There was a time when we did care … and wrote about it in impassioned terms, such as here , here and here. … Britain could have been stricter in its supervision of financial markets, but defended his response to the global financial crisis. "We should have been tougher in some areas," he tells the BBC. It's OK for Brown to say it in parliament, but "illegal" in a cleaners' restroom? It could be "intimidating" for non-British workers.Wednesday, March 04, 2009
The reality is worse
There has been somefluttering in the dovecotesover an imagined conspiracy of silence over EU bank debt. This arises from an unexplained change in an article published under Bruno Waterfield's byline on 11 February.
The original copy was headed: "European banks may need £16.3 trillion bail out, EC document warns," claiming access to a "secret document" which put an estimate of toxic debt in the European banking system at that figure - £16.3 trillion.
The implications of this are truly staggering as the IMF estimates total global losses related to asset impairment at a "mere" $2.2 trillion, putting the potential European write-down at getting on for ten times the global figure.
Less than 24 hours later, however, the headline was changed to become "European bank bail-out could push EU into crisis". The specific reference to the £16.3 trillion had disappeared, along with two paragraphs of the original text.
Despite this, there is no conspiracy. I spoke to Bruno earlier today and he dismissed any such idea. Under pressure of a deadline, he had misread an obscure passage in the Annex to the document, which retailed speculations on what figures had been considered. The figure was not an estimate, per se, merely a record of what some had speculated it could be.
Bruno was not the only one to make the mistake. Guardian correspondent David Gow, made the same mistake, yet his article still stands, with a header: "Bank protectionism will destroy European single market, finance ministers warned".
The reality, though – Bruno tells me – is actually worse. There was no formal estimate as to the extent of the toxic debt in the European banking system because the commission has no idea of what it might be. Debt has been spread through the international system so much that no one is sure of the ownership, where the liabilities lies, or even the order of magnitude. It could be £16.3 trillion, it could be less – but it could be more. No one actually knows.
It is this uncertainty, more than anything else, which is crippling the system. That much is reflected in a comment in the IHT that refers to tensions between France and Germany over the crisis.
What worries everybody, but Merkel most of all – says the piece - is that no one knows how long the crisis will last or how much deeper it will go. No one knows if the economic stimulus measures introduced by several EU member states and the United States will safeguard growth. And above all, no one knows what will encourage the banks to start lending again.
Behind that is indeed the spectre at the feast – that uncertainty which prevents anyone suggesting that any measure, once and for all, can address the crisis and set the global economies on the path to recovery. Effective measures require at least some knowledge of the extent of the crisis, and knowledge there is none.
Whoever said "ignorance is bliss" cannot have been thinking of the global banking system.
COMMENT THREADWhat to do about Pakistan?
Of the many thought-provoking pieces on yesterday's atrocity, we see Melanie Phillips tell us that it "highlights the intimate connection between the two in a web of terror that spans the world."
Michael Burleigh tells usPakistan presents a terrifying threat to world stability far greater than Iraq or Afghanistan, andThe Daily Telegraph says, "It is no use blaming outsiders: the canker is within. Pakistan needs to wake up."
We have a direct interest as well as the broader strategic interest. What happens (or does not happen) in Pakistan directly impacts on the campaign in Afghanistan. To that extent, it is an Afg/Pak problem rather than an Afghani problem. Can one be solved without the other? Many doubt it.
Could stability in Afghanistan serve as a beacon for Pakistan, illustrating what can be achieved, or will the campaign in Afghanistan necessarily fail unless we also deal with Pakistan. And, short of invading that country as well, what can we do?
COMMENT THREADDo we care?
Months later, we see this piece suggesting that Tory MPs need to grow up. We didn't write it. But we agree with it. They will not – and by failing so to do they doom themselves to irrelevance.
They will gain office, but not power. There are bigger games afoot, and they will not be part of them.
COMMENT THREADReality is a nasty place
Simon Heffer offers a laborious analysis today, which amounts to a prediction that the euro might not survive the recession. Or is it wishful thinking?
In a way, the euro is like the bumble bee – in theory neither can fly but they do. The euro should have nose-dived many times, but it has led a charmed life and continues on, despite the gathering clouds of the economic storm.
The point that Heffer makes, though, is two-edged. Invoking Milton Friedman, he asserts that "there has never been a monetary union, putting out a fiat currency, composed of independent states. There have been unions based on gold or silver, but not on fiat money – money tempted to inflate – put out by politically independent entities."
What perhaps he misses is the qualifier "politically independent entities", in which context there is an alternative that he does not fully explore … that the "entities" cease to be independent.
The essence of the European "project" is that there has emerged a European political class, where the ruling élites have more in common with each other than the people they govern. We have also seen of late more than a little nervousness amongst those élites about the prospect of civil unrest, and not a few of them must have looked anxiously at Iceland and then Latvia, where the governments have been deposed.
The idea of "independence", therefore, is strictly one for the proles. This is not something that will at all bother the élites – their concern is survival and their own protection. And, having conspired against their own peoples for so long, the driving force amongst them will likely be, "hang together or hang separately".
For all their comedic elements, we see in the statements of Joaquin Almunia and others of the "colleagues" a determination to stretch the rules to breaking point and beyond. When it comes to the Treaty provisions and what is legal and what is not, we are well beyond the stage of keeping within the treaty boundaries. The "colleagues" will do whatever it takes to survive.
Effectively, in so baldly stating that, "It's not clever to tell you in public…" what they intend to do, Almunia is admitting that they have torn up the rule book and are flying by the seat of their pants.
Thus, we would like to think – as indeed does Heffer assert – that national interest will prevail, and in so doing bring down the euro and thence the whole edifice of the EU. But there is a greater, stronger interest at play – the interest of our ruling élites as a collective.
As long as they feel safer together, and can look to each other for mutual support, national interest will take second place. In there lies reality, where the rulers are responsible to their peoples and accountable for their actions.
That, for the "colleagues" is a nasty place to be and they do not want to go there. They will do everything in their power to prevent it happening.
COMMENT THREADBrown says …
"But …". This is a politician talking, so there's always a "but".
".... there is a whole series of issues where you needed international cooperation because you are dealing essentially with global financial flows and you cannot solve that problem unless you have the kind of international supervision that I think you'll admit I've been pressing for 10 years."
So that's alright then! Not my fault, guv!
COMMENT THREADOne law for them …
COMMENT THREAD
Wednesday, 4 March 2009
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