Talk Morgan Forums Community The Malvern Arms Jeremy Corbyn Elected Labour Leader

Swings and roundabouts

It's true that it would be handy for me, but I do feel that control of the interest rate is one of the main economic tools available to a government. Being stuck with the interest rate that suits Germany whilst also being unable to devalue their currency has made it impossible for Greece to re-start her economy.

I wasn't totally against the idea of the Euro, it was more the way it was implemented. As I said in my previous post, the way it was introduced was more about satisfying political vanity than in producing a workable and durable solution (as, incidentally, was the ridiculously quick expansion of the EU by accepting so many new members at once). Political hubris is one of the worst failings of the EU.

The creation of the single currency should have shown a more rigorous approach to convergence criteria and started off with a single currency involving a small central group of more or less convergent EU states (Germany, Benelux and maybe France & Italy). The others economies should have been then pegged to the Euro by an exchange rate mechanism at first so that they could unfetter themselves if needs be, but could join when (and only when) their economies were genuinely convergent with the Euro bloc.

I do believe in the original aims of the European project; of harmony between European neighbours and of improving the lot of less developed member states. It has been reasonably successful at some of this. Take Ireland for example; despite their recent economic woes from the over heating of the celtic tiger, Ireland is unrecognizable from the poor country I remember as a child. Much of this is due to the support received from the EU. I don't however believe in one big federal European super state, and I am highly critical of much of the way the EU is run. It's not too late. Europe needs fixing, not breaking up.

Remember just coming back from a holiday in Greece and sat watching one of the supercar programmes where they were making one of the million quid Porsches.

The level of technical and engineering excellence in the factory was astonishing.

Greece is a wonderful country with a lot going for it - people, climate, history etc, but remember thinking at the time, the Greeks haven't got a cat in hells chance of competing with Germany on an economic level.

It takes a lot of mythos and melons to equal the value of one supercar.

Greece has been borrowing money they will never be able to repay to pretend they are as wealthy as some of their Northern EMU partners.

Greeks prefer not to pay tax and at least until recently retired very early. How did they fashion such a vibrant early civilisation?
Maybe the answer is the notched stick cut in half.

Without getting into the rights and wrongs of whether a million quid Porsche should even exist, it was said that one of the apparently poor areas of Greece was a major market for the Porsche Cayenne. The number per head of population was said to be above the OECD media.

Basically it means that there is a fairly large black economy in Greece. Certainly very unfair for those who can not avoid paying taxes.


If I lend money to a neighbour who I know can not repay then shame on me. Banks and other investors were attracted by the high rates of interest offered on Greek bonds. They were high because there was a risk. Now that the worst case has come about everyone is trying to negotiate a deal that will see their money being repaid. I think the inevitable is that Greece must default on these loans, in full or in part. So the banks loose money, that's business and the result of making bad business decisions. I've never had a government bailout because I made a bad decision. If I can't make money and sell my goods, assets, services, etc. I have to reduce my asking price and live on less. It matters not if I have to live on less euro or less drachma. If I can't afford imported caviar, then I have to eat local goat. (lucky that I like goat).

Part of the whole scenario is the other way about though Peter, if I borrow money that I cannot repay, I am also at fault.
People got greedy, buying houses (and other items) they could little afford if interest rates rose. Interest rates rose... Market stuffed...