establishment and media would like better than to load all the blame for Congressional inaction onto its increasingly inert EU counterparts. But if nothing unblocks this zero-sum eurozone pinball game, then be it known that disaster will zoom across the Atlantic faster than Concorde in its heyday.

Here’s why: we are within a few working days of serious bank runs, and the domino effects of those runs going unchecked. This really is the Last Chance Saloon for Europe, the US, and the global economy. Blind German ambition, weak central bank action, and Washington’s puerile political games can smile benignly going into the weekend if they wish. I can guarantee, however, that next week is going to break the urbane calm of Jackson Hole bigtime unless somebody beyond Mario Draghi wakes up.

Bollocks: the triumph of the objectionable over the objective

In Greece, the US and South Africa, the gargoyles are running the Communion Service.

* The Greek government is scoping out a plan to tax citizens who turned in their license plates because they couldn’t afford to keep a car. The ‘logic’ here is that they are evading tax by not paying the licence any more, and technically yes, the conclusion is sound: more and more Greeks are also driving without insurance because they can’t afford that either. What we need here, however, is some sort of viability analysis probing the likelihood of somebody paying a tax designed to penalise them for not having any money to pay a tax. Tell you what – let’s stand McKinsey down and conclude ‘zero’.

* Dan Hannan is rapidly becoming a parody of himself. He’s at the GOP convention (who’s paying for this MEP to be there, we ask ourselves?) and a few hours ago tweeted thuswise: ‘So Mitt is a good businessman, compassionate employer, selfless friend, decent churchman. But was he ever a community organiser? Eh, eh?’

There is something about Dan that seems to suggest short trousers, but for the record, here, from July 27th last, is the Slog’s properly balanced choice-audit between Opeless Obama and Rapacious Romney. It sort of gives the lie to compassionate employer and decent churchman. It is called Butterfingers v Sticky Fingers and it represents the triumph of objective over the objectionable.

* ‘The 270 miners arrested over this month’s violent strikes in South Africa have been charged with the murder of their 34 colleagues who were shot dead by police’, reports the Daily Telegraph. The Zuma regime’s rationale for this surreal police decision is a piece of “common purpose” legislation much favoured by apartheid governments from Verwoerd to Botha. It “places responsibility for any fatal confrontation with armed police on whoever challenges them” confirmed Frank Lesenyego, spokesman for South Africa’s National Prosecuting Authority, without breaking into a maniacal giggle.

Earlier this week Police Commissioner Riah Phiyega confirmed that the 34 murdered miners died after police shot them down at the mine owned by Lonmin. But the executioners are innocent because agitators asking for a living wage made the murders inevitableburble booble bumble bingle argle oogle pop.

On March 3rd 2010, The Slog posted that ‘Jacob Zuma is a corrupt, womanising, controlling and ruthless ANC hardliner. To those of us old enough to have marched against first Smith in Rhodesia and then the Botha dynasty in South Africa, he is a walking betrayal of our support.’ Jacob has now begun the task of proving me more right than even I knew I was.

That last sentence is, I hope, in keeping with the surreality of today’s opening burst of bollocks.

At the End of the Day

It would be nice, now and again, to stop writing anything at all about the EU, or any of the liberties, sovereignties, truths, inevitabilities and proper reforms with which it tries so incessantly to interfere.

And there are days – like today – when the banalities are so eye-glasingly daft, and yet somehow contradictory, one longs to be covering the local fete again.

Take the speeches over the last 24 hours from first Mario Draghi and then Manuelo Barroso.

The ECB boss told his audience that the eurozone needs “Stability through change….people suggest we must either go back to the past, or we must move to a United States of Europe. My answer to the question is: to have a stable euro we do not need to choose between extremes.”

It was, to be fair, a speech setting out Draghi’s pragmatic (from his viewpoint) aim: to get to a fiscal union and worry about the political stuff later. It was just the ‘stability through change’ balm, followed by the ‘extreme of going back to the past’ scaremongering that had me yawning.

But then Big Manuelo Barrowboy got going.

“Why do we need a more united and integrated Europe? Because we have monetary union…Banking union requires a single European supervisor; further economic union requires joint European supervision of the Member States economic policies. It is therefore logical, but it is also right and just, that there is further political integration as well. This is needed to ensure democratic oversight of the process, and to reassure the citizens of Europe that this is not just a project by the political and economic elites.

The world has changed and we need to change too. Every Euro spent on debt is a Euro lost for smart investment. Deep structural reform must continue, and member states be committed to implementing the Commission’s reform recommendations.’

So to sum up then, Manuelo, the logic of monetary union dictates political integration (?) and this is the only way democracy can defeat the unelected elites (?) and we need investment not debt (?) and the best way to get deep and democratic reform is to do as you’re f**king well told and follow the unelected Commissions diktats to the letter (???)

None of this piffle makes sense or has a logical flow. And if I didn’t know already that Barroso has the same IQ as a bottle of Port, I might be tempted to believe that the prose and its argument were made deliberately dense in order to discourage close examination.

But like Draghi’s effort, it’s the dribbling, pointless oxymoronic syntax that somehow makes one want to go to sleep, and awake later to find it was all a bad dream.

“For we must change, because others have changed and so we must behave like they do and bring stability by changing, such that things become better than ever but much as they always were. We must pay attention to the instructions of the unelected elite to cement democracy into place at the bottom of something or other to ensure that having voted for something themselves, the citizens will get something else entirely and become politically free with their feet bound together to vote with their feet more easily and not come last in the sack race until this ever-changing world in which we’re living makes you give up and cry, live and let die.”

But then just as the morning seemed to be drifting out of boredom into lunchtime followed by an afternoon nap, along comes a call from somebody I know to be sane, suggesting something that sounds madly unlikely….and yet horribly logical.

This increasingly bizarre combo of the bland and the bonkers sends shivers down my spine sometimes. The sheer complexity of the mix – and the bewildering array of possibility – in turn makes my head hurt.

But at other times, the fascination of real detective work restores the spirits. It does so because a nugget nobody else has found will always give a hack a charge: and much of the time it is clear (once you’ve looked into some gargoyle’s murky past more than once) who the good guys and the bad guys are.

So it was that, while waiting for somebody to give me a second opinion on the allegations from Athens this afternoon, I stumbled upon something about a very bad guy, and felt instantly rejuvenated.

Complex geopolitics, disinformation, cyber wars, professional trolls, eroded ethical standards and 24/7 news act together in 2012 to make everything a subject for doubt…up to and including empirical truth. But every now and then, something in print, on the record and admitted by the perpetrator pops out of the dusty files. And it connects with another fact that completes the circuit that explodes the dynamite.

It’s why, for my money, easy access to the raw internet data cloud can potentially make lies ultimately near-impossible to get away with. And although it remains possible for morally dead organisations like Bell Pottinger to alter the truth for their clients before anyone notices, as long as there are politically independent sources like the NAO, the Directors’ Register and the ONS, bollocks can be detected and deconstructed.

So I for one shall sleep well tonight.

GREECE EXCLUSIVE: Sabotaging the other Troika in Greece’s future?

Athens sources accuse ‘Coalition partners’ of plot to sabotage alliance with Israel and Cyprus

Venizelos….Fifth Columnist?

Sources close to a senior Opposition Greek politician today accused elements within Pasok of plotting to undermine the progress of the energy and exploitation deal between Athens, Tel Aviv and Nicosia.

Extract from a recent Slogpost:

‘Everything is connected. Greece is connected to Cyprus, which is connected to Turkey – and massively connected to EU debt and the Aegean, which is connected to energy and rare earths, which is connected to Israel, which is unpleasantly connected to Syria and Iran, which are connected to the American desire for Sunnis to triumph, which is connected to the fact that Saudi Arabia is overwhelmingly Sunni.’

From the Greek mainstream newspaper Katherimini today:-

‘The governments of Greece, Cyprus and Israel will begin discussions in September about the exporting of natural gas quantities to western
European countries, Cypriot Commerce and Industry Minister Neoklis Sylikiotis announced on Thursday in Nicosia.

The Cypriot official told state RIK television that he has received a positive response to his invitation to his Greek and Israeli
counterparts for a meeting next month. Sylikiotis also said the meeting will also discuss the formation of a working group to examine the creation of common infrastructures for the electricity interconnection of the three countries of the eastern
Mediterranean. Nicosia is already expecting revenues of some 300 million euros next year from the signing of contracts with the consortiums to be chosen for the new surveys for hydrocarbons in the Exclusive Economic Zone of Cyprus.’

The other Troika – the Eastern Mediterranean Energy Exploitation Troika (EMEET) is not a daft conspiracy theory, it is a fact. It is the ace is Antonis Samaras’s hand.

So this afternoon, The Slog is asking this question: why does a tendency within Pasok stand accused by senior elements within Tsyriza of plotting to undermine EMEET?

I have an open mind on why the mischief is being made and who is making it. This is the Tsyriza-connected source’s version:

“If the deal with Israel and Cyprus goes through, the EU will be weakened in its bargaining position. If it doesn’t, Antonis Samaras has no bargaining position. A Samaras failure would damage his political position in Greece massively. Those with their noses in the Belgian and German graft trough have everything to gain from retaining a close EU relationship, everything to lose from the development of this [Cyprus/Israel/Greece] thing, and much to gain from Samaras’s failure.”

The source accused Evangelos Venizelos directly. That’s a national sport now in Greece – but on the other hand, Venizelos is and has been implicated in corruption scandals over the last decade or more in Greece. As a younger MP, he personally drafted the law to make Ministers immune from graft prosecutions.

After starting this piece, another more centrist-right source in Athens – when confronted with the story – added this:

“I’ve heard similar rumours, but have nothing in the way of serious validation….I am convinced that Pasok’s top people had ulterior motives for trying to undermine the Samaras position [on further austerity cuts] though. Venizelos in particular is a two-faced sh*t. He’s made worse cuts than that in the past, but suddenly he has a conscience. Yes, I do think he’s trying to make life hard for Samaras, and yes, everyone knows he is playing on both sides between Brussels and Athens. So it is a credible story, yes.”

If any of the usual or new Slog sources in Greece know more or wish to comment discreetly the email remains jawslog@gmail.com

Why the Troikan Horse will do for the Portuguese what it did for the Greeks

This Portugal is not resting, it is an ex-Portugal. It is no more.

As the Troikanauts levitated themselves magically down onto Portugal yesterday, they knew what they’d land on: an extremely straightforward situation we economists call A Dead Horse. That is, the government has done everything asked of it, except grow the economy. Being by now almost completely mad, the Troika will therefore report back that the national horse has dieted most diligently, and thus little Alonso has been a very good owner. Unfortunately, little Alonso’s horse is still dead – and thus far, flogging it hasn’t produced any more signs of life than the Vegan diet did.

If there is no money with which to consume, and no credit available to folks with no money, the contemporary ‘model’ of capitalism simply cannot function. It will either produce a horse galloping forth on steroids, or a dead horse. Often it supplies both. This is Portugal’s tragedy.

Originally, the word model was taken to mean ‘perfect example’ – as in, the best available. In economic terms now, thanks to yet more consultancy bollocks, it means ‘a chosen set of modus operandi’. Its much wider usage until feminism reared up from the bath water was ‘female airhead in Vogue etc’. Belief in the currently favoured model of capitalism is very much on the same intellectual level as your avaerage stick-insect on that Tatler front cover.

“Close up now for the camera Neocon ducky, yes, yes, pout, pout…lunge, sideways on, give me wealth give me wealth yes, better, better, swivel darling swivel, trickle down a little, trickle for me….excellent….lips again sweetie, you want it, you want that money, think big screen telly sweetie, think very big screen…that’s it yes, that’s it…loosen the top buttons dear, deregulate….a little more, next button, deregulate…oh yes, great – great, now look down your nose at me darling, sneer, sneer..ooh you’re a bitch baby, bitch, give me ethics are for wimps…brilliant, yes…but you’re weighed down by taxes sweetie, weighed down, go baby go…kick off those shoes…be abandoned honey…terrific shot, terrific…wanton, gimme wanton, gimme retail thereapy, I want maxed out on the plastic darling, sad, you can do sad, no more plastic…on your knees now, closing in ducky, yes, I’m in your face for that mortgage payment…gimme fear oh fantastic these are going to be great, do homeless, homeless, on the floor, on the floor, writhe baby writhe. Excellent. OK Neocon, another great session, thanks. You’re the one darling, you really are. Fag lovey?”

It may seem an odd comparison, but Portugal is like the US, minus only the Bernanke. Both countries have the same problem: massive tax evasion, massive bureaucracy, massive political corruption, massive national debt, declining export markets following the rise of Asia, rapidly growing inequities of wealth, and a People being taxed to pay for the mistakes of the politico-financial elites.

Above all, both countries are failing to get a recovery going – because the rich with pots of money lack the spending power on their own to do that, and because the poor have lower job prospects and higher taxes. Bernanke’s solution has been to instigate two sets of quantitative easing – as its name suggests, designed to solve the liquidity constipation in an over-leveraged banking system. Because neither of them worked, he’s now considering a third go.

The Portuguese have received a totally different kind of assistance: moral outrage followed by austerity and anally strict monetarism. This has been tried so far in three countries. Because it hasn’t worked anywhere, Berlin-am-Brussels is insisting that it must continue.

I believe that this theory of triumph over adversity is often referred to as ‘one last heave’. Well, when I think of the stupidity and inhumanity involved, it certainly does make me want to vomit.

Last May – desperate to find another way to be austere – the Portuguese government suspended four of its fourteen public holidays for five years. As it happens, I’d abolish all bank holidays and simply give workers 75% back in extra holiday to choose for themselves (it would, studies have shown, increase productivity) but even I struggle for a parallel with four cancelled feast days in the context of Potuguese economic flatlining. Sewing a hole in the Lusitania’s last d eckchair as a response to being torpedoed? Not bad – but not the full ticket.

The bottom line is that falling tax revenue caused by austerity means Portugal is likely to miss its budget deficit target of 4.5% this year. They could be given more time to achieve it, but we mustn’t do that because your average Bundestag Big-Gob says if we do, Wolfgang Schäuble’s head would explode, and we can’t have that.

‘Alternatively,’ writes the Washington Post this morning – with no apparent irony, “the inspectors might demand more austerity”.

OK Gods, they’re mad now: time to start with the destruction thing.

 

 

GREEK DEBT BREAKING….Samaras unable to sell further austerity to Coalition partners

Greek PM returns home to political vortex

The Slog understands that today (Wed 29th) Greek PM Antonis Samaras returned to meet with his Coalition partners – PASOK Socialist leader Evangelos Venizelos and Democratic Left leader Fotis Kouvelis – but was unable to get their agreement (or anything near it) to the full €13 billion in cuts for 2013-2014 that the Troika insists must be forthcoming before further bailout aid is handed over.

A point of order here: the ‘aid’ will be placed into an escrow account from which approved bondholder creditors can make withdrawals. Almost none of it will go to propping up the social role of the Greek State.

Greek Finance Minister Yiannis Stournaras admitted that only the “basic scenario” had been scoped out. He tried to fudge the fundamental problem as ”of minor significance”, but the reality is that more wage cuts in senior civil service categories such as the senior admin officers, the military, the judiciary, and orthodox priests are needed; and these are emphatically opposed by New Democracy’s junior Coalition partners.

As The Slog has posted before, the reasons for this refusal are obvious: Evangelos Venizelos, for example,  doubled income and property taxes (and taxed the poor for the first time) as Finance Minister in a previous New Democracy-PASOK government. He doesn’t care a fig for social justice: what both junior partners fear is disgruntled civil servants blowing the gaff on where some of their previous misdemeanours are buried.

As for the Troika, it wouldn’t lose a second’s sleep about how corrupt elites have swindled the ordinary Greek citizen: all it wants is the bulging tax pouch with which to slake the bondholders’ thirst.

Meanwhile, we have yet to hear even one mention of pursuing wealthy tax evaders who owe
the Greek government €63 billion…a bill growing at the rate of around €11 billion a year.

Related: The naked truth about Greek debt in context

DEBT CRISIS DISINFORMATION: Isn’t it about time we were all a bit more beastly to Berlin?

Lovers of liberty should beware of Greeks bearing too many burdens

Most days here at The Slog, I get 15-20 emails from Greece. About half are from regular sources, and the rest are from people who’ve heard about (or found) the Slog via its posts about the Greek debt crisis. They go right across the political spectrum, but they all describe pretty much the same social situation: evasion of tax and justice by the rich elites, abject poverty among many who are ill or old, and a growing hatred of the corrupt political set which has brought a sword of Damocles down on their country.

Yesterday’s beauts included the Greek National debt rising to 303 bn euros, up from 280 bn at the end of March (inevitable given the ‘bailout deal’); two Greek men arrested by police on Saturday after beating a 30-year-old migrant worker, jamming his head in the window of a car door and dragging him for around a kilometer (rise of the Far Right); and more cases involving MP’s hiring their entire families – while circa 500,000 unemployed Greeks exist on a monthly benefit of €420 which…..hasn’t been paid in quite some time (corrupt elites).

The ordinary people are not, of course, entirely innocent – nobody is in this world. Cash business and tax evasion are a way of life in the Hellenic Republic, but this reflects two longstanding cultural facets: an informal, generally tolerant attitude towards payment, and an unwillingness to hurry (or worry) too much about anything. These are the very things that have always made Greece such a popular holiday destination for young and old alike: a relaxed way of life, the laissez faire that works out fair, tavernas on the beach, and cosy B&Bs where you pay in cash. Ferries leave when they leave, bars close when they close, and if you stay at a table long enough, a complimentary Metaxa will arrive.

When it comes to tax in particular, however, there are some deeply-held beliefs, and most of them are based on solid experience. Basically, the Sun headline is that 50% of what you pay will be embezzled, 25% will be wasted on pointless exercises, and the rest will buy arms. Thus, most ordinary Greeks pay the very minimum possible, many actively evade – and about  1 in 7 pay nothing.

Now in southern Europe (and if we’re being honest here, large areas of France) the same manana, tax-evading culture exists…almost to the letter. “Don’t pay tax, it only encourages them,” is a common gallic observation. In Italy, the government bends the rules about everything, and then the Mafia takes its cut. In Spain, the vast majority of EU laws are ignored if they cost money to implement or obey.

To sum up, the mass culture is one of what you might call gentle, disinterested pragmatism. And as such, it is totally different to the Netherlands, Germany, Scandinavia and still even the UK. At the very top in each of the ClubMed nations, however, the bare-faced cheating and cynical corruption is hard to take in at times. In Greece itself, for instance, by far the biggest tax evaders are wealthy – and by far the biggest embezzlers are tax inspectors and politicians

At this point, I’m going to pose a very obviously rhetorical question: is there anyone out there who thinks all those self-righteous Nord-European countries didn’t know this was the state of affairs before they let the ClubMeds into the eurozone?

And then I’d like to follow that up with an assertion – but one about which the facts have been so comprehensively proven over the years, I’m not going to waste space going on yet again about your milk for my cars and my coal for your grain: does anyone reading this really believe that the allowance of ClubMed into the club was an honest process?

Finally, if I may I will pose another perhaps less straightforward, querulous suggestion: I wonder if size, critical mass, and above all hubris-powered greed allowed the Brussels loons to turn a blind eye to all this during the period 1996-2000.

All these are vital (and essentially moral) questions for any serious observer of the EU debt crisis to address; for the hypocrisy involved in the bullying of Greece is near infinite. France, for example, has never once met an EU fiscal target for debt to gdp ratio. Its rate of debt aggregation right now is faster than any ClubMed. But this stems directly from the Germans’ weakness in not insisting on central controls with teeth from Day One. A major British criticism of the single currency idea throughout the 1990s was this glaring flaw – one that will always haunt the euro’s creators.

♦♦♦♦♦♦♦♦♦♦♦♦♦♦

I feel a parallel coming on, and it goes like this. I am the very successful landlord Monsieur Escargottinhimmel, and I spot that consumer credit is relaxed to the point of madness. I have some empty properties renovated when the economy was going very strongly, but I now see that by linking up with a credit provider, I can let those properties to the poorer end of the market. I also know that I can get affordable bad-debt insurance. So even though I’m fully aware of the fact that Mr & Mrs O’Bese can’t afford the rent, I will let the property to them, rake in the money, and leave the problem for someone else to sort out.

After a few years, Escargottinhimmel hits on the ruse of fitting his tenants out with state-of-the-art security….again on credit. The tenants are delighted, not noticing when the landlord fits one burglar alarm box but charges them for two. They happily sign up, and continue with their retail therapy.

But some years on, Mr & Mrs O’Bese get maxed out on their credit cards…along with Ms Chicklit, Mr Goforit, and a million other believers in the Free Lunch myth. The bad debt insurer gets on the phone to the landlord and says, “Guess what? I’m going bust from all these claims. I’ll have to quadruple your premium, or cancel your cover”.

At this point, Monsieur Escargottinhimmel rushes out into the street, gnashes his teeth and yells, “This is all the fault of lazy Mr & Mrs O’Bese and their spendthrift ways”, but the words are hardly out of his mouth before the local bank manager Lloyd Morgan (who happens to be passing, the way they do) says, “Quite right: put them in jail immediately, and force them to pay back the debt at a rate guaranteed to keep the debt rising”.

Cries to the effect that one cannot earn money while locked in a cell fall on ears rendered deaf by loudly feigned outrage. M. Escargottinhimmel pushes a new debt statement under the cell door of Mr & Mrs O’Bese every week. Mr Morgan smiles and repeats that this is the only way they will learn the error of their ways.

The situation is not entirely resolved by lots of citizens debating whether to feed the O’Beses a little food to keep up their energy levels, or execute them. But before the discussion can take a decisive turn, the cell inmates starve to death.

“You see?” observes Escargottinhimmel, “they will never run up another bad debt. They have learned their lesson”.

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The current impasse in the EU really is this insanely self-righteous, unfair to the point of obscenity, and completely removed from reality. And what’s more, I know that having written this piece, the usual suspects will turn up in the comment thread and continue to ignore the widespread hypocrisy and – above all – inevitably fruitless outcome. The tediously moralising berks in Berlin will keep alternately saying “Debts must be paid” followed by “Lalalalalalah”. But not only are they in no position at all to so conveniently judge in their own favour, this spectacularly failing policy is costing we taxpayers a mind-boggling amount of money…with no hope of any return on it.

How much has the Greek debt crisis really cost Germany? Let’s examine this in more detail.

Despite the constant neurotic whining from Berlin (if you’ve ever seen a German footballer dive and then roll over, you’ll know precisely what I mean) Germany’s contribution to bailing out Greek insolvency is minute. The potty notion that it’s being bled to death by bailing out its weaker neighbours goes beyond spin and into the sort of pernicious disinformation peddled by Schäuble and the tabloids to which his Ministry leaks this drivel 24/7. Greece’s biggest creditors do not include Germany: the ECB’s Greek bonds were purchased with newly printed euros that the ECB continues to drain from the banking system.

As part of the IMF, Germany must of course make its contribution….as do the UK, the US and China – none of whom have anything to gain except heavy flak from their taxpayers.

The Eurozone has helped Greece, and Germany is exposed to the liabilities that go with that. But any and all debts embraced by the Bundesrepublik have so far been dwarfed by the savings Germany is making through lower interest rates and an incredibly cheap euro.

The truth is that already hard-pressed and recessed european taxpayers are funding a German obsession with Lutheran debt refusal and inflation paranoia – not the other way round. Had all the ClubMed debts been forgiven in mid 2010, and a new centrally controlled fiscal union created immediately, the euro would be in the clear today, the ClubMeds would not be drowning in debt, and the European taxpayer would not have condemned his grandchildren to purgatory for no other reason than Teutonic inflexibility.

I say ‘no other reason’, but that’s not entirely correct. By and large, this lunacy was undertaken partly to give Merkel an opportunity to look tough – a stance that just today has given her a lift in the polls; but primarily to help, um, the lunatics. True, the bankalunatics were owed money: fair play. But only three years earlier, the world’s taxpayers had coughed up $26 trillion to bail out their idiotic investment and lending policies. In mid 2010, Greece owed around $260 billion – or roughly 1% of the 2008-9 final bailout cost. That’s not fair exchange, it’s robbery: but for the investment banker, even robbery isn’t enough: nothing less than extortion with menaces will do.

The banking community, the Chancellery (or China for that matter – to where Merkel flew today in search of more German prosperity) can’t put every debtor in jail. A programme of controlled default and subsequent debt forgiveness is the only rational way out of the mess. Mark my words, once the Fuhrerin has marched her CDU Schützstaffel up to the top of the hill, she will march them down again and do a deal with Samaras. The one and only gainer at the end of this pavanne will be Angela Merkel – the woman whose political ambitions recognise no ethics, and know no bounds.

To suggest that she and the Berlin-am-Brussels elite played no part in the corrupt deals that led up to EMU is ludicrous: one of the most blatant was carried out by Helmut Köhl with Italy’s leader Prodi. Köhl was her direct mentor and protector – until she shafted him ruthlessly of course…and then denied any of the leaks she had so obviously given to the German media. And to suggest that Germany faces abject poverty because of the Greek debt crisis is pathetic: Berlin could’ve let Athens out of its arms contract two years ago, and cleared off almost the whole debt.

No: the fable of Monsieur Escargottinhimmel is entirely sound. Greece is being pounded to death pour encourager les autres, to save French banks, to save Wall Street’s arse, but above all to save the idea of a politically united Europe that Merkel and Schäuble want so badly to run. It is time more of the MSM robots like Peston and Rusbridger stopped churning out the same old mendacity, and took some time instead to examine the bare facts. The ambition to create a monocultural European superstate in which the entire population converts into ersatz Prussians in half a generation is sick, and it is contagious. It is killing Greece, and before long it will take Spain and Italy with it.

Now is the hour. These people must be stopped.

Related: Merkel flies to China in search of more trade deals

BARCLAYS: Did they do anything straight under Bob Diamond?

Robert E. Diamond is fond of saying that he never had to fall back on taxpayers’ money. It’s bollocks actually, because without it he couldn’t have bridged enough to buy Lehman in the US. But some of us did suggest when he made a beeline for the Arabs in 2008 that there was an air of desperation about the scramble.

Now it seems that our very own SFO are about to open a criminal probe as soon as this week into socking great bribes payments placed quietly by Barcap during 2008 into Qatar’s sovereign wealth fund as the bank sought to raise money.

The Serious Fraud Office is already working with the U.K. Financial Services Authority, conducting a civil investigation into whether the bank adequately disclosed fees it agreed to pay the Qatar Investment Authority. But it now looks like things of a more overtly naughty nature occurred, allegedly: four current and former senior employees are in the frame, including Finance Director Chris Lucas.

Barclays blagged 7 billion quid of capital from Abu Dhabi, Qatar and all places dodgy after the 2007 mess threatened to blow them away. The degree of desperation was signalled by the bank falling over it’s scorch-marked knickers being willing to give equity away in the process. The Arabs subsequently sold their stake at a whopping profit.
One wonders if (but doubts whether) Bobby is one of those under suspicion. One suspects that R.E.D. knows the location of too many Threadneedled bodies, and will thus get off as usual.

As Draghi scratches at the Spanish flea, the German flea looks East

Merkel heads to Beijing in search of options

Mario Draghi sits anxiously in Frankfurt watching for any signs of crumbling bank foundations in Spain. Reggie Middleton over at Zero Hedge (superb analysis this) agrees with me that the biggest euro-danger at the moment is a bank-run, not a sovereign default…he thinks France might beat Spain to it. But in Berlin, all is calm. For unsere geliebte Känzlerin is leaving on a jet plane bound for Beijing.

The small gentlemen of the Chinese politburo see Angela Merkel as more likely to make sense of the eurozone mess than anyone else (it is a long way from Athens to Beijing) but all things are relative. The word is that they still retain a 0% interest in coughing up hard-earned currency to help an ESM that Merkel’s own Constitutional Court may soon declare illegal under German Law.

In truth, this is a meeting about trade, not debt. And to understand its significance, we need to remind ourselves of Geli’s principal interest in life: power.

Soviet power, EU power, American power, Chinese power: it makes little difference to the German Chancellor: as the horses become more or less powerful, so – like any self-respecting flea – she leaps onto the next winner. Angela Merkel doesn’t care what she’s Queen of, just so long as it’s big and powerful.

To the Chinese, she is a hugely important trading partner in both the import and export senses. Germany is China’s top trade partner in the EU – almost 50% of EU exports to China come from Germany. Meanwhile, Germany buys nearly 25% of China’s imports to Europe. It’s a case of BMWs for the Chinese aspirants, and beads for the eurozone’s blue-collars.

Merkel doesn’t really need the EU. She could team up with Russia and China tomorrow and probably get bigger volumes with little loss of margin…except for the fact that Berlin is severally responsible for the Clubmed debts. For the moment, this – and German banking exposure to Spain – is what keeps her in the euro – not any love for This Great European Project of Ours.

But she’s confident that Mario Draghi has his big guns ready, and so is unworried about the Iberian issue for the moment. “Germany’s technology has a dominant position, but it needs a market – and China is a big market,” said Germany expert Gu Junli, citing energy, environmental protection and manufacturing as possible areas of cooperation.

It’s all part of the German leader’s alles klar strategy: the blank banknotes, emergency Deutschmarks, Dollar swap deals, and ex-EU trading partners are all lined up. Should she stay or should she go? It matters not either way, for the full horizon is as yet out of sight.

If the EU strengthens around Wolfpack und Geli, she’ll stay to run that. If it collapses, she’ll head East. And if recession plus social unrest tear China apart, she’ll be on the next plane to lick Barack all over. But come what may, Angela must have her world role.

 

Dr Conan Fuller-Bollix

 

From SarkasticBarclay comes this question:

Doctor, can you just explain for the thickies why QE is profitable?

It will be my pleasure, SarkasticBarclay. You see, if I Mervyn take you taxpayer for a long walk up a short pier, divide the currency by 137.55% and then multiply by minus 41, hey Peston, we have money left over for a tax cut, where:

Cut = (1+n) on a Tuesday Ξ when £ x 83 – [∏ +sky] = £80bn

Additionally, it is very important to take into account the value of 0 + or – the meaning of nought, where the fockorl norm is contant. Thus:

(Zirp x 0) + ∞ = infinity ÷ ↔ nowt x £3 an hour

Thus we can see from this that pensioners will be better off when the country is skint.

And ovecleggpudding from Mincington-on-Sick asks:

How will these NHS hit-squads work in practice?

For goodness sake, I would’ve thought the name says it all: that fine investigative security company G4S will storm in, hit lots of enlisted men who served in Iraq, and then accuse the seven disgraceful NHS Trusts of overspending on dressings. This will take the form of a dressings down, a crack-down, and then recommend that all patients should wear a dressing gown at all time.

Moremarmaladenow from Dundee wants to know:

Should Louise Mensch get a third runway?

Opinions vary about this. Nadine Doris says she should have her school runway taken away, but she’s away with the fairies and anyway, The Blessed Saint Louise has already run away, so the matter can be considered sub-judasy.

I shall miss her bold stances, unaffected speeches, selfless devotion to media standards, and imaginary email friends. But I fancy her pulp prose will, in the end, be the most fitting legacy of her public life before she legged it without warning to pastures new.

And finally, Baglady Topnutter wonders:

Should Signor Dragladi give Catatonia the money or what?

This is indeed the burning question of the hour. I think on the whole he should leave the Catalonia, and stick to budgies in future: they eat very little, make hardly any mess, and can be trained to say “No, I do not need a bailout” with very little effort.

In extremis, he should also leave Barc alone, and switch to supporting Real Madrid. Personally, I’d rather have a Gin and tonic than be catatonic, but that’s neither here nor there.

ECB & SPAIN: Stand by for the big-guns barrage

ENTIRE ECB EXEC BOARD CRIES OFF JACKSON HOLE

Draghi….cometh the hour….

Swiss credit source tells The Slog: “We’re talking very, very big here: this is going to dwarf anything done for Greece, and it is going to make the bank 200% responsible for stopping the collapse”

The regions of Spain don’t come much more affluent than Catalonia. So the depth of Spain’s problem was made brutally clear this morning when the Catalans officially requested  the full works – total bailout – hoping to apply for a cool  €5.23 billion from Madrid. I understand that Mario Draghi knew about this last Friday, but it isn’t the only thing on his radar.

As The Slog posted two days back, Draghi has been playing a dangerous game of poker with Madrid; it now looks as if – unless he does something big, and soon – his bluff will be called bigtime. So much  money was withdrawn from Spanish banks last month, the total overtook anything the EU has seen since Draghi’s ECB began collecting the data some fifteen years ago – before EMU was even a reality.

Although the markets seemed curiously calm in the light of these developments, my good source in the Madrid money markets was sanguine on the subject:

“Our view here is that either Draghi goes nap on solving the problem now, or the euro is history,” he told me, “so there’s no point in panicking just yet. If, however, he hasn’t moved by say Friday, well, people will get edgy. If he’d gone to Jackson Hole, we’d all have gotten very edgy.”

In fact, it turns out that the entire executive board of the ECB has cried off the Wyoming jolly. So something is very clearly afoot.

Eight days ago, Spain’s Minister for the Economy Luis de Guindos told news agency EFE that the ECB “must deploy unlimited bond buying” before too long. It’s pretty obvious that Supermario did that earlier today as the bond yields fell at the latest Spanish auction. But the expectation of serious firepower being applied to the debt issue is the overriding reason why the Central Bank’s Chairman personally ordered all exec members to stay in Europe “for at least the next ten days”.

A Swiss-based bank credit specialist I’ve known for some time now insists that it is bank viability, not bonds, that’s kept the EU’s central bankers chained to their Frankfurt desks.

“I think too many observers are underplaying the [Spanish] banking liquidity thing,” he said last night, “Draghi knows what to do and how to do it, but I think only in the last few days has he grasped the size and the inevitability. We’re talking very, very big here: this is going to dwarf anything done for Greece, and it is going to make the bank 200% responsible for stopping the collapse”.

My own view – having spoken to a range of commentators and traders in recent days – is that there comes a point at which bank liquidity and sovereign debt are inextricably linked – and I sense that the Calatonia request screams out that this point has been reached. Catalans produce 20% of the Spanish gdp, but a spokesman from the region said categorically that they “would not accept any political conditions for the aid” -  a classic anti-Madrid emotion based in history, but also I suspect a swipe at the ECB in general, and Draghi’s poker face in recent times.

Too many regional and banking dominoes falling too quickly will make today’s bond purchases irrelevant. From here on, it’s about an irreversible decision from the Central Bank. And it’s abou the euro.