Tim Geithner? You can’t get much higher in responsibility for the US economy, yet he comes out with what to the layman seems an absolutely insane statement.
Germany is ALSO heavily in debt. The German coalition government has just announced a “Sparprogram” of €80 BILLION euros. Families, the unemployed and the civil service are all going to be hammered.
Germany like everyone else has overspent and of course been hit by the bankers’ insane greed and the ensuing financial crisis. (By the way, the latter was a total breakdown by regulators and if Obama really wants to rant at someone he should rant at the people responsible for organising the regulation of finance in the USA … oopps …. that was the politicians! No wonder BP makes an easier target.)
But returning to Geithner, does he REALLY think that we can get out of this mess by Germany getting more heavily into debt? It’s potty, isn’t it? Someone said recently “You don’t give a drunk more alcohol.”
Someone, somewhere, someone has got to say “ENOUGH – NO MORE DEBT” And anyway, why SHOULD Germans be expected to shoulder the responsibility for everyone else?
No Mr Geithner! Your government can continue to spend money it hasn’t got if you like (the US up to a $ trillion of debt now?) , but please leave us over here in Europe to sort this mess out in our own way. You are beginning to sound like ex- (God, how I love that prefix) British PM Gordon Brown, who spent 13 years playing Fantasy Finance, with the results all too clear.
Maybe I’ve got this all wrong – salvation really does come by incurring ever more debt? If so, perhaps the economists can explain it to me. Can we find two economists who agree?
The funny thing is, my Mum and my Gran both agree. In their day if you overspent you were in trouble and could neither blame anyone else nor hope that some benevolent soul would bail you out …. perhaps they should be running western economies?
François Fillon, the French prime minister, said on Friday (June 4th) that the weakening currency was “good news” because it could boost European exports. His comments accelerated the currency’s slide and prompted selling of French government bonds.
This of course is the cunning ploy formerly used by weak, failing, uncompetitive countries such as Greece, Italy, Portugal and so on before they hitched their waggons on to the euro gravy-train led by the massive German engine. (Anyone remember the story of the over-burdened camel, by the way?)
For France’s Prime Minister, the falling euro is “good”. Well done, François. Thanks for the increased price of oil and everything else we import. How the Swiss must be quietly smirking as they watch this shambles of overspending and reckless financial profligacy.
And the news of Hungary’s tottering economy is helping to push the euro further down towards parity with the dollar. Wonderful. Perhaps we should hope that it falls to half the dollar! Think of how much that would boost exports! This policy is of course about as fatuous as France’s idea that cutting the working week to 35 hours would increase employment.
Of course, the Yanks could copy our example and help to push the dollar down, so that the USA and Europe end up in a deadly game of spiral descendency (“Ha, Ha – our currency is weaker than yours!”) while the Russians, Chinese and Arabs quietly prepare to buy up all our increasingly-worthless assets.
We deserve better leaders.
P.S. Ireland? The Forgotten Basket Case? Don’t worry – it won’t be forgotten for much longer:
Fears for Ireland’s financial stability also re-emerged after the minister of finance said that the country’s banks had to refinance more than €74 billion of debt by October 1. The sum is equivalent to more than half Ireland’s annual economic output.
P.P.S. The USA will save the world as usual? Maybe not!
European Council President Mr Herman Van Rompuy (aren’t we so lucky to have yet another tier of vastly-expensive management – a President of a country that doesn’t even exist?) said: “Everyone shares the will to go forward together”.
Indeed. It would be rather strange if one or more didn’t share “the will” and preferred to go backwards. But going forwards together infers at the same speed and in the same direction.
The Meeting drew up this plan of action.
greater budgetary discipline (will you tell France and almost every other country that never stuck to the 3% budget deficit or shall I?)
find ways to reduce the divergences in competitiveness between member states (so German IS going to take over Greece then? What fails in war can be achieved in the economy.)
establish an effective economic crisis management mechanism(you mean, prepare to borrow billions more to bail out those who fail in the above two areas?)
strengthen economic governance to be able to act quicker and in a more coordinated and efficient manner to deal with any future economic crises(yes, you could get a bit more efficient than ignoring the rules for 10 years – certainly scope for improvement there.)
Is there any way not to be simultaneously cynical and depressed about Europe at the moment?
You eventually pay for LIES and STUPIDITY, even if it takes time. Sadly, the euro was born in a lie and now Merkel has compounded the problems by giving in to French pressure and being stupid. But the German people (in contrast to their leaders) have no desire to be the bankers of all Europe.
What Merkel has done is utter folly and, worse, won’t even fix the problem. The ONLY way to fix a problem is to DO THE RIGHT THING, which is not rescue people from their idiocy but allow them to take the consequences of it. This is not wishing to be cruel but just the way people learn difficult lessons. As J J Rousseau observed, “The fastest way to teach a child about the danger of fire is to let him burn himself once”… or words to that effect!
Besides, the euro WITHOUT Greece would be a damned sight more convincing than WITH it. The Germans gave up the Deutschmark on the PROMISE that the euro would be as strong by following strict rules. The EU even MADE A RULE that no country could have a budget deficit of more than 3%. This was insisted on by Germany PRECISELY in order to avoid this sort of surreal situation where the Greeks, Portuguese, Irish, etc. (and Britain, but we are not in the euro …) would NOT wildly overspend.
These “strict rules” were breached before they had hardly started, first by letting in Greece and then France a year or so later, justifying the decision by saying that the rules didn’t apply to big countries — in other words, the rules didn’t apply to themselves. Brussels, and the French and German elites, LIED to the people.
The criminal bit is that these countries just IGNORED the rules. And even more criminal, they (Germany included) just IGNORED what was going on in Greece and elsewhere until, surprise, surprise, it all reared up out of the sand and hit them in the face. Now the Germans have to accept even MORE tax increases, despite being already very highly taxed, just like the French and – increasingly – the British. The British finally got fed up with being lied to and dumped their government. Germany may be going the same way. (France swings wildly from left to right anyway, and each time it seems worse than before.)
Besides, Germany can’t AFFORD to bankroll the whole of Europe. France, too, is ludicrously over-spent and top-heavy with her state. The consequence of all this will no doubt be vast political gains for the left in both countries, but the left have even LESS idea about how to run an economy – see Gordon Brown of “I do know how to run an economy” fame(perhaps he meant “ruin an economy?!”).
Europe is in deep trouble and I really don’t think the politicians even now understand it. Some say that a gradual decline of Europe is already inevitable as Asia rises; the current mentality of lying, overspending, over-borrowing, bailing out undeserving basket cases and over-centralisation will only accelerate this decline.
But for some, of course – such as Jose Manuel “Boring”oso – this crisis is manna from Heaven; a big step towards a United States of Europe and vastly increased power for Brussels. For God’s sake call his bluff. We don’t WANT an “economic union” run from Brussels. It will be a bureaucratic, tax-heavy nightmare, as in France.
“Let’s be clear,” said the European Commission president, Jose Manuel Barroso, last week. “You can’t have a monetary union without having an economic union. Member states should have the courage to say whether they want an economic union or not. And if they don’t, it’s better to forget monetary union altogether.”EuroActiv May 12, 2010.
These people are really unbelievable. If Barroso is so sure about not being able to have monetary union without economic union (and, of course, ipso facto political union as well) then why didn’t he say this at the beginning? The pro-USE lobby really kept that quiet, didn’t they. It is all a big LIE.
So, to cure indebtedness, you incur FURTHER vast debts? It is surreal. Niall Ferguson, an economic historian at Harvard University, put it this way: “This bailout wasn’t done to help the Greeks; it was done to help the French and German banks. They’ve poured some water on the fire, but the fire has not gone out.” NYT May 17, 2010
The European rescue plan, which totals 750 billion euros thus far and was intended to head off the risk of default, will instead greatly increase borrowing. That could be the end of Europe’s nascent recovery.
German Chancellor Angela Merkel’s party and its coalition allies have been defeated in regional elections in North Rhine-Westphalia.
German Chancellor Merkel appears to have lost the state vote in NRW and may see her control of parliament reduced or eliminated. It’s her own fault.
Germany and in particular NRW (the industrial powerhouse of Germany) are in a serious economic situation with enforced cuts left, right and centre and yet she has loaned (aka given) billions to feckless, idle, corrupt and shambolic Greece.
The Germans have had to tighten their belts and are still paying vast sums to bring East Germany up to speed, yet Merkel feels she can fritter away her people’s money to “save the euro“. It won’t save Greece or the euro.
The Greeks fully deserve to go bankrupt and are incapable of complying with the degree of “cuts” the Germans are demanding. Other European countries will lose money if Greece defaults. Tough.
Better to suffer a one-off loss than an endless shelling-out into a black hole. No bailout of Greece, Portugal, Spain, Ireland or Britain. Did the PEOPLE of ANY of the rest of EU countries have ANY say in this at all?
It seems the French pushed hard for a bailout. What a coincidence that some of their insurance companies have invested heavily in Greece. TOO BAD. Greece’s problems have been well-known for years; which moron poured billions into their black-hole, retire-at-53, inherit-your-sister’s-pension, go-to-work-if-you-feel-like-it economy?
And the Greeks? They seem to feel it is the fault of the REST of us that they have to make cuts. Was a reality check ever more fully needed? Sadly, but inevitably, there will be social breakdown in Greece from which something new will emerge. What that is, one cannot say, but I do not believe it can include membership of the Euro.
The Brussels Overlords think differently. Their little Euro brainchild must be saved at all costs. But they are all personally very well off and have no problems with money, unlike the majority of their constituents thanks to the despicable fraud perpetrated on them by the banks under the appallingly-negligent supervision of a multitude of governments.
I have written about Greece several times in recent weeks since to me it is a symbol of the combination of arrogance and utter folly of many of Europe’s governments – and in particular Brussels – who have overspent wildly, who have allowed their banks to make fraudulent loans and have imposed an ever-increasing burden of bureaucracy, Human rights, paperwork and regulations on the peoples of Europe.
How we are supposed to compete effectively when we A) price ourselves out of the market and B) wildly overspend is a mystery.
Has Europe now to prepare itself for a long period of decline and retrenchment in living standards as Asia maintains its inexorable growth and raw materials rocket in price? I fear so, but it’ll be the ordinary people bearing the brunt of all this, not the increasingly-remote politicians in national governments and Brussels.
Greece is a warning for the rest of us. There is no law that says we cannot go the same way. The UK and France in particular have bloated, feather-bedded public sectors. The chickens always come home to roost, and they are now flocking rapidly towards the hen-house.
Here’s a novel idea, let the Public Sector live within its means!
Robert Peston is the BBC’s Business Editor. I’ve read his Blog and listened to him on the Beeb for many years now. His latest Blog article hits the bulls-eye.
The smart solution would be to somehow depoliticise what’s known as fiscal consolidation, or the process of cutting spending and raising taxes such that the public sector can again live within its means.
A public sector that seeks not to burden society but to benefit it should not be an issue of party politics.
The art of saying something and meaning something totally different.
I must confess to being a bit fed up with Greece.
In Anglo-Saxon language their attitude used to be called “taking the piss“. Today’s “funny” (or if preferred take your pick from: tragic, surreal, ludicrous, ridiculous,bizarre, insane or indeed all of these at once) is something the Greek Prime Minister said. Admittedly he said it in February and I’ve only just picked up on it.
‘We are a country which cannot alone deal with the speculation. So this has become a European problem, because if we do have a major problem, this could create a contagion for other countries too who are not to blame.’
Brilliant and I especially love the use of the word “speculation”.
This makes it seem as if it isn’t Greece’s fault at all; it’s all down to those nasty fat people in suits and sunglasses, the evil international financial mafia seeking to destabilize his country.
Then there is the “if” word. Now normally this is associated with a condition, but anyone who even in February thought that there was any conditionality involved in Greece’s meltdown must have been looney, or perhaps the Head of the International Monetary Fund (IMF) who said this on March 8th:
Greece will be able to deal with its own financial problems without needing a bailout, the head of the International Monetary Fund said today.
IMF managing director Dominique Strauss-Kahn said that Greece’s debt mountain is unlikely to spread to other eurozone countries with high levels of public debt.
And Mr Strauss-Kahn dismissed market speculation of potential default by other heavily indebted eurozone countries such as Portugal, Spain or Ireland as scare-mongering.
Yes, this is the same DSK who is paid a vast salary and expenses and could be the next President of the EU.Of course he could have been lying to try to restore “confidence”. However, lying is lying, for whatever reason. Or he could have just been humungously wrong.
That’s the trouble with our leaders and financial experts these days; you never know whether they’re lying or just stupid; it’s usually one or the other and sometimes of course both.
And Papandreou’s quote continues: ” a contagion for other countries“. Indeed, Mr P. And what do we do with a “contagion” in the body? We destroy it and get rid of it …. and finally we have “other countries too who are not to blame“.
AHA! At last! Proof that my old Mum in the UK on her measly pension is not to blame. Thanks Mr P. At last some recognition fo the truth. Let’s have a bit more of that ….
As for the merits of Greece’s plea for funds, you only have to read this devastating article to feel your flabber gasting to breaking point.
No wonder the Germans are increasingly threatening to dump Greece, and so they should. Not the German government (all governments seem currently to lack the guts to do anything really necessary or serious).
No, this time it’s an economics professor threatening to take the EU to court if they allow this blatantly EU-illegal bailout, and public opinion is increasingly on his side.
It is a horrendous mess, but the only solution is for Greece to leave the euro. Bailing them out is a black hole. Does anyone in their right mind think the Greeks can really change their traditional practices and suddenly become honest, thrifty and hard-working?
Well, the answer is probably “Yes”, but then cloud-cuckoo land is becoming seriously over-populated.
Which reminds me, I must get back to the British General Election Campaign ……
The British General Election is really hotting up, with mud flying in all directions.
Mr Pott. Your proposal to keep NI (National Insurance contributions for employers and employed) as it is rather than putting it up as we propose (as usual) will leave a black hole in the country’s finances.
Mr Kettle: a Black hole? YOU are worried about a black hole??? Ha, Ha, Ha ……
Your quiz question: Who are the real Mr Pott and Mr Kettle?
“Son, your ego’s writing checks your body can’t cash.”
Well, this may be old hat for specialists but it surprised me. Is the same true for Britain? In either case, as Friedman says, it suggests we should explore more forcefully the ways we could aid business startups.
I always find Thomas Friedman excellent value for the time invested in reading him! See here:
“Here’s my fun fact for the day, provided courtesy of Robert Litan, who directs research at the Kauffman Foundation, which specializes in promoting innovation in America: “Between 1980 and 2005, virtually all net new jobs created in the U.S. were created by firms that were 5 years old or less,” said Litan. ‘That is about 40 million jobs. That means the established firms created no new net jobs during that period.’”
And if you want to know where the opening quote comes from, read the Friedman article!