The Most Expensive Sticking Plaster in the World

It’s been labelled the most expensive sticking plaster in the world.

Greece has been granted the biggest bail out in history. An eye watering €130 billion Euros will be put into a separate piggy bank for Greece to spend on debt repayment.

But such an exorbitant gift comes at a high price.

The Eurogroup (Finance Ministers of member states of the single currency) announced that the second bail out would ensure debt sustainability and restore competitiveness. In short, the second bail out will pay for the loan repayment due on the first bail out. Come 20^th March Greece is due to pay back €14.4billion on a bond repayment, so one would hope the recent rescue package will ensure that Greece does not submit to a disorderly default and drag the entire Euro area into disarray.

But in order to save the Euro, Greece cannot be seen to be saving themselves. Taking one for the team is probably not the attitude of the Greek people, who have already seen a 22% reduction in salary bringing the minimum monthly wage down to €751 (£630), 150,000 cuts in public sector jobs and the country’s constitution rewritten to ensure that the top Government spending priority would be on debt repayment, not public services.

Imagine those same conditions being imposed here and you can start to feel a bit of empathy for the Greeks.

All of this will in theory (although unlikely in practise) achieve rewriting Greek debt down to 120% of GDP by 2020. So essentially, they will still be spending a load more on debt repayment than they will ever have in their coffers.

There will also be permanent monitors from the Troika of the IMF, EU and ECB to make sure these spending cuts are implemented, with suggestions that the upcoming elections be suspended to ensure former Deputy President of the European Central Bank retains his role as Prime Minister after he usurped the throne from the democratically elected former leader last year.

However the Greek economy will remain in freefall. The 120,000 soon to be unemployed won't exactly be contributing much to the economy (bearing in mind the total population of Greece is 11 million it's a large number to throw out of work) and neither will the once relatively affluent workers who are now not even making enough money to pay rent and buy food.

The rescue package merely buys the Eurozone more time to get their ducks in a row, at the cost of throwing real lives into the dustbin of economic despair.

By Summer the EU are hoping to have shored up €700 billion in their bail out fund to potentially rescue the economies of Spain and Italy if required.

Meanwhile the people of Greece are being squeezed again and again which does not create growth, merely sends a signal to lenders that the euro will be saved at any cost, even if that cost is a very human one.

Of the total costs for this latest crisis-stalling measure (for that is all it is - in time Greece will be back on the precipice of collapse once more) we can be proud that every family in the UK has effectively contributed £500. But don’t fancy that this money will be buying a few thousand cans of soup for the now destitute. It is simply being pumped into the blackhole of debt and stockpiled reserves for paying off debt that simply ensure the single currency is kept afloat.

In essence, UK taxpayers money diverted to Greece via the IMF has been spent on saving the flagship single currency project which is the keystone of the European Supranational dream in which we decided long ago we were unwilling to take part.

It's about time we started sensibly looking at how to return Greece to its own currency, where it can control interest rates and stimulate growth and spend the €130billion on helping those most in need (it would work out as around €100,000 each) rather than throwing money at vacant ideology.

I would sooner support a charitable hand out from the UK to Greece rather than watch the government fund autocratic tyrannical rule in Athens by a group of Eurocrats with a penchant for continental domination while ordinary people suffer.

Best way to safeguard fishing industry: take control out of the hands of...

We all know by now the problem with overfishingg, depleting stocks and discards.
It has become a recently widely reported scandal the effect EU Common Fisheries Policy has on our waters.
I was staggered therefore to learn a while ago that the European Commission has taken upon themselves to go above the law and determine fisheries management without even consulting Parliament.
The only two bodies of water where fish stocks are being rejuvenated and an economically viable industry is being reconstructed are those controlled by Norway and Iceland. Yes, non-EU member states.

iDay

My esteemed colleague Trevor Colman has released this video today laying out the reasons against EU membership and discussing what would happen if the UK left. It has already created a buzz in the House of Commons and in Brussels.
It's a great watch and I believe contains essential arguments that really should be publicised.

Maastricht 20 years down the line

Yesterday was the 20^th anniversary of the Maastricht Treaty. On 7^th February 1992 the European Economic Community laid the foundations for becoming the bureaucratic beast it is today. Common Foreign and Security Policy was adopted, as well as the creation of Justice and Home Affairs. The EEC now extended into military and judicial cooperation. But perhaps most ironically, Maastricht also led to the creation of the currency of Europe.

A mere two decades later, the Eurozone is on the brink of collapse. How timely that next month the clock ticks down on Greece to address its public finances. Twenty years to the exact day the treaty creating the Euro was signed, Greek leaders have been told they must enforce austerity measures or risk losing a new bail out which could prevent the country from defaulting on March 20^th when the current loan matures.

Greece must now demonstrate they will satisfy terms laid down by the EU, European Central Bank and International Monetary Fund, known collectively as the troika, ironically a Russian word once used to describe the supreme officials of Communist states. Yet it is becoming increasingly difficult for Greece to enforce spending cuts, leading to job losses and slashed budgets, with full democratic acquiescence from both Parliament in Athens and the Greek public.

In effect, EU chiefs are edging Greece towards the exit door. They are willing to risk a default and then eject Greece from the euro if Athens refuses to comply with demands insisting that the eurozone is now strong enough to fight against the risk of contagion. Both Merkel and Sarkozy are talking to the press about "time running out" and the French President has even argued that the South Mediterranean member state would get "no community money" without reform.

It seems to me that Greece is being made a scapegoat and enabling the two big economies to flex their muscles. Of course, the Greek crisis was spawn of irrationally high unsustainable public spending under a new currency where vast sums could be borrowed at such low interest. But who set those rates, and who benefited from them? Germany of course. Then when the house of cards came crashing down after the credit crunch struck in 2008, all fingers pointed towards Greece and their woeful borrowing track record. Nobody seemed to comment on the fact that a single currency spread across such diverse economies without fiscal integration and with one common interest rate could not in essence actually work.

NowGovernments across the EU are struggling to assimilate into domestic law savage measures dictated by Brussels; measures that, in effect, will soon be underscored by the new fiscal compact signed last month by 25 member states which essentially criminalises budgetary indiscipline as determined by the European Court of Justice. Finally the Euro members are building fiscal integration, but are essentially closing the stable door after the horse has bolted. As a result, Greece, who indeed was reckless with spending in the boom years, will effectively be left in tatters and expected to pick up the mess.

It is now widely held that Europe cannot cut and grow. Thus far austerity measures have led to deepening recession. Focus on growth is needed to pull southern European states back into competition, yet ironically the stranglehold on trade and working flexibility imposed by EU competition rules and social policy written twenty years ago prevent growth-enhancing investment taking hold.

Twenty years ago the UK negotiated opt outs which could be argued as having prevented us from becoming like Greece ourselves. As a nation we run quite a high structural deficit, that is, we spend far more on public services than we can logically afford. However the pound is strong, enabling us to borrow at rates that we can pay back. As a result, the Labour Government ran up incredible debt, leaving the mess to be sorted out today, but because we were not a euro member the tidy up is not one hundred per cent dictated by Brussels and we did not collapse when Ireland went down. Equally opt outs in social policy mean that we can in some areas be more flexible if we decide to "work our way" out of recession. Despite strikes over pensions and wage freezes, we are not witnessing the sort of uprising that has taken place in Athens. Then again, our austerity measures are not being drawn up by essentially an entente of foreign governments and supra national powers. We are also not part of this new compact, which although by law cannot be an EU treaty following the UK veto at Christmas, in all but title, is. Essentially when we said before Christmas "no" to EU law criminalising cerrtain percentage budget deficit, due to a lack of unanimity, the law could not be passed. Instead what has happened is 25 out of the 27 member states, that is, everyone bar us and the Czech Republic, have clubbed together to forge a treaty that will be governed by the European Court of Justice and whose negotiations and administration will take place within EU buildings. In essence, they went ahead and made the treaty anyway, calling into question the legality of its operation. But what are we to do? The highest court of appeal on such issues IS the ECJ. Are we to approach the Court of Justice and ask them to examine how lawful they are? What about when decisions made between the 25 members of the entente have an impact on Britain, via the single market, or through financial services reform? We are in a highly precarious situation that will at some point in the future rear its ugly head again.

This week Greece has been forced to accept an additional 15,000 public sector job cuts, which still fail to satisfy the demands of the troika. It has been reported that the Greek Finance Ministry is now examining the economic consequences of leaving the Euro, following on from the not so discreet rhetoric being issues from France and Germany.

Unsurprising then that this milestone anniversary for the EU has been kept so quiet

The Non-Treaty-Treaty Veto U-turn Thingey

This week has seen plenty of dicsussion about David Cameron’s treaty “U-Turn”. In fact I was a little startled to not see the matter picked over on Question Time last night but one assumes the BBC hadn't picked the right members of the panel for that.

The Prime Minister has revoked his original standpoint of blocking a new compact observing tighter fiscal regulation and budgetary control governed by the European Court of Justice. That is now going ahead, but without the involvement of the UK or Czech Republic. What does this mean? Well before Christmas the UK vetoed a new treaty which would effectively see economic governance enforced to all 27 members of the EU by Brussels. Apparently we do not have a new treaty, due to the veto, and so instead 25 out of the 27 member states have drawn up an "intergovernmental pact" which is supposedly separate from EU jurisdiction (as we blocked it - you see, any new treaty has to be ratified by all member states) yet the European Court of Justice will preside over it and the meeting will take place within the governmental buildings of Brussels. In essence, they have I would propose illegally sidestepped the knotty issue of the fact that an EU treaty of fiscal governance was blocked, and gone ahead and effectively made one anyway. This poses the question of how a 25 state intergovernmental pact can use the jurisdiction of an institution of the 27 member state EU without it in some way being regarded as an EU treaty. It also leaves the UK vulnerable to decisions made under this new entente which could affect the single market or financial industry in the City of London as we are not part of it. Now I'm not suggesting I'd want us to be part of it, far from it. Instead we have been told that if new regulation encroaches upon UK sovereignty, the legality of the agreement will be called into question, which would effectively mean appealing to the ECJ to pass judgement on its own lawfulness. It is a strange situation that until put into practise, remains pretty hard to fathom. What is clear is that the EU is prepared to work above the law which it writes itself and bend the rules whenever it feels like it if not all parties are appeased by the decision making.

So when will this not-a-treaty-treaty come into force? Well Nicholas Sarkozy has stated that France will not ratify the new “treaty” until after the French Presidential elections, with his main contender, Francois Hollande, suggesting he would demand a rewrite if he were to gain power. This means the 25 member state agreement will not even be put into place until after the start of May, yet the Eurozone is likely to stumble quite dramatically before this legislation can seriously send out a message of calm to the markets. The initial bail out loan to Greece is set to mature on 20^th March with the possibility of an uncontrolled default looming large. The bubble of toxic debt currently hovering over southern European Euro countries could burst when Greece fails to start paying back the loan and with potentially disastrous consequences. If this were to happen, how much would the UK be dragged into the mess?

I have addressed two letters, one to the UK Chancellor of the Exchequer and one to Edwina Hart, the Welsh Government Business Minister, asking whether any contingency plans or impact assessments have been prepared for euro collapse and whether any public money has been set aside to rescue businesses should the single currency come to a timely end. We have heard how the UK Foreign Office has prepared a rescue strategy for British nationals if a collapse of the single currency leads to social uprising across Europe, but what about the equally pressing possibility that shockwaves from another crunch could smash against UK shores?

I am concerned that Welsh businesses are implored to trade further afield than the EU, especially with the fantastic links we have with the Commonwealth, yet the rhetoric from the First Minister’s Office suggests a vain clinging to the ideal of the EU as some kind of saviour for Wales. After all, if the single currency goes down, anybody who relies on trade with the countries involved will be equally damaged. So have Welsh businesses been encouraged to slough the bonds with Europe and look elsewhere? I have heard little to this end. Instead all we continue to hear are members of the political elite still championing the EU as of some kind of irreplacable benefit to Wales. The usual reasons, trade and regional funding, are constantly echoing around newspaper columns, but in truth, we can see how in fact the trade links established with the EU are the reason many businesses should be starting to panic, while recent damning reports confirming what I have always said about EU Cohesion Policy are coming to light.

It is interesting how recently the myth of structural funding has been overturned. For years Cohesion Policy has been championed as the greatest benefit for Wales of EU membership. Even though parts of West Wales are net beneficiaries of the funding, overall, Wales, like the UK as a whole, pays far more in to the pot than is ever returned. In fact, I have often argued that Cohesion Policy is essentially Brussels saying to Wales ‘You pay us millions, we will give back 65% and tell you how to spend it in return for you publicising how generous the EU is’. It’s simply propaganda funded by extortion.It would of course be far better for us to manage our own regional spending, but propagandist nationalists would suggest Westminster would leave us high and dry and only Brussels can be trusted to make sure we get a fair deal. Really? It is silly to believe this just to fulfill a patriarchal agenda when it is clear that this would surely not be the case. In Scotland and here in Wales the forces for independence vainly cling to the idea that membership of the EU in their own right would be the way forward, after all, the benefits of being part of the British pound and receiving money via the Barnett Formula from Westminster would need to be replaced with another pot of cash. I think not. If one can see how easily the UK can be defied when it suits the EU, imagine the rollocking smaller states would get from Brussels. Plus the EU would control the North Sea Oil, the whole of the Welsh farming industry, would force us to sign up to Schengen, and make all businesses stick to their frankly inept and dangerous working and competition laws which would render us wholly uncompetitive and wholly dependent upon Mother Brussels for everything (which is of course, what they want). Plus with a whole contingent of new members lined up to join, our needs would be increasingly disregarded. It is also part of EU law that any new member states must sign up to the Euro, a rather chilling prospect I think you will agree. Plus I can't see member states like Spain sitting back and letting Scotland, or potentially Wales, sign up to the EU independently when it has such problems with the Basque separatists and those who want to see an independent Catalunia. If Brussels were our look-to government and not Westminster, I would imagine people would soon grow sick and tired of the amount of legislation and control being filtered down from Brussels when the dream was to have a Wales standing on her own two feet. I would also imagine if that were the case England may well decide to break away from the EU and grow in wealth and freedom until the disparity across the Severn would be unimaginable and everyone was regretting not sticking with the devil we know.

However let's not go too far with this line of thought. The more pressing concern is what is going to happen over the coming months to the economy.

The unravelling narrative of the Eurozone crisis is far from over and I would venture to suggest that across the continent the public are becoming wearied and justifiably concerned about the direction what was once a simple free trade community has recently taken. What is left unaddressed however is whether public opinion alone can democratically overturn the burgeoning powers the EU bestows upon it’s self. Given the recent move in Brussels to compose an essentially illegal “treaty” one would suggest that democracy is slipping further and further away from EU conscience. Only time will tell how long this delicate balance between an increasingly agitated public and a wilful supranational superpower can last.