Leading economist, Jacques Attali, Former President of the European Bank for Reconstruction and Development, is this morning quoted as saying that there is no more than a 50/50 chance of the euro surviving until this Christmas.
The immediate concern is again the trigger point of a Greek default, looking increasingly likely and launching a potential avalanche of sovereign collapses in Italy, Spain and France.
Financial analysts are increasingly openly considering the possibility of the collapse of the euro and the eurozone. The European Union is unlikely to survive such an outcome
The reality of the situation is such that the UK government has now admitted that it is working on contingency measure against such a collapse and that the time available is critical. What this means is that they are expecting the euro to collapse but the longer it takes to fall, the better the shape their alternative plans will be in.
This has been a bad week for eurozone member states with sharp evidence of lack of market confidence in the euro and in specific states.
Italy’s borrowing rate again rose again. It manged to raise the full amount of borrowing it needed – €10 billion (£9billion) – but had to pay 6.5% on six month bonds, its highest borrowing costs since it joined the euro.
The new government in Spain is known to be considering seeking an international bailout of something like £340 billion to stay afloat. financial estimates are that the UK would be asked to pay £5 billion of this. Belgium has just seen its credit rating lowered and France’s is under threat.
In the first such sign, the mighty Germany, the economic engine of the eurozone and indeed of the EU, almost saw its bond auction fail and was only able to offload 60% this week. This reflects alarm at the impact on the German economy of its role at the core of the eurozone and therefore of its ultimate exposure to the consequences of a worsening crisis.
This is becoming the point of departure for the European political project.
History is about the emergence of movements, projects, ideas that have their moment and their achievements and, in the natural order of things, fail when they meet events beyond their capability to survive. We may well be living at such a moment, where the wider framework within which we have seen ourselves changes.
In a way, Germany is recognising this is refusing to allow the underwriting of the European Central Bank to act as lender of last resort for troubled eurozone countries. French President, Nicolas Sarkozy, unable to get any shift on this matter in a last ditch attempt upon German Chancellor Angela Merkel, had to take refuge in a joint modern version of fiddling while Rome burns. They had publicly to admit they would not agree on this and would therefore focus on what they could agree on – that, in the fantasy land of the survival of the euro without such intervention, there would have to be a unified fiscal policy across members states and that they were therefore composing proposed treaty changes to cover this.
There is a point where paying to prop something up moves beyond an acceptable relationship between cost and benefit. The euro is looking increasingly unsustainable and it is difficult to see where a positive change of fortune can come in the current circumstances.
Change should never be about wasting time on grieving for times past but of assessing where the advantages lie, which directions new strategic actions should take and making an early, focused and determined start in new fields.
As we keep pointing out, this is a time for Scotland to get the thinking cap on, even to start a specific national conversation?
Here comes another plummet into the worldwide recession folks. How long before we start seeing adverts not to sponsor a starving child in Africa, but to sponsor a starving child in Greece?
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Or London, more likely.
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I hope that rather disturbing comment, Robert Wakeham, doesn’t come home to haunt you.
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WS: Prompted by Ianbeag’s comment yesterday on last February’s story – ‘Severe child poverty: Glasgow doing better than the City of Westminster’. That’s Westminster, London – a real eye opener – Charles Dickens would feel right at home, there’s need for more than just soul-searching over excessively ‘compensated’ city fat cats – it’s worse than that.
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Long past the time the Euro should have been scuttled. Get rid of the Euro ASAP, else hold onto junk paper !
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This all comes back to the basic fact…bailing out financial institutions should not have been done.
Looking at Norway and how they are recovering,with a rising economy,spells it out for me…
Interesting times indeed!
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As kintyre1 will doubtless explain to you, Morag, Norway is a small independent nation that has control of her own resources.She has done away with dependence on larger more influential neighbours and see how she is suffering. She manages to devote a large proportion of her GDP in international relief and peacekeeping.She does not appear to have many problems in attracting inward investment.Her ferries, bridges and transport infrasructure are superb.
It has to be conceded that foreigners find that the price of beer in Norway is exorbitant.
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And the price of diesel in the far north is also exorbitant, Ken (despite Norway’s status as a hugely wealthy oil producer)
I hope that the recent horrific one-man home-grown terrorist outrage in Norway isn’t somehow connected with all that relatively sudden wealth.
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Is it just possible that the collapse of the EU will have to be put down to the cunning of the Euronats when they proposed the euro? Anyone of any training in economics could ave told them that to have a common currency over an area it would be necessary – essential – to have common fiscal and budgetary policies for the whole area.But they knew that they couldnt get acceptance of this degree of supra-national control – to the point of a superstate – so they went ahead with a “pact” which all the members were supposed to stick to, with no powers for the Commission, even had they wished, to enforce. It took nearly ten years but finally the chickens came home to roost. And the only hope that the conspirators have is that the present dire state will force the acceptance of the Central control which they needed all the time.
Or am I just a cynical Eurosceptic?
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Gerry – If you think the only way that Europe can succeed is to become a ‘Superstate’, where do you think an independent Scotland should position itself if your belief becomes reality?
Bearing in mind what you said ‘essential – to have common fiscal and budgetary policies for the whole area’.
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My current view (things change so rapidly these days) ids that joining Norway in Efta would be the optimum position – and I see nothing in the future yet which could change that opinion!
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What is Salmond saying? (apart from telling us to reread one page of a two year old document which has been rendered obsolete by fast moving events)
Is it still his desire to go straight into the EU and into the Euro when we leave the U.K.?
Does he have a plan B ?
Surely he doesn’t want to go cap in hand to nursey and ask permission to use sterling?
He’s painted himself into a corner where the only alternative is to relaunch the Scottish Pound and trust to the markets and the ratings agencies.
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Reading the posts which refer to Europe there’s a fair degree of blurring. Membership of the EU is distinct from membership of the Euro club and it may well be useful to be in one whilst steering clear of the other.
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Anne – would you accept that there is a very strong possibility that the Eurozone will fail to exist in it’s current format in the near future?
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Robert Mac: I do not think that the only way that Europe can succeed is to become a Superstate – but it is a demand of a working Euro. As I said to a Party conference some 10 years ago – I’m all in favour of Europe – but not this Europe and certainly not the Europe that some want. Indeed I said that if central control freaks continued to gain the changes they wanted, the EU as it was would break up. I saw nothing against, everything in favour, of a European Economic Community for which each member state did not have to give up sovereignty (because on trade with others you did not have the power to decide prices and taxes unilaterally) – similarly on measures on climate change.
My belief remains the same – the only change is the degree to which I am certain that I might just be right.
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And, incidentally, I think that AS is not talking about this because he has made a clear strategic decision not to confuse the straight decision on Independence with questions which cannot be settled or acted on until we have that independence.Why should he (we the SNP) endanger the votes of Republicans or Monarchists, Europhiles or Eurosceptics by deciding a position now which cannot be acted on until and when an Independent Scottish government exists? When that exists we should then decide – or rather the people should decide – on the major constitutional questions which remain for decision.
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Thank you Gerry…that is a point that I heartily agree with and feel some have chosen to ignore.
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http://www.newsnetscotland.com/index.php/scottish-opinion/3760-the-lies-that-bind-the-grand-delusions-of-unionism-and-the-fate-of-the-union
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Gerry – AS is too wily a politician to commit to any monetary policy until the last moment – and quite right too. But why is there not a more informed debate about the options? The present regime is crumbling under our feet and when the only solution is printing money and inflation then Weimar is on the horizon.
Have you read the new booklet ‘There’s No Independence Without Financial Independence’ all about how Scoland could keep clear of the money markets and the Merchants of Debt. It’s tailor made to kick off the debate and AS has no need to commit – just acknowledge the options that Independence could bring…. see it online at
http://www.scottishmonetaryreform.org.uk/6.html
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Frank: Agree
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