back to article Eurozone crisis: We're all dooomed! Here's why

Quite what is actually happening over the Eurozone I can't actually tell you: it's not that things change too fast to write about them, it's that things change to fast to read about them. Berlusconi still PM? Italian bond yields over or under 7 per cent? That changes as often and as fast as Berlusconi does condoms. France to go …

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  1. Natalie Gritpants
    Thumb Up

    Time to thank Goerge Soros

    For costing us so much in the ERM that we never joined the Euro.

  2. EddieD

    Last person out, please turn out the lights....

    I'm just peeved that I lived a quiet life of simple virtue, never got into debt, and now have no chance to get all those wonderful consumer durables, and then default on the repayments.

    Any chance we'll start a new credit bubble so I can play this time?

    Silly question of course, it's not if, but when....

    George Santayana would love it.

    (PS Great article, but I still think that some way will be found to sort things, but it will be one that accidentally cedes even greater powers to the Financial Sector... OTOH, if the corporations take over, we may get Rollerball...it's not all bad)

    1. Mike Brown

      or running man!

      watch out for the pseudotrons tho

    2. Ru
      Trollface

      "I'm just peeved that I lived a quiet life of simple virtue"

      Let this be a terrible, terrible warning to all the rest of you considering frugality, virtue or a so-called "quiet life". You're all still doomed, but the rest of us will be having much more fun.

    3. Magnus_Pym

      I am presuming that you live in a western first world nation. If that is true you cannot help be be in the top 5% of the worlds wealthy and profligate. Your 'quite life of simple virtue' is living like a king to most of the worlds population. The roof over your head and the food on your table is subsidised by a cruel and bloody history that set up the favoured institutions that support your nation.

      Yes there are those who have taken and wasted far more that was their fair share and I don't expect you to do penance for those that came before you but to pretend that history didn't happen and that everything you have you would have no matter where you happened to be born is just crass.

      1. Tomato42 Silver badge
        Boffin

        @Magnus_Pym

        The number of people oppressed in history is comparatively very small to number of people living today.

        1. Marvin the Martian

          Greece "should default, pay back a bit but not all of what they owe, and start again"

          Comparison to personal default situations are off --- you cannot get the repo men in and cart off all their physical stuff (parthenon, leccy pylons) like normally (plasma, lawnmower).

          I suppose it's the same injustice -- your children losing their home because their parents can't count, or your land losing its historical possessions because someone the others voted for ran it badly.

          1. Anonymous Coward
            Anonymous Coward

            Actually, the difference goes deeper

            If you default on your loans you get marked not to run a company, your credit rating is tarnished for a decade, you can no longer get a mortgage, etc. If you do so by fraud you also go to jail.

            If you are the greek politician and banker who participated in orchestrating the entire affair while being in charge of the central bank of Greece you get to be the prime minister and the rest of the EU gets to give you money (anyone who will try to tell you that the ex-president of the central bank of Greece was not involved should really have their brains examined).

            Screw that for a laugh.

            First of all, until the Parthenon is carted off in crates to the British Museum, Metheora and Athon to Moscow and all of the Islands given away to Germans as real estate property development the Greeks must not get _ANY_ money period. Even if these are not taken as payment they are worthy collateral. If they want them back they _WILL_ _PAY_.

            Second, the people who orchestrated the fraud (as it was an accounting fraud all right) should first go to jail (and not a Greek one, I suggest this is outsourced to Turkey or Macedonia to ensure that no preferential treatment takes place) as a precondition for them getting any money.

            Now after that they are welcome to proceed to an orderly default and have some money from my pocket.

        2. Magnus_Pym

          @Tomato42

          That depends on your definition of history.

      2. GitMeMyShootinIrons

        I'll put it bluntly...

        In brutal, Darwinian terms - to the victor, the spoils.

        History is full of empires rising and falling. Look at Rome, Egypt, China and Britain. All had dark aspects, but all pushed the human race forward.

        Let's face it, the third world has never been an icon of virtue, and while the left leaning liberals blame it all on imperialism, it's certainly not the case. Slavery in Africa started long before Rome and still goes on today (child soldiers etc).

      3. Intractable Potsherd Silver badge
        Thumb Down

        @ Magnus_Pym

        I usually agree with much of what you write, but this time I feel that you sound unbearably pompous. I have absolutely *no* responsibility for what anyone that came before me did, nor do I have to feel embarrassed by any such actions.

        1. Magnus_Pym

          @Intactable Potsherd

          a) I am unbearably pompous IRL.

          b) I did say that no blame should be passed down from generation to generation*.

          c) I was just pointing out that an economical life style in most western countries is not so much from a global perspective.

          *excepting where reparation of stolen assets is possible but not conceded , although I feel the Greeks claim to their marbles may be reduced of late.

          1. John 62

            replying to thread to appear on front page

            Greece defaulting will not give Greece much of a come-uppance. Argentina defaulted a while ago and it was very painful for them at the time, but they're doing relatively well now on high mineral values and meat exports. I'm sure if Greece defaults it will be painful while they try to get new debt arranged, but they'll bounce back eventually (if they can minimise corruption). After all, Greece has sun, history and olives, all things that can make them money. The real pain will be for all the banks (in Germany, France, UK, etc) who bought Greek debt in euros. If the Greeks (or anyone else) want to punish the bankers they should campaign for a default.

    4. Anonymous Coward
      Anonymous Coward

      Re: Time to thank Goerge Soros

      Yes, it's like realising in the nick of time that you're not cut out for high-stakes poker after all.

      Sadly, Britain and other nations close to the Eurozone will have to take a hit from all this. It's all very well talking about UKIP, but even brushing aside the closet fascists and imperialists undergoing withdrawal symptoms, that party isn't really offering very many solutions.

  3. Anonymous Coward
    Anonymous Coward

    D'you know ..

    .. I was buying it right up to the last line where you admitted to being a facist crackpot. I'd keep that bit quiet next time ..

    1. Tim Worstal

      Steady now....

      It's this very analysis that made me a crackpot in the first place. That it would never work but they were going to go ahead anyway.

      As to the fascist, I plead the O'Rourke defence. No one has ever fantasised about being tied up by a liberal.

    2. ThomH Silver badge

      I'm not sure that's fair

      UKIP may say some very peculiar and some outright offensive things but I think the majority of UKIP's voters don't spot that stuff and are primarily interested in smaller government by whatever means. Most people don't read manifestos, they just vote on the general message and the general message that UKIP are perceived to push is "let's remove a tier of government and a source of bureaucracy". The BNP are who you vote for if you're looking for fascism.

      Since the article's author was good enough to state his bias, I'll state mine: I would never, ever vote UKIP as I think their policies are reactionary, often absurd and sometimes racist, and that they would be detrimental to the country as a whole.

      1. Anonymous Coward
        Anonymous Coward

        yes but....

        the irony is the BNP actually have some good ideas, as does the UKIP conservatives etc the problem is that almost all parties have a bunch of crap that goes with them.

        I would hazzard an assumption that any person who 100% agrees with any party doesnt actually have a clue what they are talking about.

        Personally i believe there is no reason what so ever for any country of the world not to be able to share some of the good points of the EU without all the EU crap. Lets face it, travel is great in europe, the original idea of trade with the EC was great, but politics got in the way and made it much more confusing, the idea that we cant sell something because some other country is crap at making it is beyond belief and beyond most of the UK population as well. Farming being the big one, lets NOT use land to make food to help feed not only us the the rest of the world, instead we'll leave it an pay the farmer NOT to use it, that money of course comes from the EU which is paid for by the member states who take the money off the people (farmers) sounds like a great idea until you look at it like that. We pay more in to the EU then we get out of it, would it not make sense to deal with the issue in house without the added layer of shite in the form of the EU?

        to bring this back to an IT related article, you could liken it to a bad piece of software, you can patch it, you can add on to it, but if the core idea / concept / programming of it is shite, its still going to be a bad piece of software, only now its bad an bloated and the good ideas that were levered in to it get lost in the FUD. thats my opinion of the EU. if it were not for the fact that france and germany would flatly refuse most changes id suggest the best thing the EU could do is sit down, discuss what is good, and start from the ground up. After all, the EU has absolutely no legal hold over anyone, its only because we passed laws in our countries that we have to deal with the crap thats shoved down our necks

        as i said, there is no reason what so ever that member states couldnt agree on trade terms that keep the benifits of the EU, without the added layer of crap.

      2. Darren Barratt

        Only useful thing that UKIP have done is split the BNP vote

    3. Brian Mankin
      FAIL

      !!! F A I L !!! How NOT to judge an idea !!! F A I L !!!

      How should we judge an idea or an intellectual argument?

      A ) On the basis of the content?

      B ) On the basis of who the author is?

      1. Anonymous Coward
        Anonymous Coward

        Re: !!! F A I L !!! How NOT to judge an idea !!! F A I L !!!

        Aha, now an argument may be perfectly good, but I think it will always give pause, if the author at the ends proclaims themselves to be an associate of some dodgy people - even if those dodgy people themselves have a good argument (I'm not saying this bunch do or do not).

        It will give more pause still if the latter repeatedly come across as a shower of delta-moron Human-Rights-Act-despising, queer-hating, white-power xenophobe refugees from what they perceive as the unacceptably socialist and woman-tolerating Tory party.

        1. Anonymous Coward
          Anonymous Coward

          Curious.

          I'm a UKIP member and ran a local branch for a couple of years. I never met any member with the views you describe.

          UKIP members are very aware of how they're viewed by extreme left-wingers and their tame TV broadcaster, and anyone with such views is rapidly turfed out. Of course, if you're a supporter of brutal dictatorships, or you support terrorists such as Hamas or the IRA, or if you believe that we should all freeze to death to save the planet from pretend global warming, then you're rapidly embraced by the parties on the Left. You can even become mayor of London.

          1. frank 3
            FAIL

            thanks for adhereing to stereotypes

            See, that's why I could never vote UKIP.

            None of our members are right-wing nutjobs, but we regard the BBC as extreme left-wing (cluetrain: most left-wingers regard the BBC as right-wing). None of our members are rascist, but in the extremely complex and sensitive issue of Israel/Palestine, we could never side with the a-rabs. We think its OK to say that you are a supporter of brutal dictatorships and terrorists if you are anything other than howling and frothing about the iniquities of the (democratically elected) Hamas group. Unlike Netanyahu of course, who is a paragon of truth and virtue no matter what other world leaders say. He would never kill and maim and slaughter in the defence of his side of the argument.

            Thank you, Anonymous Coward, for having the courage to stand up and be counted for what you believe in. And for confirming that you *do* hold the same views that make so much of the rest of the world regard you as nutjobs.

            1. Wilseus

              Re. most left-wingers regard the BBC as right-wing

              I wouldn't agree that the BBC is extreme left, but it certainly has a centre-left, liberal agenda, roughly on a par with the Guardian and the "Independent" I'd say.

              1. Beelzeebub
                Flame

                Yes, but...

                Isn't the BBC supposed to be non-biased, by it's charter?

                If so the British public are being seriously misled by the organisation that they are forced to pay over £100 a year for.

          2. Anonymous Coward
            Anonymous Coward

            err ...

            you kind of undermined your own argument there.

            While I am sure you are a sane and sensible fellow, and UKIP have some points worth listening to, your post quickly deteriorated into "the whole world is run by lefties and they are out to get me".

            Not the best way to garner support

          3. Anonymous Coward
            Anonymous Coward

            re: curious

            Per your observing how you think "extreme left-wingers" view UKIP, may I say, I'm not one, indeed, I may run for the Conservatives if the local association ever lets me.

            You write of the BBC it is the "tame broadcaster [of the extreme left]", something which indicates to me powerfully, how your idea of the centre must be very far over to the right.

            You write "anyone with such [profoundly right wing] views is rapidly turfed out" of the BBC. I think that is as it should be.

            You write "if you're a supporter of brutal dictatorships...or Hamas or the IRA.. then you're ..embraced by the parties of the left". Even were that the case, such as with Ken Livingstone, would that somehow excuse UKIP's advocating repeal of race, sex, and homosexuality discrimination laws, such as I initially took issue with? Perhaps you feel that if one or two left-wing nutjobs are sympathetic to one or another brutes (students do tend to support anyone who is on the side of the Palestinians - yet they're hardly the political mainstream), it's therefore OK politically to take Britain back to the C19th. Well I'm sorry but it's not.

            You say you never met any members with the views I described - perhaps you should read your own manifesto! With what you've written, you've painted yourself as a comic-book version of what I described.

        2. Knowledge
          Stop

          W.T.F.

          Jesus.

      2. Anonymous Coward
        Anonymous Coward

        bit of both - "He would say that, would n't he!"

        No matter how persuasive or otherwise is the message, always note the source. Some of Goebbels's messages (to take an extreme example) were great on content; when one looks at the source and context, it gives a new slant, a new evaluation of the basic premise.

        Much depends upon the credibility and standpoint of the author and the context of the message.

      3. Kay Burley ate my hamster
        FAIL

        !!! F A I L !!! How NOT to judge an idea !!! F A I L !!! #

        He was talking about the party, not the article, your reactionary reply proved his point IMHO.

    4. Splodger
      WTF?

      Count me as a crackpot too...

      Ah, so wanting to elect your own government, wanting your country to be run for the benefit of its inhabitants, and not haemorrhaging cash to be a member of a (bankrupt and corrupt) political club where we are forever fighting our corner/for crumbs/to be heard/to have meagre influence = crackpot, eh?

      Perhaps the truly crackpot are the ones who in spite of all evidence over many years *still* think that the solution to our woes is more of what caused them.

      1. Adam-the-Kiwi

        Re: Count me as a crackpot too...

        So, you're saying you're in favour of Scottish independence, then?

    5. Jedibeeftrix

      idiot

      ^ obviously has no idea what fascism is. ^

      and deserves to be ignored on the godwin principle alone.

      1. Marvin the Martian
        Stop

        What a good decision strategy.

        "Judge argument:

        A ) On the basis of the content? or

        B ) On the basis of who the author is?"

        So you'd take a grinning wild-eyed man's word for it that he's not going to use that bloody axe on you? The content states he won't.

      2. Imsimil Berati-Lahn
        Go

        Not quite though...

        I was gonna call Godwin's on this one, but he only mentioned fascism, so fair's fair.

    6. Jim Bobble
      Trollface

      BAN FACEBOOK

      Facist? I don't recall seeing anything in their election manifesto about taking a dislike to faces.

  4. Frederic Bloggs

    The Germans

    I don't want to bash the Germans, but the fact that ECB can't print money is entirely down to them. The Germans have a painful history with "QE" (as it is now called), they are absolutely terrified that allowing the ECB to do its job is the slippery slope to hyper inflation. They will point out the consequences of that to anyone that argues with them (Hitler and WWII), arguing that the EU was specifically setup to prevent that sort of thing from happening again.

    The Germans were only prepared to join the Euro if a) they (effectively) controlled the ECB and b) it could not print money.

    Unfortunately they are now hoist on their own petard because the third alternative would be for Germany to either guarantee the debts of, or buy bonds from, the indebted nations. The population, egged on by the newspapers, won't wear it.

    Pity really...

    1. fajensen Silver badge
      Coat

      Careful what you wish for!

      If the ECB could buy up all the crap debt, what does people think would happen?

      Well, That is easy: Everyone would be issuing more of it, as fast as they could get their computers to write it up, and then stick the ECB with the default. The banksters especially would just looove to dump their OTC manure on that Sucker of Last Resort and even get new money in exchange - to do the same all over again with, but bigger and with more leverage this time, with unlimited above-government guarantee ... well, 500:1 is just not rich enough.

      The solution? Let people borrow directly by selling bonds on the regulated exchanges causing the interest rate they pay to be set immediately on actual risk and performance instead of some Sovjet-style central planning committee inside central banks.

      If the purpose of the central bank was really the "lender of last resort" then the ECB rates should be higher than the market rate - they are the lowest. It is therefore just a special bank providing cheap financing to it's crony friends so they can buy everyone's assets and extract rent forever.

    2. Schultz
      Boffin

      Two ways to run the economy

      You can pretend that there is no problem, just print more money and make everybody poorer by it without officially declaring it. Or you can keep the money supply stable and tell the perpetrators of financial shenanigans that they will have to clean up their act, and yes, they'll get the pain to make up for the borrowed pleasures of earlier times.

      The former always looks easy in the short term, but provides a somewhat diluted message on how to behave in the future. So the current fight is really about who should inherit the blame and the pain.

      Full disclosure: I live in Germany and I support the idea of bailing out the Greece using some of the daily Euros I pay in taxes. But make sure they work for it every bit as hard as I do.

      1. James Micallef Silver badge
        Facepalm

        Printing more and more money to buy more and more (bad) debt is just kicking the can down the road. The problem isn't that Italian (& greek, spanish etc) bonds are now at 7%+ yields, it's that because they were Euro members, they were allowed to borrow at close to German bond yields simply because they had the same currency, while in reality their economies were not so healthy. And their governments, seeing that they could borrow cheaply, went on a borrowing spree. Printing more money by the ECB will simply guarantee more of the same.

        The politicians are much to blame for this one, many nations including Greece did not have the economic criteria to join the Euro, but they were show horned in for political reasons. Greece was lying in it's reports to the EU, and the EU knew and didn't care, because the more countries in the Euro, the better the EU looked.

        Last final rant at democracy and stupid voters. If a door-to-door salesman tells me he'll sell me a genuine Rolex for £100, I would slam the door in his face. So why should I believe a politician who is telling me he/she will reduce my taxes while at the same time getting the government to offer me more and more free services and pensions etc? Yet the majority of voters apparently believe that, and the politicians oblige in this financial idiocy, and then make up the difference by borrowing (with no doubt a few bob falling the way of their chums and old boy network as the cash merry-go-round spins around)

        1. Adam-the-Kiwi

          @James Micallef

          It's not entirely true that Italy has borrowed loads of money since joining the Euro. In fact, when Italy fixed the Lira against the Euro on 31st December 1998, its debt level was 114.9% of GDP - it had been falling steadily since 1995, when it was 121.5% GDP. It fell prettly steadily from that point to a low in 2007 of 103.1%, from whence it has risen steadily to 118.4%.

          The problem with Italy is that its government services a larger than average debt/GDP based on its productivity. That, like the rest of the Europe and, indeed, much of the world, has taken a tumble since the US mortgage lenders poisoned the world financial system by finding a way to package up bad debts in a way that no-one would understand the risks they were taking by buying them.

          Greece's debt/GDP was also pretty steady until 2007, when it also started climbing quite sharply, from 107.4% to 144.9%. Not as sharply, it should be pointed out, as the UK - which has gone, in the same period from 44.4% to 79.9%.

          The main problem is that running such large deficits works to give the government bond markets an utterly undemcratic hold over the politics of your country. Since Germany does not want to allow the ECB to be lender of last resort, there is no way to combat that in the Eurozone.

      2. Danny 14 Silver badge
        Go

        aha

        the chinese method. Works fine for them! Indeed print more euros and buy dollars with it...

      3. Bronek Kozicki Silver badge
        Pint

        @Schultz

        In principle you are right, but the problem is timing. Yields tend to go up in minutes, days maybe. And then they stay up for weeks or months with no force to push them down, if there is no lender of last resort. There is positive feedback in one direction only. In practice this turns "little" problem of illiquidity into big problem of insolvency, and the latter tends to go viral.

        I think you would agree that this is a big problem. Yes nations have to work hard, pay taxes etc. BTW one cannot fail to notice that Slovaks where *average* wages are *lower* than minimum wages in Greece, all in same currency, are also contributing to bail Greeks out. The trouble with this is that systematic changes are needed to increase tax income, cut public sector, cut dole etc. . This takes years (months at best), which is just enough time to push not just one nation, but everyone into insolvency.

        All due to lack of balancing force (lender of last resort) on the bond market. I really think it's time to put ideology aside, no matter how righteous it is.

    3. Nigel 11

      The answer?

      Rather than thinking about mechanisms for throwing the weakest to the wolves (markets), wouldn't the best fix be for Germany to leave the Euro and go back to the D-Mark?

      This wouldn't cause currency flight out of Germany and a banking crisis there. Their biggest problem would be preventing currency flight INTO their country. A problem which they'd probably have to solve the same way the Swiss recently did - a currency peg to the Euro, which amounts to buying the weaker countries debt. Isn't this just what the weaker countries need?

      Also with the Germans outside the Euro (perhaps along with a few other smallish strong Northern European countries that want to be part of the DM blok and don't mind doing what they are told to do by the Germans), there won't be any opposition to a proposal to allow the ECB to be the lender of last resort to the remaining Eurozone. Of course the Euro will plummet, but better that than the alternative of no longer having a working economy at all?

    4. fred 32
      Thumb Up

      Well it isn't the germans fault in that way, but more evidence of the fundamental fault of the project. The germans not wanting to print money without limit is fine, that they knew they didn't trust the other eu countries with this power meant they should have known better than to go forward with the project in the first place.

  5. Yet Another Anonymous coward Silver badge

    Non-euro solution

    For Britain thenm is to "do a Lira" - just print more and more pounds.

    So the pound goes from $2 to $1 to a fraction of a euro.

    It does mean that a lot of British brick layers will be hired in Poland as cheap labour and Dutchy-Original biscuits will look like a bargain in France. Good job we don't have to import any raw materials for our non-existent industry though.

  6. Chris Miller

    Very true - but what about Italy leaving the Euro and reverting to a new Lira (Turkey have a strong one they could lend them). Then Italy could do their own QE. I know it's not as simple or painless as that, but it looks to me like the only plausible option.

    BTW talking to my German freunden, I find that there was a colossal piece of cultural misapprehension when the Euro was set up. I ask them: "why did you trust the Greek economic figures?" They reply: "but they were official government figures, of course we trusted them." In reality the Greeks really meant: "these are our official economic figures; and if you don't like them, we have others."

  7. Yet Another Anonymous coward Silver badge

    @Soros

    It will be interesting if the truth ever comes out as to why Britain didn't join.

    Did Brown have the 'real' figures for Greece/Portugal/etc - and if he did why didn't Kohl?

    Was it just domestic politics - he would have lost the NF vote if he had introduced foreign money?

    Was he afraid of the house price boom if interest rates suddenly halved to German levels.

    Did the city fear losing it's currency trading?

    Did the Americans 'persuade' Blair to stay out to keep the Euro cap under the $ and stop it become the default oil currency?

    Since British banks are still on the hook for euro debt anyway it's not necessarily such a blessing.

  8. Wang N Staines

    Reboot

    I don't expect a UKIP fanboi to see the single currency benefits.

    His/her attitude to immigrants is well known, so the idea of some sort (involving foreigners) isn't going to go down too well.

    1. The greek cooked the books, thanks to our friendly bank in the USA. So the Greek is the rotten apple which helps the Euro down the slope.

    2. Every government is in debt, just so happen the banks can see preys(PIIGS) and went in for the kill.

    3. Politicians/Regulators turned a blind eye to their banker friends' evil greed.

    1. theastrodragon
      FAIL

      So enlighten us, what ARE the benefits of the single currency then???

      1. Anonymous Coward
        Anonymous Coward

        Well, none if you like being taxed with the commissions and work for every import and export, the manipulation by countries devalueing in a race to the bottom, the obscuring of cost differences behind manipulated exchange rates and, on a personal level, the sheer transparency of how much things cost when one travels outside one's own national area.

        I assume you support the financial industry in all its corrupt glory then. You must be delighted at how easy the see-sawing of the pound provides certainty for British importers and exporters.

        Is it fair that the poorer parts of NW England or N. Devon have to suffer the same currency as the wealthy South-East? Up with the Cornish pound and down with the London pound.

    2. SkippyBing Silver badge

      And the single currency benefits are? You appear to have failed to list them...

      1. Adam-the-Kiwi
        Facepalm

        > So enlighten us, what ARE the benefits of the single currency then???

        > And the single currency benefits are? You appear to have failed to list them...

        The fairly obvious one, I'd have thought, is ease of trade.

        Ancillary benefits include ease of travel, price transparency, wage transparency...

        1. SkippyBing Silver badge

          The fairly obvious one, I'd have thought, is ease of trade.

          Fine, and in the current situation would you say that advantage was a) Worth the subsequent hassle or b) Possibly slightly oversold?

          By that argument we may as well go into a currency union with China as it's a much bigger potential market and likely to undergo much greater growth over the next few decades.

          Considering the amount of rancour the UKs currency union generates how anyone thought the benefits of 'ease of travel, price transparency' etc. would overcome the obvious contradiction in giving Greece and Germany the same currency I've got no idea. Mind you I never found it difficult travelling or even working overseas before the single currency.

    3. Anonymous Coward 101
      FAIL

      Hmmmm...

      Your post was lacking in sound judgement. Talking of the 'single currency benefits' when the thing is imploding in a way critics - of the left and right - predicted ranks as an epic fail.

    4. ThomH Silver badge

      Per some of the sources, it was simply a side effect of the decade long Blair v Brown spat. Brown found a lever over a crucial national policy that was unambiguously Chancellor stuff and dedicated himself to being contrary. Meanwhile the public position became entrenched of its own accord.

    5. fajensen Silver badge
      Mushroom

      *Everybody* cooked the books! That is why "they" cannot allow a single default taking place and the fraud ending up being part of the public record during bankruptcy proceedings.

      The entire EUSSR depends on a perpetually changing mixture of coercion, deception, fraud and obfuscation for its survival and growth. The single currency is no exception to that.

      1. Anonymous Coward
        Anonymous Coward

        One obvious thing.

        Just think how much money is made out of gambling on exchange rates, manipulating them and then creaming off a fat commission everytime one sells money for money. Despite the cost to every private citizen and the tax on every import and export thus imposed on trade and industry, the financial powers-that-be know which side their bread is buttered and b-g-r the rest of us.

        Clever and not-so-clever newspaper propaganda easily persuades the rest of us to support the corrupt policy with spurious reasoning.

      2. James Micallef Silver badge
        Childcatcher

        Mr Staines has over-generalised, that doesn't mean, as teh other commenters seem to think, that there are no benefits to a single currency. I have worked in different European Euro and non-Euro countries, and the Euro makes travelling, transferring money and business transactions A LOT easier, while bringing currency exchange and bank transfer fees to zero.

        Just because it was implemented badly, with political factors (bring is as many countries as possible, allowing France and Germany to break deficit levels) trumping economic factors, does not mean it's an inherently bad idea.

    6. Magnus_Pym

      "Good job we don't have to import any raw materials for our non-existent industry though."

      Who do think is keeping Britain's financial head above the water (just)? Education? Tourism? Banking FFS? We are and always have been a major manufacturing nation. Despite what successive governments have tried to make us believe we are still the sixth largest in the world. Stuff is designed in this country and it is still in this country and a lot of that stuff is pretty good.

    7. Anonymous Coward
      Anonymous Coward

      "but what about Italy leaving the Euro and reverting to a new Lira"

      Germany can't afford Italy, Greece etc to leave the Euro because their weak economies are the ballast holding the euro exchange rate down. With 50% of GDP from exports, Germany has a vested interest in shitty economies being part of the zone. That's why they've been fanatical about Greece not leaving, and will be even moreso about Italy. PIGS suffering buys German economic security.

      1. Chris Miller

        I agree (and had posted a similar comment below) - but that means Germany will have to stump up the ante if they want to stay at the table. They could probably (just) about afford to bail out Italy (though the voters would hate it), but what about France?

    8. br0die
      Trollface

      Don't feed the troll

      Troll if I ever saw one. Or typical left extremist. Same thing, and all signs are there:

      1)Questioning immigration is racist

      2)My view is right, yours are wrong and here is why, it is obvious so I don't need to provide any evidence.

      3)People who don't agree with my views must be wrong in everything they say

      I have lots of this animal in my extended family, it is knowing how to handle them that makes them tolerable

    9. Nigel 11

      Give Brown some credit where it's due

      He was an idiot in political terms, but not so intellectually. I'm willing to believe that he simply knew where the Euro project would end up, and decided that we'd be part of that shipwreck only over his (politically) dead body. I think history may be kinder to him than his comtemporaries. Blair was the worst PM we've ever had. Gordon was by no means the worst chancellor. If Blair had had his man (boot-licker) as chancellor, it would be the UK at the centre of the Euro crisis, not Italy.

    10. John 62
      FAIL

      UKIP attitude to immigrants?

      What is the UKIP attitude to immigrants? From I've seen, it must be quite good, because there's a UKIP MEP who is an immigrant.

      Are you trying to call Mr Worstall a racist? Please present some evidence.

  9. Dan 55 Silver badge

    Spain up next

    Just wait till the general elections are over and done with on 20th November and suddenly all lines of interesting things swept under the carpet will be found.

    The outgoing government have got till the end of the year to carry out ineffectual laws dictated to them by the EU while the country is slaughtered by the markets.

  10. Anonymous Coward
    Anonymous Coward

    How about ...

    ... we change the Law?

    There is a groups of people who do that, I believe: called Governments.

    How about having a summit meeting involving all the Governments?

    It'll be the 20th, so we'll call it G20.

    Any good?

    1. laird cummings

      There's a problem...

      ...and that is: Government is slooooooow.

      The law can be changed, but it's a *central* part of the Eurozone wich means that it will take a new treaty and ratification of such, to make the change. Don't hold your breath, waiting the change.

    2. BrownishMonstr

      i think G20 means the 20 most powerful govs, right?

      1. Bronek Kozicki Silver badge
        Devil

        "G20 means ..."

        why of course, it's Merkel , Sarkozy and 18 chums!

    3. deadlockvictim Silver badge

      S&M

      The EU has a government at the moment: Brussels and Frankfurt with Sarkozy & Merkel doing what's best for France & Ger.. the EU.

      Just ask the Irish. They are very happy and extremely willing to ensure that they pay for the foolishness of French & German banks.

  11. Greg 16
    Mushroom

    The Register comments section is usually full of happy clappy EU loving "Europeans"

    I've noticed they've been kind of quiet recently, though they'll probably make do with down voting instead.

    I can't wait until we leave this corrupt EU mess :)

  12. Dogbyte
    Unhappy

    Well...

    That was a cheery read.

    1. PyLETS
      Go

      Pro European, anti Euro

      In my view the Euro will only be a viable currency in relation to the issues Tim describes if and when treaty changes relegate nations within the Eurozone to the political status of local authorities - with no veto on sensible management decisions by the ECB overseen by a democratic process empowerered to act at a speed relevant to the way financial markets operate.

      Is that a good idea ? Probably not. Jane Jacob's book - 'Cities and the Wealth of Nations'

      http://en.wikipedia.org/wiki/Jane_Jacobs#Cities_and_the_Wealth_of_Nations

      gives an excellent rationale as to why having massive state monopoly currency zones is a bad idea.

      I also think this abandonment of European multiple nationhood is unlikely to happen - what now seems more likely is that the Euro experiment flies apart. Better to have a smoother transition to a diverse and friendly Europe with borders as open to people and trade as possible, but if this current mess falls apart things could get very much worse than that. Keeping borders relatively open does require some commonality of regulations and laws.

    2. Intractable Potsherd Silver badge

      OK, Greg 16 ...

      ... I'll stop being quiet. In my opinion, being part of the EU is one of the best things that have been done during my lifetime. It has brought stability and integration with our neighbours, and slowed down the rate at which we were becoming a mere annexe of the USA, which (again in my opinion) would be intolerable. A pan-European trading group with some political power was and is logical. I'm open to discussion on whether there has been too much or too little political integration, though I err on the side of too little.

      However, I always thought, and still do, that the Single European Currency was a very bad idea, that it brought together too many countries with different ideas about what "fiscal responsibility" actually means, and that it would lead to just this sort of situation, or worse (I can still see war being a result of of what is going on).

    3. Anomalous Cowherd Silver badge
      Mushroom

      Yeah but understand the context

      Look at the history man. Europe had 30 years of warfare over 2 rounds, it was fucked financially and emotionally and by 1945 the scars were so deep they were apparently never going to heal. Now that's unthinkable, thanks to largely US insistance that French stel and German coal form the ECSC.

      It's all well and good sitting here with 70 years hindsight on an island that emerged relatively unscathed, but the EU had a purpose and it has served it well. Perfect, no, but run a thought experiment to see where we'd be if it hadn't formed. Your icon sums it up nicely.

  13. HP Cynic

    If the ECB printing money would really work maybe they could break or change the law rather than face the alternatives presented here.

    Meh

  14. Anonymous Coward
    Anonymous Coward

    QE is not the answer

    QE is stealing from the responsible people who saved to save the bankers and BTLers who gambled and lost. The solution is not QE, it is taking the banks under state control, confiscating their cash (most of it is ours from the last bailout) so that they can no longer pose a threat to the economy, and suck money out of it each time their gambles fail.

    What amuses me most about UKIP supporters is that they argue that the EU cannot succeed because it is a union of disparate nations with disparate cultures and economies that are completely different. But this is true of the UK too - four nations with very clear identities, and an economy in London which is completely out of step with the rest of the country (largely helped by the Bank of England hosing the banks in London down with QE cash every time their stock prices fall).

    UKIP go on and on about the single European currency, while overlooking the disaster that is the single UK currency. A one-size fits all economic policy is no more apt for Europe than it is for the UK. They're petty nationalists, which in my book is even worse than europhiles.

    Break up the UK, let the various regions have their own currencies, set their own interest rates and manage their own affairs. What's good for the goose....

  15. Matthew Smith

    Er, not quite

    The debt of GDP for Greece is 161% of GDP, so thats like someone on 10K a year owing 16K. So its bad, but not that bad. The problem is that also, their deficit is -8.5%, so even though they take home 10K, they have to spend 10.85K to survive. and nothing to spend on the debt when they want their annual interest paying.

  16. Scott Broukell
    Megaphone

    Fed up ......

    ..... with gubermints and banks telling us that we should be so careful to manage our personal finances and them then being complete arseholes with their state spending / borrowing.

    During the years of the last "Prudent" labour administration I was bombarded, daily, with offers of releasing equity, having more credit cards or getting cheap loans to tempt me to become more like my peers and have a second car, a fourth annual skiing holiday and another wide-screen plasma in the kitchen. It's all shit and bollocks and the little people always end up paying for it with jobs and income and stress.

    Banks and financial institutions drove the more recent expansion of Europe because they wanted to reach a wider customer base for lending euros out and trading in misery. That's what precipitated the latest pile of streaming effluent.

    Remember that both Germany and France (and UK, I think?) allowed themselves to break the sacred government borrowing rules for Europe - so that set a fine example to countries like Greece.

    I cringed every time I heard Gordon Brown say "the value of your property keeps rising under Labour" - to me that's not good news, that's dire news for the younger generations trying to rent / buy somewhere - it's just plain greed and avarice.

    There are other ways to do retail banking, with mutuals and providential societies, oh, but they all demutualized under the Conservative "Loads a money" dream of profits, profits, profits. OK, the growth isn't stupendous, but imho I prefer a steady growth concept anyway.

    So completely (YES COMPLETELY!) separate retail from investment banking so Mr & Mrs Smiths savings don't get clobbered and increase the banks capitalisation to at least 140% and if that makes the job of traders and investors harder, then perhaps we won't mind them getting some remuneration / bonus for their hard work (sorry gambling skills).

    Imho we need far more, smaller, mutual banks and far more co-operative businesses, along with government prudence (actual prudence this time) and a drive for steady long-term policy making, but I don't suppose we will see things change cos the banks and financial institutions have got all our cash (got a firm grip on our nads) and refuse to lend any out to help start-ups etc.

    Europe is built inside-out anyway imho. Instead of having a huge hub in the middle, awash with funding and wotnot, it should have hubs in each country keeping a finger on the pulse of businesses and the local economies, which feed that data back to a smaller central hub where experts make analysis and adjustments accordingly. It's called feed-back rather than monopoly.

    And, most importantly, independant and transparent oversight!

    <rant over> thanks I needed that. Of to the pub now, I've got just enough for half a pint of mild and a packet of cheese and onion. Oh! the memories / realities.

  17. peter 45
    Facepalm

    the same economic blind spot....

    ....as the council worker I met last week. (Housing officer or something). Was quite adament that she deserved an above inflation pay rise and one of her arguments was that she would pay more in tax and it would help boost the economy because she would spend it in local shops.

    I asked what car she drove. When she said a Mazda, I kept waiting for the penny to drop.........but nothing.

    1. Why Not?

      what a good idea

      We can get free education in Scottish universities and move north for free prescriptions.

      And charge rent for all those hideous parliament buildings.

      Not sure how they will afford it though they are overspending by £19.3 Billion annually more than a third more than their revenue.

      Don't believe me they are Scottland.gov.uk figures.

      Or maybe Wales, they only spend a few (15) billion but not much information on what they bring in.

      Lets do it, I have no issue with showing my passport to travel over the border.

      Of course the first thing they will do is approach the EU for bail out funds like all the other EU countries. There will be huge blue signs around proclaiming 'This Welsh themed roundabout was installed using €2 Billion Euro from the EU'

      Previously the Roundabout would have cost £100,000 but we need to pay for all the fraud associated with an organisation that has failed to get its accounts signed off in a decade.

      1. Anonymous Coward
        Anonymous Coward

        @why not

        lol, love it!

        Its amazing how the Scottish govenment has brainwashed many people up here.

        Free this, Free that, 480Million on a building here, £20,000 on a table there

        And yet somehow they honestly think they are capable of running the country by its self?

        Its quite sad really and perhaps highlights the serious problem with Democracy, the Scottish govenment had the chance to make something good, fresh with out the crap thats built up over the decades in westminster, and on the face of it, thats what they are claiming, unfortunately for us, at its core, its just another corrupt missmanaged extention of Westminster.

        Shame on you Scotland.gov!

    2. AdamWill

      slow down their, sport

      sad to say, but tim is largely right on this one, and it has little to do with banks. the greeks stuffed up their economy, which they've been doing for years, and because some idiots had the bright idea of letting them in the euro, it is now stuffing up everyone else's economies too. nothing to do with bank failures or irresponsible lending or anything here, just chronic fiscal mismanagement by greek governments since time immemorial.

      (as a card-carrying bleeding heart liberal, btw, I was never in favour of joining the Euro or staying out of it; I always pleaded lack of anything approaching the necessary specialist knowledge to determine whether joining the euro was a good idea. What I did usually object to were arguments against it that were based not on any kind of attempt to evaluate the actual benefits and drawbacks of the idea, but on tinpot Victorian British triumphalism. FWIW, anyway.)

    3. Figgus

      "QE is stealing from the responsible people"

      This, right here, is why it should never happen. EVER.

      The Fed stole from responsible Americans 3 times, and I WISH there were rules against them being the lender of last resort as there are in the EU.

      Frankly, any person or government that thinks it is ok to spend more than you make deserves to fail, and the fools who gave them credit need to feel the sting of that default.

    4. Anonymous Coward 101

      Did Gordon Brown really say "the value of your property keeps rising under Labour"?

    5. alexh2o
      FAIL

      Ok a few points here...

      Do you really believe you can just nationalise the banks and "confiscate their money"?!? If you have any true understanding about how modern economies work, in particular lending, you would realise such a statement is just illogical.

      You talk of the UK being a bunch of disparate nations and cultures just like the EU. Except for the fact that we all speak English, have a virtually identical culture, and have been in an act of union since 1801, both politically and economically. Unlike Europe who speak different languages, have very distinct cultures, were still at war with one another in 1945, and have only had a unified currency since 1995.

      You also seem to be equating all banking problems on London and saying the rest of the UK would be fine without them. So you know, the main financial institutions that needed bailing out in the UK were; Royal Bank of Scotland (Edinburgh), Halifax Bank of Scotland (Edinburgh), Northern Rock (Newcastle). The main institutions that didn't need money from the state; HSBC (London), Standard Chartered (London), Barclays (London), LloydsTSB (London) [Lloyds only needed bailing out due to taking over HBoS]. The London based banks actually didn't take any state money. The City of London's financial industry actually contributes £50odd Billion annually to the UK - or about 10% of our tax take. That helps the entire nation!

      Stop blaming the banks and start blaming the politicians!

    6. Anonymous Coward 101

      Why stop at regions?

      Why not every town have it's own currency?

      But why stop there?

      Let every street have it's own currency!

      1. ideapete

        no he said

        You will labor UNDER the value of your non property

        1. Anonymous Coward
          Anonymous Coward

          laboUr

          "Argh!"

      2. Anonymous Coward
        Facepalm

        What you don't realise...

        ... Is that HSBC and Barclays didn't need bailing out *NOT* because they are based in London, but rather because they are true global banks who are reasonably conservative (by spreading themselves into *all* markets).

        HSBC took losses in the US, yes, but the fact that their Asian business is very strong (and Asia learnt vital lessons from their currency crisis in the 90's) balanced those losses out to a large degree. Standard Chartered is very similar to HSBC. They are very strong in Asia and have some holdings in Africa.

        Barclays took a big hit, but they decided to go to the market (i.e. the Qatari sovereign funds and others) to recapitalise. The Qataris made a shedload of cash back on their investment in Barclays when they started to sell their shares off after the banks stabilised. Having bought into one of Southern Africa's largest banks (ABSA), also stabilised them somewhat.

        LloydsTSB, HBoS, RBS are all *REGIONAL* banks with large exposures to the US and UK markets, which cost them dearly... RBS overreached themselves in trying to buy another major bank which had large exposure to the US. Ahhh joy.

        Abbey (Santander) didn't need bailouts, because again, Santander is a *global* bank with a significant exposure to Latin America which is in an economic upswing (one that has Brazil worried about the affordability of their goods in other markets - Embraer feels that their planes are becoming more expensive), and that again balanced them out.

        Alliance + Leicester and Bradford & Bingley got dinged by the Northern Rock fiasco because the banks were of similar structure and size (and the subsequent runs on their deposits started weakening them). So Santander bought them.

      3. No such thing as an Anonymous Coward
        Holmes

        "were still at war with one another in 1945"

        They were at war because of meddling by the British, without the two world wars - the UK would have completely failed financially.

        Barclays was bailed out by the Fed, the Fed also bailed out French and German banks. The ECB doesn't have to be a lender of last resort as the Fed will do that for any banks or companies from any country

        "Stop blaming the banks and start blaming the politicians!" Their both at fault, the banks more so than the politicians.

        All the problems come down to the following:

        Fiat currency that's debit based

        Fractional reserve - which allows banks to create money out of thin air, this act is what creates 80 to 90% of all the inflation (the rest being created by central banks printing more money, which causes all the existing money to be work less).

        Central Banks, which like to expand and contract the money supply for the benefit of the few. The Fed reduced the money supply by about 30% in the late 20's resulting in the great depresion.

        The alternatives that have actually worked are no loner in use, only because the above 3 were forced into law and use by those who world gain the most: the Plutocracy.

        The things that actual work:

        - Colonial script which partly lead to the American war of independence/Revolution,

        - The green back created by Lincoln to pay for the civil war,

        - The tally stick system (which worked for about 700 years, within a few years of the bank of England being started, the UK government at the time was spending more than half its tax income on just the interest payments to the bank of England).

        - The Roman copper and brass coins which were issued debt free. Replaced by Caesar’s gold coins, while the brass and copper coins were removed from circulation, reducing the money supply.

        1. Intractable Potsherd Silver badge
          WTF?

          @No such thing as an Anonymous Coward

          "They were at war because of meddling by the British, without the two world wars - the UK would have completely failed financially."

          How the hell do you get that from. Which bit of "You have invaded Poland, and we are going to stop you" constitutes 'meddling'? DO you really think the world would have been better without Britain setting the standard and waiting for the Yanks to decide which way to turn?

          I'm all for re-visiting history, but your take on it ranks with Moon-landing conspiracy theories.

          1. Richard 126

            @No such thing as an Anonymous Coward

            Check the following it is all easy to verify:-

            Which part of Poland has murdered tens thousands of German civilians with full support from Britain especially the British bankers do you not understand?

            On March 31, 1939, Poland received a blank check from England, which unilaterally offered to guarantee her sovereignty; not only if Germany invaded Poland, but also if Poland invaded Germany! This merely served to stiffen Polish resistance to Hitler’s genuine desire to achieve a permanent solution of all outstanding issues emanating from the Treaty of Versailles.

            During the next five months the Polish government progressively intensified the oppression, harassment of and attacks on the 1.5 million ethnic Germans living in Poland. These attacks, in which over 58 000 German civilians were killed by Poles in an orgy of savagery, culminated in the Bromberg Massacre on September 3, 1939, in which 5 500 people were murdered. These provocations and atrocities were stoically ignored. Eventually Hitler was forced to employ military intervention in order to protect the Germans in Poland.

            On August 30, 1939, in an act of great statesmanship, Hitler again offered to the Poles the Marienwerder proposals, namely retention of the existing 1919 borders, the return of Danzig (97% German), the construction of a 60-mile autobahn and rail link connecting West and East Prussia (from Schoenlanke to Marienwerder) and an exchange of German and Polish populations. On the orders of the international bankers, the British Foreign Secretary, Lord Halifax, strongly advised the Poles NOT to negotiate. This is how and why World War II was started. The ensuing forced war resulted in victory for the international financiers and defeat and slavery for all the people of Europe.

            1. Tim Worstal

              Erm

              "the Bromberg Massacre on September 3, 1939, in which 5 500 people were murdered. These provocations and atrocities were stoically ignored."

              That "stoically ignored" is a bit odd. For you've just placed the massacre two days *after* the Nazis invaded Poland.

              And there were rather a lot of killings of Poles in Bromberg by Nazis in the weeks and months that followed as well.

          2. No such thing as an Anonymous Coward

            @Intractable Potsherd & Richard 126

            I clearly stated, as you (Intractable Potsherd) clearly quoted: "without the two world wars". <-- The important bit.

            Take a look at the situation the UK was in at the start of the 20th century. And then compare it to France and especially Germany. Then couple that with a banking system which makes the most profit from wars.

        2. Anonymous Coward
          Anonymous Coward

          @No such thing as an Anonymous Coward

          your take on history is, well, how can i put it. utter horse shit?

          So without the two wars, we would have been financially crippled?

          thats an intresting take on history, much in the way the americans didnt kill the natives, they gave them tea and cakes an they did everything in the wars, an everything they did was perfect or so much harder than anything else on any front and THAT was why so many of them died.

          Quick history lesson, the reasons for both the wars started a long time before they really got down to it, History its self was a large driving force, you could go back decades reading about events which were essentially adding wood an petrol in an ever increasing pile, moral an treaty alliances all over the place an finally the spark that set the whole thing off. Archduke Franz Ferdinand, that pissed off quite a few people an set off a chain of events that eventually set fire to the massive bonfire that had built up in Europe. Now, you could argue that Britian was involved in this through its relentless hand slapping with the other big players in Europe, but intrestingly our main reason for getting involved was because of alliances.

          Now, that war COST britian its Empire, we were up to our eyes in debt an we didnt get much out of it in the end, but we still had it is name an potentially we could have kept some of it.

          The second war was just a continuation of the first, only this time we were more active in trying to stop it before it started,, we were apart of the reason it started again but only through association, we got bugger all out of the surrender on the first war, but Germany an co was raped for all it was worth by everyone else. Thus the world war part 2 started. That broke the back of the UK and we were never to be the same again. Once again we got bugger all out of it an it cost us everything.

          So your two points, firstly we were involved in starting the war. Not directly an no more than any other European country, your wrong.

          Secondly, you are saying we are better off WITH the wars, financially speak? im not sure how you came to that, We lost everything, the UK was ruined and got almost nothing in return, the rest of Europe picked over the remains of Germany after the first an second wars, France especially, an we got largely nothing except a pat on the back, Americans re writing history, lost an empire and was debt up to our eye balls!

          so i cant see you logic im afraid

      4. PyLETS
        Happy

        @AC 101

        "Why not every town have it's own currency?

        But why stop there?

        Let every street have it's own currency!"

        I agree completely - my PyLETS web application software supports groups intending to do just that, a couple of which I am involved with, including one whose virtual IOUs issued 18 years ago are still spendable and circulating today and the other just in the process of starting up.

        But you won't yet be able to pay your taxes this way. Local taxes with a minor legislative change, in your city or town currency maybe, and why not if this helps fund the local authority and helps avoid wide area budget cutting/austerity regimes disconnecting local resources from local needs ?

        See also: http://copsewood.net/writings/kaytax.html

    7. Jonathan Richards 1

      Aye Aye, @cap'n

      The pound in Bristol buys much more than the pound in London: that can't be fair. We want Bristol pounds! Wait, what? No, you can't have Bedminster pounds and Filton pounds, that's ridiculous... I know, we'll all collect small pieces of precious metal and use that as currency instead. Or I'll swap you a pig for a bit of web backend database tuning.

      I really hope that you were being deeply sarcastic.

      1. borkbork
        Pirate

        the answer to your question is

        five tons of flax!

        1. Danny 14 Silver badge
          Go

          mmm bacon

          ref the pig: sold! What DB you use and how big is the pig?

          mmm bacon.

      2. Annihilator

        @Jonathan Richards

        cap'n clearly works for Travelex or something, and longs for the day of Filton pounds, Bedminster pounds and the fine Long Ashton Farthing. This way, he can reap the benefits of the now boom industry of currency exchange!

        Only question I've got, if it's the Euro going tits up, and we're so smart for not being involved in it, why the hell is it going to rain shit on us too? As it turns out, it seems to have made little difference whether we were in the Euro or not.

    8. Matt Siddall
      Headmaster

      <pedant>

      It's not feasible for the govt to take 100% of the GDP as taxes. Even after Labour's stealth taxes and the like, we're still only at about 50% here, and the Greeks are well known for under-collecting.

      But even if the Greek govt could collect 50% of the GDP as tax, then it would be like someone with an income of £10k owing £32k.

      According to http://www.oecd.org/dataoecd/48/27/41498733.pdf the 2006 %age of GDP taken as tax revenue was 31.3 (2006 is the latest I could see, but I didn't look that hard). at 31.3%, it's the equivalent of someone earning £10k who owes £51.44k. So the original statement was actually pretty close...

      </pedant>

    9. Colin Millar
      Flame

      QE is inevitable

      Just as the crash of the Euro (and the dollar) was inevitable.

      And it is not the banks you should be blaming but the politicians who built the system - all the banks did was operate the way they were encouraged to by successive generations of vote-buying politicians.

      QE by the ECB shouldn't have been necessary - according to the theory. All the Euro countries were going to live within the strict parameters set down and take early measures to address any breaches of those parameters - there were even penalties to be imposed to force compliance. However, economic management theories produced by crats and accountants never survive long in the real world.

      Unfortunately the whole show was being run by a bunch of people who were so tied to the Euro project being seen to succeed that they ignored all their own rules because they simply couldn't work - Greece (and almost certainly Ireland and Portugal) could never have complied with the original (or revised) rules for the Euro zone, Spain would always be borderline - a monkey with an abacus could have calculated that - the scaling made every day a toss of the coin for these small economies and their desperate need for growth gave them a vastly disproportionate exposure to bad debt.

      The parameters for action over inflation, indebtedness etc became fuzzy targets and those very clever people in Euopean finance ministries forgot that economic trending amongst a bunch of countries with lots in common would multiply the effect of breaching those parameters - like everyone rushing to starboard at the same time - and the small fry would always fall first - Greece could have been as prudent as you like for the last hundred years and it wouldn't have made any difference at all - they'd still be bust today.

      Being all smug about the pound isn't clever either - and all this talk about "european firewalls" and stopping the spread of contagion is childish nonsense designed to protect UK politicians butts. We are just as exposed as the rest of the Eurozone because the big debt is now on Europe and we don't have the ability (will?) to force our solution down everyone elses throats like the yanks do.

      The failure of Bretton Woods to agree a proper balancing mechanism was the fault of wussy Brit and French pols not standing up to Uncle Sam. For many decades the third world paid that price. Now we are having to suffer a bit of the pain ourselves and it is again wussy euro politicians who are going to see us come out of this with a "solution" which sows the seeds of the next disaster - i.e. WorldBanking 2.0 - "get your Chinese credit cards here".

      QE is going to happen when the europols realise that the IMF and World Bank will allow europe to do it just like it let the US do it. The UK should get the printing presses going right now. As for Greece, Italy, Spain and Ireland - let em bail. The last time the world tried to get blood out of a european stone we got nazis and WWII.

    10. Matthew
      WTF?

      Me thinks that you are confusing yourself. You don't like bankers 'gambling' with others money, but you want them to lend money "to help start ups"?

      Could you please explain the difference between the two and why lending money to start-ups is not gambling?

  18. PikeyDawg
    Coffee/keyboard

    "You expect me to default? No bonds, I expect you to die"

    TY for that : )

  19. Marketing Hack Silver badge
    Unhappy

    Nice 007 reference in the second section title....

    In the spirit of your subtitle, and since the whole Euro-bailout seems to be heading in the direction of black comedy, might I suggest the following line if an outright parody is ever penned:

    "My name is bond....lame bond"

    That's all I've got, and the sad thing is all I've got is at least as much as the various pols and technocrats who are supposed to steer Europe out of this trainwreck.

  20. Mage Silver badge

    UKIP?

    Hardly an unbiased commentator.

  21. Terryphi

    Inflation is the greatest danger

    Inflation is never good unless you are a spendthrift individual or government. The Germans are right : let the spendthrifts go to hell in a handcart.

    1. mccp
      Thumb Down

      -1

      If this is meant to be a criticism, it's a bit of a fail.

      We all have our own bias. At least the author has declared his.

    2. Tim Worstal

      Correct

      That's why mentioned it, so that the bias is known.

      Would you prefer that it wasn't?

    3. AdamWill

      so?

      there's no such thing, so what's your point? evaluate his arguments.

    4. John G Imrie Silver badge

      I'd rather a pieace like this

      with a declared allegiance. Than the tosh that gets printed in the tabloids.

    5. PeterGriffin

      @Mage As long as people are honest about their political ideology all points of view are welcome. I have listened to opinion from independent financial types who have held the same opinion (Greece will default eventually) for many weeks.

      Listen, for example, to Johnathan Davis - jonathandaviswm.com

    6. Notas Badoff

      Are there any unbiased commentators inside a house on fire?

    7. Anonymous Coward 101
      Meh

      What's your point?

      An analysis stands up or fails by the quality of it's arguments. Saying that someone has invalid opinions because he is a member of political party you happen not to like is stupid, though admittedly tempting.

    8. laird cummings

      :: ...let the spendthrifts go to hell in a handcart. ::

      Nice theory. One problem with it - the spendthrifts have your economy by the short-n-curlies, and they're taking it with them when they go.

    9. El Presidente

      Who, with anything wotrhtwhile to say ...

      ...is unbiased ?

      And how does having a point of view diminish the information conveyed ?

      1. Paul_Murphy

        Thats exactly right (though it's spelt 'worthwhile')

        It's virtually pointless to hear from people with no bias, even those with extreme views should have their say. We're human, we're all bound to have biases - even if legally we're not allowed to have them <rolls eyes>

        Just because someone says something does not make it necessarily true, it's a view point that can be debated and judged on it's merits.

        Let statements be valued according to their ability to stand up to scrutiny - if they are false then they will be ignored.

        ttfn

    10. Bronek Kozicki Silver badge
      Angel

      you expressed your opinion but I can't fail to notice you forgot to declare you bias. I don't believe you have none.

  22. Anonymous Coward
    Anonymous Coward

    Look.

    I'm a business. I supply stuff on credit and I expect to be paid back in due course. I have a Credit Control team so that I don't lend money to people who clearly are unable to pay me. Mostly it works. Occasionally it hiccups, and usually I survive (the Credit Control folk may have to be extra nice to me for a while). But on the whole, mostly it works. If it goes wrong in a big way, my company goes bust. I know this because it's been that way for decades.

    Now change the picture ever so slightly.

    I'm a bankster. I supply money on credit and I expect to be paid back in due course. I don't have a Credit Control team, I use ratings agencies. Mostly it works. Occasionally it hiccups, and usually I survive. But on the whole, mostly it works. If it goes wrong in a big way, the taxpayer will bail me out. I know this because it's been happening with different sets of banks every few months for the last few years, and very few people seem to realise what's going on.

    See any problem with that?

    [The more detailed pictures goes into Credit Default Swaps and other such tools of the "masters of the universe" in a lightly regulated world. But that'll be tl;dr.]

    Austerity for the 99%.

    Megabonuses for the 1%.

  23. bitmap animal
    Pint

    Smugness

    The author wrote "I've been saying it will all end in tears for at least a decade. I can find a Usenet post of that vintage saying exactly that. Being right is quite wonderful,"

    I'm always intrigued by people who say that as generally it means they made a mass of predictions and can drag them out individually in the future to show how right they were. I have no idea on the percentage of correct predictions the author has made but in the interest of fairness I think it should be considered.

    Regarding Europe, perhaps Israel and Iran will kick off soon and then we won't have to worry about the state of the economy. If not, mine is a pint so I can sit back and watch us all sinking.

  24. Dazed and Confused Silver badge

    @ Fred Bloggs

    Hit it right on the nail

    Germany won't print money.

    The Euro's problem has always been that it tried to mix together a group of countries that believed that inflation and printing money was the obvious answer (if you are in debt and can keep your income inline with inflation it pays off your debt - that's how the pension generation in this country paid for their houses). Then there is a group of countries, primarily Germany, that doesn't believe in printing money and inflation.

    Who's right?

    Who knows - probably both of them.

    But you sure as hell can't mix them.

    The best solution is for Germany to leave the Euro along with anyone else who wants to follow them. The rest can then change the rules and print money to their hearts content.

    In the mean time, we still stuffed, because there is no way we are ever going to pay for the pensions we've promised each other. If you're not already drawing your pension you can look forward to a bleak future.

  25. vogon00
    Facepalm

    Peston Eat Your Heart Out

    Cracking explanation - someone forward this as a lesson to the ubiquitous Mr Robert Peston.

    Thanks God that I don't have anything to do with politics (Even the office sort!).

    I have to agree with EddieD above - I've been cautious and lived within my means ("If you can't pay cash, you can't afford it!") and am peeved that I will now be suffering because of someone else playing fast and loose with the bookkeeping. Sort of makes Enron's accountants look employable again..

  26. Anonymous Coward
    Anonymous Coward

    I like how we can dismiss economic points on the basis of the author's political affiliation.

  27. Vladimir Plouzhnikov

    There is a solution

    Eurozone countries must become federalised and subject to a central federal government, enforcing the policies of a central federal treasury and the ECB.

    This is the US Civil War moment for Europe - no more procrastination is possible.

    Don't want austerity? - woosh, paratroops land on the Government building, PM "voluntarily" resigns, Parliament suspended, no questions allowed.

    Can't decide when to resign? - a descendant of Otto Scorzeny will gladly escort Musso... Berlusconi to Berlin, for extensive "debriefing".

    There will be blood...

    Oh, I'm so glad the UK has managed to dodge the Euro!

    1. John Sager

      Oh the Irony!

      Interesting thought. It would be deeply ironic if Jean Monnet and his successors managed to do through years of incompetence what Bismarck and Hitler failed to do in Europe by political & military means.

    2. Gary Heard
      Mushroom

      unfortunately

      we don't seem to need overt means like paratroopers, you just get the Prime Miniater to resign and replace him with a technocrat with lots of EU experience, has already happened in Greece and looks like Italy will get "Super Mario"

    3. Mark 65 Silver badge

      I'm curious, did you pay for your house with cash as the vast majority could not do so? If you do not own but instead rent then you may find issues further down the track with housing affordability unless your rent has been markedly cheaper than a mortgage on a similar property and that saving has been incredibly wisely invested.

    4. No such thing as an Anonymous Coward

      @Anonymous Coward - Posted Thursday 10th November 2011 20:28 GMT

      Businesses actually deal with real things.

      The banks create money out of nothing, then expect real money (which has had value attached to it by for example: work) to pay off the fake non existent money - in return. Every thing else (the tools of the "masters of the universe") is just to fool you into believing that illusion was real.

      1. Vladimir Plouzhnikov

        @No such thing

        "The banks create money out of nothing"

        If you would be so kind as to explain precisely how that works we will also happily join the banks in the process.

        1. freekyeekz
          Devil

          RE: creating money out of nothing

          It's called fractional reserve banking, toss that into google for an explanation. If you are unfamiliar with the practice, prepare to get very angry...

      2. PyLETS
        Megaphone

        lender's commitment == lender's IOU == lender's issue

        "The banks create money out of nothing"

        They don't, we do - but not out of nothing so long as we intend paying it back. We issue our own IOUs which the bank anonymises and circulates whenever we purchase something on a credit card. Or we create the money when we take out an overdraft or mortgage. (Those who rabbit on about 'fractional reserve banking' don't understand how the current loan-backed money system works. Banks don't keep fractional reserves and haven't for many years.)

        But once understood that it's _our_ money that circulates why should we have to pay interest for the right to circulate IOUs ( which fractional reservists misrepresent as a privilege ?) I can understand the person accepting IOUs from someone with a bad credit rating wanting the issuer to pay insurance. Apart from that centralised cost-recovery function (insurance) , the only fair way to get this job done is if the bookkeeper, as a mutual service to the community, gets paid based on cost of service, pretty much the same way Building Societies or Credit Unions do.

        See also: http://www.gmlets.u-net.com/ .

        Keynes once claimed only 3 people in the UK understood money. I'd now say it's closer to several thousand but mostly they're people who use LETS.

  28. Why Not?
    Mushroom

    How I see it

    Think of the European union as a couple of Gamblers, a few Alcoholic benefit scroungers, some low income earners working hard to survive, some well paid professionals and a couple of millionaires sharing a house and bills. There is only so much 'lend me a fiver till my giro clears' you can take before you want to move out.

    You could of course join the Euro!

    With the Euro you get to share the same bank account as well. Imagine finding out your car payment hasn't gone out because Geoff has put the lot on the 3:30 at Cheltenham. Or that because you share a house with an investment banker your granny has to pay for her own home care.

    What I think most people signed up for when we joined Europe was :

    'we all live in the same village lets start a neighbourhood watch,have a farmers market Thursdays, collect for the church roof and organise a bonfire committee'.

    We have got something completely different.

    I'm not a UKIP voter (the local representative appeared a little racist which put me off) but I did find myself agreeing with Nigel Farrage's 'FIRE THEM ALL' speech today.

  29. Anonymous Coward
    Go

    Silver lining?

    According to the nice lady on the phone this morning I could have been mis-sold payment protection, and could get a lot of money back. I wonder if greece had it too... Problem solved then.

  30. jotheberlock

    A UKIP column on the Europe on theregister? Really? What next, the BNP on immigration policy?

    1. Drewc (Written by Reg staff) Gold badge

      Re:

      UKIP supporter does not = UKIP column. As for the BNP point ... very silly.

    2. Mr Cheddarfingers

      @jotheberlock

      You seem suprised, didn't you see Lewis Page's anti-Lib Dem rant on the eve of the last general election?

      Have you not noticed Andrew Orlowski's climate change denialist posts and pro-music industry/abusive business posts?

      The stories supportive of extremely right wing celebrities like Jeremy Clarkson?

      If you didn't get the clue that The Register is extremely right wing before this article then there's not much hope for you. It's the Fox News of the IT world.

  31. James 47
    Mushroom

    Why has no-one mentioned Belgium?

    1. Anonymous Coward
      Anonymous Coward

      No need...

      ... to be THAT rude, eh.

  32. Doogie Howser MD
    Big Brother

    CDS's

    Good article Tim, some interesting thoughts there. I would however disagree with your comment that Credit Default Swaps were "that system worked for a decade". That it "worked" is a stretch, I'd probably argue that the only reason they went on so long is because there was a bit more liquidity in the system, hence it sort of hid the problem until the liquidity ran out. Fundamentally though, it's a flawed concept that got swept along in the euphoria.

    For those interested in this sort of thing, I highly recommend "Inside Job". It's only 90 minutes long, and it will make your f**king bloody boil.

    1. Tim Worstal

      Umm

      "Credit Default Swaps"....I think you mean CDO...mortgages piled up into bonds and sliced and diced, not CDS, which is an insurance policy on the default of a bond.

      But yes, I take the point, "worked" might be too strong, "continued" might be better.

      1. Jonathon Green
        Pirate

        "...CDS, which is an insurance policy on the default of a bond."

        I thought the thing with a CDS was that it was an insurance policy on a debt which could be held by somebody else, and might have been deliberately engineered to fail (Merrill Lynch/MBIA).

        More like an under the counter bet on an event organised by an unlicensed promoter placed with an unregulated bookmaker that an insurance policy really. Or ta least my home contents policy doesn't look anything that :-)

  33. Anonymous Coward
    Anonymous Coward

    Spain was not a problem, but that is not relevant

    Almost convinced me, until I realized how all this works and why those explanations are absurd. What started to make me wary was the statement about Spain. Spain was never a problem of public, but private debt. All these talks about Spain defaulting were completely baseless, but that was, and is not relevant, because what mattered was, and is, to instill fear, uncertainity and doubt.

    Because what is relevant is why all this is a non existent "problem" . This "problem" is created by the need of having bigger profits than the previous quarter, or year, having spent the previous profits in big bonuses, more risky loans to entities whose ability to pay is doubtful and who knows what else.

    Everybody forgets that, in absence of a money printing machine, this is a closed system. A zero sum game. Whenever someone profits, someone else is losing. So when they have sucked all the possible profits, current and future, from a market, the market collapses because there is no one to profit from. Easy solution, we demand for "rescue" packages whose only purpose is to make someone else richer by giving them a few more percentage points of interest. And who is going to pay for those rescue packages? The taxpayer, of course.

    This is a master plan: they have created a situation where they can only benefit from, extracting more and more wealth from the public.

    They created the problem, only to profit from the solution. The only question that I want answered is this: who is profiting from all this?

  34. TopOnePercent Silver badge
    FAIL

    Are you all really that slow?

    There's a lot of ignorance around these days, never more so than when it comes to City finance.

    All those complaining that we should nationalise the banks and moaning about bailouts, please get back on your meds. You evidently know nowt of economics or finance and should really stop embarrasing yourselves.

    There's a fourth solution that would work and isn't mentioned (funny, the author being UKIP n all) which is to simply issue Euro-bonds. These would be underwritten by all Euro denominated states, which provides an effective guarantee against insolvency, but without the need to print money and thus scare the auld enemy.

    Now, obviously, there is simply no way we can all continue as we are. State spending MUST drop below the level of tax receipts across the board and permanently. That will require the public sector to feel some real pain of actual cuts, but since that is where the borrowed wealth has been squandered they really have no right to complain.

    1. Mark 65 Silver badge

      Ok, so you've issued them and they're backstopped (underwritten) by all the Euro states. Given you know a fair few can't balance their books and/or cannot be trusted with their finances they are effectively backstopped by Germany. How do you sort out who pays what of the coupons, or are they couponless, and you still need to work out who pays what of the final par? What is to stop them saying they have no money when the bill is due? Who pays what then? Unless of course they are backed by the ECB as the head of all these countries' central banks, which would in effect make them the lender of last resort. I don't understand how this works.

    2. Tim Worstal

      France

      OK, it's not as rude as Belgium. But the reason that French bond yields are rising (ie, prices are falling) is because France has made great big promises through the EFSF about backing up Greek, Irish, Portuguese, soon to be Italian etc bonds.

      And when you crunch through the numbers France cannot afford to back up those promises without becoming Greece.....

  35. amanfromMars 1 Silver badge

    Like a thief in the night

    And that is not all, for there is more s**** to hit the fan, for your political representatives are avoiding making their positions publicly known on this little gem trying to get itself kicked into the mainstream by the back door ........ http://youtu.be/5CZr17HLH5U

    Bring out the Madame Guillotine. She gonna be needed.

  36. nsld
    Terminator

    back in 2001/2

    I was in Greece visiting the ex missus family and with the olympic development and every bank on every corner offering credit cards/mortgages to all and sundry I joked the Greeks would lend themselves into oblivion.

    And lo and behold it came to pass, all those ninja loans and borrowing for the Olympics plus joining the euro really did kill the Greek economy.

    Its time for the Greeks to call Ocean Finance and consolidate into one affordable repayment

  37. Anonymous Coward
    Anonymous Coward

    Everybody Pay Attention

    Only two things is required to exist in order for somebody to make money. Delta. Thats a difference between two markets and the change in that difference.

    There is always money to be made, if you understand that Delta. Thig biggest one of all is the collapse and replacement of world currencies. Anybody that thinks a magical solution will be found, are kidding themselves. The big investers want the change.

    They don't know or care who is protesting, or what they are protesting for, they are just making adjustments for the market accounts

  38. Spotthelemon

    Good article (& I'm defintely not a UKIP supporter), been explaining this to people fior weeks & they just bleat

    printing money bad

    spending money bad

    can't spend your way out of debt crises

    If they decide to changee the ECB rules then they'll find a way to do it, apparently Sarkozy suggested it & the Germans said no.

    The Germans have a morbid fear of inflation & they've also cut out all the pages from their economic books relating to the 1930's which unfortunately is when economists figured out how to fix the kind of problems we have now. In truth the Eurozone could do with a little bit more (but not too much) inflation at the moment & a lower Euro. Even the IMF have started making Keynsian noises & talked of a 'pardox of thrift' in relation to EU imposed austerity cuts. The entire IMF would normally slit its wrists before acknowledging Keynes so that shows how bad it is.

  39. This post has been deleted by its author

  40. Anonymous Coward
    Anonymous Coward

    So uhm, now what?

    Maybe I should read up on economics. Maybe I will after finishing with the topics I'm busy with now, if that's not too late. Anyhow. So, all of Euroland is hosed and so are plenty of others. What, then, /is/ going to happen, how does that affect the guy with 10kUKP in the bank and how does the little man survive as well as he can, other than putting a concrete cellar in the garden, stuffed to the brim with food and water?

  41. Anonymous Coward
    Anonymous Coward

    Berlusconi doesn't do condoms

    Doesn't like them apparently

  42. Jemma Silver badge

    heres an idea...

    Scrap the whole tottering edifice and save ourselves the hassle.

    the world monetary system is nothing more than world wide hallucination, and as lethal in its way as cancer. It pervades everything and is the root of many of the social problems we've seen in the hundreds of years we've all happily joined in the madnesses.

    Lets say I trade my skills for money to buy a car. Great, but its all arbitrary, it makes no sense. I could spend £500 on something which is much more functional than something I spent £50,000 on? I buy a house - it triples in value - some twerp screws up 3000 miles away and its down to half its original value within a week.

    On the other hand... do away with currency altogether and youve lost nothing...

    Right now people work to get money to eat and purchase other items. Drug addicts do what they do to keep body and soul together and get high. Companies produce items but have to add money to pay for the food and purchasing of their employees plus their materials. transportation adds more costs and so on.

    since monetary value is nothing more than a construct based on a collective insanity... why bother with it and all the problems it brings?

    but we need money to buy food...cars... crapple products. Yes, but only if we all agree that a lot of pieces of paper equals a Jaguar XK8.

    Money only has value if that is universally agreed. Therefore if money and currency is.abandoned alot of the bad effects of it cease to exist.

    How is that an advantage? its simple really - there'll be no arguments about value, no 10 year disasters because some banker decides all of a sudden that hes bored and thinks its a good laugh to trash the world.

    I wonder how many people the banks have effectively murdered post 2008... the good thing about corporate manslaughter is its not messy... even better its based on a mass hallucination.

    The point that people seem to miss in all this is money is no longer neccesary. fundamentally what happens today with money has no reason to stop without it. US buys oil so that the people who sell it buy from others, great, but since we're all going round in circles anyway nothing will fundamentally change without the use of money. It has no reason to.

    In fact for alot of the world things will get much better. No more african debt, less african war, less war less disease better standard of living. No nees to 'profit', less overuse of land and other resources, the list goes on.

    Take Mexico, 45,000 killed in 5 years over drugs and the profits thereof. No intrinsic value or price, no profit; no profit, no incentive - no incentive, no beheaded women and children. Its the same with everything else, we've managed to get into a position where a theoretical construct with no intrinsic value rules all. It makes no sense...

    After all, whats good will a bag of coins do you on a desert island? On the other hand, a big bag of potatoes might be more boring, but its a damn sight more useful.

    We are such a connected world that the old arguments about currency driving trade make little sense either. Trade drives trade. You want something in Germany so you give the people who have it something they need and so on.

    No money... no need to assign entirely arbitrary values to things. No value, no way of creating debt, no debt means no need to come up with arbitrary ways of valuing value and no need for money to service that value.

    life still goes on... exactly the same as before... just we're a little more lucid and alot less miserable. If you think about it it'd even help the environment too, in so many little ways. Less stress due to money worries, less smokers, less COx.. happy kangaroos.

    The only downside for it is that to work we've all got to do it at the same time and *thats* the real embuggerance¥

    ¥ Technically defined as "an obstruction in the way of progress"

    1. Adam Durling

      Here, John Lennon

      While we're at it, why don't we do away with time as well? I'll never be late for work again, though it won't matter anyway because what's the point in work?

      1. Anonymous John

        Jemma has a point. The whole thing is FUBAR and needs replacing. I've no idea with what though.

        Money was invented to avoid the need to barter all the time. Fine, but now we have something beyond our control or even understanding. Nobody has any idea how much money there is in the world or where it is.

        There was a report a week or so ago that a bailed out bank was found to have assets of $48 billion (I think) that nobody knew about. Shares are bought and sold by computer. Rogue traders can lose billions with nobody noticing. And there's the nonsense of commodities trading, exchange-traded funds, forward contracts, swaps, options, etc.

        It's no surprise it's failed. The only surprise is that it's lasted so long.

        1. Anonymous Coward
          Anonymous Coward

          I don't agree with the OP. Money is there for a reason - convenience of not having to barter all the time, as you state. Perhaps it is fiat money, excessive leverage or fractional reserve banking that is the problem rather than money per se?

          1. Vladimir Plouzhnikov

            @Jemma

            "¥ Technically defined as "an obstruction in the way of progress"

            OMG - I didn't know the Japanese were that evil!

            But money, money is the civilisation's blood, quite literally. It provides oxygen and nutrients to various organs and parts of the economic body. Where it is abundant the relevant parts swell and prosper, where the flow dries up they must wilt and die out. To call for abandonment of money is like calling for your body to be drained of blood. The lungs may think its a good idea at first (for they get to keep all the oxygen), but the brain may disagree. And then you die...

            1. Jemma Silver badge

              Yes, but only because we all buy into the idea. We are taught from practically age 0 that money does this and money does that - we need to pay for this and pay for that.

              You know its odd, thinking about bank account interest. I put my money into a big pile of money and it makes 5% a year... what does it do? does my £5 note find another £5 note and make babies faster than a chav on a housing estate?

              The concept makes absolutely no sense. The concept that if I take it out of the money box in my bed room and put in in someone elses box in another room and it miraculously seems to gain the ability to use the photocopier and create more of itself.

              It has no basis in fact - other than the fact we agree that it happens - its a construct relying on a worldwide government induced hallucination and it needs to stop, because the more integrated the hallucination becomes the more of a total disaster it will be when the whole thing fails.

              Given your argument the human race shouldnt exist - because if money was that important to the concept of the human race, we shouldnt even have evolved.

              1. Vladimir Plouzhnikov

                Basis in fact

                "You know its odd, thinking about bank account interest. I put my money into a big pile of money and it makes 5% a year... what does it do? does my £5 note find another £5 note and make babies faster than a chav on a housing estate?"

                I pity you, Jemma. It must be completely terrifying to be living in a complex world and to have not a slightest idea how that world works.

                FYI Yous fiver has been lent to a business somewhere, the business used it to buy raw materials and to pay its staff, then the business sold the product (maybe to you) and, hopefully, made a profit which allowed it to return your fiver back to the bank with interest. If it didn't make the profit and was not able to return the money to the bank you still have your fiver because the bank put it back on your account out of its own funds, because the bank takes the risk, while you are sitting in your bedroom in blissful ignorance....

    2. zyzyx159
      WTF?

      ‘Nuke it from orbit’ is not the solution for all for life’s problems.

      ‘Nuke it from orbit’ is not the solution for all for life’s problems. Money is just a simplified form of bartering. We have money because it’s easier to agree on how much money a car is worth than it is to agree on how many chickens a car is worth. If you stop to think about it I’m sure you’ll find that the love of money is the root of all evil and not money itself. Until we live in a utopia where everybody loves everybody else and works to make everybody else’s life easier money is a necessary evil.

    3. Why Not?
      Facepalm

      Thanks Jemma that made me laugh

      Oh no you are serious!

      So which part of the MRI machine did you barter for? How are you going to pay the surgeon for the operation when you are recovering for 6 months and she won't accept half a dozen carrots?

      That way leads to even more injustice, in a few years most of the land would be owned by a few feudal lords and soon you would work for them for the right to grow your crops. People who can't work will be ignored and die.

      Money is a way of redistributing and aggregating wealth, the barter system sooner or later turns into a monetary system (look at history) because saving up enough pigs to pay for a new factory can be problematic.

      What is the issue is responsibility and consequences.

      I don't rob a bank because I'm afraid of either getting shot or locked up.

      I pay my bills because the penalties for not doing so are draconian. Bailiffs at the door, costs spiralling etc.

      Banks rob us because there are few consequences.

      They muck up they get a golden parachute etc.

      Now if our government had said 'Right lets see you fail, we will strip your assets (including the Directors personal ones) to satisfy the deposits and resell you to the highest bidder who are likely to fire everyone above a branch manager, by the way which members of the board want to go to jail for trading while insolvent?'

      I would imagine most of the Banks would have fixed it themselves like Barclays did.

      If the government had had proper regulation (they disbanded it) then this situation would probably have not occurred either.

      If you want to go to a Bar and clean the toilets before you can have a refreshing glass of wine then go ahead, I'm going to extract the filthy lucre from my wallet that's made in china and drink a beer brewed in Belgium on a seat made in Taiwan all bought by the bar owner selling beer to visiting tourists using their folding currency.

      Of course I would be out of work, because in IT you don't get many GHz to the chicken egg.

      1. James Micallef Silver badge
        Mushroom

        The OP was a bit over the top, at a lower level I agree with the sentiment that money has gone out of control since it stopped being pegged to something physical and became a purely theoretical construct. Money nowadays is just a bunch of bits on a hard drive somewhere, and governments and banks can call more money into existence as if by Magic. Yes, banks too, thanks to the magic of fractional reserve banking, every £1 I deposit in a bank, the bank can lend out (and charge interest on) £10. Most of the fancy trading schemes that bankrupt whole economies have no real or well-understood link to a physical product, it's all derivatives of derivatives of derivatives. That makes it very difficult and messy to assess their real value and risk, and that's when the big fuck-ups happen.

        The ultimate driver of this is greed. It used to be that people invested in a company to share the profits, and they had a vested interest in the success of the company. Nowadays many deals are pure gambling, and even worse, there are big players in the market who can make mind-boggling sums by betting on the failure of some business, industry or country. Big money and power with a vested interest in something failing, and gee whiz, i wonder why in the end these things DO actually fail. Fund managers and their clients are no longer happy with a constant 5% return, they want 10, 20, 30% every year, which is clearly unsustainable.

        Make no mistake, the big-money boys are really happy with this sort of crisis, because they can buy valuable assets on the cheap. When the governments step in and start printing money, and inflation starts to rise, guess what happens? Poor guys' £10k savings in the bank is now worth £9k , while rich guy's block of apartments that used to be worth £10M is now worth £11M.

        1. Vladimir Plouzhnikov

          Oh, dear

          "Yes, banks too, thanks to the magic of fractional reserve banking, every £1 I deposit in a bank, the bank can lend out (and charge interest on) £10."

          You really have no idea what fractional reserve banking is, do you?

          Fractional reserve means only that the bank cannot lend out GBP10.00 out of every GBP10.00 it received on deposit. In the ratio you use for your "example" your bank can only lend GBP9.00 out of GBP10.00 it received from customers.

          Now, if you still think it's a bad idea please explain how a better system might work (and still provide credit to businesses and consumers at single digit interest rates)?

      2. Jemma Silver badge

        You still dont get my point do you?

        Its actually fairly simple. You mention an MRI machine, which at the moment is an expensive bit of kit, which hospitals buy, with money, because they have a need for it. But you are assuming that if we were to remove money from the equation the whole thing would grind to a halt and the MRI would have never existed or be needed.

        WRONG

        Money does not drive development on its own, there are so many other reasons - a wish to be better, a dream to fulfil, the drive to make sure that cancer will never take another persons loved one (and I know that pain personally), even just the drive to be the best person you can be. If it did we would never have managed to get beyond the stage of yelling at the other monkeys in the next door tree. There is a need for MRI scanner systems ditto other complex systems, but the monetary cost for them is entirely arbitary.

        I dont get paid for mucking around with my old WinMo phones to make them the best that they can be with the hardware available. I dont get paid for hypermiling and ecomodding my Safrane either, I do it because I enjoy it. If I had the ability to build MRI systems I would, because I never EVER want to watch another 22 year old woman, who was my partner, die of a pervasive and slow cancer that took 7 years of agony to finally kill her, or see anyone else go through that pain.

        The amount of people in jobs they hate merely because of MONEY must be amazing, I have personal experience of that, my grandfather had a massive heart attack at the age of 52, simply because of stress from a job he hated. I wonder how much money we would save on health care if people werent worrying about money and their kids college funds and the like.

        As to arbitrary value, I've another example. A 2.2vi 136bhp hatchback with class leading ride and features - at half the price new of the directly competitive BMW. Its now 15 years old and *still* has features that brand new cars dont have. Oddly though, you can get hold of one for £525. Why, because people have put an arbitrary value on it even though it does a better job as something twice the price. Then you get the ridiculous price of £215 for a 15cm wheel on a piece of metal, welcome to price gouging for spare parts, which wouldnt happen without the powerful but horribly broken paradigm of 'currency'.

        The assumption that everyone has been trained to make is a simple hallucination. "If money were to disappear then the world would end". No, it wouldnt, unless you are a banker, hedge fund manager or the like.

        We progressed before there was money, we will progress after there is money...

        The problem we are having now is the same problem we had with religion at times like the enlightenment. The paradigm is tired and just not compatible with the continued advancement of the human race - true, there will probably be a world wide crunch heard when the paradigm is shifted without the use of the clutch (aka lots of wars and the like). It will be a painful shift most likely, but my personal opinion is its coming to the point where we are in serious danger of a complete and utter implosion going forward.

        It could be argued that 2008 was that implosion, but I dont think so. I think things could get immeasurably worse. 2008 was led by American debt - the problems the banks had worldwide was fundamentally that they had bought US debt (in some cases without even knowing it) - therefore the effects were worldwide - but importantly the fundamental failure WAS NOT.

        Now imagine what would happen in say 50 years time when we have say 3 different countries (US, Russia, China) in the same situation as the US banking industry; at once. Up until this point bankers and the financial system has always had somewhere to run for liquidity. Whats going to happen when *all* possible sources are dry? You think Libya & the like are bad, or Greek protests? That sort of implosion, assuming the governmental response is the same as this time - try worldwide mass civil war...

        We are going to be sitting on our hands with no way back and no way forward - and given the state of things with just US based issues right now how much worse do you think will can get?

    4. Scott Broukell
      Pint

      @Jemma

      Whilst I find myself sharing some empathy for the argument you put forward, I'm rather more inclined to believe that it is culture of values we bestow upon material goods and the shiny shiny, that needs to change. We are bombarded with messages to consume ever more and that, I would suggest, is where the hallucinatory factor comes into effect. We are like rabbits caught in the head lights of corporations, and we can't take our eyes away from the idea that if we don't personally own that "must-have" thing, then we fear what others will think of us and how we will be measured socially. This is utter shite of course, unless you are caught by those bright lights.

      Money, currency exchange and business transactions are rather like armaments - ok in the right hands but a real danger in the wrong ones. We do need a monetary system - we don't need it to be fueled by greed and avarice.

      I am a firm believer in "small is beautiful" - in the sense that good smaller companies usually place greater value on their workers life-work balance and greater value on their individual contribution to the company. (Yes, it can happen in larger corporations I know but I think it is rarer). It's those values that we are missing - making the customer really feel valued and not RIPPING PEOPLE OFF that matter. Small is beautiful makes sense for the banking sector as well - having many more smaller banks causes less damage to the whole system if one makes a mess of things. Cooperatives can offer a good model for sustaining values towards the work force and the customer imho.

      So it's getting away from the "value of things" and placing more emphasis on individual skills and abilities and valuing an item because it's well built, does the job perfectly and is going to last that I would suggest we need to push for. (or get back to indeed)

      There are two ways for a bunch of people to climb a mountain - they can run at it, with the stronger ones clambering over the corpses of the week who have fallen. Or, the stronger ones can reach down and give a helping hand to those that need it below them and in that way we all reach the top and feel a much greater 'value' all round.

      Tis our own human nature that holds us back all the time, and yet, it has the potential for such greater things, if only we would let it happen.

      yours, (embuggerancedly),

      Scott

      1. bhtooefr
        Mushroom

        This one is more US-specific, but...

        ...take a look at "Money as Debt".

        Essentially, it discusses how the US economy has a nasty feedback loop - you can make almost infinite money by loaning it, and to pay off the loans, you have to make more money because there isn't actually more inherent value in the economy. (And, any system allowing interest on loans would suffer from that, all wealth migrating to the banksters, or both.)

        So, to make more money, you end up trying to make more value... but that means you have to make more. Which means more people, more product, more consumption.

        Obviously, this is an unsustainable endless cycle, and eventually it's bound to collapse.

        Basically, the current US (and world) economy is a ponzi scheme, and the entire world is wrapped up in it. Such a ponzi scheme would work if you had unlimited land and natural resources, but they're finite... so it's collapsing now, and everyone gets screwed except for those at the top.

        1. Colin Millar

          Not just the current US economy

          Its been that way since Hamilton and Washington

  43. bill 36
    WTF?

    hold on

    A lot of German bashing going on here! Quite rightly the Germans do not want to bail out the basket cases in the Euro zone. Their economy is doing nicely thanks to their fiscal and monetary policies and they expect every other member state to manage themselves as well as they do.

    German debt is sitting at around the same level as the UK and nearly 20% less than that of the USA and no sign of QE from the Germans. Quite rightly.

    Watching Bloomberg and others,anyone would think that this global recession, its about to happen, was caused by poor economic management in Europe.

    It was caused by American and European bankers playing poker with slight of hand dealers, Lets not forget that! And America is heading fast into the abyss after the amount of cash it has just printed.

    1. Chris Miller

      Up to a point, Lord Copper

      The German economy is doing nicely also because the value of their currency (Euro) has been artificially depressed by the antics of the PIIGS. If they were still on the DM they'd be having the problems of the Swiss Franc and their ports would be full of unsold Mercs and Beemers. The Germans want the benefits of Euro membership without any of the inconveniences.

      Expecting Greece and Italy to turn themselves into a sort of NordRhein-Westfalen with sunshine was never going to work, and betrays the kind of misunderstanding of European cultural differences which has led to so many problems over the years.

  44. Lars Silver badge
    Pint

    Cheer up

    Life will go on, and yes, it's nice to be right. And I was not thinking of the author.

    And yes, the Germans may have some memory of the money printing adventure.

    https://secure.wikimedia.org/wikipedia/en/wiki/1920s_German_inflation

  45. Tralala
    IT Angle

    Did you think about what you were trying to say?

    If I wanted to read the daily male I'd go there.

    UKTIP has no memory of brilliant Britain getting its ass spanked by a single, lone European [teehee] currency speculator a few years back?

    None at all it seems...

    The saddest thing is that you think you are being rational.

    OK, I'm assuming you assume you are being rational.

  46. Anonymous John

    How about declaring the whole planet bankrupt and starting again?

  47. ideapete

    Burley-aint gonna goni doesnt

    Total slander Burley-aint gonna goni doesn't use condoms totally hun - italionao ( my pun my pun )

    Reusable plastic rolled Lira only (ouch)

  48. Anonymous Coward
    Anonymous Coward

    Wrong in the first sentence.

    There is a solution because I have one, and it's not illegal, and it works and it solves dozens of other things besides. It even allows the unchanged existence of fractional reserve banking while making it safe. But it costs me money, much more than anyone else in my position, so while I've offered to sell it to the treasury (for enough money so I don't have to have anything to do with politicians,) I'm not going to give it away to the scum whose vote garnering spending priorities cost my Dad his life who would then charge me for making them look brilliant. Politicians won a popularity competition.

    My daughter asked me last night. "What's economics?" I answered "It is the study of who has money and what happens when it moves and why." She replied "It must be difficult" and I replied in turn "It is for the people who do it for a living, but the subject appeals to people who can't count. It's like play arithmetic. If they got some real scientists in, people who could count, they'd solve it."

    Why would I give away a solution to people who'd use it against me and my sons? Why should I solve a problem for people who will use it to buy votes and make themselves look good.

    As an example as to the kind of scum we are dealing with, Alastair Darling, announced in his book, there are many people who claim ownership of what turned out to be a very successful plan to stop the collapse by banning shorting of financial stocks, but who thought of it isn't important. What he considered important was him saying "Ok! I have absolutely fecking no idea what to do, can anyone think of anything." Naturally none of the people who caused the mess, could solve it, because of their mindset.

    Lo and behold, on the six o'clock news that evening, voicemails I left for my wife as to how I'd solve it were announced verbatim as Treasury policy, and Gordon Brown had the nerve to say he'd saved the world. What a scumbag. Did they bring my dad back from the dead as thanks? Did they even, even up health spending between men and women? No, they dropped the amount they spent on men to scarcely £1 in 8, (that's with Gyno care taken out before the comparison,) and removed simvastatin from OTC sales. Are the Tories any better than New Labour. No they aren't. I therefore have a simple aim, to be, along with my family, free from the clutches of politicians.

    I may be noone of consequence, but my dad was truly a great swordmaker, though I truly can't stand it when people say "It's impossible" when in fact they mean "It's beyond me."

    They say there's a story that Frank Capra started to believe his own publicity, like Gordon Brown did, and Vince Cable does, until a screenwriter shoved a blank sheet of paper in his hand, and said "Here, apply the Capraesque quality to that."

    The reality is that the Cabinet is full of people who will steal anything from anyone, and justify it on the grounds that they've known since their first day in Eton, that they were destined to be in charge of the plebs. It's my birthright! My view is that if they're that clever, they should solve it.

    Apologies if I may come across as hostile, but you should see me whem I'm not taking the tablets.

    Regards,

    Inigo.

    ps. The fullest respect to politicians who deserve their positions of both parties. There are several of them, but lads and lass, I'm afraid you're outnumbered.

    1. Intractable Potsherd Silver badge
      Unhappy

      Sorry, Inigo ...

      ... you might be entirely correct in what you say, but anyone can say "I've got the solution, but I'm not going to tell you what it is". It is, though, possible to gain some credibility from that position.

      However, suggesting that the government was tapping your phone and put your ideas forward as its own with only a few hours gap will just get you labelled as delusional.

  49. Yet Another Anonymous coward Silver badge

    Single UK currency

    It did always used to confuse me how London and Frankfurt were SO different economically that they couldn't possibly share a currency while Chelsea and Barnsley were so similar that it was ridiculous to suggest they couldn't

    I suppose it's the same logic that says decisions mustn't be taken by distant bureaucrats in Brussels, but it is essential that decisions about Gateshead are taken in London.

    1. Matt Siddall

      I think the main issue is that we have a significant amount of transfers within the EU. The home counties pay a lot more in tax than they receive in services, and a number of places receive a lot more than they pay.

      So it could work across the whole EU if Germany were willing to give large chunks of cash to places like Greece, Italy, Portugal, etc. Oddly enough, the Germans are not overjoyed with this idea...

  50. Destroy All Monsters Silver badge
    Paris Hilton

    Not allowed to print money (i.e. tax using a Heimlich Manoeuver)

    How about this then...

    http://mises.org/daily/5575: The Fed and the ECB: Two Paths, One Goal

    While the ECB's and Fed's functions (to provide liquidity to the banking system in times of crisis and to finance the government together with the banking system) are the same, there exist small differences between them. In the so-called open-market operations (another term for active manipulation of the money supply) the central banks produce or destroy base money.

    There are two ways central banks produce base money. By tradition, the Fed uses the produce-money-and-purchase approach (PMP). Normally, the Fed produces money in their computers and uses it to buy US Treasuries from the banking system. In exchange for the US Treasuries, the Fed creates money on the account that the selling bank holds at the Fed.

    The ECB, in contrast, uses the produce-money-and-lend (PML) approach. It produces money and lends it to the banking system for one week or three months. The preferred collateral for these loans to banks is government bonds.[1] As a result of PMP and PML, banks receive new base money. They hold more reserves at their account at the central bank. The additional reserves mean that they can now expand credit and create even more money.

  51. amanfromMars 1 Silver badge
    Black Helicopters

    If it wasn't so true, would it be almost amusing

    http://youtu.be/aKpE0HqJtow ...... And they got the part right, right at the start, with their identification of key major sub-prime administerial players as idiots.

    Take money supply out of the hands of bankers and governments, for they have proven themselves to be incapable of making it do its magic and creating wealth and prosperity in peace and harmony for all. And the arrogance of the deluded fools is that they would deny that it is so. For is it not so.

    Identify the problem .... and remove it from the equation and the solution will appear in something completely different. It is not rocket science, is it? But because you can buy anything you like for nothing whenever you control money supply, you can be pretty sure that the present idiots will profess themselves to be smart enough to remain in control and save the day, even though they aren't and they won't because they can't without seeding/ceding control of confetti currency power to others who are not themselves. ......... Catch 42, and a Colossus of an Enigmatic Dilemma which would appear to have Zero Practical Solution and that would a Virtual Global Default and Outlawing of All Debt Promotions, so that Credit Supply and Money Generation can Free Nations and Peoples to Create Economies and Industries that Build Brave New Future Worlds you need only Imagine to Believe in.

    Or do you want to complicate things by trying to maintain the present inequitable and demonstrably failed enslaving methodology which is most likely to result in systems heads losing theirs, for that is what is just around the next corner. Only a fool would not wish to avoid that at all costs ...... and a Montana mountain bunker complex is no safe haven from an educated population, it's a tomb.

  52. Herby Silver badge

    As a once wise man once said...

    A billion here, a billion there, pretty soon it adds up to real money.

    Unfortunately politicians don't really understand how the "system" works. Not that any of us peons (voters) understand it much either. The politicians are only there to keep their jobs, and they keep their jobs by being elected. To be elected they need votes, and nice things like credit and handouts (we call them "entitlements" here in the USA) make voters happy so they proliferate. Never mind they they cause negative cash flow for the governments. We here have bonds that are 30 years, and by then most of the politicians are retired with nice pensions (voted by themselves, of course) and it isn't their problem any more.

  53. tekHedd
    Happy

    And thank you for saying it

    It's such a relief to see someone openly state that there really is nothing we can do about the whole joojooflop situation, that I feel much better.

  54. Adam Inistrator
    Mushroom

    cartoon

    Germany is a lumbering dim witted giant and France is a domineering little monkey sitting on its shoulders.

  55. foo_bar_baz

    Blame Germany and France too

    I don't blame just the loose governments in the Mediterranean countries. Germany and France, along with almost every Euro member, broke the Maastricht Treaty by taking more debt than they were supposed to, without any penalties. This was a direct license for the PIGS to do the same.

    Flawed treaty with no penalties for breaking the agreement, bad example by those who could afford to break it, bad judgement in the countries that could not.

    People of those countries that did abide by the treaty now have to foot the bill.

  56. Richard Fletcher

    Barnsley and Chelsea and the banning of money.

    Barnsley and Chelsea can share the same currency because of tax and spend. Tax in Chelsea and spend in Barnsley. And of course if Jemma had her way and killed money, then along with it goes taxes, and with that, policing, education, health, infrastructure and rather quickly civilisation.... Not that you could ban it for long mind. It's not like you can un-invent it after all and everyone will soon get tired of stockpiling goods at home for the purposes of a trade.

  57. Magnus_Pym
    Pirate

    We should break away now while we can.

    I would like to see us independent from our new overlords. Able to make our own decisions for our own benefit not for the benefit of those few individuals who say they represent us but are in fact unelected, unaware, uninterested.

    Yes, I say we should break away from central control and go back to the old borders and the old independent trading states. Let the new battle cry ring out - 'FREEDOM for MERCIA'. Fuck you Westminster and your parochial attitudes. You have taken us for granted for too long.

  58. Anonymous Coward
    Anonymous Coward

    Start a black economy?

    The root cause is politics and nimby-ism here; no politician wants to tell people to pay the price now or suffer later, so they don't make the hard decisions and as a result keep their jobs.

    I would like to start a "black economy", where people can join a "charitable organisation" who ask for some form of investment and who invest it more wisely (homes, small businesses) and provide sensible returns at lower risk. Having had a low-risk super fund in the 90s lose 25% of its value, I no longer trust the financial establishment. If this could be extended to those items funded by tax (hospitals, schools, transport) that would be even better, but unfortunately would be dependent on rebates which the govt could change when it gets arsey.

  59. Anonymous Coward
    Anonymous Coward

    This article starts well - but fails miserably...

    Suggesting that money needs to printed is ridiculous. So we print $1.9 trillion just to save Italy and the other PIGS?

    Have you never studied hyperinflation and what happened after the 1st world war in Germany?

    Occupy wall street is now active in 2300 cities worldwide and it is the people taking power back from the banksters.

    Ireland have recently set a precedent by going back to Euroland and asking them to prove that they do have a debt and where the figure came from.

    It will be proven that most of this came from the Banks in collusion with the heads of Government, and that is when the arrests will start to happen.

    So we can watch Cameron, Berlusconi, Merkel and sarkozy being marched off to prison amongst others.

    1. Mr Nobody 1

      I think Solaris_fan has been out in the sun too long.

      1. Anonymous Coward
        Anonymous Coward

        Are you saying that politicians are never to held accountable for ruining countries?

        1. Vladimir Plouzhnikov

          @Solaris_fan

          "It will be proven that most of this came from the Banks in collusion with the heads of Government"

          By your logic it will also be proven that floods come from sewers.

          But it will be better if you will remember who and when borrowed the money from the banks and what this money has been spent on. Perhaps than you will be in position to apportion your blame more rationally...

  60. IDoNotThinkSo

    I have 3 million Reichsmark from the 1920s in the loft which say that Germany won't print money.

    Let the Italians do it on their own.

    1. Chris Miller
      Happy

      I can beat that

      I own a hundert milliarden (10^11) note, overprinted eine billion (10^12).

      1. IDoNotThinkSo
        Thumb Up

        Good one. Guess yours are from a week or so later...

      2. PyLETS
        FAIL

        family story

        My German grandfather used to have to run to the bakers at lunch time with similar notes, before the price of bread went up.

  61. Ben Norris
    Thumb Down

    Actually...

    It is like earning 50K with a 50K debt, everyone coming out of the woodwork saying you are going to fail so we will reduce your salary to 10K. There, we told you you would fail.

    People keep comparing government economies to household finance but it doesn't work the same way at all. The more confidence the governement has the more they make in taxes and the more debt they can afford.

    1. Magnus_Pym

      While a agree generally there is a similarity with home finance: Borrowing money is cheap so long as you don't need it. If you need it it suddenly becomes very expensive.

      I quite like the circular logic that the banks use and hope to find an application in salary calculation.

      10. because the likelihood of default has increased we have to increase the interest rate.

      20. because the interest rate has increased cost have risen

      30. because cost have risen the likelihood of default has increased

      40 rub hands gleefully

      50. goto 10

      I'm not sure about line 40 but I think it is quite safe to assume.

  62. filo
    IT Angle

    Run to the hills

    The news this morning had a report stating that everything was really bad and we (the UK) may or may not be liable for some of the debt and we should very afraid etc.. I feel that there is a lot of fear mongering and obfuscation around this issue.

    The media should stick to the facts and stop causing unnecessary anxiety.

    As for the problem it is an infinite loop

    While (debt > 0)

    {

    Move the debt from pillar to post;

    }

    The solution is to break the cycle and pay off the debt--

    While (debt > 0)

    {

    debt--;

    }

    1. Vladimir Plouzhnikov

      Well

      "The solution is to break the cycle and pay off the debt--"

      That's what our Govt is proposing (at least reduce it a bit, or at least reduce the deficit) and that's what is being demanded from Greece. However, there is the slight problem that the local population seem to dislike the idea...

      1. filo

        Tough times ahead

        It is the right way to do it, however the debt in some instances is unmanageable. Perhaps the central funds could be used to clear debts rather than adding to them.

        As for the people we are all the unfortunate losers in this situation. Is there any other way out of this but to cut spending to within sustainable limits? It is a galling proposition especially when considering the political / financial leaders at the time of the crash come out smelling of roses.

        What are the alternatives?

  63. Anonymous Coward
    Anonymous Coward

    War between London and Frankfurt financial outfits

    Whatever Mr Worstall and friend(s) may want Joe Public to believe, what you are seeing here is not what he wants you to think it is.

    As readers will know, the City are very keen on light touch regulation so they can carry on making megabucks from things like Credit Default Swaps and so on.

    As sensible readers will know, CDSes are potentially financial weapons of mass destruction and the ECB wants the CDS business to be supervised from Frankfurt.

    That doesn't appeal to the City and their puppets in the Millionaire's Cabinet.

    There's loads more to it than this but I need to be elsewhere; the best short writeup I've seen is at

    http://www.guardian.co.uk/discussion/comment-permalink/13232166

    Austerity, or democracy. Take your pick.

  64. Zog The Undeniable
    Angel

    The best thing Gordon Brown ever did

    was not joining the euro. This might hurt us, but not so much as it hurts them. *We* can still print money.

  65. airbrush
    Thumb Up

    Consumer debt is huge in the states, the largest in the western world. Their government debt is worse than Greece. It's politicians generally seem at least as corrupt as Greece's, do wonder if this whole euro crisis was a smokescreen for the mess in the US. Now if say the euro replaced the dollar as a world currency, the us + goldman sachs et al would be totally sunk.

    1. Anonymous Coward
      Anonymous Coward

      Had you heard the one about the toppling of Saddam being largely about the fact that Saddam wanted to sell his oil in Euros not in petrodollars?

      No, not many people have. I wonder why. Anyway, here's a piece of the story you can easily find:

      http://www.time.com/time/magazine/article/0,9171,998512,00.html (13 Nov 2000)

      Europe's dream of promoting the euro as a competitor to the U.S. dollar may get a boost from SADDAM HUSSEIN. Iraq says that from now on, it wants payments for its oil in euros, despite the fact that the battered European currency unit, which used to be worth quite a bit more than $1, has dropped to about 82[cents]. Iraq says it will no longer accept dollars for oil because it does not want to deal "in the currency of the enemy."

  66. Anonymous Coward
    Anonymous Coward

    illegal?

    If the easy solution is illegal, just change the law.

    Works for the US all the time.

  67. nucotech
    Thumb Up

    Good article. We now just need to get the politicians to realise what everyone else here worked out quite some time ago.

  68. crowley

    "It's also not a large default, we're talking about the entire financial system losing £100bn or so: sure, real money but it doesn't bankrupt everyone or melt all the banks."

    Err.. that stuff is used to leverage up all kinds of other investments you know, such that the whole house of cards crumbles if they default. Probably more like £2 trillion at stake.

    "We could just make new money. The European Central Bank (ECB) can do that.... Sure, we get a bit of inflation out of this: but that's actually good at this point.... The ECB just isn't allowed to print money and bail Italy (or whoever) out."

    Yeah, a bit of inflation for most, outright theft from savings for the Germans.

    They're not blocking such a move just to throw their weight around.

    Whilst our government happily let inflation out of the bag and thereby stuffed all the savers, the German's as a nation of savers see no reason to stuff their entire populace.

  69. NomNomNom

    The solution is to ban lending

    there I said it

  70. A Butler

    "I can't wait until we leave this corrupt EU mess :)"

    Yeah and dig up those fibre cables linking the london financial district to the rest of global financial economy; the UK biggest industry by far. Plus the euro goes down, it will pull every finance house in London down as well: Europes biggest financial services city and on to New York, the domino effect.

    Oh yeah lets leave EU, like we do not need to be a trading global economy.

    What gold fish bowl do you live in?

  71. Anonymous Coward
    Anonymous Coward

    Just waiting for China...

    They'll buy up all our debt and then declare the EU as part of the Republic of China......

    1. pompurin

      The Peoples Republic of China? I don't think the Taiwanese have enough cash to bail us out :)

  72. Robert E A Harvey

    Ransom

    Well, there are too sides to this debacle

    Governments, like the rest of us, should be living within thier means. They have lied to us about this since the end of the first world war, and are finally getting found out. How Britain can so suddenly go from the Largesse of the Brown years to the Misery of the Coalition should be evidence of how untrustworthy governments are.

    But the Loan Sharks are accountable to no-one in this, and are being Greedy. To effectively double the cost of repaying Italy's debt is just banditry, and in the past we used to hunt down bandits and hang them. Now we watch as they give each other multi-million pound bonuses, and if it looks like their nasty racket is going to come off the rails our governments - the same governments they are blackmailling - prop them up with yet more of our cash.

    To make both thing possible governments just print more money, making the value of my savings drop. This is why house prices have not plummetted since the crisis began (ok they have slipped a little but, but not off the cliff) - because there has been a secret revaluation of the money we measure them in, and it is now worth half what it was 5 years ago.

    A pox on governments, and a pox on bankers.

    It is time for the ptichforks and flaming brands, I tell you. Are there no lamp-posts? is there no rope?

  73. mraak
    Thumb Up

    I so wish to be Greece

    if debt > N:

    debt = 0

  74. Anonymous Coward
    Anonymous Coward

    Interesting concept,...

    the price to paid for admitting the situation is out of control will be to the egos of those notionally in charge, which means they will watch the entire system fall down rather than admit they got it wrong.

    "Any system is perfect until humans are involved." Skynet(tm), 2050AD

  75. browolf
    Facepalm

    Surely the obvious answer is for Greece to sell some islands...like Crete?

  76. Werner McGoole
    Mushroom

    What'll happen is this...

    The rich euro countries must realise that it's a choice between them hanging on to their money for now but having a financial disaster resulting in no euro, no banks and probably eventually no money. Or, they can bail out the debtors in the eurozone, resulting in a continuation of the status quo, albeit with less money for themselves and an urgent need to reform how the euro works.

    The decision really rests on how much Germany and France want to keep the euro (i.e. how much they're willing to pay to keep it). When push comes to shove, if they decide it has to be rescued (and I think they will), the fact that there's no legal way won't matter. These are politicians - they make the laws (or they re-interpret them as necessary).

    IMHO, Germany and France shouldn't be that bothered about having to bail out the PIIGS. The PIIGS have suffered from having an over-valued currency (the euro), while France and Germany have profited from having an under-valued currency (also the euro). If they want to continue profiting, it's only fair some of that gain goes back to the PIIGS who are keeping the exchange rate down for them.

    So a transfer union of some sort, but the reason that hasn''t already happened is because the rich euro countries don't want to sign a blank cheque. While they can, they're determined to make the PIIGS reform their economies as that will make the eventual bill as small as possible. But I think they know the bill will eventually fall on them, probably through some form of QE. That'd be the fairest way, as all sectors of the euro economy would then pay via the effects of inflation.

    I know the eurozone politicians are acting like they're stupid, but I think most of them know how this must play out. They just don't want to commit before they've squeezed as much as possible out of the PIIGS. Similarly, China, Russia, Brazil, US, UK, et al. aren't going to commit to helping the eurozone via the EFSF until they've squeezed as much as they can out of Germany and co.

    It's all politics of course, but in this situation it's also good economics. Those who have made mistakes must pay, but only as much as they can afford to pay without wrecking the whole financial system. That's what's being negotiated at the moment via a process of brinkmanship.

  77. Old Painless
    FAIL

    demeaning..

    ..this whole "money" concept just makes us look a bit tawdry as a species really doesn't it? I mean if you can really solve the problem by printing more "money", we might as well just switch over to using leaves, or drawing our own notes at home.Honestly, as a species, is this the best we can do? What a bunch of cocks..

  78. Zolko
    Pirate

    no, printing money would "solve" anyting

    1) printing money wouldn't solve any problem: it would just push it down the road, because there is not only accumulated *debt* but also chronic *deficit*, and paying back the debt would only reset it, but you'd still have the chronic deficit. Actually, the USA and UK have done the Qauntitative Easing stuff, with absolutely zero effect. You'd want the BCE do the same fuck-off ?

    This chronic deficit has mainly 2 reasons: petrol and free-trade. Unless these are solved, printing money has no benefit.

    2) the real solution is to default on the debt, which lowers the value of the money of the concerned country, making imports pricier and exports more competitive, with a transitional 1-2 years of hardship. To rely on domestic industries and resources.This is the road Argentina and Iceland have taken, with very good results.

    Of course, the US pension funds would go bust, but that should be *their* problems, not ours.

  79. Calum n Shady
    Joke

    Three men went into a bar..

    A Greek, an Italian, and Portugeezer.. who paid ?

    The German !

  80. Johan Bastiaansen
    Devil

    I have the sollution

    We put the people, responsible for the ECB not being allowed to print money and buy bonds, in front a firing squad.

    They are willing to risk the entire economy all because of "procedure"? Let's see if they're willing to lose their lives because of their holy procedure.

  81. Kay Burley ate my hamster
    FAIL

    I'm now judging this article by the comments of the author's party supporters.

  82. The Serpent
    Black Helicopters

    It's time

    So our first efforts at a world economy failed - it's to be expected really and quite silly to think something will work out right first time. <conspiracy>It's time to roll out all those low cost/no cost alternative energy sources being kept quiet<conspiracy/>. They were hoping to prep us a bit more, but I think global financial ruin has crept up faster than expected. Reducing the cost of goods to just materials and labour would put a real rocket under the @rse of WorldEconomy2.0

  83. Alfred Butler
    Coat

    A wise man once said

    You come in to this world with nothing, if you die in debt, you've made a profit.

  84. Darren Barratt
    Devil

    So, we're agreed then. We hang all the bankers and start again from scratch?

  85. JaitcH
    Pint

    Thank you, Tim Worstall, and Register for publishing this

    With this comment being in the two hundreds only one or two will read it but i want to say THANK YOU for explaining such a complex subject in such a a lucid manner.

  86. davefb
    IT Angle

    If I wanted stuff like this

    I'd pop by the Daily Mail ?

    No offence, but little englanders belong in the last century.

  87. amanfromMars 1 Silver badge

    Sordid Dirty Great Games are in Dire Straits Need of a Executive Systems Purge ... a WipeOut

    Y'all are thinking that trillions has been lost, but in reality has it just been transferred into other accounts. It is as simple as that. And your leaders right at the top know that, for they are responsible account holders and they fear it most whenever they try to enjoy their ill gotten gains for it marks them as proven guilty as charged.

    Nobody loses money, and especially not bankers with banks and banker and sub-prime ministerial, political clients. So there are the perps of your growing misfortune and enslavement to artificially created debt burdens?

    Too Fantastic to Believe ..... Meet and Greet Too Big to Fail ........ and so Simple and Easy to Hide in Full Complex Sight.

  88. SleepyJohn
    Big Brother

    Monty Python's dead parrot could have foreseen this

    Instead of arguing about something that Monty Python's dead parrot could have foreseen with ease we should perhaps ponder on the strange case of a democratically elected Prime Minister being elbowed aside by a has-been Euro-Bank boss with no political experience and no mandate from the people.

    The front men of the EU strutting on the world stage may be babbling buffoons but the silent ones beavering away in the bowels of Brussels, who pull their strings, are clearly not. If an ex-parrot could see this coming then they certainly could. So why did they allow it?

    Standard political tactic #1 - engineer a crisis (encourage feckless idiots to borrow too much money) that appears to be caused by someone else (the banks - hated, easy target), then step in as a White Knight to rescue the people.

    And guess what? An EU big-wig has hinted that the disparate economies make it impossible to deal with the crisis properly, so it can only be resolved by handing central control of all the nations' affairs to an unelected EU 'politburo', neatly sidestepping the fact that the EU caused the problem by sucking in all those disparate economies knowing full well what would happen, and is going to use the resulting mess to justify taking even more unaccountable, authoritarian control over the people than it already has. See para 1 for the thin end of this wedge. You don't have to be a 'racist pig' in UKIP to worry about that.

    I began worrying when I saw roads and bridges all over Scotland plastered with political logos and Orwellian slogans, and people slurping up handouts from Brussels that clearly deliberately circumvented the policies and control of the elected government. I worried even more when I discovered posters all over my children's school telling them their milk came courtesy of the wondrous EU, and that Euro-police could now drag me off to prison on the Continent without trial or proof of any wrongdoing. And when the Euro court decreed that criticism of the EU or its bosses was akin to blasphemy I decided it was time to leave.

    We escaped to New Zealand pretty pronto. NZ is a nice place, 12,000 miles from Brussels. There is no euro-brainwashing, no foreign police with the power to imprison you abroad without trial, and you can actually elect your government, which brings nostalgic memories of old England. But it is sad seeing my home country being turned into a Soviet-style satellite, ruled by strangers over whom the people have no control.

    1. All names Taken
      Joke

      ??

      Hmm

      New Zealand you say?

  89. jonfr
    Boffin

    Dear Mr. Wrong at The Register

    Hello Mr. Wrong and UKIP supporter at The Register.

    The Greece might well be having hair raising problems in terms of debt problems. But as they are a country they cannot default (a common mistake) on its debt. But they can and often have refused to pay back what they owe to its creditors. From what I can tell that is not going to happen to Greece or Italy. While the problems are big and complex, they are going to be solved and fixed. It is just going to take some more time. I also have no worries about the euro. It is going to remain and only get better with age.

    Now. If I where you I would worry about that pound that you have. The inflation rates are not looking good for the next 48 months forecast.

  90. elkyyz

    A parrot or a headshot??

    Surely I appreciate a British view, but this is more than ridiculous.

    Just because you don't like or understand Europe oughtn't (!!) obliviate a clear view of what's going on in Europe. Namely: a unified Europe is pulling your British pants down, is finishing your colonial visions and marginilizing your very existence to a petty poop.

    Of course you don't like it ... tho you will have to get used to it. All the US / UK short calls will not stop Europe to finally get its act together and stand united. Greece? A 2% problem (in debt or GDP).

    Give up your snot-nosed non-sensical disapproval and realize that you are outclassed, outdated and outthought. Britain is by now a failure, a non-entity, a declassed has-been!!

  91. An ominous cow heard

    strangers over whom the people have no control

    "my home country being turned into a Soviet-style satellite, ruled by strangers over whom the people have no control."

    Yep, much of Europe is just a playground for the banksters now.

    Austerity for the 99%.

    Megabonuses for the 1%

    e.g. £40M/yr each for the top table at Barclays:

    http://www.dailymail.co.uk/news/article-1363790/Barclays-bosses-47m-head-pay-bonuses-Bob-Diamond-says-greed-good.html

  92. we all know how irritating it is having to interact with the shopkeeper in any way
    FAIL

    We can all say this

    "I can find a Usenet post of that vintage saying exactly that. Being right is quite wonderful"

    Anyone can find a comment supporting their case, as both sides promoted their views. So comments like this have no meaning.

  93. All names Taken
    Paris Hilton

    Look, ...

    ... life goes on.

    Is a mega-whammy headache to some in financial-politico sectors better or worse than a universal nation-by-nation call up for those between 18 and 35 to report for immediate training for armed forces battle actions?

    It appears that Euro is a form of Tower of Babel, well, so what?

    Capitalism theory will always tell you boom follows bust oftentimes overlooking the converse bust follows boom?

    And ultimately: why believe anyone proclaiming that the end of the world as we know it is about to arrive (won't wee see that for ourselves)

    Would lurve to babel more but just kant bee botherded?

    1. Tim Worstal

      No

      I mean a usenet post written by me predicting that this would happen.

  94. SleepyJohn
    Big Brother

    Four possible simple explanations ...

    It seems to me there are four possible, simple explanations for this mess:

    1 - The EU bosses did not know this would happen, because they have no idea how human communities function.

    2 - The EU bosses thought this would not happen, because they have no clue how banking works.

    3 - The EU bosses knew this would happen but did nothing, because their "Grand Design" is more important to them than the lives of the people.

    4 - The EU bosses made this happen, because it gives them an excuse to increase their control over the 500 million people living in what is already a de facto dictatorship.

    So the results are --- Incompetence - 2 : Malevolence - 2.

    Would you vote for them to run your country? Oh wait ...

  95. elkyyz

    Four possible simple explanations ... you say ?

    Do please consider that you could be wrong. No, sorry ... a complete idiot would not think of a fitfth alternative. -- It's about Europe. It's about a common purpose, a continent in peace, a community of nations united.

    But there you are, an idiot. English, neverthless.

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