Sunday, 6 June 2010

End of the Euro is nigh and Obama shoots himself in foot

The Sunday Telegraph business section, page one, lead story, "Euro will be dead in five years". This is the result of a survey of the Telegraph's 25 'top' economists. Well some of them are OK but others are slightly dodgy. The voting was 12 for the Euro's demise and 8 for its survival over the next 5 years with 5 sitting on the fence, the two handed economist's lotus position. Of the 8 seeing the Euro survive two opined this would require losing at least one of its members to a default on its debt. This will be spun euphemistically as a debt restructuring but the bottom line is for every 100€ of debt you hold you will get back around 50€ eventually!

Four of these experts opine Germany is the country most likely to leave as they will not go on subsidising the PIGS bloated public sector. Would that our government took the same view on our EU contributions! Tim Congdon expects most of the PIGS to leave the Euro with a split between France and Germany the Euro's death knell. I hope they are right. I can remember when 364 economists, including the now Governor of the Bank of England, wrote a letter to the Times saying the Thatcher Howe 81 budget would lead to economic disaster. They were all wrong but few had the grace to admit they were wrong and the lady was right. In short, I do not place much faith in economist' predictions. Better to read your horoscope on the back pages.

In South Korea the G20 met and decided not to proceed with a global banking levy so countries can introduce their own bank regulation reforms. Let us hope we do and do not get dragooned into one of Barroso's idiotic 'European' plans. Look at the mess Portugal is in right now. Do you want a Portuguese regulating our banks?

The problem with politicians like Barroso and Obama is that they cannot see past their short term political interest and believe their own rhetoric. I am old enough to remember the last great white hope of US politics, Jack Kennedy. Until Obama he was the most disastrous US President in my lifetime. He almost got us into a nuclear war over Cuba and got the US into the Vietnam war, their worst ever defeat. An unwinnable war just like Afghanistan.

One might describe Obama as the great black hope but like Kennedy his family has a hatred of the UK based on long past conflicts in Ireland and Kenya. The best presidents have always been unprincipled pragmatists like Nixon and Clinton.

Louisiana governor Bobby Jindal is such a man. He is currently making huge political capital out of criticising Obama and BP whom he invariably describes as idiotic. He was quoted on the radio this morning as demanding Obama's ban on off shore deep water drilling be reversed because of the dire effect it would have on the Louisiana economy with job losses of 10,000 in the next 6 months. Well Mr President who is going to want to drill there anyway given your ass kicking performance with BP. Oil drilling rigs will float away to Brazil and South Africa and leaving embittered unemployed oil workers in Louisiana. Worse for Obama, Mr Jindal, a 38 year old son of Indian immigrants, has ambitions to run against him in 2012. Jindal has already extracted 350 million dollars from BP to build the 5 sand barrier islands to protect the Louisiana coast. Obama achievements to date, ehh nil. A man to be reckoned with I think Mr President and coloured to boot.

No comments: