Tuesday, 16 March 2010

EU on Greek bailout and UK budget deficit

The EU policy on the mythical Greek bailout is allegedly one of constructive ambiguity i.e. long on rhetoric and short on fact. The EU finance ministers are in charge of the former department and their position is we have a cunning plan but its so secret we can't tell you, a sort of dumbed down version of Blackadder's Baldrick.

Meanwhile, safely back home in the Fatherland, German finance minister Wolfgang Schaube denied Berlin had signed off on a Greek rescue deal!

The details of the proposed deal cureently owned by the 'experts' are scant. The French talk of an EU bond debt guarantee or purchases of Greek debt conveniently by German agencies like KfW and even France's Caisse des deposits. French money market funds used to be only allowed to purchase French debt. Has something changed or are the experts being economical with the actualite?

All this does not stop the EU for criticising our dear leader Comrade Brown for his little contribution to constructive ambiguity. We will cut government spending but not just yet, St Augustine Brown, and we cant tell you where we will make cuts as it might panic the voters into voting for OEDC. The Tories and Liberals are also of course contributing their little bit to constructive ambiguity. Its what passes for political debate especially when larded with meaningless phrases like 'difficult decisions', 'tough choices'. When you crack the political code these phrases become, 'We are going to take a lot more of your money in tax'. Whatever happened to 'hard working families'? Are they all now on the dole?

The EU is right to point out that Comrade Darling Brown's plans to cut the budget deficit are predicated on some very optimistic growth assumptions and at best our deficit will be down to 4.6% by 2014 whereas the German regime prescribed by the EU for Greeece will cut their deficit to 3% by 2012! Three percent is the magical figure enshrined in the EU growth and stability pact so the Greeks have to be predicted to end up there in 2 years time. It reminds me how the Bank of England's inflation fan chart was always nailed down at the target two years out. If not heads would have rolled. It's a variant of they would to say that wouldn't they.

I wrote on Sunday warning that today's EU finance minister's meeting to regulate the hedge funds had some very nasty implications for the London City establishment and predicted views would change. Well surprise, surprise today it was announced that the item had dropped off the agenda to give time to 'seek further consensus'. Real tough decisions are too tough for our politicians!

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