Friday Fun: One wish from the Labour Magic Lamp

So, as we have long know, social media and Brexit have destroyed our body politics. Our political class has now stopped any pretence of seriousness and just promises anything to try and bribe voters; in many ways this is the end of democracy.

Back in 2009 and 2010, we wrote a series of articles on Greece - two years ahead of the eventual terrible financial crisis. One of the main takeaways was that the politicians in the Country had reduced democracy to bribing their own voting factions and nothing else, plus the bribes were increased massively with borrowed money. The result was a bankrupt country with 25% unemployment and a ruined body politic. I recall warning we may head the same way and by a little more circuitous route we have indeed!

Anyway, it is Friday so it is a challenge day. Imagine you are a political leader in the UK and you have one last bullet to fire to get as manay votes as possibly through electoral bribery - what do you choose to make free with you magic money tree wand?

When a deal is not a deal

Hmmmm....there are 2 international deals out there today and both seem to be a very bad idea on the part of the 'superpowers'

Firstly, to Greece, where the Parliament is expected to sign on to the EU bailout terms. These terms, as many commenting and contributing to this blog know full well (see Phil's comments on yesterday's post for a very clear example), are simply unachievable for a Country with Greece's problems.

We will be back at the Grexit table in due course.

Secondly, we have the nuclear deal with Iran. At no point have Iran said they will not develop nuclear weapons - as they have always said this. Nuclear Inspectors will not be allowed unfettered access which suggests that Iran still has much to hide.

Moreover, Iran is in nearly full control of Iraq, with many divisions now on the ground in the Country and the forces opposing ISIS all controlled by Iranian commanders.

That Obama wants to 'reset' the US position in the Middle East is simply crazy. Of course, plenty of Iranian oil will flow and this will further undermine Russia, Venezuela and ISIS, but the price for this is backing the Shia's against the Sunni's and further inflaming the Islamic civil war.

All for nothing as the Iranians won't really co-operate until it is too late.

How can it be that the Western leaders are so desperate and weak that they keep making mistake after mistake?

Hubris defined: Tsipras the Quisling

Hubris Defined:

"excessive pride towards or defiance of the gods, leading to nemesis"

So Greece's new proposals to its creditors look the same as the ones it rejected last week and had a referendum to say 'Oxi' to.

Somewhere this week Mr Tsipara has been sat in a dark room and had the facts of life explained to him on EU and the true gods of finance. He has become a Quisling and the fate of Nick Clegg now awaits at the ballot box - something he will no doubt avoid after his recent fondness for it.

The EU Monster, as Budgie commented yesterday, has a Terminator like ability to reform and re-focus just enough to kick the can a bit further down the road.

Tsiparas however is doomed to follow the path so well defined by his ancestors.

One day, the EU will run out of road, but not yet at least......

China; not more threatening than Greece

Interesting to see the Chinese Government so swift to act to stop a large stock market rout. Not sure that  Capitalists would approve of banks being asked ot lend money to companies to buy their own shares - seems a bit gamey perhaps?

Still, it has done the trick of stopping the share collapse. The Chinese are struggling to allow stock market trading into their retail trading base. Much like we do with AIM etc, the propensity for the newbies to get robbed is high and as a Communist state this has some downsides.

They seem to have licked it for now and the impact on the UK is minimal, far less than a Grexit or indeed huge EU bailout of Greece could be,

In time China will go pop big time. The Government have decided to print money at an alarming rate to keep up the growth profile. The money is printed in the back of the $5 trillion of US Dollar T-bills that the US is never going to redeem. They are merely playing the game according to the rules they have learned.

Of course, this leads to massive over-investment and poor investment choices, as well as rampant asset inflation. All in all, a disaster, but the underlying strength of economic growth will provide a big shock absorber. The rise of the US did not stop in 1929, neither will China's crisis in 2015.

The "O'crapalypse"

It's really hard to see how Greece can stay in the Eurozone and even the EU from here on in:

1. There is only around €500 million of cash in Greek banks  and even with allowances of €60 euros per person that is only 1 days supply left.

2. The ECB is not a political unit and Draghi hates being seen as partisan so it will not do anything ahead of agreement by the EU leaders.

3. The EU leaders are not meeting until tomorrow - so good luck in Greece trying to live for at least 48 hours with no money.

4. The IMF loans are sub-ordinate to the EU ones and the Greeks have defaulted anyway.

Basically, by the middle of this week Greece will have no money left, let alone trying to pay €3.5 billion in a couple of weeks time to the EU.

So, even if the Euro leaders try hard - which initial reactions suggest they are not minded too anyway, the chances are that Greece will have to issue its own scrip sometime this week in order to keep any semblance of the economy going. Medicines and food are running low with the Banks shut - the Country maybe struggling but ordinary Greeks can afford to buy goods - it is the EU via the ECB that is creating an artificial shortage.

As I have maintained for years, the sooner they do this, bite the bullet of a hefty devaluation and get on with it the better - The Country will be a much better place in 3 years, versus the 7 years of disaster that have accompanied trying to pay the debts.

As for the Eurozone, ECB and all that - there is nothing positive to be said at all. The actions to create the crisis in Greece are sickening, the lack of vision and judgement to design an easy path to exit or a parallel 'soft euro' for Italy, Spain and Portugal too is pathetic. The UK can also see clearly where attempts to negotiate or change the will of Germany get you - nowhere and worse.

The sooner we can leave the better, when is that Referendum?

The biggest question about Greece that nobody will ask or answer

Given how much I go on about Greece and have done for many yeas,  have been trying my best to leave it this week.

For Greece, there are only two choices; penury under European hegemony or an exit from the Euro, with chaos and confusion before eventual renewal. Neither of these are very palatable dishes.

However, the really interesting news this week is to watch the reaction of those who know...the 'CEO' of Europe, Jean-Claude Junker, is saying Greeks will commit suicide by leaving the Euro. He is a dangerous man in his own right and it was right for the UK to oppose his Presidency - with his one-eyedness that will lead to huge future problems for the EU as it pushes up against integration issues across all states.

Further more the biggest story of all is not being covered.

Where has all the money gone? Since 2000 when the Greece was admitted to the Euro over €300 billion has been borrowed and spent. So the key question is, who borrowed it and who spent it?

We all know the Olympics 'cost' more than the London Olympics ($15B versus $14B) and resulted in a loss of $14 billion. Property developers and building contractors made huge money out of this venture - all of it now likely residing in Switzerland.

Equally, we know that few people have paid tax in Greece for a long time - so their lifestyles have been above what they have been earning. But still I doubt this would cover the loss. German exports to Greece are now €4 billion a year, down from double that in 2008 -but still its net trade is a €3 billion positive in Germany's favour. It sends over tourists and BMW's and which don't really balance each other out.

Hence German businesses, as well as French, are keen to hold onto their Greek market. Of course, behind German thinking too is that a Grexit in the long-term will enhance the value of the Euro - anathema to a Country based on a mercantilist policy.

Also, Greece has not really repaid much of its debt, payments have been made until today at a steady €7 billion a quarter, but this barley covers interest in the main and thus the total stock of debt has kept exploding upwards. More debt has been issued to cover the increasing debt repayments to avoid default - so in effect more debt is being accrued to pay the European owners of the original debt. I can see this amounts to over 60% of the total money Greece has borrowed

But I don't really know where the other money went, but it is interesting that this is not a topic of discussion at all by either side - the Europeans are refusing to admit they are in effect bailing out their own banks and taxpayers by forcing Greece to endue austerity in extremis whilst paying themselves back. The Greeks are not up for admitting the huge corruption that must underlie the initial uptick in debt to pay for the Olympics and other such projects such as the Egnatia highway and railway upgrades which have been ( and still are) both expensive and often contracted out to European major corporates.

The last post on Greece before the Euro exit?

Really, this is unlikely to be the last post on Greece, but it could be the last one before Grexit.

Interestingly today the EU Commission - the hotbed of fundamentalists who put the EU before everything (except their wallets which are supported by it)  is making all sorts of soothing noises in the EU media about how Greece's new proposals are just great and a deal can be sealed.

On the other hand the IMF is in a quandary - the IMF supports real basket case countries on the rule that it must not actively support bust countries and piss away the wealth of the world's poorest countries into basket case situations. Unfortunately for Greece, it current falls foul of this basic criteria.

As such the IMF should technically force a default here is Greece fails to pay. That means the EU will have to find the money to pay the IMF at the end of the week. They will do this via the ECB and possibly by the European Stability Mechanism which was sort of designed to enforce the will of Eurofudge.

I don't know whether the Greek plan is in fact new or just the latest in the bizarre rantings of the mental communists the Greeks elected to run their show.

I guess we will find out today whether the mother of all Euro Fudge is being baked or if even the EU Commission has lost its power over Germany and the will of the majority of EU citizens to stop throwing good money after bad.

Greece: Acropolypse now

This must be the 50th piece I have written on Greece, but I do find the story so interesting. For so many years I thought it would be Spain that blew up the Euro; it just seemed so obvious, the housing bubble, corrupt Government, total lack of balance in the economy. As it turns out Spain for a while made austerity sort of work.

It won't in the long term and if Podemos get near power then we can expect a Greek re-run next year (just in time for our referendum - better than a present from Santa!).

But Greece has beaten even the Spanish to it. World class tax evasion and Governmental corruption has seen them lead the field. Allied with a intransigence on behalf of Germany to admit even slightly that their mercantilist policies might have something to do with the crisis in Southern Europe and hey presto, Grexit.

For a long time there was to be Euro-fudge. The Euro could not be allowed to collapse, as in 2008, Politics would trump economics. But the IMF have walked now, the Syriza poly of thinking the lenders will come back to the table is in jeopardy (I say Jeopardy because funny things can yet happen at the 11th hour).

More intriguing is now the talk is of Greece defaulting within the Euro. This is a brilliant idea; currency union has failed so let's wipe the slate clean and stay in the same currency union.

Amazing piece of double-think and only in truth allowed because it will save The ECB's arse on the losses in Target Two funds if they all stay denominated in Euro's.

Gotta love the Euro leaders too, saying how terrible and awful it will be for Greece and how they won't be able to fund rescue help. This is first order bullying bollocks by the Euro leaders, showing perhaps they are more scared than they are letting on - an inkling that perhaps Syriza will get their concessions at the eleventh hour?

Does Madame Merkel Give Happy Endings?

- or is she just slicing Tsipras' salami?

Happy endings when I say so

Some years ago I found myself in mortal conflict with my employer: a big company so, an unequal contest, it might be thought.  But no.  They devoted a small percentage of the time of one bored HR director (and an even smaller % of a lawyer) to the fray; whereas I was on it 24/7, with 110% motivation.  Everything worked out just nicely.  That's the way some things go.

Other times, though, the big guys are implacable - and patient.

Amid calls for "happy endings", it seems our champion has taken up the can-kicking challenge once more, and given the Greeks another toe-poke along the road.  The next bit of wedge in return for the first of the big reforms: a simple formula.

Painful

And since the Greeks' calendar of repayment dates is a lot longer than the list of reforms, we can see where this one might be going.

That's the trouble with the EC types: they just don't go away, and they reckon history is on their side.  They may be as wrong about that as the Soviets were: but Tsipras won't be able to hold his breath long enough to find out.

 
Happy ending?  We may have to wait a bit to find out.  Ah, but can she kick the can out beyond 2017 ..?

ND

Grexit looms into view

RBS puts Grexit at 20% risk after today.

I think in reality this is much higher now. The offer from the IMF/EU is simply not what Syriza can stand in Parliament or get passed. As such a bill will either fail or lead to new elections.

How can Greece organise elections and still make around €3.2 billion of payments by the middle of July is beyond me.
I really hope Syriza go for it and have elections, then campaign to leave the Euro as a last chance to convince the EU to take their democratic (if not fiscal) claims seriously.

With each passing day it appears that the classic Euro-fudge is off the menu - the Germans just won't wear it and the IMF has an eye on other debtors globally and can't be seen to let an EU country escape its grasp due to special pleading.

Developing and Interesting.

Those immigrants pooring onto the Greek Islands are making a lot less progress than they think they are!

Waiting for Greece to be or not to be

An interesting week watching what will happen in Greece. As ever, the markets move as if it will all be completed in a late-night stitch up on Thursday. All will be well in time for Saturday and the US has chipped in to say don't drop the ball and cause a crisis (irony alert - Lehman Brothers).

Meanwhile, perhaps for domestic consumption, the current Greek PM claims that all is not well and the international community are being big meanies -

 "the obsession of some institutional representatives who insist on unreasonable solutions and are being indifferent to the democratic result of recent Greek elections"

So says Tsipras, but who knows what he really means. What we do know is that the group of international lenders are being intransigent. There is no reasonable way that Greece could ever get its public debt back in order without a large write-off. For political reasons, the Germans don't want that to set a bad example for others. Also, as much as the Greeks hate the Troika they don't want to leave the teat of the EU.

The Greek Government was elected on a populist lie, a fine tradition in the failure of Greek politics, which it cannot deliver.

So either we will get -

- Greece forced by the EU and IMF to concede to endless Austerity. With no choice Tsipras and his Government will have to whip up severe anti-foreigner nationalism to try to dissemble away from reality.

- Greece not agreeing, as Tsipras finally gets the EU cares not one jot for Democracy - a messy Grexit ensues but of course Greece defaults and in 5 years will be a much better place that it is now.

On we go, tick, tock.

The Euro strangle hold continues for Greece

I very much doubt, whatever they thought previously, that the new Finance Minister and Prime Minister of Greece knew what they were getting into.

After a week of 'negotiations' with their European paymasters, they are now scrabbling around trying to find a way of remaining in the Euro and indeed, remaining in the bailout programme that they were elected to leave.

This is not a happy situation for Syriza and you would have to have a heart of stone not to laugh at the uselessness of the polemic negotiation style which ended up cutting no ice with the Germans.

So now, very desperately, they are reduced to trying to find ways of re-naming the 'Troika' to try and pretend it is something else - typical left-wring approach, same as we have here in the UK with numerous elements of political correctness, where language alteration is used as cover for power and control.

The sad element is that really, the Greeks have more power than they realise. The future of a happy Greek people lies outside of the Euro. Even Germany has really acknowledged this by making it clear Greece can leave. Not an easy decision for the Euro's foundation stone member, but for last week to have happened and to have had such an effect on Syriza, the conversations were clearly very blunt.

The worst outcome will be for a muddle-through solution that allows Greece to remain in the Euro whilst it continues to be consumed by its outlandish and growing debts. These communists, never quite a strong as they like to pretend they are. Real leaders in Greece would walk away from the German terms.

Greece; Decline and Fall

This picture in no way looks to me as if the Greeks will shortly be accessing Russian funds

It was all looking so optimistic last week, Greece's new unsuited finance minister came to London and the European Capitals with a plan to reduce Greece's payments and also to get back some money from the ECB which it had made buying Greek bonds.

All sounded so good until he went to Germany. The German Minister, Wolfgang Schauble, was not happy at the idea of further Greek reduction and an end to the Troika policy. He was open to relaxing some of the terms and coming to a deal, but only with the ECB/IMF remaining in charge or Greek finance.

However, it has all deteriorated quite rapidly in the past few days. The ECB has restricted funding to Greek Banks and the Prime Minister in Greece, Alex Tsipras has gone on record to end austerity and co-operation with the Troika agreement.

This, in the colloquial, is squeaky bum time.

It is going to be interesting to see what happens from here. My hunch has been that the QE from the ECB was a quid pro quo deal to allow Germany to force Greece out of the Eurozone. This is a big deal for the EU though as it make the Euro an exclusive rather than inclusive club- completely against the political grain of the EU.

The markets won't like it either and it will do nothing for the Eurozone's weak growth but in the long-term it is the right way forward for all parties.

Who asked the ECB to kill Greece?

Why is the world so dominated by Central Banks?

It is a strange phenomenen that we live in the West in 'deomcracies' but virtually every country has a central bank. The key for all central banks is that they are private- they are not state owned nor even state managed. This is a legacy from their establishment by the Rothschilds and other wealthy families a couple of centuries ago when money was desperately needed to fight wars (these families never founded the banks, but they rather helpfully at the ime put up all the money!).

Countries with independent central banks are generally held to be more stable in the international political economy. The Banks act as a buffer against populist or crazed politicians.

However, this means they can also do things that are themselves risky and there is little oversight. The Federal Reserve in the US decided to expand its balance sheet by $5 trillion during the 2008/9 crisis - five times what Congress approved on the 'bailout' which was the main political discussion at the time.

Just today we can see the effects of central bank. Greece has been making conciliatory noises for the past week about debt restructuring and playing nicely with the EU and Germans, despite Syriza sweeping to power.

In London the new finance minister got a good reception, less good in Germany but they did hear him out. Yet today he has met with Mario Draghi at the European Central Bank. Things have not gone well, straight after the meeting the ECB has withdrawn the right to use Greek bonds as collateral for Greek Banks which has meant a 300% increase in their borrowing costs.

Clearly, Draghi is sending a message that the Greeks need to negotiate in good faith with the ECB and EU.

But who elected Draghi? Why should the ECB be allowed to take actions that are not sanctioned by the Euro nations?

Central banks, although independent are situated in a Country. It is hard to imagine the Bank of England really acting against the best interests of the UK economy - of course, we know it makes makes mistakes the whole time, but there is no intent here, just incompetence.

The ECB is a more dangerous institution, it is not beholden to anyone or anything and yet is the most powerful institution in the EU. How powerful and monomaniacal we will find out in the next few months as the new Greek debt crisis unfolds.

Tsipras gives a big hint of the stitch up on Day 2

"We don't want to go to mutually assured destruction [with the eurozone] but we won't continue being subservient"

So already of the Greek nightmare and already the enormity of the situation facing the Syriza Government has dawned on its hapless leader, Alex Tsipras. Greece won't default on its debts nor exit the Eurozone....but nor will it be subservient according to reports of his first cabinet meeting.

If I was a more cynical person I would think this is all a set up.

Last week The ECB announced QE, €60 billion a month of Government bonds to be bought. Then Syriza is elected and now they are already moving towards just asking for a bit of debt forgiveness to placate the populace.

The QE until July will push $240 billion of debt onto the ECB balance sheet - the holdings of Greek debt by Eurozone countries are, err, $240 billion. What a strange co-incidence!

It is almost as if Merkel has stitched up to accept QE in exchange for only forgiving Greece say 30% of its debt and it continuing in the Euro. This 30% will allow for a little more spending to keep Tsipras happy.

Life is good in the democratic Eurozone. Less so for Greek people trapped in the Euro nightmare perhaps, but hey, they are only little people after all?

Will this dastardly plan work...

 ....There's many a slip 'twixt the cup and the lip

Syriza - The New Archanians

 

Back when Greece was great, busy inventing democracy and defeating the Persians it also did a good line in Comedy. Indeed, Greeks, as with much in Western history, invented modern comedy. The greatest exponent of the original art was Aristophanes.

The news that Syriza have won with 36% the Greek election reminds me of one of these plays. Notably 'The Archanians', in this play the hero is trapped for a long-period. Most of the Athenians do not want peace from the war with Sparta, but the hero, Dikaiopolis manages to negotiate a private treaty to end the war and sets up a market to supply the rest of the Greek cities.

In this way today, Alexander Tspiras, must continue. He knows that Europe and the IMF cannot really bend to his desires. That way lies a compromise with Italy and even France, which cannot be afforded, even if a compromise with Greece could.

So instead he will ask and be refused. A messy compromise is the best he can really hope for. Somehow, in their desperation the Greeks have believed in the magic money tree rhetoric of the left - but without really appreciating the truth.

The only way out for Greece is to leave the Euro but even Tspiras will be very reluctant to take the path he has always denied he wanted.

It will be a busy few weeks, but there will be some comedy along the way from all sides before the final curtain.

One week left for the Euro?

It was interesting to see the currency traders panic last week when the Swiss National Bank suddenly decided to end its policy of shadowing the Euro for the Swiss Franc (CHF). A net +30% revaluation was not a trade to be on the wrong side of - which of course the Swiss National Bank was.

Noticeable for me too was the supposed surprise of the move and the lack of understanding of why the Bank had given up the peg so suddenly. There was some thoughts of it getting to expensive to maintain.

But the reality is twofold. There is imminent Quantitative Easing for Euroland being loaded up. €550 billion euro's of it in theory. This will push down the value of the Euro (so beware a UK Sterling appreciation event on a smaller, but similar path to the CHF). Whay hang around with a a peg when your neighbours are about to ruin you. The SNB made the sane choice.

However, the second issue is the more important one, albeit related. Syriza are very likely to be in Power in Greece in one weeks time from now. It is even possible that they will have an outright majority.

Their, leader Alex Tsiparas, has declared that his policy is to negotiate a huge debt write down for Greece and to end the Troika imposed austerity that has so ruined the Country. Either Greece or Germany will win, even a compromise will be a victory for Greece really.

Syriza are maintaining that they do no want Greece to leave the Eurozone, however it is highly likely that Germany will try to force this through. otherwise the principles of sound money, if there is such a thing, are for the birds as far as the Euro is concerned.

To me, it is clear that the QE that is being revved up is being put in place to help manage the euro crisis that will out in a better manner than was possible in 2011. Back then the whole continent was plunged into a terrible crisis which could have wrecked many of its economies. This time it seems better preparations are being put in place. It will still be a roller-coaster rise no doubt.

As for poor Greece, there is no good end to the story. Tsiparas will be deeply unpopular if he leads Greece back to the drachma as this will entail the savings of the Country being wiped out entirely. Neither will be be popular if he negotiates only a partial deal with Europe that still leaves Greece with an untenable debt burden. So, as with most radicals, he will be forced to become centrist or mad. My bet would be on centrist which will come as a shock to many of his followers.

Self-igniting euro collapse?

Loving this article from the peerless FT Alphaville today. over the sumemr lots of US companies have been thinkin about what to do to sustain their business if greece falls out of the euro. Bank of America is looking at a fleet of trucks to ship in cash from abroad (how advertising this to potential brigands is sesnisble is beyond me).

My reaction to this is that we are witnessing the further build up of the Euro crisis. bad enough is the Eurozone's inept performance at managing the crisis. Still every day senior German minister's gon on and on about not saving Greece. This forms the basis f the plot re Grexit to whcih private actors then work to.

By withdrawing all money from Greek bank accounts the Country is forced closer to bankruptcy - so the rhetoric in the media has a causal effect on Bank share prices and others in Greece.

In one weeks time is the meeting of the Trioka in Greece. After a summer lull, all the talk of eurozone collapse will return to provide and indian summer of hot air for the autumn.

What if anything can stop this cycle? I doubt myself it is possible, but when politicians are involved it maybe there is a massive printing of money or some other kind of mega-collapse that will allow Greece to continue in the Eurozone. the price for exit is a disaster of 2008 proportions, only this time piling into a much weaker Eurozone economy.

Friday - What will the weekend bring?

Above is the YTD FTSE graph, poor reading it makes. This month has bee an unmitigated disaster though in particular. After an OK start to the year it has all gone pear shaped. In an exact re run of 2011, oddly enough - albeit for different reasons.

With the endless euro-mess there has been a move out of equities into safe haven bonds - quite irrational when you think those bonds are of UK and Germany in part both of whom will get wiped out in a major euro collapse as their Banks fail. Hey ho.

What intrigues me at the moment is the euro-denouement re Greece is approaching. Probably it won't be this weekend. However, it will be a weekend as it always is. the markets are closed and Governments can conspire against us (or maybe even for us?) freely.

Then one Monday in the next 6 weeks Greece will be in or out of the euro and a huge liquidity stream from the Central banks will be with us. It's quite likely there will be a strong equity rally after this for some time, until again people realise the problem is not fixed but has been kicked down the road again.

In the meantime, my equity portfolio is destroyed, again.

The dangerous power of political lies

When I started this blog in 2006, one of the main drivers was to discuss the intersection of business and politics. With hindsight, in the midst of a leveraged fulled boom and several years of stable Labour government in the UK, this was not a topic high on many peoples' agendas.

How much has changed since, here we are 6 years later and there is a visceral fight to the death between politicians and the markets. In Europe, populist politicians, ignorant of anything economic, have led a campaign of 'anti-austerity'. As if there is some kind of valid choice. Of course, the people are also not well informed and it is part of human nature to hope there is a better answer to all life's challenges - the cancer can be cured, the relationship saved, the house afforded etc.

But now to peddle this fantasy is a dangerous lie. There is a simple choice, repay debts or default. Promising instead 'Growth' is a nonsense. Governments cannot create growth, only can they create the environment for it. Of course, this does nto stop Governments trying, which is why the size of the state rises inexorably across European countries as Governments try to deliver on their impossible promises.

The limits of this attempt have now been discovered. Vast monies have been spent on welfare states with 50% of GDP coming from Governments who at most raise 40% in taxes. No more can this be sustained without the reductions in Government spending. This is of course very painful for the populations.

The alternative though is default and Euro exit, not some dreamland 'third way.' Thus this promise of an end to austerity is the worst kind of fantasy - lying to gain votes and then potentially tipping countries into an economic darkness for which they are unprepared. Here sits the Greek Party Syriza. Europe has a history of this, the last great depression of the 1930's also led to populist, nationalist, socialist governments to come to power. Promising people an economic fairy tale they could not deliver on.

The collapse in Greece is however, sadly, to be expected. Too far gone are the debt dynamics to save Greece and too incompetent the Government structures to be trusted with another bailout (but, yet it may come in one scenario).

With all this populist outrage across the channel, the UK has its own promoters too. The siren calls of the Labour party and its Union masters mimic the same tune - no cuts! no austerity! nothing to change! tax the rich! create growth with greater debt!

For many people, this is the nirvana mix in the current economic dark days. Why should we have worse schools, hospitals etc, why can't things be different?

Yet of course, Labour have no alternative, no different policy. Darling's predictions pre-election 2010 and Osborne's response have been similar to within a few percentage points. So this outrage is entirely manufactured - the job of opposition, perhaps one might say with a shrug of the shoulders.

The Tories for their part, with the Lib Dems, have a terrible hand to play and are doing an average job - when we needed an excellent Government. But even so, the damage caused by Labour lies is telling. The people believe in wishful fantasy alternative, not aware that Britain and Greece share many of the same, frightening, economic statistics. Only the Pound and the Printing presses (and the City, able to secure money for its host nation whilst turning a blind eye in a way that Eurozone states could not expect) keep the UK relatively afloat.

So finally, the Great Lie; The Euro. A political project without economic merit, which has sunk the periphery nations of Europe and enriched Germany and the northern states. A credible plan to end the currency area over a 2 year period is needed. The markets and economics cry out for this. Instead, Politicians proceed as if this is impossible - when even now discussing kicking out Greece. A Grexit will lead to a run on Portugal and Spain - so bad is this end that another bailout would be much cheaper. The lie though must continue, Europe is a single currency area and countries and adjust internally, even whilst demand collapses. A complete fantasy - but an acceptable one. Greeks still want Euro's, even after the tragedy it has inflicted on the Country - there we have it in pure essence, the power of political lies.