In the light of more evidence pointing to a global slump, the thrashing of Greece will prove to be the most expensive beating in history

The degree to which the elected Syriza government in Greece never stood a chance of turning round a dying, austerity-hammered economy is revealed by today’s BIS report on cross-border lending. It shows that, while such lending rose by $755 billion in the Q1 2015 – spearheaded by a Tsunami of lending to ezone sovereigns and companies – lending to Greece fell by $22 billion.

Mario Draghi also illegally shut Greece out of the QE programme, and as the IMF reported last week, the blackmail pressure applied to the Greek banking system during the last month of the negotiations humiliation sent the economy backwards and knackered any credibility the debt sustainability ever had. Finally – the icing on this ‘bailout’ cake – Troika2 has upped the VAT on a huge range of products….just as the first holidaymakers of the season are arriving.

Somebody on the UK’s Opposition benches needs to address a simple PMQ to David Cameron, along the lines of “Could the Prime Minister explain to this House why anyone with a scintilla of morality and an ounce of common sense would want to stay in this power-crazed madhouse called the EU?”

As it happens, while much of the hapless spin continues to come from the eurozone, most of the globally significant data at the moment is from outside the EU. None of it looks good.

Global trade has slumped to the same dismal 2009 levels occasioned by the 2008 financial crisis.

The FT has been sold to Nikkei for 35 times operating income. Not pre or post tax profits, but income. That’s the sort of PE ratio I remember seeing in the late 1980s…just before the first of many busts since then. The Nikkei said, in an official statement, that it saw the deal as “the key to global expansion”. The global expansion of what exactly….its ability to measure central bank asset purchase insanity without batting an eyelid?

Two very bad signs from China: electricity usage is at a 30 year low; and Bloomberg’s commodities index slumped to a 13 year low as Chinese demand was the lowest for 20 years. Low, lower and lowest.

And in the land of the Rising Sun, things are also diving. Earlier this week, Japan’s index of economic indicators was shown to have fallen in May. This prompted the Tokyo government to downgrade its assessment of the nation’s economy for the first time in nine months……..from “improving” to “pausing.” Yes, it’s another outstanding success for QE.

But the business media just keep on hanging in there, determined to polish every rotten apple. There was uncontained joy in the US yesterday when the grab-bag of ten leading indicators (the LEI) went up 0.6%, “leaping past” analysts expectations, as CNBC put it. But a few paragraphs down came this short burst of reality: ‘labor market indicators such as average workweek and initial claims remained unchanged.’ This could turn into Jobless Recovery II, but the workforce’s slightly different experience to that of the directors and stockholders came through loud and clear when the consumer confidence index turned out to be exactly where it was in November 2014….that is, not very confident.

The fact that the corporates staring up their backsides surprised the analysts staring up their backsides doesn’t impress me that much, to be honest…and equally, the fact that bank lending to corporate entities is on the rise (accordinng to the BIS) might suggest increased banker confidence, but it doesn’t improve my opinion of bankers and their correlation with justified confidence. Having come close to destroying the global banking system as a result of infinite confidence seven years ago, ever since then they’ve had the confidence in their ability to regulate themselves by fighting every last banking reform tooth and nail….and, I might add, usually winning.

For example, a large proportion of the upweight in bank lending has gone into the eurozone, where the lenders’ view is that growth is just around the corner. As we saw at the outset, the exception is Greece – but I think we all need to accept now that Greece’s role in world affairs is to be run ragged, starved and have its liquidity cut off. Either way, with or without Greece in the mix, would you invest heavily in an already flatlining and indebted currency area? Nope, neither would I. Certainly not in Italy, where Beppe Grillo last night called for the nationalisation of Italian banks and an exit from the eurozone. Certainly not in France, where things are going from worse to awful. And certainly not in a FiskalUnion which, sooner rather than later, is going to have to face out the French on the awfulness of its deficits and derisory level of its exports.

Brussels-am-Berlin is in triumphalist mode for the time being. It won’t last.


  1. You write: “Having come close to destroying the global banking system as a result of infinite confidence seven years ago, ever since then they’ve had the confidence in their ability to regulate themselves”

    What do you call “regulate themselves”? That banks were limited to leverage 12 times to 1 when lending to SMEs and entrepreneurs but allowed to leverage over 60 to 1 when lending to the government of Greece?


  2. “As Alexis Tsipras said: ‘… on the 18th of February the European Central Bank made a decision that from a political point of view is not a regular or a rational one. So they limited the capacity and the possibility on behalf of the Greek state to issue and re-buy Greek bonds. So there was a capping as regards the treasury bonds, so at EUR9 billion, whereas the normal capping stands at EUR15 billion. So in this way they excluded the possibility of the bank to finance, to re-finance the Greek government, the Greek sovereign debt, by EUR6 billion.'”


  3. ‘Somebody on the UK’s Opposition benches needs to address a simple PMQ to David Cameron, along the lines of “Could the Prime Minister explain to this House why anyone with a scintilla of morality and an ounce of common sense would want to stay in this power-crazed madhouse called the EU?”’

    There isn’t anybody with the balls to ask that question yet, after all Obama is again banging on about the UK mustn’t leave the EU, he needs all the vassal states he lay his hands on, and who wants to upset the Big Man?

    Maybe, just maybe Corbyn’s the man for the job?


  4. China’s electricity consumption in the first half of 2015 actually went up 1.3%, the smallest GROWTH rate in 30 years.


  5. ” The fact that the corporates staring up their backsides surprised the analysts staring up their backsides doesn’ t impress me much ….”

    Or to quote the lyrics of ” Protrct and Survive ” :

    Place your head between your thighs
    Whilst maintaining this posture
    You can make a final gesture
    And with a little muscular pressure
    You can kiss your arse goodbye


  6. “Maybe, just maybe Corbyn’s the man for the job?”

    One can but hope. And that coming from someone who, until the 2010 election, had never voted anything other then Tory for nearly 40 years. I can hardly believe that I would be promoting and defending a hard left candidate.


  7. I know, I’ve never been a favourite of Labour but, something needs to shake up the system and, from the way the ‘big guns’ are railing against him makes me think they are running scared of more than meets the eye. Apples and apple carts spring to mind.


  8. That thing about electricity consumption. A very neutral way to measure the real economy. Unless the masses have taken to private wind turbines on their properties (you do see a few and solar panels), the stuff has to be generated and distributed and you can’t fudge it. So far, PV and private turbines contribute negligible amounts to UK electricity generation.

    Some fascinating top level generation and demand data can be found at, a site that should be on every MP’s shortcuts because it shows the truth about UK demand and consumption, with history if you care to delve for it. Both for the UK and France, comparisons between which are just a little scary. They sell their rather large surplus. We import electricity as much as we can.

    It would be most interesting to compare countries on this basis, with numbers over (say) the last decade. Yes, I know that the total lighting load has been much reduced in recent years due to low and very low energy light sources. And yes, I know that electricity is vastly dearer than it was in the mid-2000’s, so people are not so wasteful. But I bet we can adjust for those to get to a trend that represents true economic activity.

    I have never been happy with the government’s bland statements about GDP growth, with error rates exceeding the number they are measuring. Other metrics may be more reliable and revealing.


  9. The Baltic Dry Index has risen over the last few months it’s now 1,102.00, not great but surprising under the current circumstances eh?
    Not sure I believe anything in the way of published data these days, it’s all so conflicting, truly the age of misinformation being king.


  10. A bit O/T but:
    Tony Blair refused to give a 20 minute speech to The World Hunger Forum’s ‘Eat’ conference last weekend because they couldn’t meet his £330,000 fee of a £250,000 donation to the Cherie Blair Foundation plus £80,000 for expenses.
    TB doesn’t understand why he is loathed.


  11. Well Guv
    Nice to see you having a debate with yourself on the tow/toe thing. The correct form is actually ‘toe’.


  12. Forget the Opposition benches, there are plenty of occupants of the government benches who, if they had any integrity at all, should be asking that same question, except they’re too worried about their next promotion, quango-job, post-parliament sinecure in Europe……


  13. His mistake was including the even-more-loathsome Cherie’s name in the deal. Kiss of death. But he won’t have that problem with Wendy….


  14. I see Obama thinks we should stay in the EU and probably adopt the euro (Lisbon Treaty states this eventuality quite clearly).

    America wants us in so we can be their puppets in europe, no more, no less and everything else is the political doubletalk to pretend to a population it is something better. This is how we got led up the garden path with the EU, it was never ever going to be any better like all the politicans promised.

    Truth now, the euro and in a way the EU as run by the ECB puppets to Germany is not fit for purpose TO SERVE ALL EU NATIONS EQUALLY SEEING AS WE SIGNED UP TO THE LISBON TREATY. and after the Greek debacle only serve an ever dwindling priviliged group of citizens.

    Stupid Brits believe under the current arrangement we are equal to German citizens. We are not! If so we should be able to demand the ECB does not print to achieve a strategic advantage over the pound. Direct currency manipulation to me? Lisbon does not address the issue of EZ countries directly manipulating the euro against EU members.


  15. KFC let’s jump and that data and build a ship together what do you say? No? Well there’s your answer.


  16. Corbyn doesnt seem to have much of a foreign policy agenda…just old Labour ideas…might have been enough in the70s but now….things are on the move…needs some dynamism…
    By the way Tony Blair is pissing me off like never before…someone needs to remind him that he remains liable for his crime in his lifetime… best advice is for him to keep quiet..


  17. @KFC
    It’s enough with John making my brain hurt ! without you starting my head spinning ..Re the balltick index.. Is all that trouble in the Ukraine .. down to the chinks buying up grain?
    Shades of Stalin’s Bolsheviks!


  18. I was afraid to say what you’re saying – as it sounds petty in some ways – but his age at the next general election could be conceived an issue. Yet, what is the age of many who serve in the Lord’s? That never seems to present a problem. I’m 52 myself and hardly ‘ageist’. Nevertheless, his influence could reestablish a true party of the left, and someone else could emerge under him to take over the role eventually.

    I’ve not had much hope in any of them for a long time now, but it would be refreshing to see some real opposition at PMQs; I might even be convinced into watching it again!


  19. Your blog’s a great read, and the comments make lively reading too. Just had my seventy-ninth birthday; never belonged to any political party; never voted Labour, but I’d vote for Jeremy Corbyn. I like a man who talks with a straight tongue. It makes a welcome change in politics.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s