There were always too many cooks in Athens. Next time, we should slim down both the players and the sanctimony. Next time, we should offer some carrot as well as stick.

‘Sources in Athens said the talks between Greece and its creditor banks were on hold while Lucas Papademos, the Greek prime minister, vacillated between negotiations with his own politicians and the “troika” officials from the European Union (EU), the International Monetary Fund (IMF) and the European Central Bank (ECB).’    (Daily Telegraph this morning: pictured above: IIF negotiator Charles Dallara)

You read it here first.

Now for some more.

The markets have shown little reaction to the stalemate in Athens. There’s a very good reason for this: the markets pronounced Greece dead ten months ago. If only the Belles of St Trillions had done the same. The markets are always ahead of the EU curve: they’re interested in what deal the Greek bondholders get, what’s going to happen in Portugal, and what bond yields will be doing in Italy.

The same isn’t true of the banks, because they of course will be in front of a firing squad as and when Greece defaults. That’s why a record 503 billion euros were deposited at the ECB at close of play yesterday. And when Venizelos says the negotiations with the Troika “are not going well”, it really is time we should worry.

Or should we? Portugal is still salvageable if the eurocrats get a move on. Bond yields there are at a ridiculous level (over 13% on 10 yrs), but the total owed by that country is 167bn euros as of yesterday. The reason the clowns need to get a move on is that it’s 5bn higher than it was three months ago.

I know perfectly well that this still represents 110% of Portuguese gdp, but at this juncture I think people should start counting what’s in the cupboard, and sod the percentages. The point is, as basket cases go, 167 billion is a large but affordable number. It would be nice, would it not, if the Troika woke up and let Greece quietly default while focusing every energy on solving the Portuguese crisis. This is another way of saying they should learn from the Fred Karno’s we’ve all just experienced in Athens, and vow to take a different approach next time.

Forget for a minute how it’s done in terms of technicalities – or what it winds up being called – but think instead of consequences. All actions have consequences, but is anyone in Brussels, Frankfurt or Berlin giving thought to the least consequential approach? I’d imagine Mario Draghi is, but his dire consequences would be my Champagne-popping moment. It was more the ‘elected representatives’ I was thinking about.

I can hear the blogosphere snorts from here. Of course I know that Troika & Ptnrs are not going to do this, but I prefer being wise before the event rather than after it. Debt forgiveness is the only way; so maybe people should give some thought as to how that could be a disguised debt forgiveness.

This is the same plea I made before the Greek Debt talks got going…or rather, got going and wound up in Nowhere. There are two results from Portugal we need to finally create a period of calm in which much bigger nasties can be headed off:

1. Making it clear to the markets that there is a guarantor from here on.

2. Ensuring that the Portuguese economy, and its creditors, both do well out of the solution.

As regards 1. above, the first thing we should do is take the IMF out of the equation. There are many reasons for doing this, but the biggies are that Lagarde is an idiot, all the IMF will do is tell other people to stump up, and there have been too many cooks burning the water on this to date. For similar reasons of idiocy, varietal self-interest, greed and poor culinary skills, there should be no private sector involvement (PSI) at all in what gets done…beyond being told what haircut they need to take.

That should be followed by the ECB, Brussels, Berlin and Paris saying “the buck will stop with us”. From our positions as, respectively, the Central Bank, the Government, and the two biggest EU economies, we hereby guarantee that we will carry the can until such time as FiskalUnion comes into being.

UPDATE 8.45 am GMT Wed: DRAGHI AGREES TO GET INVOLVED IN DEBT RESTRUCTURING

However, the quid pro quo is that no ezone member will be allowed any further borrowing until that time: the EU guarantors will be responsible for the liabilities, and make the immediate debt repayments until such time as FU is a reality.

The 2. part of the approach is even more controversial. That is, the EU pays off 100bn of the more pressing Portuguese debt immediately via the EFSF. It then promises the Portuguese a further 50 bn euros (from the EU’s development fund, which is quite separate from the EFSF or future ESM) within six months if it presents a firm plan for debt repayment and economic reform, and sticks to it with complete transparency.

Thus the markets and Portugal see something called constructive action, and a ClubMed member demonstrates that it can deal with its own mistakes….with some central help.

There would be other very good consequences. For a start, Wen Jaibao will be put on the spot: we’ve played our part (the eurocrats will say to him) now you can pile in with a clear conscience. What’s also likely is that Washington would feel an anti-contagion investment in a recapitalisation of the IMF was much safer, if not a good bet. (If nothing  else, it would provide a discreet conduit via which to help stop too many US-owned eurobanks from blowing over.)

The final piece in this jigsaw would, for me, be the establishment of one very important EU financial regulation regarding what would then presumably emerge – i.e., eurobonds. Trading and buying a bond would come with a simple penalty: during the final year of its term, the maximum price discount would be 10%. I don’t mind Hedge Funds that play the game, but I’d quite like to wipe out the market for carrion crow and vultures.

Folks, do me a favour before we start commenting on this one: spare me the ‘you are so naive’ bollocks. Cynicism is merely the radioactive alter ego of blind idealism. Second, don’t waste everyone’s time by observing that you’d rather the EU imploded anyway: so would I. The point of this suggestion re Portugal is to save taxpayers money and innocent victims. I know for certain that none of it will be adopted – and the EU will eat itself one day anyway. What I want to focus on if we can during the thread is why the elites won’t do it. Because that’s the real issue. The better we all understand what’s really going on here, the more well-prepared we shall be for when lots of pols start suggesting we dismantle all our democracy and liberties.

That last process continued yesterday in Westminster, when MPs gleefully backed a security recommendation that Islamist incitement sites should be banned from the internet. Not only would doing this make it easier for the face of radical Islam to hide behind its mask; the legislation would (you can be sure) refer broadly to ‘terrorist organisations’. One man’s terrorist is another man’s freedom fighter: and, quite often, the next generation’s Government.

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