Central Bank intervention can make the bet, but it can’t repay the Bookie’s debt. The geopolitical ramifications of this need to be taken into account.

Although many won’t agree with me, I sense the mists of obfuscation gradually clearing  to reveal where the EU has decided to go with the debt crisis. I still think events will overtake both them and the central banks who piled in with some more can-kicking yesterday; but at least (to me anyway) the strategy makes some kind of sense – given the desperate circumstances in which the euroist-globalist-bankster trio finds itself.

In many ways, this represents a remarkable victory for Wolfgang Schauble, the German finance minister. At some stage just before or during last weekend, Schauble concluded finally that Greek was a busted Taverna, and decided on one last, desperate throw: reverse policy entirely to allow the Greeks to default and stay in the euro. Merkel – caught between her European ideal, hawkish colleagues, and the German electorate – seems to have been easily persuaded to follow a policy by which Germany would continue to sound very strict in public about keeping up with the repayments – but behind the scenes ( in a loop not including Athens) organise to have the necessary hatches battened sufficient to survive the default of a eurozone member…the ‘orderly’ default so beloved of politicians who have never experienced a bankruptcy in their lives.

A small cabal within the CDU is now running with the plan. Thus – after some delays and postponements between Berlin and Paris last Tuesday- one the one hand, the German and French leaders called on Athens to “strictly and effectively” implement the reforms it had agreed to in exchange for billions in aid from the European Union and the International Monetary Fund (IMF) – adding, “this is a pre-condition for the payout of any future tranches”. But on the other, what Jean-Claude Trichet’s ECB, the main central banks, and now Tim Geithner have been successfully co-opted into doing is no less than the provision of thicker hatches, heavier roof tiles and underground car parks for any banking vehicle suddenly faced with a post-default hurricane.

What first amused and then alarmed me this morning was to watch BBCNews for a while, and hear some pundit talking about “an impressive action by the bigger banks to stop this turning into a disaster for all of us”. I sometimes wonder what the Beeb’s criteria are for defining expertise. There are times, indeed, when I think an apparatchik wanders out into the street, grabs a passing minority ethnic, and asks if they want to be on the telly.

This is not the ‘bigger’ (commercial) banks doing the attempted rescue, it is the central (taxpayer-funded) banks doing it. It’s not for our benefit: it’s yet another attempt to throw our money at yet another spectacular piece of arrogant stupidity by yet another bunch of financially incontinent investment bankers. But it is at least action – and it does seem to have impressed the markets.

Are they right to be impressed? Well, in one or two ways they’re right, but mostly, they’re wrong.

If I was German, I’d be impressed with Schauble. He’s no Hjalmar Schacht, but he did do the right thing at the right time from his point of view. And if I was French, I’d be impressed by Christine Lagarde’s perseverance in refusing to be ignored by the EU’s denialists. So if I was (say) a trader from Alsace-Lorraine, then yes, it might restore my faith in the idea of an orderly Greek default.

But I’m an Englishman who’s very pro-European diversity, and virulently anti both the EU and globalised investment banking. And my calm appraisal is that this move, once again, is ‘too late’. Not too little – as a taxpayer, I’d say ‘too much’ – but definitely too late.

First, this liquidity injection is short-term money. It has to be paid back…but it will be used up. This is a deadly combo if the borrower can’t pay it back – as we have seen around the shores of the Mediterranean of late. Soon enough, the Central banks will find themselves short of money to solve another problem, and it’ll be no good  turning to the taxpayer to ask for more, on account of we’re borassic.

Second, orderly or not, the Greek default will not be the only one in the EU. I cannot see the jobless American voter (or the President, in an election year) approving a blank cheque with which the Federal Treasury can then bail out Italy and Spain. Nor can I see Mervyn King stumping up yet again when he already has the money earmarked for a bout of QE in the UK.

Ah but ah but say the optimists, surely a banking survival with Greece inside the EU will set a precedent, and thus help the lenders see that this isn’t Armageddon after all? I think not. I think it will only convince the commercial banks to take a harder stance behind the line marked  ‘no haircuts’. I think it will also make the Italians and Iberians think that they can now relax, because the same guarantor of last resort has been found (the taxpayer), only this time with the welcome addition of the Americans.

Finally, flooding the banks with liquidity won’t help the EU’s now obvious state of economic slump come to an end, because those same folks refusing the haircut will refuse to lend to businesses…especially in Greece, where everyone and everything is paying neither bills nor tax. The extension of EU/Central bank ‘protection’ to the other Latins in the EU (were they so mad as to try this) would simply create a gigantic Bad Debt Zone inside which the very thing required to get tax income up – economic output – would be starved of lending. The circle is which the ClubMeds find themselves would simply go from vicious to all-engulfing.

What’s happening here remains very simple to define: a lot of still quite good money once owned by us is being thrown at bad betting slips owned by investment banks. This will not only hasten the point at which even the most placid citizens say “No”, it won’t write off the bookie debt in total. Banking punters backed two Apocalyptic horses called derivatives and sub-prime sovereigns. As both came in last, the credit line at the Nasty  Brothers Turf Accountancy Company has now been placed in the physical violence file. The gambler won’t pay, the governments can’t pay for much longer, and the citizens gave at the office already.

Sorry to keep whipping this analogy, but the people behind the Nasty Brothers chain of betting shops are threefold: Sino-Indian Holdings, the Islamic Allah Corporation, and The Smart Bank League. None of them are people to mess with, and while they’re all different, they have one thing in common: a passion for the pound of flesh. Payment in kind could be anything from telling the US to keep its nose out of Africa, bombing Pakistani nuclear installations, demanding a place in the EU, demanding oil quotas be bought at an outrageous price, and having at least one nation State run by and for the likes of Lloyd Blankfein. In the end, diplomacy has an inexhaustible range of weapons, and mercantile dependency is inseparable from geopolitical power politics. Take note all those who think my opposition to globalism is a form of Green fluffiness: in a nuclear world, a nation’s commercial independence is worth a lot of military deterrence.

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 This time – as opposed to 2008, when a lot of real people weren’t paying much attention – a majority of Americans and a sizeable minority of Brits are more wary, better informed, and considerably less impressed with their legislators than they were. If you’re betting on the West solving its multivariate problems, don’t bet the farm – and get odds of at least 75-1: social violence, constitutional stability, moribund economic output, diminishing monies spent on defence, and the brightest nation in the World catching us up in a million ways are the huge obstacles facing our children.

Young people are much-maligned – as often as not, by me.  But in the end, enough of them in the West will rear families in a stable environment; and when they do – having been mauled by global financial bollocks – very few of them will tolerate any more of it. We genuinely are heading for a better place in which community construction will replace towers of financial Babel. The bad news is, the gambling addicts aren’t going to rehab voluntarily.