Why we should fear the Greek financial crisis
Call me a doom monger – but we understate the perils of the Greek financial crisis at our peril. Every stock market in the world took a hit yesterday. The Asian markets caught a cold before we even woke up this morning.
A relatively obscure New York indicator – the Fear Index went toxic yesterday. It’s called the Vix Index, which measures ‘fear’ in the US stock market. It rose by more than 30 per cent, its biggest one-day jump since the height of the financial crisis in October 2008.
Look no further than the Portuguese stock market – which lost 5 per cent in yesterday’s Greek inspired fall – for the next domino in the line. Cross the Iberian peninsular and Spain continues to look worse than rocky. But for heavens sake don’t look too closely at Italy. My City sources tell me Italy is the one that would bring the entire Euro house of cards down. And where would that leave us? Don’t think Sterling would represent a comfy haven.
I sat for 90 shocking minutes in a briefing in a sweaty basement in the Institute for Fiscal Studies yesterday as the young terriers who staff their research laid out the true scale of what faces everyone of us in Britain as we attempt the five year odyssey to pay off our own structural deficit. Yes, shocking stuff. Huge tax hikes and cuts in services are in the pipeline.
I have yet to attend one single news conference with any of the three major political parties challenging for power at which they did NOT offer yet another spending commitment. I can’t see the room any longer for the sheer size of this elephant – the unspoken, undescribed, uncosted (until yesterday) battle to save the British economy. We aren’t Portugal, Ireland, Spain or Italy. But crash them and we are beleaguered Britain. I used the word bankrupt of the UK economy the other night on Channel 4 News. It triggered much complaint. I withdraw it. But bankruptcy is in the eye of the beholder. And the stinkers who speculate and trade products that challenge national economies are out there. These sharks can yet crash the world economy in a way that leaves October 2008 a side show.
There’s to be a summit on May 10th to discuss Greece. I wonder if the sharks will wait that long. What a time to be looking for people to lead us away from the abyss!
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There are 73 comments on this post
Jon,
I think your analysis is correct about the dangers here. One thing though, remember that all sharks do is clean up the rubbish left floating in the ocean by others. In a sense its harsh, and overkill but all the ‘stinkers’ are doing is enforcing a kind of rough justice on governments who cannot manage their balance sheets.
When I hear our own PM and ex-Chancellor wriggling out of his own responsibility for what has happened to this economy by blaming it on a ‘global problem’ when many of the key players and miscreants were sitting in corner offices in Canary Wharf (thanks to more serious financial regulation in the US, much of the dirty work had to be farmed out to the UK where ‘light touch’ has been the order of the day), then I have to say I don’t think the ‘sharks’ are the biggest ‘stinkers’ in the financial ocean.
Hard to manage the balance sheets – when Govts . handed over Billions to the Banks – who did not mange their balance sheets or their policies – so they came running to the State . The Banks are the core of the problem – now we pay for their mistakes – while they still hand out billions of our money to themselves in bonuses . How come these high flying execs. are still there – how many have been put in the dock for waht they were pulling ?.
Quite astounding that the rational argument was that governments should bail out the banks to stave off full scale crisis, yet the full scale crisis hasonly been delayed. Insteadof letting the banks sort their own mess out, we have taken responsibility for their crass stupidity and we will pay for it in a worse manner.
Let this be a lesson for the future – whenever a rosy future may be
One of the reasons I agree with breaking up the banks, separating out the high street facility we all need from the gamblers, is that we could then let the gamblers go broke when they went wrong. If that had happened this time, we would have all suffered.
It’s an irony that banking nor the stock market were invented to become a giant casino, but have become that because of the greed of a few people who are never satisfied with how much money they have.
Let’s have proper high street banks, and let’s have a stock market where the money goes into businesses and where the reward is paid in dividends, not traded around in the corrupt way they are at present.
A bit of a taster – what are the numbers? What about inflation and interest rates? Tell us the facts.
10th May conference is going to be too late. The EU central Bank is not up to the job and should have taken action earlier. Even though the Greece government wants to address the hard fiscal measures required, increasing numbers of the Greek population does want to accept the new spending cuts which would be required.
What’s the chance that the ‘crises’ surrounding Greece, Portugal, Spain and Italy are being engineered as a way for banks to divert attention from their own still-toxic debts? My understanding is that a huge amount of the liability that caused the first stage of this mess is still out there, ‘unaccounted for’.
I get the horrible feeling that for certain financiers and banks, it would be preferable (even desirable) for a few Euro economies to go down the pan, hurting the €, and offering up massive asset-stripping opportunities in the process.
OK so maybe I’m just a thick, paranoid Trot. But when did the banks and the markets ever tell us the truth when they could sell us something else?
This is an excellent article, illustrating that the world has indeed gone mad when you can’t use the word ‘bankrupt’ because it might scare the markets – well it’s about time they got their heads out of the sand and stated living in the real world, using real words…
At what point will countries start to nationalise their banks to take hold of the profits they generate in order to pay back the debts they have caused?
i thought some of Banks had been partailly nationalised . Well they have here in ROI – makes no difference – they still pay out huge bonuses – and as an added insult use bailout money to buy Corporate seats / lounges [or wahtever the name is ] for their high flying exescs etc at Man Utd – and these are the people who got us into trouble. We – the Public are worse fools for putting up with it . Talking is no use . Its waht these guys / and ladies ?? are good at . The really sickening aspect is the degree to which the public accept all this – there have been no mass marches – virtually nothing . Perhaps the Slave mentality is too strong in ROI .
My knowledge of the stock market is very limited. Well sorry but here goes.
Private companies hold countries economies by the scruff of their necks. That is completely wrong. Why should an Australian multi billionaire have anything to do with a hard working British milkman? It is indirect of course but the eventual hit couldn’t be more direct. This world banking system is going to bring us to our knees sooner or later, with most of the multi millionaires/billionaires already knowing now, that it is not going to affect them.
The real change can only be to eliminate
currency completely and switch to a resource based world economy, otherwise the wealthy will just want to keep on getting richer and the poor, well i’ll leave it to your imagination.
adzmundo The Venus Project & CND
Money is only a medium of exchange, if you like a way of trading apples for oranges, putting an agreed value on different resources. Switching to a resource based economy sounds ominously like switching to a barter economy. This would end the free movement of capital. Imagine you are a small manufacturer and you have more orders than your factory can deliver. To increase production and sell more you need new machinery, but you can’t pay out the huge capital this requires – even though you’ll be more profitable long term, so you go to the bank for the money. If you have no bank in a resource based economy, you have no lending.
Sadly, banking is essential to the economy. The trouble with the banks is that they are putting their energy and best people resources into speculating on the stock market. They need to divert these incredibly able and clever people into making the lending decisions instead of computers and credit ratings which are always based on the past and not the future.
Not too sure I’d be that worried about Italy John – for two reasons.
Firstly I think Spain is much more fragile and I think that by the time it falls Greece + Portugal + Spain means enough trouble already to put the whole Euro project in trouble.
Secondly Italy has been historically able to raise funds from its own citizens (who have an impressive savings record) rather than turn to the financial markets. Think of Italy as a low tech Japan – the numbers may be staggering but they’re meaningless if the country doesn’t have to rely on the markets.
The real elephant is Germany. Their exports benefited from overspend in the mediterranean. Unless they wake up and realise that the whole eurozone MUST prop up Greece, then Portugal (it is monetary union after all) then their exports will suffer. I found the story of Bild handing out Drachma’s in Athens yesterday quite naive and insulting. And I’m by no means Greek!
See you’ve taken my advice. You could have published the comment….
Thanks for the spelling correction Braveheart (pointing out it was Sterling instead of Stirling!). Didn’t publish the comment as felt it wouldn’t then make sense once the change had been made.
At times I’m in despair. Politics needs fixing and yet it is the broken political system that has to fix the other great danger in our society, the financial system.
The Goldman Sachs hearing showed clearly that these people who created a market where some of their clients lost at the expense of others who were betting against them, is to say the least dodgy. Yet the people creating that system could see nothing wrong with it.
I’m willing to bet there are more than a few financiers out there manipulating the market so they make a killing if Greece collapses. And to an extent they have the power to create a self-fulfilling prophesy – they can creat the fear to bankrupt Greece despite the efforts of the IMF and Euro group.
The financial system is rotten and needs sorting. it should be serving society and not just a few ultra wealthy punters. If they are addicted to gambling let them got to the horses where they can’t damage the rest of us.
Sam we all know what should happen, but realistically it is not going to happen.
You are not going to change the greed of people.
I have suffered too much and put so much effort and capital knowledge and my own money into our localility, for over 30 years to know that the parasites will go on sucking the life out of us, no matter who they are. For every generous person is an opportunistic fraudster, who will say black is white with a look of honesty on their faces. It is a microcosm of the rest of the world.
Sorry to bring the weird element into this, but it might be worth remembering that the financier who initiated the sinister Bilderburg conferences (George Ball) had strong links with Lehman Brothers, eventually becoming its managing director. This establishment was the first to properly collapse at the outset of the recent economic crisis, so setting up the domino effect for the others. It would make sense to think: why on earth would the banks want to shoot themselves in the foot? But if things are as you suspect Sam – i.e., that a select few of the biggest financiers want to cause chaos and confusion across the world so that they can grasp unprecedented power and huge financial gain – it might not be beyond the bounds of possibility that, having failed to orchestrate the collapse in the first instance through the banks themselves, they’re now attempting a second coup by bringing countries down instead. It might sound paranoid, but I get an uneasy feeling that indeed there are planners and schemers behind all this – it’s why I kept banging on about the banks and the need to take back our power and vision and choose the direction of our society in a former blog comments section.
Jon an excellent article for a blog.The Greek situation is dire for many reasons.
It shows what happens to a government and a country when they live beyond their means and the consequences of putting it right.Governments have a finite amount of money.Money produced by taxation on profits of the private sector. Unfortunately ADZ that multi millionaire you complain of , provides jobs within the private sector and profits the government can tax, as do the banks.Regrettably our government became too reliant on the banking sector and when it began to collapse, panicked into bailing it out .If we let our private sector manufacturing decline any more we become even more reliant on banking and service industries at our peril.
The government SHOULD only spend what it acrues and not rely on borrowing.That unfortunately means drastic reductions in monies available for the public sector.In Greece we can see the attempt to do that by severe job cuts and look at the situation with the unions and workers that is creating .Is that a portent of the future here or is there another way to do it?
You fail to mention, Adrian, that many of Greece’s super-elite have always preferred to keep their monies in off-shore bank accounts, particularly those of Luxembourg and Switzerland, I believe, so avoiding the tax that can help pay for social goods. An estimated £10bn has been taken out of domestic bank-accounts in the first two months of this year. In what way is this helping the Greek economy? Seems the socially responsible multi-millionaire you mention is more legend than reality. I’m with Adz on this.
Adrian, what you say makes sense, except that the only way any state can provide the services that it must – and which the market won’t touch because there’s no profit in it – is through taxation. And until everyone pays their fair share, that means borrowing.
People who have more money than they can ever spend in a lifetime, spend half their lives protecting it and finding new ways not to contribute. The Lord Ashdowns of this world refuse to pay taxes but still want the power and influence.
Why do they think they are so important just because they have made money? If the accrual of wealth was based on the value of work and not the vagaries of the market, it would be firemen and nurses who would be paid 100k per week, not footballers and speculators.
Meg i did not for one moment say they were socially responsible .I said they provide jobs in the private sector , that pays tax to fund the public sector .I do not for one moment dispute they keep a lot of their money away from the British tax man .Were they to leave , how do you replace those jobs?Employ more in the public sector on less tax income??
Mr Snow, this is what happens when you live above your means. Your creditworthiness goes down the drains, prospective creditors charge you an arm and a leg in interest payments and bailiffs start knocking on the door. It is no different for governments as the Greek crisis is now showing and as the UK crisis will soon do, if the government doesn’t take steps to reduce the deficit. Bankrupt? The UK is heading towards it faster than a fighter jet.
I believe there is another way to assist workers in the public sector.The first thing an incoming government has to do is see the amount of revenue that is available for the public sector expenditure, then allocate that expenditure around the departments it finances.That would involve a huge reduction in available financing.There are clearly within many areas non essential jobs that need to be stripped out of the system.Let departments decide which should go.Decide what monies is left for the wages bill and and split that between the existing workers .It may mean wage cuts .higher on the more senior members of an organisation .Better wage cuts than job losses.The poorest can be helped more, either by a higher minimum wage or a reduction in the states tax take from them.
The unemployed , capable of working , should if they expect state aid have to work for it on community projects , receiving a minimum wage.
That is just the starter of an idea.
And IMO opinion its way off Adrian – for a couple of reasons . First it was the Private Sector – The Banks who got us into this mess – but for some reason [ good propaganda ] its the Public Sector that is paying the heaviest pRice . Second – you say cut waste – Fine . But who will cut the waste ??eg if a Minsiter writes to a Hospital ,school or wahtever saying he is citiing their buget by X million – who decides waht happens – The Admisisatrtors of that Hospiatl etc – and they will not put themselves out of a job – no they will close wards , fire junior doctors etc – thats how this rotten system works .
Adrian, I feel so churlish on a day when you’ve agreed with me, to challenge your assumptions.
Elsewhere you referred to public sector jobs as non productive i.e they don’t make a profit. That is true – because apart from skimming off a few people for private healthcare – there is no profit to be made from the fire service, the police, the armed forces, the nurses. But would we want to be without them?
We hear how the private sector creates the wealth that makes the jobs that give us all a living but we hear nothing about how they benefit from the private sector. Unlike US companies they only have to provide healthcare to their elite, part of the perks to avoid income tax.
I’ve read Rowntree’s report on York and seen Booth’s maps on London poverty and I don’t want to live in a society like that, where a few people live in luxury on the backs of the rest.
The Big Society shouldn’t be based on charity, it should be based on the most fortunate helping the least fortunate, being grateful for their own good fortune and caring enough to help out.
Jim where you are right it was the banks that got us in this situation , but that was because of governments lax control of the finance system and also their over reliance on it at the expense of manufacturingAs to how the cuts are carried through , when i said departments , that was under the control og government ministers resonsible for those departments .
Failure to act will soon put us in the situation of Greece where we are told what to do,as the last time a Labour government went to the IMF with begging bowl
Saltaire i totally and utterly agree with you
The problem in an international world how do you get rid of the sharks?
Bankruptcy is in the eye of the bondholder
Banca D ‘Italia cites projected GDP growth in 2010 China at 10%, India 8%
Pressed the wrong button here,…nil desperandum… but don’t think you are a doomonger Jon.. on the contrary you are usually optimistic and see both sides of the story and even in your cross examining ( Which is far superior to A Boultons.) you don’t really go over to insult, only adamant clarification.. with a little impatience at waffle.
Saltaire i totally and utterly agree with you
The problem in an international world how do you get rid of the sharks?
The Labour government had an excellent opportunity and blew it.They nationalised two of our largest banks in the bailout and then instead of controlling them for the benefit of the people , gave them their heads again.
The problem becomes the international producers like the oil companies, where we have little control.It is a difficult problem , but i think there is a need for a national controlled mutual bank and back to a seperate building society system, which worked so well before building societies were allowed to become banks
As I understand it – and it has happened in US – so probobly in UK as well as rest of World -, The banks can pay back any bailout money when it has it and when it likes – so basically it has had an interest free loan from the State Go into a bank and ask for an interest free loan !!. This is ” Socialism for the Rich and Capitalism and poverty for the Poor ”
The Banca D’ Italia cites GDPin 2010 to grow by 10%in China, 8% in india and 5 and a half% in brazil. These are developing Countries and the growth would be expected, but they are also going to arrive at saturation.
The projected growth of the US is 3% and the Eurozone trails at 1%.
The strange difference in Italy is that whilst other Countries are considering contracting the banks, Italy is amalgamating and expanding with care.
The smaller types of banks have been operating in Italy and the levels of toxic assests are much lower than anywhere else. They seem to have been much more conservative in their handling of their own economic difficulties.
Banca D’Italia still says recovery is feeble and are trying to sell high flying life styles on the back of inexpensive property, which may work for them in consideration of their connections.
It would be prudent to maintain good relations with Our RC friends in Rome.
The reasons why Greece, Portugal, Spain, Italy and to a lesser extent us are being looked at in such fearful ways is the huge debt , not just deficit like us but pre-existing debt these countries have built up over yonks cause they have too big a social security system and an economy based in large parts on the government.
Thanks to the bail outs and the recession these debts have sky rocketed.
Now the stock markets are scared that they won’t be able to pay it off at all if they don’t change their ways and they will have to default and drag down the Euro with it. These countries have always been the ill the children of the EU and need to be slapped in the face and corrected by the IMF for the long term benefit of us all. It’s going to hurt, it’s going to be painful but for too long they have gotten away with being lazy corrupt shits.
We aren’t much better at the moment, but we were for a good time and we know the pain of an IMF bailout. That alone should strike the fear of god into any government we get after this election to do the right thing. We need to cut the deficit and debt but we have some time unlike these countries.
Nirav , the fact is we have no time ,or it will be out of our hands .That is why we need a strong government to start immediately
Our level of government debt is virtually identical to that of Greece and Portugal.We are again a sick man of Europe.
The politicians in power ,both here and In Greece, are responsible for this situation. It is government spending over and above it’s income that has caused the crisis and the international banks crisis is a separate issue. It suits the Greek government and our own to blame their difficulties on the “international” situation in order to pretend that they are not culpable. They blur the distinction between the two issues deliberately so that voters who do not understand the detail will not punish them at the polls.
The only way out of the hole that we are in is to cut public sector pay across the board (as Greece has been forced to do) and to close down the vast non-essential areas of bureaucracy such as the quangos that have been created by the Labour government over the last 10 years. The private sector has already done this in job cuts and pay reductions. Any incoming government will have to chose between massive strife with the public sector and economic collapse with the IMF taking control. Either way the public sector will face huge job cuts.
Jon, I don’t think you’re a doom monger, you’re just being totally realistic. We’ve had the boom and now we must face the bust. We’re all going to feel a whole lot poorer very soon.
But the really sad thing is that the great British public don’t want to face that truth. When George Osbourne spoke about an “age of austerity” last Autumn (rather gently I thought) Tory support fell away almost completely.
The ugly truth is that the British public don’t want to face ugly position that the government, the bankers, and they themselves have put themselves in.
WE’VE made a great big sh*t sandwich and we’re all going to have to take 3 bites. Happy munching folks.
@Nirav – so, privatise health, shut down schools, rein in infrastructure improvements, increase university fees, sack public servants (except the police, obv.) – is this the IMF ‘correction’ you want to occur.
The IMF is not really interested in the solvency or otherwise of national economies; it’s only interested in the orthodoxy of their acceptance of of neo-liberal capitalism.
We should all ignore the IMF and the bankers and get on with real life. The UK, Spain and pretty much any country could easily survive with practically no finance sector whatsoever.
Nationalise the banks and make them work for us, not the other way around!
The IMF only care about one thing, getting there money back. They will demand what they think they need to recover the money. It is up to the governments to make sure that whatever cuts they sanction as part of any loan deal are good for the nations economic health in the long term. This always means hard choices that have to be made and had been put off in the past.
What they cut is down the governments negotiations with the IMF.
As for an economy coping fine without a financial services sector, I dont think that’s possible or has ever happened in the past! Financial services, (retail banks, insurance companies, credit cards) are all essential parts of a modern economy.
These countries need to make cut’s, we need to make cuts. Our parties know this and they will probably do what’s right for the economy but this being an election year they are just pandering to us. It’s the sad state of affairs that we live in for now.
We’ve lived through it before (well I haven’t, I’m only 27) and we will live through it again. Things will get better they will just take time.
‘The battle to save the British economy’ you rightly claim is being ignored by the three government-contenders could be helped by a tax on land. It’s been suggested that LVT could wipe out the current budget-deficit in one year (sorry, don’t have the figures for that). LVT would be a replacement for the regressive council tax/business-rate, and would have the added social benefit of reducing property-prices and directing savings away from unproductive bricks and mortar to socially useful activities. The UK’s tax system encourages owner-occupation and so actively undermines the much-needed change of direction.
Lloyd George’s 1909 ‘people’s budget’ which included LVT was defeated because of opposition from the landowners in the Lords. The parties vying for our vote lack the guts to raise the issue, fearful no doubt of the ‘property-owning democracy’ they bang on about screaming to keep its unearned income from house-price inflation that has bourgeoisified our brains.
Interesting to see that cash-rich Greeks are taking their money out of their country, flocking to London to pay, eg, £1.6m for a 2-bed flat (Greek wealth finds a home in London, Guardian 13 April).
Jon, allow me to explain the elephant in the room: thanks to Labour’s profligate job creation in the public sector, there are now more people working in or dependent on the public sector than work in commerce where wealth is actually created. Unsustainable.
Any party announcing their cutting plans is effectively telling more than half the electorate that their jobs are at risk and that pay cuts are a reality. This is the electoral equivalent of asking turkeys to vote for Christmas.
Off topic. There appear to be a lot of wasps around in the last week or so. Looking at their colouring, I blame Nick Clegg
There are also an unprecedented number of dandelions. Same culprit, obviously.
The problem will be, that social obligations are not commensurable, with a level of social charges of the state. The problem of all socialist governments, is the overestimated charges in comparison with a profitable part of the budget. The life in a duty, sooner or later comes to an end a default. If that is probably I I shall describe in more detail, why there was a global crisis
We should all be fearful of the Greek crisis . It is IMF[ for IMF - you could say Big Biz USA ] policy to get countries into debt – come in – and then virtually ruin them . That is their track record . They come in – Privatise virtually everything – and make things nice and easy for the big multinationals to prosper. The local politicians are used as stooges – so no change there . Slowly – or fast – peoples rights, living standards wll decline – and the gap between rich and poor will continue to accelerate – That is US Govt. Policy taken from US Space Command doc ” The globalization of the world economy will continue. With a widening of haves and have nots, only military dominance will protect America’s commercial interests.”. This is what is coming down the road at us all. Its a pity to see even on this forum – so many disagreeing with each other – when the common enemy is at us all , IMF World Bank and the so called 2 b ” World Government ” – the World Trade Organization . What matters now is the profits of the large Multinational companies – thats all -. Yet they are defended by some who suffer or will suffer from them .
Where has the money GONE?
Wasn’t the part-nationalisation of banking the perfect moment to redistribute wealth fairly. But apparently none of the political leaders in this position wanted to do so…
All this ethereal guff about ‘confidence’ and ‘markets’ – wealth is water, food, oil and shelter. These things are being extracted from nature in greater quantities than ever, but it’s not trickling down from the global elite to the rest of humanity any time soon.
G the money has been spent and on top of that the government borrowed on their credit card and that money is now being called in
Where has the money gone? Nowhere, because it didn’t exist to begin with. It is backed by nothing; not gold, not silver- nothing. It’s simply a confidence trick, a measly IOU that does not have be honoured. It’s worthless, and it’s value can be eliminated at the stroke of a pen.
Read this article, it’s an eye-opener (Money- what is it?):
http://www.hiddenmysteries.org/themagazine/vol14/research/money-what-is-it.shtml
While definitely a paranoid rant, if you actually read the facts (the stuff that can be verified to be true) then suddenly the entire financial system begins to make sense. Politicians talk about reforming the entire system and eliminating fraud, but in reality the entire system IS a fraud.
Human society desperately needs a new way of bartering and trading. For all our great advances over the millennium we still have not perfected the basics- our units of trade. Millions are out work right now who could be producing and generating wealth- both for themselves and others. The only people who have benefited are the shadowy types on the ‘markets’, who right now have governments all over the world by their nuts.
Jim and Saltaire you are both right , but that does not alter the fact that it is only Tax from the private sector that provides the wealth to pay for the public sector .I would have let the banks like Northern Rock go to the wall and now they are Nationalised i would severely restrict their methods of operating .I would also have taken to court those responsible for running their banks in such an irresponsible way .Their assets should have been frozen and a new team put in to run them on behalf of the general public and business.
As for the poor Saltaire i couldn’t agree more , but i am afraid it is a flourishing private sector that helps protect them
There is no way you can get away from it ,taxes to pay for the services we want all come from the private sector .It is a fallacy to say us pensioners or policemen ,nurses etc pay taxes to fund private sector jobs .That is a tax on money that has already been taxed .You might as well scrap income tax within the public sector and pay them that much less in wages.
Why not a tax on land, Adrian – a substitute, not an additional tax as a means of paying for the social goods we need? Was only scuppered in 1909 by the unelected opposition of the landowners in the Lords to Lloyd George’s budget. You surely agree that council tax is regressive, benefitting the wealthy unmortgaged property-owner/landlords/London b/millionaires and penalising the tenant and single-property owner? Don’t have any figures, but it’s been suggested that even a modest LVT could pay off the deficit in one year. Would like to hear your views on LVT.
what do you expect when we elect Labour governments
Tom i see you want to adopt the Zimbabwean system
The real basis of the Greek crisis is that it systematically lied and cheated to get into the EU, to stay in the EU and to get into the Eurozone. Many other EU states have also consistently lied and cheated but to lesser degrees, hence they are further down the looming queue of failure – but it’s coming. Once the global cover-story evaporated, there was nowhere to hide and the dominoes have started to tumble.
Yet, at the same time here in the UK, we are faced with 3 major parties who are all, in varying degrees, dissembling and disguising the steps which they and we know are needed to address our own, very serious, Greek tragedy.
It may indeed be a brave (foolhardy?) politician who first ventured to outline the hash truth of what is in store but, without that truth emerging, 40 million of us are expected to cast ballots next week in complete ignorance of their true consequences.
Maybe asking awkward questions about the deficit elephant makes us all ‘bigots’ too !
Prediction: irrespective of who wins power we will see cuts in frontline staff of 25% – 30% in a number of Government Departments or Agencies.
Question: What happens if a country e.g. Greece turns around and says? “We’ve decided not to pay our debts, do your worst!”
Steve , the poor go to the wall without any state help and the currency resembles that of Zimbabwe
The more I think about this, the angrier I get.
The banks brought the world to its knees and survived because we, the people, bailed them out with our taxes. As a result, thousands of ordinary people are losing their jobs, others are having services cut, we are all less well off. Bankers continue to be paid over the odds with obscene bonuses.
A few months later, a country like Greece gets into trouble – probably mainly as a result of its own foolishness (like the banks) – but straight away the financial system starts its usual speculation and unhelpful dealing. Where do these people get off on trying to make a bad situation even worse. These are real people in Greece who are losing jobs and seeing their lives wrecked.
To quote one of my favourite films ‘I’m as mad as hell and I’m not going to take it any more.’
We need a financial system that works for the good of society and not just their own pockets – and if they won’t do it voluntarily legislate them until they do.
All snowbloggers concerned about the banks should read the drily titled but excellent web pages of the Money Reform Party (www.moneyreformpart.org.uk). Amongst other things, this explains how around 97% of the UK’s money supply is created not by government but by the banks, not to help the economy but for private financial gain, creating the massive profits/bonuses/rising bank share prices we read constantly about.
Splitting up the large and the small banks, while helpful, won’t do anything to wrest control of the money supply from the banks.
We should all be angry, like Saltaire and others on this blog. To quote JKGalbraith – taken from the website above: ‘The process by which the banks create money is so simple, the mind is repelled’.
Adrian: while still advocating LVT as the fairest tax around and a way of making houses homes and not investments, I’m convinced that monetary reform is key to getting us out of the current mess we’re in.
I also recommend: http://www.jamesrobertson.com. James’ outstanding ‘The sane alternative’ was first published in 1978, and reprinted several times since. James has long advocated monetary reform. It’s time we listened!
…there you go again Sam. It’s all the banks fault, only the banks did this. Absolute drivel
1. The banks need mugs to mug (that’s you & me. And your pension fund manager).
2. The banks need mugs to give them free free rein to mug the mugs (that’s government, and the not very bright people at the FSA).
3. The banks need mugs to make the market (that would be estate agents, fund managers, TV and the media.)
It’s all based on lots of people being mugs.
Saltaire , here i agree with you .I do hope this is not going to be a habit.Whichever government comes to power they actually have the answer in their own hands.We still control two banks that are part nationalised .Cut them adrift from main stream banks and form one large National mutual bank.All government monies to be processed through these banks,Government to control wages .Mo bonuses .If anyone chooses to leave , no cash to go with them.If there are existing contracts rewrite them on a take it or leave it basis.I remember Reagan did similar with his air traffic controllers ,and they capitulated on his terms .Just as an aside i believe BA should do it to their potential strikers.
Adrian! I feel a coalition coming on
Richard, are you sure you’re not the sherriff of Nottingham? In modern society it is almost impossible to live without a bank account. My parents had to switch from only dealing in cash in their mid 70s. We may be mugs, but we have little choice.
When conmen con people, we send them to jail. We should do the same with crooked bankers.
If we had retail banks who, like they used to, make their money by using money from savers to lend to borrowers while taking a small percentage for their efforts, we might have a chance to get back on course. Those who want to fiddle around in dodgy markets can then be allowed to go bust. And good riddance.
Meg i am not familiar with LVT.but from what you say it will replace council tax and business rates .Is it only paid by landowners? or is it paid by everyone on the land on which they reside?.If as you say it will fund the deficit , therefore producing more tax than the current system , how do you believe land owners who are struggling now would pay it????
What is needed is not more tax but less tax.Tax destroys the ability of enterprise to succeed .Governments have to learn they can not spend money they do not have and borrowing can not finance a burgeoning public sector.We either want more government , tighter restrictions and controls(the big brother state) or less and more freedom to make our own mistakes..As for equality and a fairer distribution of income read 1984 and Animal Farm
Greece hosted the olmpic games in 2004;
Only Kelly Holmes would ggo back there for nostaliga;
I remeber reprots about massively empty venues;
Greece did not make the revenue they hioped;
Is this what the UK has to look forward to 5 yesra after 2012 when London has hosted the games/>
Its somehow bemusing to think that the Templars set up the first banks eight hundred years ago with an entirely alltruistic aim, as a public service!
The Templars did not set up banks as we understand them today. Lending money was banned by the Church as the sin of usury. The templars invented the money order – documents allowing – allowing deposits to be reclaimed from different Templar outposts – this was done to prevent armed robbery on the road. Lending was practically the exclusive province of Jews – the only group with the religious freedom to practise capitalism. Hence the constant public belief that Jews were all loaded at everyone else’s expense and consequent horrific persecution. Modern banking is an upshoot of the Reformation – one of many underlying causes of the subsequent explosive economic growth in protestant countries.
The world is awash with money looking for a home it is why money related shares are on a long-term upward trend even though this seems counter intuitive given the real level of confidence in the banking/insurance sectors. Investors and speculators alike dumped money into London yesterday because it is not a Euro market. We will continue to profit from this situation which is driven by greed. It will only reverse when Ireland, Spain, Portugal, Greece and yes Italy sort out the national debts.
Darragh, all value is subjective, not just the value of money. Food has ‘value’ because we don’t want to starve and we’d rather eat certain foods than others; this preference varies and fluctuates everywhere, like money or commodity markets. Because we collectively award value to tokens such as money, it takes on real value, hence you can feed a hungry person by giving him money, so long as he can get as far as the nearest shops with it.
Money is divided unequally among the world population. So are goods. Money is the primary means of acquiring goods. The super-rich baron who has 10% of the world’s money effectively has 10% of the world’s oil, water and corned beef to himself. If he had no cash but a huge pile of beef his wealth would be measured in $.
The resources are constantly being wrenched out of the Earth. They have not gone away anywhere. People are still making them. However if ecological collapse results in their only being 10 tins of corned beef left in the world, that baron will own one of them.
Bartering is impractical in this world, and we could still fight wars over oil and corned beef. Money and speculation are a symptom, not the original evil.
One answer that would help the situation is a return to the land .Produce more of our own products from milk , to vegetables to meat.Cut out the regulation that allows the supermarkets to artificially drive down the farm profits and sell all home grown farm produce through farm cooperatives.
Does uk face the same predicament as Greece after hosting rthe Olmpics;
I live in Brum but only saw my tall dapper Snow froma distance when he was at The Birminfgham campus for the third election debate;
Why didn’t he cover the oens from Britol or mandchetser;
Though when he’s inthe field I can’t see the colour of his socks unless he’s seated.
Spoof (Kinnock-in-a-lightbulb) Sun front page that expresses my fears of Greece-style riots in Britain: http://www.moneymad.org/sun_kinnock_bulb.gif
Jon, you have a large following in Ireland and i’m sure many were surprised and unhappy with your “up the Kyber” remark on Ch 4. Regards Noel Magee
Greece and Spain won’t pay back. The only thing Germans can do is:
REPOSES 170 Leopard 2AEX Battle Tanks from Greece, and 190 Leopard 2A6E Battle Tanks from Spain.
U.S.A must REPOSES 170 F-16 Jet Fighters from Greece, … the rest is gone with the wind …forever …
Greece must stop paying lucrative pensions with borrowed money, reform the free health care system, and cut down, 4 times the military budged.
this is very interesting…
Israel buys 13 Greek islands..
http://www.gpexaminer.com/?p=32