Default blues - by Richard... Thursday, June 23, 2011

Default blues - by Richard... Thursday, June 23, 2011

Despite little Myrtle's dose of EVM, we now have Andrew Alexander in The Daily Mail stating unequivocally: "Greece will default on its debts, leave the euro and return to its own national currency, the drachma. This is one of the certainties in an uncertain world".

He then goes on to say, "The decision might be swift or it might be slow, but the question remains when, not whether", exactly mirroring my own position, although he is equivocal about whether Greece's departure from the euro in will lead to economic Armageddon.

Alexander is joined by Andreas Whittam-Smith in The Independent. He says the Greeks can't pay and won't pay, so let them default. It would crash out of the eurozone, re-establish its own currency and suffer a devaluation. Greece would be in a mess, but at least it would be its own mess.

Elsewhere, the Mail had earlier ramped up the crisis with a report that the Greek crisis could cost Britain as much as £336 billion, although the actual direct exposure seems to be round about €14 billion (give or take) – although you get a different set of figures from The Independent.

Meanwhile, Der Spiegel is breast-beating about the euro. It remarks that the German government also seems to care little that the European Central Bank is slipping into serious distress.

It worries about fact that "our financial system" is so tightly interwoven that if part of it fails, we could all fall and then complains that Germany is in an impossible situation. Having "ponied up" hundreds of billions of euros but is nevertheless being pilloried.

Some Greek newspapers refer to Germans as "euro Nazis," and not as a benevolent leading power. The fact that the situation has deteriorated so far does not speak well for statesmanship in Berlin - and that is putting it mildly.

But then does it lament that, if the euro-zone does break apart, it is Germany that will be blamed - because it was the country that could have saved the euro but didn't do so out of short-sighted self-interest. The damage, should it come to that, will be much more than monetary.

Hilariously – and possibly more accurately - Zerohedge takes a completely contrary line, arguing that if Germany is seen as the reason for the collapse of the Euro, it will be branded a saviour, not a villain ... at least by the non-banking population of Europe.

However, while we may enjoy the irony, there is something rather unpleasant closer to home - personal debt. We can rail about nation states, but in the UK, we are the most indebted nation on Earth, per head of population, the total level of personal debt running to a trillion and a half.

Against that, I suppose, Greece is rather small beer – especially when we see the level of default that will follow an economic crash.

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The Green Revolution – part 1 - by Richard... Wednesday, June 22, 2011

The great labour of referencing the Battle of Britain book is finished, with the completed manuscript delivered to the publishers. Now, with the pressure off for the time being, I can give my full attention to the blog, which has been sadly neglected over the past couple of weeks.

And, as marked up earlier, I promised to take a closer look at the open letter by environmental activist, Charles Secrett, published in The Guardian yesterday. This, I suggested, was potentially every bit as dangerous as what is happening on the furthest edge of Europe. He is calling for a green revolution, repeating a call he made on13 June, in a piece headed: "Environmental activism needs its own revolution to regain its teeth".

In that piece he charged that "today's protest tactics are not sufficient to alter the destructive path travelled by virtually all governments and most corporations". Tactically, he feels, the environmental movement has stalled and now is he out setting what amounts to a vade mecum for his new revolutionaries.

The good news is that he should feel this way, revealing an insider view of a movement which, from all external appearances, seems to be sweeping all before it. The bad news is that the man seems to have a better grip on the realities of power than many of the wannabe revolutionaries on our side. But that is tempered by the indications that the man has some curious blind spots.

As to this vade mecum, first, Secrett tells the movement, "appreciate how powerful you could be from pooling your efforts", second, stop working in parallel, and unite with other causes – development, human rights, poverty, public health, democracy, community well-being – under one banner: "For people, for the planet".

Third, he says, "every successful revolution has a compelling text at its heart – ideals, goals, words, images and examples that inspire the majority. Where is your equivalent of the Rights of Man, Wealth of Nations, Das Kapital, or Little Red Book?"

You need, he thus says, to agree a joint manifesto for life. Mine the library of sustainable development strategies to spell out a route map that can take humanity from where we are to where most want to be. Then, crowd-source the draft "help the public create a new world order".

For his fourth item, he wants activists to build a cross-party political consensus in every nation, observing – with some prescience - "societal change is about power, and who wields it and why. Your regular interaction with government and companies is not the same as real influence".

From this, he declares: "You must systematically generate significant pressure to change the failing business-as-usual provision of energy, food, housing, jobs, welfare and the other things that people require for a good life", then offering the observation that: "Power resides with voters, tax-payers and constituents. No government can rule without citizen consent".

Organise locally in every constituency, he instructs, to build formidable alliances between your supporters, other community groups, unions and local businesses, stating that, "The imperative is to hold government and industry to account at elections and between elections, at AGMs and throughout the year".

And for his fifth point, he wants his activists to target the "markets". Business too needs a license to operate, he says. Consumers, shareholders and investors are the kings and queens of commerce and industry. No company will invest in, make or sell services and products that people won't buy, or shareholders reject. It's another opportunity to organise and mobilise.

Finally, he counsels, accept certain campaigns are not winnable, and simply drain resources. Absolutist positions do not hold up for the majority. Because of climate change, this probably includes total opposition to nuclear power and GM products globally. Focus instead on the conditions where these technologies become acceptable: safe, economic, free of patent control by a few companies, and effectively regulated.

That, in summary, is Secrett's pitch. We'll analyse its strengths and weaknesses in the next post.

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The edifice crumbles? - by Richard...

You know how, moments before a building collapses, bits usually start falling off it? Well ... it's happening now says The Failygraph. Banking Times seems to be agreeing. The Irish Independent, today, seems to support their line, which is expanded upon by The Boiling Frog.

Zerohedge, however, is less than impressed, not least as it reported on it last week, with this:

Allied Irish Banks PLC has officially experienced a Restructuring Event. CDS settlement to proceed next. And yes, thanks to daily variation margin on CDS this means absolutely nothing, and should the cash/physical settlement auction clear tight of prevailing prices depending on where CTD bonds trade, it means CDS sellers will (gasp) receive daily margin cash at the end of the day. Yes, contrary to AIG-related stigma, selling CDS on an entity does not mean an automatic default for the sellers of protection. But that won't prevent those who have no idea how the CDS market operates to spread more BS stories, especially as relates to Greek, then all other PIIGS, CDS.

Delicious ... that's exactly the sort of thing I would have written if I knew what I was talking about ... which I don't. We're still domed though.