Interesting Times for the Labour Party

Intruding on private grief is a disgraceful thing, I know ...

But.

What times for Labour, eh?  SNP, UKIP and even the Wicked Tories taking all their best lines as well as their votes;  nobody paying them the slightest attention;  Harriet Harman splitting them with her New Realist strictures;  Jeremy Corbyn steaming up on the left;  little Owen Jones floating the idea of supporting 'Out' at the euro-referendum.  

And the achingly glamorous, oh-so-tempting possibility of becoming the British (English?) wing of a pan-european anti-austerity movement !  With real street-fighting !

Can they resist it ?  One thing's for sure: all the leadership candidates except that nice Liz Kendall will be trying to keep the LabSyriPodemos option open.  What else have they got for 2020?

ND 

PS: errr ... so, would that be 'In' or 'Out ' - ?  Decisions, decisions

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.

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.

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.