…so please can we have some imagination applied to foreign policy?
I understand that global economic crises and US debt stand-offs are bringing improved News Station ratings in their wake. If so, it represents the only good piece of business news anywhere on the planet at the moment.
We in the UK have a faint, comparative glimmer, because our borrowing costs have fallen below those of the US for the first time in 15 months. But this is only because we are on the way to default, whereas they’re into the final furlong. The markets foolishly continue to worry that the Congress v White House Daily Show is for real, although I can’t imagine why. Of course, now and then in even the smartest circus, performers do fall off the high wire. But such accidents are rare.
Credit Suisse, meanwhile, has had a few accidents along the way, and thus parted company with 2000 people. I knew the number from insiders beforehand; what I didn’t know was just how badly sales and trades had slumped – by the best part of three fifths. Credit Suisse has been heavily involved in the Greek can-kicking contest, and was one of the first to spot that Italy was a key debt guarantor for the Athenians. Just to reassure everyone, Italy’s borrowing costs spiked today at a sale of 10-year bonds: the Italians sold €2.7bn worth of securities at 5.77% – compared with 4.94% a month ago. That’s one giant leap – but not for mankind.
The situation in Europe remains an unfixable mess in its current form. In my estimation, the private sector contribution to the latest Greek rescue package is probably only about 40% of the level it should be – and even getting that out of the banks was like pulling teeth. We are all now paying the price for their selfishness, because although Greece’s repayment rate and debt total have been reduced, by 2012 its public debt will still be around 170% of GDP. Consequently, the markets are paranoid, and yields are dangerously high. I see that Deutsche Bank is blithely saying ‘all’ the Greeks need to do is have five surpluses of around 5% a year from 2015-20. What DB didn’t bring to the party was any ideas about how their economy would grow in order to do this if the country stays in the euro.
Personally, I don’t trust the banks to even get their hair cut to the extent they’re promising. They remain the spivs and dissemblers they’ve always been – and bank accounting is the most surreal (as in open to every trick in the book) of any business with which I’ve ever worked. To count obviously bad debts as assets is, let’s face it, a truly Swiftian idea. So probably, Barcap is right to be saying Greece won’t make it. I mean that in the sense that it will be proved right with little or no risk to its reputation. For a commonsense northerner like me, it’s glaringly obvious Greece will default: it won’t make the asset sales targets it needs, and it won’t make the growth targets either.
The ratings agencies agree with The Slog – not a position I’m that happy with, because on the whole they’re just as mad as the lenders and borrowers they monitor. However, there is no point in shooting the messenger, and one or two players in this mess are in touch with reality: German Finance Minister Wolfgang Schäuble admitted yesterday, in a circular to his Christian Democratic Party colleagues, that ‘the euro-zone debt crisis isn’t over, and that more discipline is needed’. Er ist eine gute Eier, Herr Schäuble.
It’s highly likely, I think, that by the time Spain and Italy finally go west, there’ll be little or no money left in the EFSF anyway – for Greece, or indeed anyone. I did find the brazen way the self-congratulatory EU onanists said Portugal and Ireland would have to whistle for any help last Thursday made me more angry than any other single statement since this Babel called the EU first began to spout tripe about the ‘need’ for a currency union. I wonder what the hawks in Dublin and the London Treasury made of it. But increasingly, I wonder over and over what Wee Georgie & the Camerlots think about anything.
For the life of me, I still can’t see the upside of Coalition trade policy. I also can’t decide whether Camerlot’s big three plus Head Boffin Oliver Letwin are being incredibly clever, or just catatonically incapable of action. As a nation, we have always played much too fair with Abroad, and my gut tells me we are doing it again. British foreign policy at the moment is not so much perfidious as perfunctory.
I understand perfectly well that the Cameroons believe they are helpless to act against the Franco-German stitch-up. The problem is, their judgement is way off, and lacks both imagination and ruthlessness. This is the time for a major throw of the dice. But fifteen months in, William Hague seems incapable of throwing a party, let alone craps.
The Germans are sick to death of the French; they don’t trust them, and they’re tired of them taking the p*ss on everything from stats reporting and the CAP to their self-aggrandizing definition of growth. I have it on the highest authority that they don’t believe the French inflation figures (nobody in France does either); but the average German businessman does tend to say that in Britain, if nothing else, we are at least trying to get our credit-obsessed lifestyle under control…and we are straight.
Merkel herself is frosty towards the UK, but she isn’t representative of thinking Germans. If Britain plunged in now and got alongside the Bundesrepublik, the Irish and the Dutch in a constructive way, we could come out of this as a major-power trading bloc on a par with China…and cooperating with it in a complementary way. The one thing the Americans and the French have in common is a willingness to dump on the Brits. But as always, the dunderheads at the Foreign Office are incapable of seeing that.
I think the best of Anglo-Saxon, Celtic and Eastern Europe have similar cultural approaches to commerce. We might well wind up sharing a currency, but we wouldn’t be a bureaucracy-strangled Mark II EU. The ClubMeds and France can revert to cheaper currencies and keep their nicer pace of life…where they’d be happier anyway. The most important task of all for everyone, of course, would be to turn Belgium into a frites theme park, and send Mr Van Rompuy on a nice long holiday somewhere. I’m told St Helena is very nice.
This sort of internationally patronising, broad brush-stroke trade vision makes a welcome change from explaining to Piers Moron the difference between ‘did’ and didn’t’. But it does have a serious objective: Britain and its potential trading partners need a very big idea to survive a eurozone implosion, an American default and a Chinese recession within one similar time frame. I see little sign of it emanating anywhere from Westminster at the moment…..and none whatsoever of it emerging from Downing Street.