It's a plan ... sort of - by Richard... Monday, April 12, 2010

It's a plan ... sort of - by Richard... Monday, April 12, 2010

The "colleagues" – namely eurozone finance ministers - must have been pretty desperate (or worried) to turn out on a Sunday, although it was a teleconference rather than a physical meeting. Even then, what they seem to have announced could have waited until tomorrow ... or not. What do they know that we don't?

That would be a stupid question if it was meant as anything other than a rhetorical device, highlighting that, when it comes to Greek finances, more than a few things do not add up. And we're not just thinking about the accounts.

Anyhow, the news came officially at an afternoon press conference in Brussels, following whichBloomberg and others reported that a "rescue package" had been cobbled together for Greece, worth "as much as €45 billion". 

This is to cover the €11.6 billion needed by the end of May to cover maturing bonds, on top of another €20 billion by the end of the year to pay debt coupons and finance this year's deficit.

As to following years, it was well into the evening before Reuters issued a correction, stating that the aid would be "significantly higher" than €40 billion. This was from an unnamed official who said "it would be logical" for it to amount to some €80 billion over the next three years.

And, contrary to earlier predictions - the money will be available at a variable rate, but below what it would cost it on the market. The level is currently calculated at about five percent for the member state contribution, and less for the €10-15 billion coming from the IMF.

Nevertheless, Greece is still declaring that it intends to seek money from the market. Only in the event that it is unable to get the requisite finance will it ask for the help, when an as yet unspecified "mechanism" kicks in. Or, that is the theory. In fact, there is an amount of incoherence in the statements. 

Contrary to the public optimism of the Greek government, the Eurogroup – as it likes to call itself – says it is offering the loans at "non-concessional interest rate", in order to "set incentives for Greece to return to market financing." This makes it sound as if the loans are a done deal, with Greece already planning to take them up.

On the other hand, Luxembourg prime minister Jean-Claude Juncker (pictured), who chaired the tele-conference is saying officially that the money would come only "if needed". But it seems this is said at the behest of the Germans. It is they who are saying that Greece needs to try, and fail, to borrow on financial markets before it gets help – and this may be for domestic consumption.

Quite how the markets will react is anyone's guess – no doubt traders and bankers too are trying to work out precisely what is going on. We will be seeing some sort of a response later today. A Greek finance ministry official says that the reaction over the next few days "will determine future developments."

But that hasn't stopped Greece's prime minister George Papandreou crowing. "With today's decision," he said, "Europe sends a very clear message that no one, any longer, can play with our common currency, no one can play with our common fate." 

This sounds an awful lot like hubris. The man may yet have to eat his words. 

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The white man's burden - by Richard... Sunday, April 11, 2010

Since it was covered poorly by the daily media in the UK, one might have thought that the $3.7 billion World Bank loan to the South Africans for 4.8 GW coal-fired power station might have been followed up in the Sunday media.

On the face of it, the granting of the loan represents a major defeat for the greens and the climate change lobby, who marshalled all their forces in an attempt to stop the project. 

Yet, for all its importance, only Andrew Chambers of The Guardian picks up the story, although he does make the right noises – after a fashion.

"It is not acceptable to use climate change as an excuse to limit growth in poor countries as the west's carbon emissions rise," Chambers writes, noting that "this question of development versus environment may become one of the most contentious international issues over the next few years."

Environmental movements, he says, certainly have a role to play in highlighting ecological degradation and its impact on local people, and in some cases the interests of protecting the environment will be perfectly aligned with the needs of the local community. 

However, he continues, it is unacceptable for poverty reduction in the developing world to become a staging post for ideological battles lost elsewhere. We should embrace whatever methods provide the best outcome in alleviating poverty – whether that be new roads or airports, power stations or renewables. 

Then, by way of a conclusion, we get the money quote: "To do otherwise is to be guilty of the worst kind of eco-imperialism – where the poor are held back for the benefit of the rich."

If we take on board the underlying logic of this piece, though, it means a carte blanche for developing countries massively to increase their CO2 emissions. But, by the same logic, this then means that burden of reducing global emissions must fall on the developed countries, which must not only reduce their own, but offset the increases from the developing countries.

One can see the greenies' point of view, therefore - eco-imperialism is perhaps a small price to pay, otherwise the white man's burden might simply be too much to bear. 

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A painfully empty charade - by Richard...

This blog and a few more have made the point. And latterly, the politicians have been comparedwith drunks in a karaoke competition. Now, it's Booker's turn to point out, in his column the simple fact that none of the politicos and their claquers want to admit, that this election is a painfully empty charade.

With the latest poll putting the Tories only eight percent ahead – 26 seats short of an overall majority – it would appear that there are many people who would agree. Despite his frenetic activity, the Boy Cameron has failed to (so far) to engage with the increasingly disinterested electorate and, according to a poll in The Independent, two-thirds of voters distrust both Labour and the Tories over the deficit

And that is precisely the focus for Booker, who says there are four huge shadows that hang over this "claustrophobic" election. The first is the "barely imaginable scale of the deficit in public spending", increasing at the rate of half a billion a day and set to cost us the equivalent of £60 a week for every household in the land just to pay the interest on the debt.

But what strikes us so forcibly is the utter unreality of the political debate, illustrated last week by the Tories' claim that they could cut spending by £12 billion. That is the amount the debt is risingevery month. Not, of course, that Labour is any better, boasting that it could save half a billion a year by cutting out NHS waste – the amount our debt is increasing every day.

The second shadow over this election is the unprecedented damage done to our politics by the expenses scandal, which has degraded the standing of Parliament to its lowest point in history. 

More than anything, says Booker, these revelations have reinforced the realisation that we are ruled by a political class in which the three main parties are blurred indistinguishably together, almost wholly divorced from the concerns of the rest of us. Never have MPs or peers been so diminished in stature, at the very time when the bloated apparatus of the state has been intruding on our lives more obviously than at any time before.

The third, closely related shadow is the still barely understood extent to which the politicians have handed over the running of our country and the making of our laws to that vast and mysterious new system of government centred on Brussels and Strasbourg, all of which is related to the final huge shadow – the way our politics has become permeated by everything which can be related to global warming.

Having made the points at some little length, Booker notes exactly the same phenomenon to which we have been referring – they way three virtually indistinguishable parties squabble over trivia, leaving the electorate without any clear alternative. His feeling is that on 6 May, almost half the voters may well stay apathetically or sullenly at home.

My great concern is that, as the campaign develops, people will get caught up in the drama and, having focused on quite how awful Labour is, turn to Cameron's not-the-Conservative-party as the antidote. What is so desperately needed is the recognition that choosing between disasters still ends up with a disaster.

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