大象传媒

Some are arguing that there should be a default on the debt and the debt to be written down, but the consequence of this for the Euro zone would be difficult to contain. Now this crisis is moving from an economic protracted crisis to a political crisis, as bail outs challenge democracy. This crisis is going to run and run.

If the EU are not prepared to step in and provide a long term solution for both the burden of debt and the growth of the economy defaulting on repayments is the only sensible way forward. Otherwise it will be a recycling crisis and applying of short terms stop gap funding until everyone's patience runs out.

so we have to finance a country that refused to put its finances in order and has been living of a merrygo around of debt.

yet we are making the neccessary cuts in the UK to put our house in order

bring on UKIP

No actual money will be handed over. A form of gaurantee will be given. Only if Portugal defaults will we be asked to stump up some cash, and then it will only be a percentage. Get real and stop all the hype Robert.

As I've said before, for every reckless borrower there is a reckless lender.

Quite rightly the reckless borrowers are being punished for their foolishness. However it is ridiculous that the reckless lenders are getting away scott free - they must be punished and be seen to be punished if we are to stand any chance of these people learning a painful lesson.

An interesting article, but it misses one real cause of these problems for Greece, Ireland and Portugal. Following the last few years of international financial depression, the weaker countries are pressurised more than the stronger ones; but this self balances by a nation's financial strength being equivalent to it's currency's strength, i.e. an organic devaluation; but ooops, they all have the Euro, therefore nature is stopped in it's tracks. In other words, the rigidity of the Euro across these nations makes the weaker really suffer when what they need is a currency devaluation in order to get funds back into the country. I am convinced the Euro will eventually fail, or at least need to be reformulated into two levels, i.e. two currencies. The cross firing of cheques and debt between the european nations cannot go on for ever. In addition, the ECB increasing interest rates can only make this situation worse.

So what we're saying is that they've a bubble in the water bed and are hoping that as long as they keep pushing it down it'll eventually go away.

After the prodigal son, there now cometh the prodigal PIIGS, it does make you wonder at our collective sanity.

I think we need to sort out our country first before helping other countries I know it sounds harsh but its true.
With our countries finance issues how can you justify 4.8bn euros from the UK?
People in the UK are stuggling financially & the goverment needs to get their act together!!!

1. At 09:49am 8th Apr 2011, Hasson wrote:
"Some are arguing that there should be a default on the debt and the debt to be written down, but the consequence of this for the Euro zone would be difficult to contain. Now this crisis is moving from an economic protracted crisis to a political crisis, as bail outs challenge democracy. This crisis is going to run and run. "

I agree. The only long term solution is default and break up of the Euro.

Everything else simply postpones the inevitable collapse and in the meantime the PIGS will get poorer and the central Euro countries will get richer, as can be seen by growth figures for Germany compared to the PIGS. Far from bringing the economies of the Euro Zone closer together, the Euro Zone is driving them further and futher apart. That in itself is unsustainable.

Of course, it would be difficult to break up the Euro Zone but the politicians who went along with the scheme should have thought about that before they committed their countries to joining the Euro without a clear escape route if it all went horribly wrong.






Failure

The lack of spending on things of real value has left the EU in a mess. The mean test is meant to make things fair but in its various forms is very expensive to administer. The increase in public sector jobs has stultified progress, but made the people feel comfortable.
We helped out Ireland but clearly not enough - hence the recent murder.
We are not responsible for Portugal but a small direct contribution, like for Ireland, would have an impact greater than the cost.
Greece is beyond help. Spain is too large to help.

We work hard in this country and are beginning to get back on track. We are likely to be dragged back down by our membership of the EU. Seems we have a lot in common with Germany these days.
We cannot be friendless. Perhaps it's time to resurrect the Commonwealth in some form and start trading properly again.

Here's what happens when you rely on the markets to lend you money, and then fail to keep their confidence in you.

This is the real problem of deficits; they expose you to pandering to money market confidence. You lose control, so it's imperative to be very careful with them. Fail to do so, and here's what happens.

This should definitely be seen as a vindication of what the Coalition is doing. As for our liability towards these countries, well it's quite clear in Robert's article exactly what series of events is required to activate that concern. I expect it won't come to that, but we should be well prepared should it.

The Euro was always a crack pot idea formed in the minds of idealists thinking of only their own place in the history books and to 'compete' with the US. The only sure way you can have a single currency with single interest rates is with full political integration. That way it's not a bail out, it's just a profitable part of a country subsidising a less profitable part - analogous to London tax receipts supporting public sector workers elsewhere. Without this you have a broken system which was initially responsible for fueling the bubble (suddenly Greece and Ireland are as risk-free as Germany and can borrow and borrow) but is now constraining the ability of these countries to deal with the problem (they should be devaluing but instead interest rates are rising!) It's a terrible mess and one which the UK chose to avoid and - frankly - should not be bolstering.

it is the "socialist" disease we are talking about spend spend spend borrow borrow borrow tax tax tax we governement now best that is the problem that really needs addressing and quick

This comment was removed because the moderators found it broke the house rules. Explain.

There is some truth in George Osborne's remarks about the necessity of cuts to (slightly!) re-balance the budget..... however.....

The trouble is George, that it is also true that you can't cut your way to growth!!!!!

Hence this is the most definitely the start of a Long Depression, juts like the 1870s (that lasted over twenty years in countries that had overinflated their property prices the most - that is the UK today!)

The Euro has next to nothing to do with the collapse of debt fuelled booms in Europe and the developed world. Indeed the Euro will protect its members from the worst effects of the coming collapse. This who put forward the idea that it is all the fault of the Euro should wonder why the USA is suffering similarly and it is outside the Euro. The reality is these anti-Europeans are xenophobic and isolationist separatist warmongers; in historic terms they are the siren voices that created the second world war out of the ashes of the first world war by demanding completely unaffordable reparations. They are (or may be) well meaning, but they are wrong.

The real culprits in this awful coming decades long depression are the regulators (incl. Bank of England and the Fed) and their puppets, the banks. The sad economic truth is and has always been that inflation destabilises all economies be the inflation in revenues or assets. The sad reality is that the only real solution is debt deleveraging and restructuring in a climate of a rational money price.

I would say that I am amazed that via the EFSM we are liable to help Eorozone countries, except that anything the labour government did has ceased to amaze me. The problem with the Eurozone is essentially that a whole bunch of countries of dubious credit, Greece being by far the worst, were suddenly given a strong currency with which to be profligate. A large part of this profligacy went on imports from Germany, and the Eurozone has become an export financing vehicle for Germany, which is why Germany does not want to see demolition of the zone. Why we should prop up Germany's debtors is beyond me, although obviously we do have to contribute via the IMF when there are real restructuring problems.

Ireland is fine. They have embarked on theoir own austerity package. Greece and Portugal seem to think they can exist on borrowed money for ever. Allowing them to go bust would be a good wake up call. It is curious that the Spanish position appears to be improving, at least judged by interest rates, when they have yet to acknowledge the full problems of their banking system.

Given the oil price increases have wiped out Ozzie's 1p fuel tax cut is this what he's now going to do with some of the 拢10bn he's filched from the Scottish oil and gas sector in the latest cross border raid by the thieving Treasury?

This is a fine opportunity for Britain's fatcat bankers to pay for the foul up in Portugal. They can demonstrate their "social usefulness" for once!

If the Bank of England bought Portugese gilts directly from the Portugese treasury, the transaction will not be reflected as government expenditure and in that respect will avoid the fiscal oversight. We can in fact fund any social expenditure in this way.. Simple solution to the whole budget deficit

The bank of England, while being an agency of government, uniquely does not require any oversight and can report free of enquiry. It can create assets out of thin air and then report that it does not exist. It can also create liabilities out of thin air to avoid raising the value of its equity when it creates assets out of thin air.. Raising the value of the equity would mean altering the HM treasuries stake in the bank and that would need to be reflected as Income to the treasury. THis could eradicate the deficit but then the Tories cannot justify the cuts which feeds into their ideaology

Quantum Physics.. Reality changes when you observe it.

Deficit denier and proud of it.

18. At 10:51am 8th Apr 2011, Wee-Scamp wrote:
Given the oil price increases have wiped out Ozzie's 1p fuel tax cut is this what he's now going to do with some of the 拢10bn he's filched from the Scottish oil and gas sector in the latest cross border raid by the thieving Treasury?
----------------------------------------

and i wonder how much the English tax payer is putting towards the royal balls up that was the RBS management from Scotland, that needed an astronomical bail out. Stop being so pathetically nationalistic, and start seeing the bigger picture.

If you're looking for someone to blame you should actually look at the Germans.

Go back to before the advent of the Euro and you'll find a Germany struggling with an overvalued Deutsch Mark getting more and more uncompetitive in world markets. Then the Euro is cooked up by the Germans and French and as soon as it's born it effectively devalues the DM considerably while pushing up the values of the weaker member states currencies. On top of that the interest rates in the weaker states fall to ridiculously low levels.


All this fuelled inflation and allowed Germany to expand its industrial base on top of the greed of the smaller member states. It also gave the Germans a more competitive edge in the rest of the world with a currency much lower than the DM would have been.


Hence the German economy is very robust and half of Europe is bust.
It's the Germans who should be paying not us, a realisation that is just starting to find its way onto the inner pages of the German financial press.

To be fair to Darling , he was looking at the EFSM agreement in a bi lateral way. Remember at the time the UK economy was looking particularly vulnerable .So by joining the EFSM he was providing the UK with a contractual bail out from the Euro Zone.

As I touched upon yesterday , if the UK did get into difficulties , without above we would only have the IMF to turn to , although you would hope your "friends" help out.

The real issue with the bailouts is , the money is not for free , you are having to pay nearly 6% for it , approx double the UK's bond rate.

It is the paying of these interest rates which will cause problems for the PIG's as they are struggling to keep their heads above water . In reality a 2 zone euro is a better proposition in order that the PIGS can devalue , otherwise Germany and its allies will own half of Europe within 20 years.

Why are these loans not being secured on the countries land? That way if they default we own a part of Portugal - bags I the beach location!

We continue to support ailing economies with money we just don't have - So who will support us when we run out ???

We are still spending like there is no tomorrow - How much did the 1 day vist to Pakistan cost ? - this is a crazy approach.

The solution is simple really - Stop spending in Libya - Afghanistan - Iraq - and for Goodness sake stop this eternal waste - Get out of the Eurozone and reduce unemployment - Throw off the shackles of Restriction - Regulation and Retardation of OUR economy.

We are wasting 拢 billions per day - soon we shall have nothing left !! Then we shall see who our true friends really are !!

17**

I disagree over Spain , I think they are next in line, even if they stated tomorrow that have put a plan in place that provides 110% assurance , it won't be enough . It's their inability to devalue that causes the issue.

As mentioned yesterday , would you lend money to euro sovereign states for 3% ?, I wouldn't , personally I would want 8% plus . The issue is sovereign debt is now viewed as almost "Junk" status and with Greece and Ireland going backwards in terms of growth it is only going to get worse , I can see another bailout for both within 12 months.

Providing northern Europe keeps growing at 3% plus , I can see this going on for years to come , with the PIG's ever increasing their loans . If however growth was to slow to say 1% due to say an oil crisis ,it could swing the other way , with northern Europe taxpayers unwilling to provide additional support or wanting high rates of interests.

If I was a PIG I would withdraw from the Euro zone and follow Iceland's model of giving everyone the two fingers....

The EU spends its entire budget. And on every occasion when the budget is renegotiated, the EU institutions push to have their budget raised. And on every occasion they have been successful in getting that raised budget and spending the new budget in its entireity. So the idea from Preston that somehow an extra 60 billion is not going to push the EU budget (which is 121 billion euro total in 2010) into the red is laughable. Nor does anyone seriously doubt that some or all of these three countries are likely do default. The only question is when.

Furthermore, the 5.7% interest rate charged by the EFSM fund (to which the UK contributes) is less than the 6.05% interest on the eurozone only EFSF fund. Therefore these indebted countries have an incentive to make first use of the fund to which the UK is exposed. The UK is therefore very much in the front-line for a 'hairciut' and only the pro-EU bias of the 大象传媒 tries to minimize it.

Portugal suffers from a number of problems of a political and social nature which lead to the current set of problems.

Here's a couple of examples:
- The Portuguese bank that required a rescue from the Portuguese state was a commercial bank setup a couple of years ago mostly by politicians and run by (ex-)politicians.
- Portugal has a HUGE problem with cronyism at all levels. The only way to get a good job in that country (either in the state or in the private sector) is to know somebody that knows somebody. Some people even say that the most competent Portuguese people have to leave the country in order to get anywhere in their careers.
- Management in Portugal is all about connections, about knowing and influencing the right people (mostly those in government). It's not about being efficient or providing innovative products/services to your customers. It's not by chance that very few Portuguese companies succeed in their ventures outside Portugal (in other countries nobody cares if you know big-shot-Portuguese-politician-X) and most of those are small companies.
- Given that Portugal does not have Proportional Vote but instead has a First Past the Post system, there is essentially a duopoly of holding the reins of power (i.e. it's always the same two parties in power). The end result is that said parties have attracted the sort of people that go into politics for personal gain and you end up with scenarios like ministers passing laws to benefit certain industrial interests and a couple of years later they've become well paid members of the Board or Consultants in those companies they helped.
[And this is a bit where the UK should look at it's own belly-button: compared to, for example Holland, where Proportional Voting is used, both the UK and Portugal seem to have a lot more issues with conflict of interests, cronyism and influence peddling]

In my opinion, to become competitive Portugal needs to go thorough a deep cleaning and some pain and suffering so that, at least to some level, they are forced to address those deep-seated problems.

I say this as a Portuguese myself (though I've been out of the country for a while now, so take it with a pinch of salt).

That said, I don't think the UK is at all a model that you can point at and say "this is the way you should do things":
- In the UK I see many of the same underlying social and political problems as in Portugal (though with a British twist).
- The UK benefits a lot from English being the second language of pretty much everybody in the world and is ridding on the coattails of it's own recent past as a major trading power (thanks to the structure of rules, practices and institutions that were born in that time)
- Size: being bigger gives a lot more marging for manouver when things go pear-shaped.
- Staying out of the Euro and thus being able to devaluate its own currency (from something like 1.5 GBP per EUR to 1.13 GBP per EUR) - as much as the Euro was good for a place like Portugal (which threw out a fascist dictatorship in 1975 and had several years of instability and high-inflation after it), the benefits for the UK of adopting it are nowhere near as large.

For some years now the UK's economy is becoming LESS dynamic and LESS competitive (for all the appearence of success we had for a couple of years before the recession, it has become clear to most by now that having such a large part of the UK's economy concentrated on a single sector - the financial sector - is not a good idea). The positive side effects of having had an Empire will wane (remember, Portugal and Spain had their own trading empires in the 15th century, Rome was once the center of the greatest empire in the known world and before them the Greek cities dominated the Mediterraneum. Look at them all now!)

To regain it's greatness the UK has to look forward, not back. Singing praises to the nation's glourious past, celebrating it's "special uniqueness" and relying on the structures inherited from the past will hold the country back, not guide it to a successful future.

Look not down at Portugal as a sad example of a country, look at it as a warning for the UK of what happens to a once great country that keeps supporting itself on the crutches of it's Past.

Could someone please explain if I have got this right:

- The UK is undergoing austerity measures to reduce its deficit and subsequent debt
- Portugal voted not to undergo austerity measures
- Portugal gets given money from a pot to help with its debt
- The UK has to contribute 拢4.2bn to this pot, still has its debt and still has to subject itself to austerity measures

Robert

Very concise article: however I think your talent is wasted.
We are just "papering" over the cracks, whilst Capitalism, as we know it, goes through its death throes: after Portugal there will be Spain, Italy, Belguim, UK, nearly every state in the US, etc etc etc

Please concentrate your considerable talent on developing "New Capitalism"!

Hi Robert
Just to add that the situation has just changed a little. The European Commission has just announced that it is looking at bailing out Portugals banks as well as the nation. This may well add some ten billion Euros to the total bill and add a bit to the UK's share of it.

Portugal is our oldest ally. If we can't help our friends when they are in need then who exactly are we?

'There would be a direct cost to the UK only if the loss generated by a Portuguese default were to exceed the available resources in the EU.'

You might also add that the financial state of the 'peripheral countries' will be trotted out to block every attempt at reform of the EU budget - it's already costing us. Witness Cameron's rather lame attempt at negotiating contributions last year.

On a separate note, whilst there remains a chance that Ed Balls will get the keys to No. 11, we'd do well to look willing when it comes to bailing out our European neighbours. We may need to join the queue.

I am sorry but this is getting ridiculous. Country after country now are asking for bailouts due to them being unable to cope for mistakes made, and as we stump up a hefty rescue package to rescue these crippled countries, we will have to draw the conclusion that the UKs deficit is going to get wider and wider unless this stops. As some people have said on here, Spain is probably next in line. When will this end? The world has become a sad lonely place economically, and as I see these bailouts happening, all I can see is our recovery being halted, and deeper cuts for the UK due to more money owed due to the bailouts. We simply don't have any money to give to these countries. We are a country saddled in debt, and that debt will only widen if we continue with these packages. It is very worrying. Onwards and upwards I suppose, but it's hard to be optimistic at this moment in time.

It's beginning to look like these bail out mechanics are simply a way for governments to absolve responsibility for austerity from their populations.

Portugal vote down austerity measures, the people rejoice. They ask for a bail out, germany imposes austerity measures on them. The people riot, the politicians say it's not our fault we have no choice blame germany.

I'm no economist but the Euro was a crazy idea in the first place, all those so called racist anti Europeans should feel totally vindicated by all of this madness.

#21. Alastair wrote

and i wonder how much the English tax payer is putting towards the royal balls up that was the RBS management from Scotland, that needed an astronomical bail out. Stop being so pathetically nationalistic, and start seeing the bigger picture.

Oh dear. Another bigot in need of some education. RBS was owned primarily by City based fund manager types and regulated by the London based FSA, Treasury and BoE all of whom report to Westminster. It's a bit like Scottish Power which the City sold to the Spanish. Nothing to do with Scotland now.

I wish my bank would behave this way: "You've borrowed more than you can repay - have another loan!"

30. At 12:29pm 8th Apr 2011, jeff lampert wrote:
We are just "papering" over the cracks, whilst Capitalism, as we know it, goes through its death throes: after Portugal there will be Spain, Italy, Belguim, UK, nearly every state in the US, etc etc etc
==================
I think tjhat you will find that the problems to which you refer are caused by excessive GOVERNMENT spending!

29. At 12:28pm 8th Apr 2011, RedandYellowandGreennotBlue wrote:
Could someone please explain if I have got this right:

- The UK is undergoing austerity measures to reduce its deficit and subsequent debt
- Portugal voted not to undergo austerity measures
- Portugal gets given money from a pot to help with its debt
- The UK has to contribute 拢4.2bn to this pot, still has its debt and still has to subject itself to austerity measures

===================================================

Yup. You missed out the bit when Cameron goes abroad he inevitably a la Gordon Brown splurges with international aid money which increases our debt. The UK is only slowing the rate at which overall debt increases but it is still increasing.

Darling must have known there was 'no money left' when he signed up to this deal.
He should have made that clear to Osborne up front.

#20. At 11:27am 8th Apr 2011, Supersage64 wrote:

"Quantum Physics.. Reality changes when you observe it."

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Excellent viewing.

29. At 12:28pm 8th Apr 2011, RedandYellowandGreennotBlue wrote:

Could someone please explain if I have got this right:

- The UK is undergoing austerity measures to reduce its deficit and subsequent debt
- Portugal voted not to undergo austerity measures
- Portugal gets given money from a pot to help with its debt
- The UK has to contribute 拢4.2bn to this pot, still has its debt and still has to subject itself to austerity measures


Yes you have got it right. And Britain has got it right. We are about to undergo a period of austerity - the effect of which will be that we emerge a leaner, fitter, more prosperous and less indebted nation.

Portugal, Greece and the others not tackling their deficit will still have to pay off their debt at the end of the day. Meaning todays portuguese are leaving their debt to their grandchildren.

We should all have learned by now that, if you spend money you havent got, all that happens is you end up paying more in the long run.

As part of the bail-out, Greece, Portugal et al should be forced to accept EU medicine. If they dont want to, the should be chucked out of the EU. I. for one, would be happy to see the massive subsidies they have received for years being saved. Au revoir, auf wiedersein.....

16. At 10:45am 8th Apr 2011, John_from_Hendon wrote:

鈥淭he Euro has next to nothing to do with the collapse of debt fuelled booms in Europe and the developed world. Indeed the Euro will protect its members from the worst effects of the coming collapse鈥�.

You could not be further from the truth! Portugal and the other PIGS need to devalue their currencies against the Euro but cannot do because they part of the Euro. They cannot compete against the likes of Germany or cut their costs sufficiently by driving down their prices whilst they remain in the Euro. Lending them more money to stay in the Euro only makes their debt mountain and the inevitable collapse even worse.

You went on to write

鈥淭his who put forward the idea that it is all the fault of the Euro should wonder why the USA is suffering similarly and it is outside the Euro. The reality is these anti-Europeans are xenophobic and isolationist separatist warmongers; in historic terms they are the siren voices that created the second world war out of the ashes of the first world war by demanding completely unaffordable reparations. They are (or may be) well meaning, but they are wrong鈥�.

The error in reasoning is all yours!

As Stephanie Flanders said in her blog 鈥淭he basic laws of economics are threatening to pull the Euro zone apart, just as politicians are trying to pull it together鈥�.

Stephanie went on to say 鈥淭he problem for Portugal and the rest - in many ways the root cause of the entire crisis - is not that these countries are insignificant. It's that they're different鈥�. In other words their economies are very different and have very different needs that cannot be met by a single currency, a common external exchange rate and a 鈥渙ne size fits all鈥� interest rate.

And until you get to grips with the fact that the Euro Zone defies the basic laws of economics, you will never understand that it is membership of the Euro that is the problem!

#38. At 12:51pm 8th Apr 2011, AnotherEngineer wrote:
30. At 12:29pm 8th Apr 2011, jeff lampert wrote:
We are just "papering" over the cracks, whilst Capitalism, as we know it, goes through its death throes: after Portugal there will be Spain, Italy, Belguim, UK, nearly every state in the US, etc etc etc
==================
I think tjhat you will find that the problems to which you refer are caused by excessive GOVERNMENT spending!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Hmmm, not entirely true, private debt is off the scale too.

37. At 12:50pm 8th Apr 2011, Cassandra wrote:

I wish my bank would behave this way: "You've borrowed more than you can repay - have another loan!"

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

They did up to 2008, therein lies the problem.

Dear England

Greetings from Portugal we have been friends for a long time. I鈥檓 sorry that you will bail us out, I really am.

I acknowledge I know very little about Keynesian economics, debt, lending and central banks, but I am a bit of a realist.

We used to have a little textile industry in Portugal it used to make those fancy football shirts that you and I use when we support out football teams on a Sunday afternoon. That didn鈥檛 last long because they could be manufactured for less in the Far East. We also used to make shoes and cars, as the labour used to be cheap.

The industries we had here all moved elsewhere, very similar to the ones you had, such as the steel industries in Sheffield (I think). They all moved elsewhere.

This meant our GDP went down we produced less and less, just like you produce less and less.

This is why we are being bailed out, like I said I am really sorry.

Sorry for you and sorry for my countryman.

Realistically speaking, whoever bails us out, we will have to pay back with interest.

Someone will make money at our expense.

Yesterday, it was Greece and Ireland

Today it was us.

Tomorrow it could be Spain... UK?

Who benefits in the end?

ECB?

Sadly, intentional or not, the PIIGS know that politics will step in where economics wont.

Kicking Portugal out of the EU is the equivilent of sitting a naughty child in the corner, the problem doesn't go away.

Kids in Africa won't be feeling sorry for the children of Portugal anytime soon and we won't be holding a telephon. That's not how the world works.

Like many families in this country it's not about repaying national debt's it's how long you can put off paying them and living on the never never.
What is Germany going to do, send in the bailifs and reposess Madiera?

This is a crisis made and orchestrated by European and global financial capitalists. Once again, the governments that give them free reign to borrow money to people who can't pay it back are bailed out, and who will foot the bill? You guessed it, the European working class, through austerity measures. That's a cynical word for destroying the living standards of millions of families.

The governments and criminal financial institutions of Europe are a disgrace, their wealth should be expropriated and distributed to the people who really need it and their authority should be repudiated and replaced with a government for the people, by the people.

The reason this happened is so simple and for everyone to see. A European currency operating within competing nation states. It is just bound to fail. An inevitable contradiction of the capitalist economic system.

I'm looking forward to Spain going bust. We'll be able to buy back Scottish Power for a song after those industrially treacherous City outfits flogged it off.

36. At 12:48pm 8th Apr 2011, Wee-Scamp wrote:
#21. Alastair wrote

and i wonder how much the English tax payer is putting towards the royal balls up that was the RBS management from Scotland, that needed an astronomical bail out. Stop being so pathetically nationalistic, and start seeing the bigger picture.

Oh dear. Another bigot in need of some education. RBS was owned primarily by City based fund manager types and regulated by the London based FSA, Treasury and BoE all of whom report to Westminster. It's a bit like Scottish Power which the City sold to the Spanish. Nothing to do with Scotland now.
--------------------------------

Oh dear another blinkered, flag waving, blue painted Scots nationalist attempting to defer blame anywhere apart his beloved heartland in need of some education. RBS HQ: Scotland. All major decisions regarding fiscal policy taken in: Scotland. Yet the English tax payer pumped more taxes into it than the Scots are capable. Why? because we're a Union, no matter how hard you Scots seem to want to blame Westminter for everything short of the sky falling down, or shouting 'iut's ooor oiul pal!'

More relevent than that, financials are so utterly kicked around the world that green trumps blue/white or red/white. So i say again, stop being so pathetically nationalistic, and start seeing the bigger picture.

Marnip 12

"This should definitely be seen as a vindication of what the Coalition is doing. As for our liability towards these countries, well it's quite clear in Robert's article exactly what series of events is required to activate that concern. I expect it won't come to that, but we should be well prepared should it."

Why? Hasn`t worked for Greece,Ireland,Portugal.More cuts,more debt,more bailouts,more cuts...

Frau Deficit insists,Europe`s strongest economy with a vested interest in the Euro`s survival.Doesn`t suit everyone,they will probably default after a decent interval when they can say wse tried.This will have a ripple effect through Europe`s financial sector and beyond.

Sovereign debt is the present stage of the crisis which began with the collapse of private capital.Fiscal and monetary measures across the world averted catastrophe,it`s not over yet,in fact it`s just beginning.

Why you think Mr.Osborne`s policy is vindicated by the failed fringe economies who adopted policies similar to his own is hard to understand.But then he is more interested in politics than policy according to Mervyn King.Solves problems verbally,not practically.

re #48
You could be right. Why go to the trouble of making bombs and getting them in place and perhaps blowing yourself up when you can sit by a computer and just by switching lots of cash and investments around the place in certain (irrational) ways, cause chaos in the Western world.

@ 34. At 12:42pm 8th Apr 2011, andy blythe wrote:

> I am sorry but this is getting ridiculous. Country after country now are asking for bailouts
> due to them being unable to cope for mistakes made

No wonder it's getting hard for my wife to make ends meet. I keep getting told to put first the Portugese, the Bankers, the Greeks and the Irish!

I can't remember them helping me out much; quite the reverse with respect to the bankers and the Irish - they've been a drag. It's time to clamp down on these scroungers - I'm not made of money, you know.

The third eurozone bailout leaves me breathless.My husband always said it was that Mr.Browne`s fault.(Is it spelt with an `e` like Lord Browne?) I now find they`re all at it.(I mean having big deficits and such)

Was he moonlighting? Husband said he wouldn`t put it past those Labour chaps.He`s home this weekend,no more ships.

#50

"All major decisions regarding fiscal policy taken in: Scotland"

I wish but sadly you couldn't be any further from the truth. The Scottish Govt has no control over fiscal policy. Do try to get your facts right.

The big picture? I assume you mean the one that means that whilst Scotland remains under the malign, short termist, visionless and miserable influence of the City and the Treasury then Scotland's economy (nor England's, Wales or Northern Ireland's for that matter) will go nowhere.

Well old chap you may be happy to llive with a future that is one of terminal economic decline but I'm not.

Oh and I'm happy to do you a deal on RBS. You can have it lock stock and barrel because believe me it's never been any darn use to us.

Let us all take a guess on what kind of cuts will be in store as some group of bankers decide what is best. Cuts in services and reduction in governmental agencies that regulate big business and banking and of course tax breaks for big business and banking. Neither the banks nor the governments will stop until the people say no. Difficult times ahead as the governments continue to be agents of bankers...will be too late when they recognize the people no longer support the process and illusion of representation.

UK's conribution 拢4.2bn?

Can we not find a hedgefund which has made 拢4.2 billion so far on speculating against the europeriphery, and tax away all the money they have made so far with their Credit Default Swaps? There must be scores of them by now!

Speculation against Euro countries will continue to happen, until Credit Default Swaps are banned!

(Does Robert Peston read his posts?)

@28. Ricardo:

Very well said!

@16 John_from_Hendon: thanks mate, yours is one of the few realistic comments on this board. The Europhobes obviously don't ever bother to do their homework; nor do some others.

49. At 14:07pm 8th Apr 2011, Wee-Scamp wrote:
I'm looking forward to Spain going bust. We'll be able to buy back Scottish Power for a song after those industrially treacherous City outfits flogged it off.

---------------------

Don't forget BAA, Alliance and Leicester, Bradford & Bingley, the profitable part of Northern Rock... do you fancy flogging all the family silver and digging a canal through the Panamanian istmus? Legendary Scottish prudence in action. Cheers Gordon!

and a big word of thanks to 22 alfiebengal - hitting the nail on the head. The Euro was and remains a good idea, but only if it is applied together with other unifying measures (which does not mean any kind of dictatorship!); this has not been done, and the problems are now coming home to roost.

As I understand it we are not actually giving Portugal 4.8bn euros, this is just how much we would lose in the unlikely scenario of Europe not being able to cover the debts through the stability fund and IMF. However the EU have not balanced their books in years and their budgets are never signed off so is this so unlikely? If Spain is next, that is a much larger economy so although Robert says it would take a series of accidents before we would actually have to find the money Spain could be a catalyst to this "series of accidents".

It goes to show how our economies are all balanced on a knife edge and the financial collapse in 2008 may have been the deciding factor but it seems as if many governments have been overspending for years. What about Australia or New Zealand or Canada? According to the OECD figures last year their deficits were much smaller so presumably their governments have been a bit more prudent or maybe their banks were not so indebted they needed to be bailed out. Frightening that ours is the largest deficit in the whole of the developed world in spite of being one of the smallest countries.

Lets face it! the people of all the above countries wont really mind if their countries are in debt for the next 30 years! they are in the eurozone they can come and live here and get all the benifits and support! so this whole senario will cost us far more then 4.6billion (oops cant say that i must be a rascist europhobe)

/news/business-13009669
They seem very keen to do a deal before the elections, I wonder why. What about democratic accountablity. Are they worried the public may reject it. Best button it up now then.

So, which Banks and which Pension Funds lose out, IF Portugal actually does default?

If Portugal goes into a British style cuts led downward spiral, will they have enough tax income to pay their way ?

56. At 14:50pm 8th Apr 2011, ghostofsichuan wrote:
Let us all take a guess on what kind of cuts will be in store as some group of bankers decide what is best. Cuts in services and reduction in governmental agencies that regulate big business and banking and of course tax breaks for big business and banking. Neither the banks nor the governments will stop until the people say no. Difficult times ahead as the governments continue to be agents of bankers...will be too late when they recognize the people no longer support the process and illusion of representation.

.............
Watch out for the IMF mafia coming to a european country near you soon. Who will sell your nations wealth piece by piece to huge corporations in a giant firesale, and leave you like a third world country. And all because you borrowed too much money from banks in order to bail out banks who were too big to fail. You couldn't make it up.

@ 63. At 15:54pm 8th Apr 2011, themase wrote:
Lets face it! the people of all the above countries wont really mind if their countries are in debt for the next 30 years! they are in the eurozone they can come and live here and get all the benifits and support! so this whole senario will cost us far more then 4.6billion (oops cant say that i must be a rascist europhobe)

I personally find your remarks offensive. I am one of those people living in your beautifull country (benefits and support)!!!

What you support me, when?

I like many idividuals, pay taxes, abide by local laws, have you ever thought that you might be benefitting from my specialist knowledge?

I dont need you support mate, I work.

Maybe I do a job you not prepared to do!

Or maybe I do a job you not capable of doing?

I dont live of benefits!

I think everybody knows deep down that any bail out loan will be defaulted on by the Portugese. If, as a member of the EU we cannot avoid being one of the contributing bodies, then it is about time this govenment and the rest of the politicians who supposedly represent our interests put our continued membership of the EU to the vote.

65. At 16:07pm 8th Apr 2011, supercalmdown wrote:


If Portugal goes into a British style cuts led downward spiral, will they have enough tax income to pay their way ?
Nope. Its the downward spiral that faces us all. Cuts reduce net demand, which reduces tax receipts, which requires more cuts etc etc........
There is no way, other than destruction of debt through default, but in doing so we must face the prospect of the collapse of banking system as we know it.

I wrote on an earlier blog by RP in reply to matt_us

"However, the fact remains that all the countries that have gone to the ECB for help have done so because they were running out of money and could only borrow money at penal rates of interest. That situation would have arisen with or without the market for CDSs."

Matt-us replied

鈥淥f course other things matter, too, speculation with CDS makes it worse. Perhaps 10 times worse.

There is no reason, why Portugal, which is basically not much worse than the UK, should be excluded from credit markets, or pay interest rates 2 or 3 times as hight as Britain. Or why it should have a much worse credit rating. That is the problem.

Unless somebody could make money out of it, it would not happen. You can only make money through CDS from a worsening situation - that is why they need to be banned. Otherwise it will be in the interests of powerful 'masters of the universe' exactly the same ones which speculated against the Pound, to try that trick again with other countries鈥�.
...

I think you are attacking the messenger because the message is not to your liking. Portugal (and the other PIGS) are in a far worse position than us to reduce their deficit and fund their borrowing requirements because they are part of a single currency and cannot devalue. They do not have the monetary tools that we have such control of our own interest rates and money supply. We are inflating away some of our debt. Furthermore they borrowed short term whilst we borrowed long term.

What you haven鈥檛 dealt with is why there was a market for CDSs in the first place as the likelihood that Portugal would be forced to ask for help was 100% - it was only a matter of time. You yourself appear to accept that it was a one way bet that couldn鈥檛 lose. So who was betting that Portugal wouldn't need help and why did they think they would make a profit by making such a bet?

Here is a thought...if the tax take in UK is falling (as growth is stalling), how about we CUT income taxes and VAT, do away with certain tax allowances and reliefs....simplify. Merge NI and Tax (they are the same) and that way put more money into the public (private sector hands & businesses)....we spend more and invest more, create jobs....more tax revenue...SIMPLES cos borrowing to spend got us into the mess we are in and as the world has gone mad....create a growth tiger...luckily we have independent monatary and fiscal (to a point) control unlike Eurozone....Have a lovely weekend

The fake money goes round and round and ends up back with those who created the global financial crisis in the first place. There's always enough for a bonus on top too!

Just allow euro zone countries to get their own sovereign currency back - the Euro has created more problems, and not one benefit for the complexity and diversity of Europe as a continent of individual nations with individual needs and strengths.

@69. Averagejoe wrote:

"There is no way, other than destruction of debt through default, but in doing so we must face the prospect of the collapse of banking system as we know it".

Would that be such a terrible thing, I wonder? I daresay the sun would still go on rising as usual. I think the nation's morale would be given a terrific boost at the sight of all those bankers standing in the dole-queue, the City and Canary Wharf deserted and derelict... What an enticing prospect.

What good has "the banking system as we know it" done for us? We need a banking system that functions as a public utility, publicly-owned and as an adjunct of the public sector (which it is already, in fact, it's just that for some unknown reason the profits get diverted into the pockets of the hired help).

And, anticipating the usual rubbish about how these City casino operatives out of the goodness of their hearts do us the honour of contributing their taxes for our welfare - don't make me laugh. The bloated parasitic financial sector constitutes the single biggest obstacle to this country ever being able to re-balance its economy along saner lines.

' In the end, Mr Darling voted in favour, because there was nothing the UK could do to block the EFSM, even if it had wanted to do so (or so Mr Darling believed).'
...................
Sheer cowardice and incompetence! One 'Chamberlain' after another!

51. At 14:31pm 8th Apr 2011, bryhers wrote:

"Why? Hasn`t worked for Greece,Ireland,Portugal.More cuts,more debt,more bailouts,more cuts..."

You know bryhers, we all get that facts aren't a big deal to people like you, but out of general courtesy could you at least make a little bit of effort? The austerity measures were not passed in Portugal, and in Ireland were imposed by the IMF after they failed to produce anything worthwhile, or raise their corporation tax rate. Please stop blaming countries' financial situations on cuts when they didn't bother making any. It tends to give you the wrong end of the stick.

"But then he is more interested in politics than policy according to Mervyn King.Solves problems verbally,not practically."

According to Mervyn King, the austerity measures are correct! Which Mervyn King are you talking about? I'm talking about the Governor of the Bank of England...you might be talking about the darts player.

That would explain the inaccuracy of your information.

The money from our cuts will go to the Portuguese banks ( for bonuses , etc ) , but not to the common men/women that need it .

Ireland, Greece,Portugal whos' next Maybe Spain or Italy What will happen when all the Eastern european countries go belly up? and of cause Turkey will go the same way, About time we started to look after the U.K.??? and get rid of the greedy blood sucking bankers and they fat bonus checks,before they make all small business in the U.K bankrupt and make many thousands more hard working familys homeless in the E.U.

The Euro,a failure from the start is still being propped up.

Nevermind the Arab uprising,it is time we Brits and the Europeans rid ourselves of tyrannical union.

The debt crisis in the eurozone has started the most asinine coverage from media in a decade. And that fuels the most asinine moves from politicians and the most asinine notions are conveyed to public.
Stop talking in "bail-outs". Stop talking in "financial aid". There is no such thing as "financial aid" to Ireland, Greece or Portugal. Your money is not being given away to repay the debts of Ireland, Greece or Portugal. They are being loaned and will have to be pay, with interests. Substantial interests. And in a very short term. For Portugal the consensus is to repay in 3 years. So stop the Orwellian double-talk. Aid. Bail-out. This is pure business.

29. At 12:28pm 8th Apr 2011, RedandYellowandGreennotBlue wrote:
Could someone please explain if I have got this right:

- The UK is undergoing austerity measures to reduce its deficit and subsequent debt
- Portugal voted not to undergo austerity measures

What you clearly do not know is that the austerity measures thrown way by parliament was the fourth austerity measure plan to be put to parliament in less than an year.
Portugal is undergoing UK-style austerity measures to reduce its deficit and debt since 2010.

Er, where is the "rescue package" for britain?