The moral implications of bail outs and austerity

Morally bankrupt.

Bankrupt?

How little we have seen of the human impact of the ongoing financial crisis in the Europe.

Of course we have seen reportage of the human reaction, be they stern faced Ministers assembling around large oak tables, shooing away the clucking throngs of news journalists awaiting any shred of carrion to be tossed from the wreckage, or the gathering crowds of unhappy protestors, waving banners before being strewn with rubber bullets by an equally unhappy, yet duty bound police.

And yet then, when we read on, we learn that Greece has asked for that, despite being reprehensible for having committed such and such an oversight, while doom laden Spain is sure to encounter this in their fate leaving it to Germany to propose that, and so forth.

As such the anthropomorphic labelling of whole countries is enabling both journalist and reader to be removed from what should be the real news story of the unfolding Eurozone disaster, the true cost to the everyday citizen. The people angle.

But it has suited the European Union to convey this image and the largely national-leaning print press to extenuate it. Define the problem as an entire country’s fiscal profligacy and then the only tool for debt solution is the EU's favoured austerity that must be shouldered by all. In Brussels it allows for a convenient bypass of democratic wont in order to transact further powers within their scope, while for national governments and newspapers, it conjures a sense of national unity  by lauding an "all-in-this-together" sermon that allows the weakest in society to be most heavily burdened, despite being the furthest removed from the causes of the crisis. What is so ironic is that while in Brussels, Barroso readily condemns the very notion of nationalistic, populist barriers to deepening European integration, he relies upon it implicitly to sell the Troika imposed programme of cuts to a nation. Everyone must do their bit.

Mr Barroso, it was your fiscal policy and foolhardy adherence to a single currency, placing political will before economic sense, that both caused the problem and continues to prolong it, so why must Senor Garcia be forced to work until his joints are ground to dust while his children will be taxed for the ills committed by their predecessors? I am sure when the concept of a single currency without unified fiscal policy was being drawn up he wasn't consulted.

Every country that found itself in the same position as the Eurozone after the credit crunch in 2008 was able to find a solution. In Iceland, the economy hit such a wall that the country defaulted and devalued the Krona. Iceland is now recovering very quickly and is borrowing again on the world markets as a creditworthy entity.

You see the debate that has raged in newspapers across Europe about what to do with a problem like Greece depends heavily on viewing each and every man, woman and child on an Athenian controlled island as both part of the problem and therefore responsible for its solution.

If a person borrows money, they receive the amount directly and must pay it back according to the terms and conditions. If a country borrows money, the citizens are unlikely to be informed of the loan, its purpose and certainly not its terms and conditions. How then does central government, let alone the government of a third country, morally justify imposed austerity?

Yet the personification of Greece as the naughty member of the Eurozone allows the EU to paint the picture of the reckless neighbour who, finding themselves unable to pay for their mortgage, appeals to the bank for help to keep their house. They are relucantly granted a reprieve on condition of some very stern, and of course wholly warranted, terms and conditions. Therefore if Greece gets a bail out at the cost of imposed spending cuts and strict austerity measures, then Spain would have to subscribe to the same punitive conditions if their economy is also to be rescued. Of course Senor Garcia cannot see why his benefits are being stripped when he has done nothing but work hard all his life. Meanwhile Germany, who does not find herself in such a financial mess, can bang the fist on the table and make demands which will affect the retirement age of Kirios Papadopoulos. Of course when I say Germany I mean Merkel and her cronies and their Brussels-based counterparts.

In 1995 Germany strongly opposed an IMF bail out of Mexico arguing moral hazard in giving a €17.8 billion loan as it essentially worked out as a rescue package for the American investors who had shored up so much Mexican short-term debt. Now the boot is on the other foot and it is German banks facing losses if Greece is allowed to go under, with as much as €22 billion of Greek public debt held by German investors. Suddenly Frau Merkel repeats the tune of solidarity for Greek and EU ears, but will happily pour scorn on Athens as and when it will placate her own people.

It may suit Brussels, political leaders, newspapers and ministers to talk about Greece, Spain, Germany, Portugal and Ireland as if they are characters in philosophical problem. But the real moral debate is not who should be paying the debt, but how.

Passing the buck..or Euro

US President Harry Truman famously had a sign on his desk in the Oval Office that said "The Buck Stops Here".

 

The expression itself is thought to originate from poker, whereby a marker or counter indicates whose turn it is to deal. A player could pass the "buck" into the next player and thus buck his responsibilities.

In international relations the phrase has come to mean the tendency of nation-states to refuse to confront an escalating issue in the hope that another nation will step up to the mark. Perhaps a more fitting representation of playing hot potato with multi-national responsibilirt would be the phrase "The Euro Stops Here". But then, where does the Euro actually stop?

I don't just mean in terms of the currency itself. The very problem with the single currency was that it was created without any sense of centralised control. Instead a sort of Ashram-style communcal ownership of the currency was forged. But as the edifice began to crumble, all of a sudden shared responsibilities were denied and finger pointing, points-scoring and accusatory proclamations shattered the previously optimistic murmured assent of the great single currency project.

It is of course summer recess in Brussels. That means the big boys in the EU are essentially on their holibobs, leaving nobody to call their shots for a couple of weeks and essentially passing the onus onto the European Central Bank to calm the waters before everyone can return to the drawing board and bang their heads together once again.

Rather unhelpfully, the ECB President Mario Draghi has been left the usual script.
Phrases like "The single currency is not reversible" and "The ECB will do whatever it takes to save the Euro" are being jettisoned out at the world's media, who, of course, have heard it all before.


Then there was even the line “In the coming weeks we will design the appropriate modalities for such policy measures,” alongside the usual affirmation that eurozone countries "must use the time constructively to move towards closer integration in the eurozone".

The ECB's bond-buying programme had managed to actually bring down the costs of government borrowing in the Eurozone via the trade between banks and government institutions on the secondary market. However this was shut down in January and anyway, actual costs of government borrowing are largely determined at auctions in the primary market where bonds are sold directly to banks (bonds are essentially I.O.U.s which certain crafty financiers agree to "buy" ata rate of interest which they believe will land them a sizeable profit. Of course, the less desirable the I.O.U. the higher the rate of interest demanded by the potential purchaser). It is here that the ECB would need to bring down the costs in much the same way as the Bank of England has done in the UK, effectively spending 20% of UK national income on government debt.

The same sort of intervention by the ECB would be a bond purchase of around €1.6 trillion.

But the ECB's constitution prevents it from lending money to European governments, precluding it from buying bonds at government debt auctions in the primary market.

Instead, under the Eurogroup plan, the EFSF (European Financial Stability Facility, or to you and I, the bail-out fund) would do the buying...through the ECB.

The problem is however that the bail out fund which at one point had €440billion has already thrown €200billion at Greece, Ireland and Portugal and has recently committed another €100billion to Spanish banks.

Yet the ECB has also stated that "first of all governments need to go to the EFSF; the ECB cannot replace governments". But there's nothing really lefy in the EFSF, and what's more the statement made by the ECB was not really backed up by one vital player:  Jens Weidmann, head of Germany's influential Bundesbank, the ECB's biggest shareholder. The very fact that Draghi named the dissenter was clear intent that rather than buttering up Germany as potential paymaster, the institutions are tempted to round upon the economic powerhouse by portraying Germany as some kind of Judas.


He is without doubt fully aware that all this chit chat must get through Germany's Constitutional Courts in September. 


Draghi has also reaffirmed that national governmens had to do their bit and stick to, if not enhance, already devastating austerity measures and use their bail out funds before turning cap in hand to the Central Bank.

Essentially all we have heard from Draghi is the usual rhetoric designed to temporarily calm the storm while everyone enjoys their vacation. However, perhaps significantly, the German Government has backed the ECB's statement despite officials at the German central bank being openly critical of using ECB resources to buy the bonds of struggling countries such as Greece or Spain as against the spirit of the ECB’s statutes, which forbid it to finance states. The bank simply reiterated that “There haven’t been any changes” on this position.

The question over whether the ECB could grant the proposed €500billion rescue fund a banking license in order for it to borrow from the ECB has been shot down by Germany. Yet while the Bundesbank cannot veto ECB policy decisions, the very fact that Germany is the biggest shareholder in the ECB due to the size of her economy means it is vital that they are on board.

And so we have in practice what the EU was designed to prevent.

The question of on who's desk the sign "The Euro Stops Here" should sit is increasingly obvious to us all. Once again the future of Europe will likely be determined in the Bundestag unless all the other European states can combine forces to overcome her might.

A knock on your door from Barosso can mean only one thing...

It's getting rather tiring talking about the same topics, week in week out.
But they simply cannot be ignored.
As soon as they disappear from newspapers, they are simply simmering under the surface of a fast-track primordial swamp waiting to evolve and re-emerge a more fearful beast.
More than £30billion of value of British companies was obliterated  by news that Spain, as predicted, will likely need a national, as well as the already agreed, banking bail out. And if the Eurozone's fourth largest economy is sucked into the mire, well, I've said it before and will say it again. The EU is screwed.
In fact the Global economy is going to be up the creek without a paddle. World stock markets fell by 2% in the wake of the news.
British banks with billions tied up in Spanish loans are now in a precarious position while the credit ratings of the Netherlands, Luxembourg and Germany are all set for a downgrade, which ultimately will compound the problem, making the powerhouse economies of the single currency face higher rates of borrowing.
Italy is also heading towards a bail out with public debt totalling almost £1trillion.Ten Italian cities are on the verge of bankruptcy.
Currently Spain has been granted a bail out of up to £80 billion to shore up its banks, which are sitting on £122 of dodgy loans. But the latest news that the state also need an urgent cash injection adds an eyewatering £250billion onto that amount. Throw Italy into the mix and in total the Eurozone looks like it may need the previously predicted €2 trillion to get through to the end of the year. The bail out fund that took months to agree has only €700billion to it's name.
Let's see what that looks like as a number...

€2,000,000,000,000,000,000

Yikes!

Meanwhile the Troika, (IMF, ECB and EU) are about to arrive in Greece to turn the knife a little more and make sure their hugely unpopular and unsuccessful austerity measures are being obeyed to the letter.
Greece is likely to suffer much deeper recession that previously thought, with expectations that the economy will shrink by 7% ratehr than the forecast 5% demonstrating the swingeing cuts are driving the economy into the ground. But without progress, Greece is being threatened with not receiving the final part of its bail out of €31.5billion. Reports suggest the IMF will now refuse any further calls for aid.
I was surprised to learn that despite his pontificating from Brussels, Commission President Jose Manuel Barosso hasn't even set foot in Greece, the country he has overseen being brought to its knees, since 2009.

Welcome to my club

How easy it is to jump onto the bandwagon of popular opinion.

For years, UKIP have been labelled everything from fanatically anti-European to xenophobic for holding the view that the European Union was bad for Britain. As recently as a couple of years ago, throughout the early months of my tenure as an MEP, I received accusations of scaremongering if ever I suggested the Eurozone was doomed. Those critics have fallen strangely silent of late.

Now politicians from across the political spectrum are championing a British exit from the EU, warning of the dire economic consequences of prolonging the single currency without fiscal unanimity and bandying about suggestions of an in-out referendum. All of a sudden our party line is trendy.

One thing is for certain. For the single currency to survive member states must forge closer economic bonds, to the extent of becoming a single federal entity (the argument is that the EU has borders, a flag, an anthem, a Parliament, an army, foreign policy, a currency and laws, so the only thing separating it from a federal state is the lack of tax raising powers). If this does not happen, the Eurozone will, eventually, implode, and in doing so, force the UK into a decade of depression.

Of course, the UK would resolutely not wish to be part of a federalised super-state. It raises the question of what sort of relationship we could have with a new Europe. UKIP has always championed a relationship akin to the current Swiss model, where free trade and continental cooperation remain priorities, despite not being a member. This is now being mooted by politicians who but a few months ago championed a more integrated European Union, only to find their subject today ridiculed by fate.

Either way the tapestry that has been woven by Brussels over the last five decades is unravelling at an alarming rate. Spain requires a £100 billion bank bail out to save her finances. The incomprehensible nexus that has formed between the Spanish state and the banking sector means the Government can no longer sensibly bail out the very banks that have been bailing out the Government. The Spanish Finance Minister has resolutely denied needing a bail out, but we’ve heard this before. Greece, Portugal and Ireland all said the same thing. In the UK, the Government recapitalised British banks to the tune of £1 trillion, a measure that was widely criticised on the continent as too closely bound to Anglo-Saxon capitalism. But it saved us from the economic disaster we are now seeing affect banks in the Eurozone’s largest economies – even in Germany. It’s estimated at least £200 billion must be injected into Eurozone banks to stimulate borrowing capacity, but in order for this to happen Germany must essentially underwrite all single currency loans.

It’s understandable that Germany doesn’t like the idea of so-called “Eurobonds”. Why would they? Holding them culpable of the debts of their neighbouring countries is hardly going to seem fair to the majority of Germans. Meanwhile Spain wants a bail out with no strings attached. Of course they would. They can see what has happened in Greece, where desperately ill people are queuing outside pharmacies for life saving medicines as stocks run dangerously low. Germany does not want Spain to get a free handout without agreeing to fairly stringent conditions. And thus we are left trapped in an ever revolving circle of national self-interest that is leading critics to cry out for the greatest seismic shift in political power ever seen by Europe – the move to federalise the Eurozone before the clock ticks down, despite such a schismatic resolution flying in the face of democracy.

What about the UK? What do we want? We need Eurozone banks to be protected. Barclays is exposed to Spanish banks to the tune of £26.5 billion. RBS is liable to £14.6 billion if they do collapse, while Santander, one of the high street’s biggest financial retailers, is actually Spanish owned. Then there’s our economy. In many respects inextricably intertwined with European markets, not just through EU membership but as the result of simple geographic positioning.

The most sensible answer would be the UKIP option. Leave the EU, enhance trade with traditional partners in the Commonwealth and demonstrate neighbourly cooperation and free trade with Europe as is the modus operandi of Switzerland and Norway.

As part of the Queen’s Diamond Jubilee celebrations, a lunch with Commonwealth leaders was hosted at Buckingham Palace. We were reminded that our Queen is not just the head of state in the UK. She is Queen of Antigua, Barbados, Bahamas and Belize, Canada, Grenada, Jamaica and New Zealand, Papua New Guinea, St Kitts, St Lucia, The Grenadines, the Solomon Islands, Tuvalu and Australia, as well as being head of the 54 countries that make up the Commonwealth of Nations, including India, Nigeria, Pakistan, Singapore, South Africa and Kenya. These are long established natural allies of Britain, countries with a diverse diaspora, different geographical landscapes and as a result, present true international trade opportunities.

This year Commonwealth GDP will soar past the Eurozone’s. While the Eurozone will grow by only 2.7% if it manages to avert fiscal disaster, the Commonwealth will be boosted by 7.3% growth.

I’m not bitter that my views are now being championed when for so long they have been slated. I would be a poor politician were my pride more important than my conviction. I just hope the newest recruits to Eurosceptic ideology have strength enough to hold as steadfast to their beliefs. For what Britain and Europe needs more than anything right now is a steady hand on the tiller.

Oil, banks and democracy - a potent blend

Oil carries with it so many connotations.
The social, moral and geo-political implications create a quagmire as opague and viscous as the crude substance itself.
When Ghana discovered oil off its coast line a few years ago there was a sharp intake of breath. Everyone saw what had happened in Nigeria. The Government were not prepared to fall into the same trap, creating a feral landscape where natives and multi-nationals go head to head over the black stuff, where misery is wrought across borders such as in Sudan, and where corrupt governmental allegiances and illegal wars exacerbate religious and ethnic divides. Where there is misery and oppression, there is often oil.

In the case of Spain, Italy and Greece however the interconnection between oil and misery is different.

Oil in Spain?

Yes. The Golden Stuff.

Olive oil.

For in Spain the price of oil olive has slid so drastically, caused by a sharp decline in domestic demand, a failure of potential foreign export markets to embrace the oil - such as the Far East, and a supply overload flooding the market. As a result, the EU has been forced to intervene. [Sigh]

Taxpayers' money is now being driven in to shore up the prices in order to maintain employment in rural areas that rely almost exclusively upon olive plantations.

We all know what happens when the EU intervenes, fixing prices and stockpiling resources.
Should we expect olive oil producers over the next few years to become completely dependent upon single payments?

The future of the Mediterranean economies in the Eurozone is bleaker than is being made out. In Spain, the Government are beginning to realise there is little they can do to avoid becoming the next Greece. The likelihood of the country needing an EU bail out is almost certain. Spanish banks have been propping up state finances to the tune of €316 billion borrowed from the European Central Bank. Those banks now emergency finance, to the tune of €23.5 billion, which the Spanish Government has been determined to find itself - creating an ironic cycle of debt that cannot be broken without outside stimulus.

Yet the people of Spain have already shown vehement opposition to the Government's own austerity measures, and with a quarter of the adult population now unemployed, who could blame them? Yet any EU bail out comes with a multitude of conditions that must be met - however unsympathetic to the plight of the normal person. This is the situation we are now seeing in Greece, where the democratic choice is an end to austerity, yet the EU refuses to climb down on the demands stipulated in return for propping up the single currency. One can be assured that if Spain ends up in a similar position, the opinion of the public would be known the world over.

In Ireland,  the public have gone to the polls to vote in a referendum on Irish approval of the "EU fiscal pact" set out last December. Prime Minister Enda Kenny has urged the nation in a televised address to back the proposals, in order to ensure the rug isn't pulled from under their feet, and for the time being, the propaganda appears to have worked with early results indicating voters would back the fiscal pact. Of course in Ireland they also have the added security of sterling propping up some Government debt after George Osborne signed off a £7 billion bilateral loan, but this also means our loan, which is due to be repaid with interest in the future, is at risk of falling into a fiscal blackhole if the single currency collapses.

The coping mechanism that has been rolled out during the course of the last four years has been for deeper integration and mutualised responsibility, yet this flies in the face of the will of the majority of voters in the EU,  be they Germans who do not accept their share of any burden or Greeks forced out of work, unable to access medicines and even food. The public conception is that closer EU integration has weakened national economies, rather than providing the reinforcement that it was purported to achieve.

Economics is more of an art than a science, it is often argued. It involves theorising, when nobody can understand or predict what any outcome may be, however well read they may be in the field or practised and proven in managing national debts. While one side of the argument would state that breaking the single currency up would cause a lot of short term pain but enable each country to forge an idiomatic platform upon which to compete and rebuild, others would argue that disintegrating the Euro would leave huge unaccounted for wounds of debt that would plunge the global markets back into disarray, creating shockwaves more severe than those witnessed in 2008 and the first global credit crunch.

One thing is for sure. The break up of the single currency would not be good for the EU. It would undermine the entire European project and pit disenchanted countries against one another, further enhancing the risk of member states applying to leave the EU, potentially resulting in the domino affect of the entire dissolution of the entireUnion. It is argued that nowhere in any treaty is exiting the single currency accounted for, further enhancing the risk of the break up of the Euro resulting in ejection from the EU itself - by law.

June is set to be an interesing month. If Greece runs out of money before the elections, and if Brussels are resolute in their stance that a bail out would not be provided without obeisance to their conditions, we could have a humanitarian crisis on our hands.

I hope, for the sake of the people of Greece, this is not the case.

The Young Ones

What sort of country are we leaving for our children?

What sort of society, what sort of culture, what sort of world will they inherit?

It's a question that is often asked.
But perhaps we should be questioning what sort of children are we leaving for our world?

With some of the worst youth unemployment figures in the developed world, Europe is home to a disengaged, disenchanted and disenfranchised generation who will soon be expected to take over the mantles of their nations.

Figures for youth unemployment are largely double the incidence of adult unemployment in many European countries. The economic slowdown is hitting the young the hardest, but we are yet to truly see the scars that will be left behind. Those will only become apparent in around a decade or so.

While Generation X, the post war baby boomers, may be held accountable for the strain on economies brought by capitalism, credit and unsecured loans, Generation Y have managed to squeeze through and are largely upcoming professionals who have completed education and are well on their way to careers. It's the next generation down, dubbed Generation Z. that we should perhaps be worrying about.

There is an increasing incidence of NEETs in Generation Z - Not in Education, Employment or Training. A lost generation who are likely to be living at home, and as such are delayed in becoming fully engaged young adults who are taking an active role in society. Together with their peers, they look at everyone else around them and perceive a world that is forn the most part inaccessible to them. They feel they must carry the burden of the mistakes of their elders on their shoulders, while they are stripped of responsibility, indepence and pride.

Youth unemployment is largely the product of structural factors, where there is simply no capacity to accomodate those entering into the jobs market for the first time in the system. This is then exacerbated by the sort of austerity measures we are seeing in Southern Europe that has put youth unemployment in Spain higher than in Greece, with both running over fifty per cent for 18 to 24 year olds.

Youth unemployment across the Eurozone as a whole was 21.6 percent in February, according to the European Union's statistics office, Eurostat. That accounts for hundreds of thousands of unexploited, underused and wasted capable people who are not only contributing to society, but are starting to feel like society is not contributing anything for them.

Youth unemployment is often the first symptom of a failing economy. Service industries are hit by the reduction in available spending money and the perceived threat of joblessness, causing people to stop going out and buying, or eating in restaurants. It is well noted that service industries are one of the biggest employers for this sector of the demographic. How many of us toiled in pubs and restaurants, or shops, during our youth? Yet with so many places affected by the recession closing or having to cut back significantly, the first area affected is often staff.

Meanwhile, job cuts in other areas are seeing better qualified, better equipped, and perhaps more motivated members of Generation X and Y taking up jobs that Zedders would otherwise have access too.

On top of that, large amounts of immigration, both EU and non-EU, is providing cheaper employment for already struggling businesses who are more likely to be tempted to take on a foreigner for less money.

Youth unemployment is not just about joblessness. Various studies have shown clear links between youth unemployment and antisocial behavior, alcoholism, mental and physical illnesses and suicide. Meanwhile a large number of the protestors involved in the riots that have spread across Europe and are likely to continue and escalate well into the summer, are unemployed youths who feel disconnected from society as a whole. You only have to look at pictures from the London riots and the most recent scenes in Barcelona to see the majority of people who took to the streets feeling that their voices were not being heard, came from the younger generations who feel they are unfairly having to bear the brunt of matters they could not possibly have contributed to.

Not only that, but economists have also argued that youth unemployment creates a scarring effect that reduces the capacity to earn throughout a person's life compared with someone who did not suffer long term unemployment at an early age. Therefore the majority of those young people stuck in an unemployment rut now will be blighted by a decelerated passage of progress compared to their counterparts who are able to traverse the current economic situation relatively harm free.

So what can we do to help Generation Z?

The primary driver of employment is growth, especially for those just beginning their careers who can be taken on baord and groomed and moulded into the future workforce of an industry. But with ongoing austerity measures designed to to tackle structural problems, growth is being sacrified on the altar of a quick fix recovery.

The other solution is to take these people out of the job market by placing them into training. While they may not be earning money, many believe the best solution is occupying them with studies which will also prepare them for participation in the workforce when the better days finally do arrive.

However, with structural state deficits as they are across European nations, governments are ill placed to pour money into the further education of a group of people who have already negotiated the school system and have either chosen not to enter further education, or have come out of it to find no job at the other end as well as potentially a large amount of debt already accrued in their bank accounts.

The situation isn't uniformly bleak across Europe. In Germany, young people's prospects for work have never been brighter. Yet this may also be a reflection on the higher number of young people engaged in education and vocational training.

It is essential countries like Spain and Greece need to ensure Generation Z are well rounded, fully engaged and highly skilled young adults, ready to compete in an ultra competitive global market place. However strategies to encourage youth into training schemes work best when they come with guarantees of employment at the end. However prolonging the amount of time spent in education is not the solution.

Whilst in Germany the length of a degree is similar to that in the UK, in Spain many courses take much longer. As a result, young people may be dissuaded from signing up to such a big commitment, with many degrees taking up to six years, when they are already demoralised by the society in which they live and as a result would be less likely to want to make such an investment when their prospects look bleak.

Meanwhile those attending shorter courses will likely come out the other side to see little change, and may feel even more let down by the system.

At the same time, austerity measures are seeing an increase in retirement age across Europe . It's ironic that at one end of the demographic you have people seeking work who are unable to find it, while at the toher you have people wanting to leave work but finding they must remain in employment for years to come. On top of that, regulations and directives from Brussels restricting flexibility in the workplace are preventing dynamic handling of the socio-economic situation from the bottom up. From the working time directive to the agency workers directive, legislation is costing companies billions in red tape and making it expensive to take on new staff.

It is also likely that such social regulation has also affected the expectations of Generation Z, who are becoming less willing than previous generations to perform what they deem menial tasks, or work for long hours for perceived little pay.

Meanwhile the generation in question has been brought up in a Western capitalist society where they know little other than a culture that demands recognition, luxury items and a certain lifestyle which in itself denigrades the usual forms of employment for those just starting their working lives. As a result, many 18 to 24 year olds look down their noses at employment opportunities in supermarkets or manufacturing plants. As a result, many of those jobs are taken up by migrant workers who essentially flee unemployment in their own countries, but by doing so, essentially shift the burden of jobs creation and welfare onto another country.

The cost of youth unemployment in Europe could be very high. This summer as Spain joins the ranks of Portugal, Ireland, Italy and Greece in economic turmoil, expect to see more riots from a disgruntled public on the streets, with a large proportion of protesters hailing from the 18-24 year old age bracket.

For every young person out of education and out of work, not only is an individual's capability wasted, but also their spirit. It is high time Brussels sought to rescind restrictive regulation that places a stranglehold on enterprise and curtail uncontrolled and exacerbatory free movement of people, if only to give the youth of today a chance while the going is tough.

Meanwhile as adults and as parents, it is our job as a society to keep the fire in their bellies alive, and thank or lucky stars when we have a solid income and a stable job.

Comparing stuff with Downton - well, it's the current trend

Did you see the series finale of Downton Abbey? More happened in one hour of television than in decades of popular soap operas.

Finally there was "the kiss" leaving many of us to wonder what the no-doubt feel-good Christmas Special will be about now Matthew and Mary have hooked up (and regretted it miserably all in one episode) AND Mr Bates and Anna married and spent a romatnic conjugal night in a secret suite kindly decorated by the soon-to-quit Cora look-alike who's been snogging old Lord Grantham in side rooms, before old Bates was carted off by police. With the speed in which the plot line moves on, one imagines Matthew and Mary will have a Christmas wedding and spend most of series three tackling marital issues in the changing post war society of the swinging twenties while trying to secure the Grantham lineage in a few steamy scenes.

It was lucky that flu was so voracious though. It worked well to move various narratives and sub-plots along. Although did anybody else think it had the epidemic alacrity of the Ebola virus? One minute Lavinia was wandering down stars to see her betrothed tonsil-deep in Miss Mary, the next she was spluttering her last breaths as Lady Grantham's profuse sweating and nose bleeds persisted over the course of two gripping will-she-or-wont-she nights.

Apparently the actual Spanish Flu lasted from June 1918 to December 1920 spreading to the Arctic and remote Pacific Islands. Between 50 and 100 million died, or more than 3% of the world's population, making it one of the deadliest natural disasters in human history. The virus preyed upon the young and strong, turning a healthy immune system into a corporal civil war where the strongest fighters were cuaght up in a battle that turned against their own bodies.

Ok, so how was I planning to draw parallels between this and the EU?

Where there's a will there's a way.

The first cases of influenza were registered in the U.S., just a the collapse of Lehman brothers signalled the start of the global recession. The flu then spread around Europe before getting to Spain. The pandemic received it's nickname "Spanish Flu" because of the severity. Germany, Britain and France all had media blackouts on news of the flu that might be seen to lower morale and did not want to disclose information about disease and the number of deaths to their enemies.

The Euro crisis, first striking Greece, and spreading virulently from Ireland to Portgual has now reached Italy, deemed to large to bail out. Meanwhile Germany and France continue to insist that the Eurozone will be alright in the end, despite the fact that the latter's economy could well be next in line. Huge efforts have been made to cover up the extent of deficit in these major economies, to calm the world's markets and silence the enemies of the Eurozone who hage already called time on the stricken common currency project.

The Greek crisis is small fry compared to what is now looming in the wings and is preparing to sweep over the cast of Europe with the same narrative upheavals as Spanish Flu in Downton. Greece makes up just two per cent of the EU economy compared to Italy who was the eighth largest economy in the world last year, or the fourth largest in Europe.

Indeed so ferocious is the contagion that France and Spain could be the next to suffer. Some might argue that Spain's economic fate was written since Portugal contracted the debt disease bringing it to Iberia.The borrowing costs to France have soared to over 3%, almost half way to the dreaded 7% hypothesised doom that Italy has recently achieved.Perhaps just like the Spanish Flu, by the time contagion hits Spain it will have reached it's most virulent and deadly.

German experts have slammed the European Central Bank for buying Spanish and Italian debt, putting Germany precariously at the head of the pack when it comes to calling the shots and starting to revert to self interest, something which when adopted by a nation with as much economic might as Germany, could be quite hard to counter.It is interesting then to remember the founding goal of the European Union was to prevent another German war with her neighbours after 100 years of devastating conflicts. Even today it would seem the unenviable task of the EU is to again diminish the power of a reunified Germany.

So what for series three of Downton? We all know how history plays out from now, and considering series one started with the sinking of the Titanic in 1912 and has hurtled in 14 episodes to the Spanish Flu reaching UK shores in 1920 it is conceivable that a new head to head with Germany could be on the cards for the already battered and beleagured cast of the Abbey. And this time, the war really could be brought to the Grantham estate as World War II brought bombing attacks onto UK soil.

As for us? Well it looks as though Germany are getting rather wearied at playing the coy and well meaning big brother role. At the recent crisis summit in Brussels, hoping to secure the one trillion euro rescue package to save her embattled currency, Angela Merkel warned "No one should believe that another half century of peace in Europe is a given - it's not. So I say again; if the euro collapses, Europe collapses"

I would rather take this comment as scaremongering. After all, it's more than likely now that the Euro will collapse, and hopefully the EU along with it. However whether we will all start turning arms on eachother seems to me a rather far fetched concept used to scare member states into jumping to attention.

But then, after all, who knows? If there's one thing we have learned from history, and from Downton Abbey, it's that however predictable the majority of the narrative it, there will always be the unexpected twist in the plot that takes us all by surprise.

Nessun Dorma!

Nothing induces insomnia quite like stress, so I can well imagine a bit of Nessun Dorma in Italy over these coming weeks.

Fears that the "Euro Contagion" were spreading like Ebola to Italy has caused the country's cost of borrowing to reach it's highest level in almost a decade, prompting a large sale of bank shares and a sizeable plummet in the stock market. The problem is being exacerbated by Silvio Berlusconi and Italy's Finance Minister Giulio Tremonti who allegedly, and perhaps somewhat operatically, emphatically stated “If I fall, Italy falls as well…If Italy, a country too big to be rescued, falls, then the euro falls too!”

As a result of the latest fears, officials from the European Central Bank know report that the current eurozone bail out funds are insufficient and suggest doubling the available money to €1.5 trillion.

The creeping insolvency is also stalking its way across the continent to Spain who thus far have remained astonishly free from talk of rescue packages. It will once again fall on Germany's shoulders, who have actually enjoyed a serious period of good growth, to wade in and pull her floundering neighbours out of the shallow waters. And so again the debate continues - full fiscal unity, or break up the Monetary Union altogether, and risk making the EU a laughing stock?
Even in the Financial Times commentators are dismissing threats that contagion would only spiral out of control should Greece leave the euro or default as utter balloney designed to promote whichever purported rescue plan is currently on the table. Yet most EU leaders are now beginning to embrace some degree of default as the only option for Greece.

Cucumbers at Dawn

It’s all getting a bit nasty in the European Parliament these days. In fact, MEPs are getting so hot under the collar there will soon have to be weapons scanners on the entrance doors to the hemisphere with burly Belgian cops sweeping metal detectors up and down the trouser legs of infuriated MEPs.

Ok perhaps not, but Spanish MEP Francisco Sosa Wagner’s strong words about Cucumbergate were accompanied by a threatening wave of his mean green cucumber cudgel right in the middle of the chamber!

The EU has been caught in the crossfire between Spain and Germany over accusations that the recent deadly outbreak of E-coli all began with Spanish cucmbers. As a result thousands of farmers in Spain had to destroy millions of pounds worth of crop. The EU, as compensation, has proposed donating £134million in aid, yet the Spanish are threatening legal action unless Germany reimburses their loss 100 per cent. This is one cucumber sandwich that the British will not be having with their tea.

Meanwhile Europe are also getting tough on taxation. EU chiefs are demanding direct tax powers which could cost families up to £200 every year. That’s despite the cost of bailing out our neighbours costing the UK over £12.5 billion, far more than has been saved by savage government cuts.

Cuts which, incidentally, the European Commission approve. The fact that the European Commission has come out and demanded Westminster should stick with their “Plan A” for budget cuts and tax increases suggests that we probably are doing the wrong thing. What with protests in Madrid, Lisbon and Athens over EU and IMF enforced austerity measures, as well as three failed Eurozone economies and many more ailing governments in the single currency, the Commission seem increasingly out of touch with their people and decreasingly less likely to give a hoot anyway.

In fact over the next six months the European Commission are unrolling the “European Semester” where they will demand member state governments submit national budgets and reform programmes for EU approval. Jean Claude Trichet, the President of the European Central Bank, has described the new European Semester as the beginning of centralised fiscal policy.

We will watch and wait to see whether Osborne is happy to dance to the Brussels beat.

The one thing that is desperately missing from this dialogue is the fact that actually, Eurozone countries should be able to leave the common currency and return to independent fiscal governance. Currently the ECB in Germany controls interest rates across the Eurozone, to the detriment of weaker economies and in part responsible for the collapses in Ireland, Portugal and Greece. I put this forward to Barroso in the last President’s Question Time.

Notice how he fails to answer the question and instead talks about how the Euro was not responsible for the world recession (well duh? But really, it was a massive contributing factor to the so-called euro contagion) and that he is sure Greece wants to stay in the Euro. Frankly, they don’t really have much choice given how endebted they are now to the EU and IMF. No wonder Brussels is doing their utmost to make sure the next IMF President is a European, and, surprise surprise, from France.

I also challenged Parliament over a little and at first seemingly unobtrusive amendment to a directive on HGV charges that plans to add an EU carbon toll. It is basically the first indirect tax to be levied by the Commission. Although the UK does not partake in the Eurovignette scheme, the government has been discussing joining in 2015, yet before that the Commission reserves the right to make their little “experimental” carbon charge obligatory. We all know that such costs are never fronted by big business and always land in the consumer’s purse, but what is worse is the fact that taxation powers should be discussed and passed by unanimous vote at Council level with all 27 leaders of the member states agreeing to the proposals.

This matter however has been slipped through Parliament as it “only relates to transport” which is an EU competence under the provision of the Lisbon Treaty. A sneaky backdoor way to introduce an indirect tax, because frankly, the Commission know full well not all member states would agree to such a policy.

Sneaky sneaky Europe.

Financial Crisis

I know, I know

It must seem every time an argument is put forward about anything to do with politics it all boils down to money. But this is surely a reasonable expectation, given that the job of most governments is to collect and then spend the money of the people they purportedly represent in a manner they see most universally suitable.

Do not think just because you personally do not pay a direct tax to Europe that it’s not your money being spent. It is. And a whopping estimated £48million a day goes to Brussels from the UK.

Yet in Europe, the state of their own finances is atrocious. While they chastise Greece and Ireland for running up enormous deficits and have in the case of the former turned the country into little more than an economic protectorate, their own fiscal record is far from unimpeachable.

Not only has the Commission failed to have its annual accounts signed off for the past 16 years (and let’s remember their former Chief Accountant turned whistle blower was so appalled by what she had witnessed she signed up as a UKIP MEP) but when there’s allegation of serious wrong doing, everything is brushed under the carpet. Meanwhile they are standing with their begging bowl insisting that non Eurozone member states contribute to a bail out fund to rescue their pet project currency that countries such as the UK were wise enough to never sign up to.

More recently a sting by The Sunday Times revealed three MEPs willing to take money from planted bogus lobbyists in return for introducing amendments to European Regulations. Out came OLAF from retirement (the European Commissions own Office of Fraud Busters) yet were then barred from the offices of the three accused MEPs by the Eropean Parliament in an utterly laughable twist to the plot, leaving everyone scratching their heads as to who has the legal entitlement to investigate bribery of this kind. Should the honour be bestowed on national authorities, or can the EU wade in and conduct their own investigation (whose credibility, I hasten to add, would probably be called into question anyway).

Yet Europe is keen to set up a financial services watchdog that will operate on a pan European basis and tell every financial institution in the 27 member states how to conduct their dealings. Whilst from the outside in the wake of a recession it may seem eminently sensible, let us not forget that this is the self same Union that insists on awarding itself a year on year budget increase despite openly acknowledging that purse strings need to be tightened. To quell the upset in The City, which effectively manages around three quarters of European and international financial transaction, former UK Financial Services Authority head honcho Verena Ross has been granted the title of Executive Director of the European Securities and Markets Authority, as if that is going to make the big banks less jittery about suddenly having a rule book thrown at them.

On top of these complaitns, Brussels just can't seem to stop spending their own money, so it begs the question how they will go about telling banks and member states how to spend theirs. £58 million is being thrown at a House of History Museum which is designed to show a fluffy and beautiful history of harmony and similarity across our beautiful 27 nation bloc. For this reason, the clock has only been turned back only as far as 1946 due to deep divisions in the interpretations of World War II. It has also been revealed that more than £80million has been paid by the Parliament to fnd spin doctors and the hugely popular EuroParlTV, which of the half a billion citizens it is designed to serve, attracts fewer than 850 per day.

And so that brings me to my final grumble. Ireland are needing yet more bail out cash and as predicted so does Portugal. The European Central Bank renewed its bond buying activites by purchasing €432millon government bonds, mainly from Portugal. Despite the huge spend, markets seem to have barely registered the bold move, meaning a full scale bail out is becoming increasingly inevitable. Germany, already the good Samaritan for Greece and Ireland, are likely to insist the IMF is approached, meaning, yes, you guessed it, the UK will be part funding the rescue of Lisbon. Not that we wont contribute to the European Bail Out fund, negotiations about which were plunged into despair as Lisbon fell off the bottom of the debt scale. However it has emerged that despite all of his tough talk, Cameron seems to have agreed for Britain to pay a whopping £7bn into the fund, on top of the £3bn we have already given to Ireland. It has also been suggested Greece may need to shake their tin towards the EU or IMF again in order to reach the targets laid down by the Commission, as will Ireland. And of course, as we’ve said all along, if Portugal falls, it’s only a matter of time before they drag Spain down too. Already Spanish regional banks have had to announce plans to be recpaitalised to the Spanish Central Bank. Three have already requested funding from the Spanish government’s own bail out scheme.

And then of course you have the straw that will break the camel's back as Italy shouldn’t hold her breath either. Another economy biting the dust could well plunge the whole Eurozone into a quagmire of inflation, deep division and signal the end to the common currency.

Just like centuries before, The Fall of Rome could be a massive turning point in European history.