Tuesday, 9 November 2010

Eurozone problems & political lies

There is an historic cultural difference between Dr Frau Merkel and the other so called political leaders of the free world, she believes in sound money! The Germans saw their currency trashed twice within a generation in 1928 and 1945 and they don't want it to happen a third time. Hence the Germans deep mistrust of the ECB and their desire to have the Mark back with the BU running monetary policy.

Debasing the currency has been the easy fix for politicians in economic trouble since the days of Julius Caesar. The current exponents are Ben Bernanke at the Fed and Mervyn King at the BoE. Both these so called independent central banks are of course acting as the poodles of their political masters Obama and Dave and have invented a wonderful new term redolent of laxatives for the process, Quantitative Easing. The good old Bundesbank was a rarity, a genuinely independent central bank.

I well remember when we were kicked out of the ERM, a great result for the UK, John and Norma went to the then German Chancellor Kohl and asked him to commit German reserves to support Sterling against the speculators. Kohl told them this was not in his power. Only the Bundesbank governor Otto Pohl could make this decision. Pohl said No. The UK left the ERM and the UK recovery started.

Interestingly Herr Pohl, retired from the Bundesbank, has recently been opining on the Greek debt problem click here to read a great article. The upright Herr Pohl makes the point that Greece can never recover without a huge 'restructuring' of their debt and leaving the Euro. Herr Pohl dislikes the Euro and the whole EU.  Even worse he makes the point that the EU bail out of Greece organised by the three French Musketeers, Sarkozy, Trichet and Strauss Kahn was to save French banks from huge losses on their holdings of Greek debt if the correct, Pohl endorsed, policy of a Greek default had been followed. No wonder Merkel is furious. If her voters realise how they have been conned she is toast! One could say the same thing about Farage and UKIP voters but love is blind as they say.

The other debased currency is that of political debate. Mr Woolas has been found guilty by an electoral court of telling misleading lies during the election. The Labour political class are in open rebellion against poor Hattie who suspended Phil from the Labour party on the grounds that this sort of thing, punishing lies, might be catching. Sacre Bleu, it might even spread to UKIP currently holed up in the Brussels bunker.

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