Wednesday, 31 March 2010

Greek bond sold 30th March, political economics rules OK

Yesterday it was triumphantly announced that Greece successfully sold a €5bn, 7 year with a coupon of 5.9%. Well if you are happy to pay 3.25% more than the Germans pay for a similar tenor bond! The Greeks need €23bn by end of May so that will need another 3 offerings by then. They need €53 bn in total by end 2010 which is a bit more than one a month till year end. I hope the market has a good appetite for moussaka, there is plenty coming their way.

More interesting is the banks chosen to place the bond, a lucrative bonus enhancing process for bankers. Goldman Sachs were noticeably absent from the chosen few. French banks, especially those with Greek subsidiaries were well represented. This was seen as a reward for M Sarkozy's helpful attitude last week to the Greek problem. These banks of course did not use their own money but those of their clients French pension funds and the like from whom the bond can be borrowed by their friendly banks for a very small fee.

The real help to the Greeks came not from M Sarkozy, but as I noted in a previous blog from M Trichet, Governor of the ECB who helpfully said the ECB would continue to take Greek bonds in their open market repo operations even if these bonds were down graded by the nasty Anglo Saxon credit rating agencies. Under its own rules the ECB should not accept non-investment grade bonds as repo collateral but of course in Euroland rules can be waived to help a friend.

The FT today put it rather well today, I quote,

"Market-watchers said that last week's decision by the ECB to keep existing rules on collateral beyond 2010 was just as important as the EU package because it ended fears among investors that Greek banks would no longer be able to borrow from the ECB in exchange for Greek government bonds."

This is a hidden subsidy to the holders of Greek debt because of the steepness of their yield curve. An accredited Euroland bank with a Greek bond can use it as collateral to borrow Euros from the ECB at their policy rate, currently 1%, in their repo refinancing operations. The amount loaned should be the dirty market value of the bond less a safety margin that depends on the tenor of the bond but at 7 to 10 years would typically be 2% to 3%. When the repo ends the bank repays to the ECB the loan plus interest calculated pro rata at 1%p.a. The bank then has its bond back plus the coupon interest accrued at say 6%. So Greek bank makes almost 5% on the deal. Its a great money making exercise.

The snag is in the weasel words market value. There is not a real market in these bonds so how do you get a market value to calculate the loan amount. That is a problem some poor sod in the ECB will be sweating over right now under considerable political pressure. The risk is if the Greek government defaults on its debt when the bond's value takes a big hit. Before it gets to this stage the ECB should have called for variation margin but that depends again on having a market price - Nick Leason gave a good explanation of how this process should work in the Barings Bank film.

Who ends up with the loss? The ECB should demand the amount loaned back and if the bank cannot pay then the ECB will sell the bond for what it can get in the market, probably not a lot as they say. So we end up with bust Greek banks, an overall rise in Euroland interest rates, a fall in the Euro plus a hole in the ECB balance sheet that, yes you've guessed it, the Germans will have to fill.

Monday, 29 March 2010

Greek rescue package is not what it says on the packet

At international conferences to 'resolve' tricky problems the press communique is written and agreed before any substantive discussion takes place. Such communiques are written as vague, opaque, unverifiable wishful thinking to please all parties a bit like Gord's latest five pledges. What was actually said and agreed therefore emerges in the days after the meeting ends. Thus today's piece by AEP in the business DT headlined, "Europe's summit deal was a package to rescue Germany, not Greece"

Dr Frau Merkel triumphed and there will be no EU debt union while she runs Germany good for us. Frankfurter Allegmaine's verdict on the 'deal' was "No member of the Europe's monetary union should be liable for the debts of another state. Bilateral credit from Berlin for Athens is not the same as Germany accepting responsibility for Greek debt" ie there will be no fiscal union. Aid to Greece from Germany will have to go via the IMF to avoid German constitutional court problems.

Dr Frau Merkel has much more in common with Mrs Thatcher than just their sex. Both trained as scientists, Thatcher as a chemist and Merkel as a mathematical physicist. Thatcher was a pretty run of the mill science graduate but Merkel went on to a PhD in a tough subject. Both however are driven by facts and observation not emotion, a very good thing in a politician!

JC Trichet and the ECB's future development is limited by the Dr Frau. Nevertheless the ECB say they will continue to take Greek debt as collateral in their Repo liquidity providing operations but if no one else wants Greek bonds then there will be technical problems as to how to margin such debt in which there is no other market. The ECB has currently lent a reported €59.8 bn to Greece. I opine this will have been entirely secured on Greek paper.

It leaves the Greeks still in the same pickle. They urgently need to sell more of their debt to cover bonds coming up for redemption. This means going to the market for funds and that is always the acid test of one's credit worthiness. Shades of Northern Rock, Greek banks have lost €8,4 bn of deposits since December. No wonder the Greek finance minister Papaconstantinou is not hurrying to the market. The will have to offer a very high coupon to sell their paper, more than twice what the Germans are paying. Their increased interest bill since the crisis began has already eaten up all their politically hard earned savings from public sector cuts.

The same is happening to the UK and will accelerate as the election approaches. Just as for Greece watch the Gilt Bund spread and the Sterling forex rate!

Friday, 26 March 2010

UK Universities took 117660 EU students last year that you paid for.

The Higher Education Statistics Agency published the above figure for the academic year 2008-09. In 2009 there were a total of 588689 students applied for places on UK undergraduate courses of which more than 100000 failed to get a place. Well that's clear we are giving places to EU nationals which we, the British tax payer pay for, with subsidies and cheap loans and these foreign students are taking our children's places. For goodness sake can Farage's UKIP not make any political capital out of this 6 weeks before a General Election? Well no it seems. They are completely hopeless. Do they not realise there is a lot of potential votes in this for UKIP!
100,000 disappointed UK students plus their parents this year and if you add in next year's worried 500000 then its a very big number.

The Cabal is just not interested. I'm all right Jack on my €1 mn plus for the next 4 years is what they say. Let them grandstand in a powerless EU assembly and on TV, gratify their ego and make UKIP a laughing stock. Their EU paid sycophants spend their time attacking people like me for telling the truth about the EU rather than attacking the EU for its lies! The EU pays the piper and calls the tune.

The problem is getting worse. This year student applications from Lithuania and Latvia have more than doubled while Romania applications are up by more than 70%. How on earth does HMT think they are going to get our subsidised loans back from these people at the end of their course? And by the way all these students from poor countries will be seeking work whilst in the UK displacing our own poor people. It is sheer lunacy. If the LibLabCons want efficiency savings I suggest they start with this idiocy. We are being taken advantage of big time but worse than that we are denying our own children their birthright of a decent University education. Which other EU country does this? None!

These EU foreigners got more than 5000 places last year at our very best Universities, the Russell Group, that includes Oxford and Cambridge. If you add in the non-EU students you can comfortably double that figure to 10000. There is roughly 20 Russell group universities so that is an average 500 students foreign undergraduates at each. From personal experience I am sure there are proportionately more at Oxford and Cambridge and in expensive high value courses like Medicine and high added value courses like Law.

A UK headmaster who now works as a 'consultant' in Vienna points out these EU students are being admitted on merit to Russell group universities. Well he would say that wouldn't he! He is getting paid to get them in and we have to pay to keep them!


More EU Greek fudge and EU control

Europe agrees rescue package for Greece bleats the BBC this morning. Well not quite, the IMF are to be crucially involved but as always the press are long on rhetoric and vanishingly small on what exactly is proposed. The IMF will only disgorge the funds if it is running the show and there will have to be EU funds as well to get up to the €30 bn Greece needs in the next six months to stave off bankruptcy. It is also trailed as a last resort or as the Dr Frau put it a cold corpse job.

The attractive thing to EU politicians about having the IMF involved is when the Greek public sector unions revolt and strike over the austerity cuts effect on their members the nasty Anglo Saxon IMF can be blamed not them. The IMF know this so it will be interesting to see how they handle this to protect there good reputation. The IMF only deals with individual sovereign states so will it gratify the Eurofanatics dreams and treat the EU as a single state? I think not.

The unattractive angle is that it shows that the ECB cannot put its own house in order. JC Trichet, governor of the ECB is quoted as saying it was "a very,very bad idea" to let the IMF into the Eurozone. The IMF as I wrote yesterday will come in and kick ass and the first bum to be kicked will be JCT's!

The big unknown is how the Chinese will react. They have large holdings of Euro denominated debt and are understandably unhappy about the Euro's steady decline. Their central bank deputy governor, Zhu Min, said yesterday, "Greece is only one case but its only the tip of the iceberg. The main concern today is obviously Spain and Italy". Just what the Eurocrats did not want to hear.

There will be lots of hot air from Brussels but if you want to know how things are going watch the markets, the Euro Dollar rate and the PIGS credit spreads will tell the truth.

You have to admire the French they really know how to capitalise on a cock up, make a bigger one! So now they are bidding to draw up a single economic government to police financial policy across the EU - that includes us by the way. Its another power grab to go along with pushing aside the pathetic former PCT chair Baroness Ashton so the French can run EU diplomacy and have a French run EU army to back it up. The spirit of Napoleon is alive and well in the Quai d'Orsay. This will all require another Treaty. Lisbon was billed as the last Treaty needed. A lie like the Great War was billed as the war to end wars!

Click below to see my podcast


Thursday, 25 March 2010

Emergency EU meeting today

France and Spain have today convened a 'What shall we do about Greece meeting' for all EU member heads of government including our Gord. Yesterday the Eurozone group had a meeting to discuss the same topic where the German policy position was to 'wait until the corpse is cold' before doing anything. A Dr Frankenstein approach from Dr Frau Merkel who does not wish to become embroiled with the German Constitutional Court or antagonise her allies in the Bundestag who do not want to see their hard earned Euros handed over to these deceitful idle Greeks. Game, set and match to the Dr Frau is how Frankfurter Allgemaine, the German business paper described it.

The EUcrats are full of helpful suggestions to get round EU rules but unfortunately its the Germans who have the money! Meanwhile out in the markets the Euro continues to fall to a 10 month low against the US devil's dollar and Portugal, the country that put the P in PIGS, has suffered a Fitch credit downgrade to AA-. An idiotic board member of the ECB said recourse to the IMF would take Europe down a perilous path. Presumably he means it would lead to financial probity! Perilous indeed for the Eurocrat producers of Euro fudge.

Mr Constancio, another brilliant mind at the ECB said loans for Greece would not amount to a rescue in EU speak. Credit is not a bail out he then added. So what is it if not a bail out? The German commercial bankers are appalled but that's what happens when you put a load of dodgy mid Europeans in charge of the ECB.

Fear not Eurocrats we are sending you Gord, the man who saved the world single handed. Just make sure there is a vacant empty telephone box for him to change in and a clean pair of underpants. But can he save the EU from the IMF? I think not. The ass kickers will soon ride into town chewing gum and walking tall and boy there are lot of bums for them to kick!

Click for Eric's podcast

Wednesday, 24 March 2010

Why Politicians love the EU

Del Young suggested I write on this topic in the light of the Byers, Hewitt & Hoon scandal, all taxi cabs for hire at £5k per day. Of one thing I am certain, lobbying at Westminster is a cottage industry compared to what goes on at Brussels. Westminster is a beacon of transparency compared to the obfuscation of Brussels. Also, MEPs are not targeted by the sort of stings that C4 Dispatches and the Sunday Times mount regularly on MPs whose greed overcomes their limited intelligence. MPs have constituents, constituency parties with nasty chairmen who want answers whereas MEPs are simply numbers on a party list for a huge region and are answerable to no one. Its clearly a lot less hassle to be an MEP than an MP!

The money is also better and the expenses or allowances as Farage likes to call them are terrific and no need to produce receipts. That's only for little people! The EU controls these MEPs by massaging their huge egos and stuffing up their mouths with Euros. The EU reminds them which side their croissants are buttered on if they show any hint of forgetting. There is of course frequent junkets and jollies often called fact finding missions which the EU lays on for MEPs and their relatives. Some UKIP MEPs are particularly fond of EU funded fact finding provided it does not take them to the UK.

This was built into the EU from the days of the Common Market. Even when I was a student, in the mid 60s, aspiring young student politicos were offered expenses paid trips to see how Europe works. These are now European elder statesmen and kept sweet with Charlemagne prizes and their like. E Heath bought his yacht Morning Cleoud out of his prize money. Corruption, thy name is Brussels.

So there they sit in Brussels, well away from the prying eyes of nosey investigative journalists, protected and cosseted by the EU like the eunchs in the Sultan's harem, apart from the sexy French MEP ladies. Free to visit the pubs, restaurants, bordellos and gay clubs. A completely pointless and useless existence. As Tiny Rowland once said of his non-exec directors they serve the same function as the decorations on a Xmas tree. MEPs are purely decorative there to pretend to the poor citizens of the EU that it is democratic. Just as non-execs on the RBS board were useless in controlling the ego of Fred the Shred Goodwin so MEPs are useless at controlling Barosso and his executive eurocrats.

What the Taxigate scandal reminds us of yet again, although why anyone should need reminding, is that politicians put themselves first, then their party second and last and very least their country.

Click for podcast

Tuesday, 23 March 2010

Germans stole our gold reserves says Greek PM

As I opined previously, the great fraternal European Union is starting to crack. The scars of World War II are still there and reawakening as the master race once more rules in Europe. They killed 300000 Greeks and pinched their gold in the war says the Greek PM. Greece got off lightly compared to Russia and the Balkans. That is why the Germans have kept a low profile up till now and let the French delude themselves they run Europe. Economic power will out and now Germany has got its military wing back things will revert to the old order.

The Greek Deputy PM, Mr Pangalos, has accused the Germans of exploiting the latest crisis to benefit their industry by driving down the Euro. "As long as southern Europe is under fire and the Euro is falling the Germans can win massive exports to the rest of the world" says Mr P. He adds, "By speculating on Greek bonds and allowing credit institutions to take part in this squalid game some people are making money". That's the hidden hand of the market, beware Greeks bearing gifts.

The 10 year Greek bond to bund spread is now 338 basis points so Greek interest rates are now twice German rates. Don't laugh, it will be us next. Its a poker game. Greece threatens to go to the IMF and Frau Merkel wants to call his bluff. Well its cheaper than bailing them out, risks the great EU project but is the right policy for Europe and UKIP.

Monday, 22 March 2010

Beginning of the retreat for the EU superstate?

I think the EU may have just seen its Borodino or Stalingrad depending if you take Sarkozy or Merkel's view of history. It looks like the Germans have decided not to rescue the Greeks. The German voters wont wear it. They have had enough bailing out the bankrupt Prussia and Saxony. Their old time allies the Italians are now in one of their many reverse gears with the lira dropping that an IMF rescue will cost them less. The French of course would much rather someone else did the fighting and used their money so Greece will just have to go cap in hand to the IMF a hated Anglo Saxon institution set up by J M Keynes at Bretton Woods.

Eurogroup chairman Jean Paul Juncker said recourse to the IMF would shatter the credibility of monetary union. This crisis will force a radical rethink of the great EU project in the capitals of Europe. Its the moment of truth. Time for the French to break out the cheese. The long retreat from Moscow has begun.

Frau Merkel, in her latest speech to the Bundestag has announced that henceforth Germany would pursue its national interest and called for treaty changes to allow EMU rule breakers to be kicked out. The Bundesbank's Herr Sarrazin has said that if Greece cannot pay its bills then, "it should do what every other debtor has to do and file for insolvency. This would encourage the others". This means Greece defaults on her sovereign debt. A default bigger than the recent Russian and Argentinian defaults combined. The Russian debt default of 97 almost produced melt down in the banking sector. Now we have much weaker banks and a much bigger potential default! Its a huge potential catastrophe for the EU.

The maximum the IMF can lend Greece is €15bn which is not enough to get them through without swingeing cuts in public expenditure. Its not the Greek peoples fault but the fault lies with the ego driven European politicians. Remember, the great French hero and soldier crossed the Polish border into Russia with his Grande Armee of 500,000. Thanks to his military genius it staggered back 6 months later with 10,000. The Germans lost a similar number of men at Stalingrad. Merkel does not intend to repeat that mistake.

Sunday, 21 March 2010

British children lose top university places to EU foreigners

As a former University lecturer I have known for some time this was happening. The huge scale of the problem was brought home to me 4 years ago when my daughter went up to Oxford and found undergraduate courses with a surprising number of Johnny Foreigners both EU and non-EU. The Universities prefer non-EU students as they can charge them £20k plus on my daughters course as compared with £3.3k for EU students. Worse, although no University will admit it, money talks and non-EU students are getting in with lower grade offers.

But the price rationing effect means that the EU students who pay the same fees and get the same loans as UK students are far bigger sector of the Johnny Foreigner market. The Sunday Telegraph reports today that more than 5000 undergraduate places at the 20 most sought after UK universities went to non-UK EU students. Last year there were 5004 of these students compared with 3799 in 2006. These numbers will be heavily skewed towards Oxbridge who are very coy about how many non UK students are on their undergraduate courses. The repayment rate for British taxpayer underwritten loans to these EU students is poor with 35% non-performing as the banks say or to put it crudely Johnny Foreigner does a runner after graduating.

EU students also count towards the admissions cap imposed by the government so they are clearly taking places from native British students. How crazy can we be. We are discriminating against our own children! The same thing is going on in medical recruitment where UK born excellent doctors cannot get training posts as they have largely been given to foreigners. That is why my eldest daughter, Edinburgh medical school, FRCS in one year, has been forced to go and work in Australia!

Public school headmasters from the South of England are currently whingeing on about Edinburgh University discriminating in favour of Sottish and North of England students. They would do better to complain about places given to EU students. The cap on student numbers will create some interesting allies.

Because of the appalling UK state education system there is no doubt that EU students are better academically than UK students. The EU maths students I taught even spoke and wrote better English than our kids! But these are our Universities largely paid for by UK tax payers, even Oxford and Cambridge and autonomous or not the government has to make it clear to these institutions they are there to serve the needs of UK children not foreigners children. Charity begins at home.

Friday, 19 March 2010

Europes Greek rescue unravels

Thus reads the headline to AEP's piece in today's DT. He has some good quotes. Greece again threatening to go to the IMF. The Greek PM prefers a 'European solution' but knows it will be cheaper to go to the IMF and borrow at around 3.25%. I dont know why we don't do that. Well I do know, its the election.

A Silvio Peruzzi from RBS said the IMF solution is suicidal, "It completely undermines the credibility of monetary union. It would show that EMU is not viable because it lacks the fiscal means to absorb shocks. If they can't help out a small country like Greece its not worth going on with the project. Sacre Bleu! Treason!

Could it be that if the IMF do it the Italian share of the bill will be 3% and the US, Japs and Brits will cough up 28% under IMF rules. It will only cost the Germans 6% compared to the near 100% under the European solution. No wonder the Germans favour an IMF solution and it puts the IMF hard men in charge of, and blamed for, the painful Greek austerity plan.

So the great project suddenly looks shaky under pressure when the united states of Europe reverts to squabbling nation states. I remember a British diplomat saying about the EU that it will break up eventually because they all basically hate each other.

But this is only money. Just imagine if it were war. We have already seen what happens with German soldiers that can't go out at night without an escort in Afghanistan. If, God forbid, there is trouble in Europe where will the EU run to? That's right, big bad Anglo Saxon dominated NATO, the military IMF. This is not an enviable prospect. The alternative may a real Fourth Reich now the Prussians have got their industrial sector back.

As the UKIP conference is now over for a new take and want to see me in the flesh and hear my Scottish tones should click below for my new podcast


Thursday, 18 March 2010

EU fault lines are opening up

AEP wrote an excellent piece in today's DT which I quote from liberally. As I noted yesterday brinkmanship is now the name of the game in the Greek debt crisis. The Greek PM Papandreou told the Brussels press that he had not ruled out going to the IMF. As AEP says this would be viewed as treachery by top EU officials. The Greeks are becoming pissed off with the EU constructive ambiguity, do nothing, policy ,lots of rhetoric on European solutions but no cash or even any details. As one of Merkel's advisers, M Meister, Christian Democrat finance spokesman in the Bundestag, helpfully put it last night, "We have to think who has the instruments to push Greece to restore access to capital markets- nobody apart from the IMF." Merde, the hated Anglo Saxons.

Worse, there is a growing body of opinion in Germany, who after all will have to foot the bill, that IMF involvement would produce the cleanest solution and would be at above market rates, usually 100 over SDR, pour encourager les autres as M Sarkozy might say. This would also avoid breach of the EU's sacred no bail out clause.

Jean-Claude Juncker, Eurogroup chief is quoted by AEP as saying 'recourse to the IMF by any Eurozone state would shatter the credibility of monetary union. He then gives the real agenda away by saying, "If California had a refinancing problem the US would not go to the IMF". Exactly,the US is a state and M Juncker and the Eurocrats clearly see the EU as a state equivalent to the US. Let us hope the great British public realise this as well!

The Germans , with their super efficient manufacturing economy, are defying France and the IMF and sticking to their policy of an export led growth to get them out of their insignificant crisis. German has done this since the time of Bismark but today it will suck billions of euros out of the PIGS.There is no way of recycling these funds thanks to the EU's no bail out clause plus of course German dislike of financing the idle Greeks. As Lombard Street research puts it, "If the Germans want to run a $220bn surplus then others have to run net deficits totalling $200bn".

Euro rules are forcing the PIGS to tighten their fiscal policies by 6% to 10%. That means public sector wage cuts and redundancies, a deflationary slump like the 1930s, riots and if you remember what also happened in the 1930s the likely rise of far right Nazi parties.

Crucially the French are infuriated by the effect this German policy of a wage squeeze and consequent reduction in unit labour costs is having on the rest of Europe. This is the old Franco Prussian fault line reopening. Even the delicious French Finance minister, Christine Lagarde, is criticising Merkel publicly. The lumpen Frau is now Europe's Iron Lady just like Bismark was the Iron Chancellor in the 19th century but then she too is a Prussian.

Wednesday, 17 March 2010

Gord saves hedge funds - for now

As I predicted on Sunday the proposed new EU hedge fund regulation has been put on the back burner under pressure from Gord, well at least until after the election. Its a bit like Tom Lehar's Werner von Braun song. "The rockets go up, whoosh! Who cares where they come down. Its not my department". There won't be enough room in the dovecot when all Gord's pigeons come home to roost post 6th May!

Meanwhile the Greek saga grinds on like the Trojan horse entering Troy. Constructive ambiguity means nothing happens. The headlines say the EU is indulging in brinkmanship. The Greeks have picked up on this and are waiting to see the colour of the EU's money and the EU is being very coy about this. My prediction is this will grind on until the market precipitates a further crisis. As AEP writes in today's DT business, "EU fudges bail-out of Greece yet again." The Greek trauma will continue for a long and painful time.

Not content with this the EU commission has been lecturing all the EU states on their fudging and breaching of stability rules. The difference between the commission and national finance ministers is the former is unelected and the latter are all seeking re-election. The unelected versus the unelectable!

On the UK front the BoE has claimed QE has cut borrowing costs by one percent. Well I would like to see how they arrived at that figure! What it certainly shows is that unwinding QE is going to be a very painful business indeed. Post election I can see gilt yields easily going North of 6% at a 10 year tenor. Its the same problem with Afghanistan. Its very easy to put troops in to a conflict. Its much more difficult to withdraw these troops without horrendous casualties. Read the history of the First Afghan War c 1840, 2000 troops in, 2 came back alive.

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!

Sunday, 14 March 2010

EU Greek bail out is coming, who will pay and what about the UK?

The EU spin machine is at full speed promising a Greek bail out paid for by the Germans and French but not directly or maybe not at all, Things are now coming out in the open that were swept under the carpet to launch the Euro. Greece cheated on the fiscal stability rules but so did Italy, Belgium etc. The Finnish commissioner quite openly admitted that the Euro was a political project needed to drive the EU superstate forward. Small countries that have had to suffer centuries of invasions from their larger neighbours are always the keenest on the EU as they mistakenly believe it will save them from further invasions. It won't. Future invasions will be financial not military.

I have no doubt the EU can cobble together a solution to keep Greece from default and leaving the Euro. But at what cost? Merkel's government could be fatally wounded. An EU IMF will require another Treaty plus a probable Referendum. The EU will avoid this at all costs. It would open up Pandora's box. Every EU state has a wish list from the UK to Spain. The other PIGS would want similar treatment to Greece, a big problem for the EU. The Euro is fatally flawed and gives us the best hope of the whole EU project unravelling.

The hedge funds and speculators will be blamed just as Harold Wilson blamed the gnomes of Zurich in 1967 for Sterling's demise. It was not true then and it is not now. The blame begins and ends with the politicians.

More important to us is the huge UK deficit. It is off Greek proportions and Sterling is already in free fall with the Bank of England leading it down. Darling is in crucial talks this week on the proposed EU directive on regulating hedge funds. We have no veto on this, Blair gave it away. If the EU gets its way on this then prepare for a mass exodus from the City of London probably to Zurich in the first instance. When things start to hit London government and establishment opinion changes. The IRA proved that!

Friday, 12 March 2010

Franco Prussian dislike of things Anglo Saxon costs our soldiers' lives

I watched last night the all woman audience Question Time. Politicians have much more difficulty answering questions from the public than the usual press hacks stereotyped questions. Last night was no exception and the nauseating Caroline Flint, sometime Blair Babe, sometime Gordon minister who fell out with Gordon and resigned.

A woman in the audience said her 18 year old son was due to be deployed to Afghanistan and she had had to go and out of her own pocket by what seemed to me pretty basic kit for her son, webbing, as the MoD supplied stuff was not fit for purpose. This met with the usual waffle and change of subject from the repulsive Flint but of course no answer to the question.

This was followed up by a woman who asked as snatch Land Rovers were death traps why did we not simply go out and buy the American heavily armoured vehicles that the US Army had purchased for its troops when their Hummers had also proved disastrous. Wow, good question. Again no answer from Flint just the usual reading from the Labour hymn sheet, author G Brown, about how much more money the government were spending blah, blah blah.

Today I received an unrelated call from my relatively near neighbour Major Niall Warry (rtd) and I asked him about this. He explained that circa 2002, the warmonger Blair, had signed a deal on military procurement with his EU chums saying we would buy EU developed kit. Hence the common sense option of buying our soldiers the good American vehicles which would have saved many of our boys lives was not an option by EU dictat. This chimed true to me as I remember trying to get EU funding 20 years ago for research projects. I was astounded to find the rabid hatred of the Americans that pervaded the EU commission. Why I asked are we wasting time and effort on duplicating what the Americans have already done very well. We do not want Anglo Saxon solutions was the reply I got, we want European solutions to European problems.

It only cost money then but it is costing our boys lives now! Why, oh why can our moronic UKIP MEPs not try and make some real political capital out of what could win us millions of UK votes rather than making us a laughing stock by boorish rude attacks on van Rumpuy by Farage and Cathy Ashton by the belted Earl. They would both do better to belt up and look at why our soldiers are dying in Afghanistan. They could try talking to the families of the bereaved and even try going to Wootten Bassett! Its a simple message. The EU bureaucracy is costing our soldiers lives. But no the allure and glitz of Brussels bars and restaurants now dominates the lives of our political warriors!

We have a Eurofighter that has still not flown, is miles over budget and years behind schedule and will not be any better than the current US plane that is available off the shelf at a fraction of the Eurofighter cost. Its the same with the heavy lift military transport that has just had its maiden flight. We could have had the US plane in service now at a fraction of the price.

I am not comfortable writing on military matters as I have never served in the forces. I am amazed that we actually have managed to buy Chinook helicopters from the US, but really I should thank God the EU bureaucrats have not thought about building a European Chinook. Just 8 miles from where I write this is the Westland's Yeovil helicopter plant. Is it beyond the wit of the MOD to negotiate a Chinnok assembly deal for Westlands?

Our soldiers have as always also been let down by their own Generals who are kept in line by the usual Government threat of with-holding their K or peerage if they don't do what the government wants. Its nice and safe to protest after retirement to a cushy billet in the Lords. Men of real integrity would make their protests while in post and be prepared to resign if necessary. Courage comes in many forms.

Thursday, 11 March 2010

Greek bond crisis derails my holiday plans

Woe is me. I switch on the radio this morning to find the Greek air traffic controllers have gone on strike against the Franco German EU austerity package to be imposed on Greek civil servants. As my regular readers will know I regularly sail in the Ionian and Aegean. How on earth am I to get there. This action will bring the impact of the EU's actions home to everyone who habitually holidays in Greece. Writing about bond spreads is all very well but air traffic strikes are what impacts on Joe voter. I live in hope of our union boys striking against the EU but so far only Bob Crow with his No2EU party has shown interest. Its the way we have to go to get out the EU.

Meanwhile in Brussels, peace loving, recently appointed Baroness, Lord High Po Bah, Catherine Ashton, a former CND activist, has had a Pauline conversion within 3 months to the need for an EU military HQ in Brussels. What use is an HQ without an army? Well Napoleon Sarkozy and Reichsfuerher Merkel have plans to soon remedy that military deficit. We will then have the EU Wehrmacht and Nato headquarters in Brussels, a sure fire recipe for conflict. But Sarkozy hankers for the return of Napoleon's continental empire and system and Frau Merkel wants the fourth Reich asap. My problem is it will probably be bought with the blood of British soldiers as currently happens in Afghanistan.

The virginal and naive Baroness Po Bah has also been legged over by Don Juan Barroso on who will run EU foreign policy and embassies. Well rather him than me in the leg over stakes with La Ashton. She should have stayed between Liverpool and Manchester. Then she and all of us would have been a lot safer including UKIP's one and only belted Earl who got slung out of the chamber yesterday for a Faragesque performance re La Ashton. Brussels certainly brings out the worst in people!

I was glad to see the DT today published an article from Hedgie Hugh Henry whom I wrote of yesterday. Hendry's article was headlined, "We hedge fund managers are on your side". Great, all we need now is the trade unions. There are a lot more of them and they do have Gordon by his golden balls so Gordon's heart and mind will surely follow.

Wednesday, 10 March 2010

Greed is good, greed purifies, greed simplifies

So said Gordon Gekko in the film Wall Street. I was reminded of it watching the spat on Newsnight last night between Hugh Hendry (GG), Hedge fund operator, and great Dane Paul Rasmussen leader of the European Socialists party,who wants to shut down hedge funds, most of the CDS market and Mr Henry. Mr Henry's logic was pure and easy to follow. Mr Rasmussen came across as a typical mealy mouth politician who did not know what he was talking about.

Mr Henry pointed out Greece's misfortunes arose from their government failing to comply with the stability pact rules and one might say cooking the books to get into the Euro. Mr Rasmussen of course blamed all Greece's problems on Mr Henry and his ilk and added Merkel and Sarkozy were going to set up a new tough regulatory regime and a EU Euro stability fund to boot. The latter is most interesting as Merkel admitted this morning it would require a new EU treaty to set up such a fund. Now were we not told less than 6 months ago that there would be no more EU treaties? Worse for the Tories Mr Cameron promised a referendum on any new Treaties! As Merkel's new reaty involves the Euro if the UK were involved that would also require a referndum.

Poor old DC, his troubles come not singly but in battalions.

Mr Henry finished off by calling Rasmussen a champagne socialist parasitically living off risk takers like himself and pointed out criticism of hedge funds was simply because politicians find the truth unpalatable. In particular, the good times have gone and things will be very tough in the future. This sort of statement is very upsetting for politicians seeking re-election.

As Mr Henry also pointed out he has done people a service by ensuring Greek debt is correctly priced. He certainly has!

Monday, 8 March 2010

Well they would say that wouldn't they

The words of Ms Mandy Rice Davies at the the Profumo related trial of Stephen Ward are still true 50 years later. The head of the IMF, Dominique Strauus-Kahn, is quoted this morning re Greece, as saying 'There is no reason to believe that Spain and Portugal will also need to seek IMF assistance. Well as Ms Mandy noted he would say that. He can't say anything else without panicking the market. The same applies to the Corporal Jones, "Don't panic, don't panic" cries from the Bank of England's Mervyn King, Darling Brown and every other UK authority you can think of.

The truth is there is every reason to panic. The fiscal position of the UK is dire and the Forex and Bond markets are even now passing their rational judgement on the UK economy. Sterling has further to fall and consequently Gilt interest rates have further to rise. Who wants to buy gilts at 1.50 $/£ knowing it will soon be 1.40$/£?

I know from working in government that the first reaction of the authorities is to hush things up to avoid a panic by the general populace. Eggs might get broken particularly politicians eggs and they want to save their eggs first. So called panic reactions by the populace as a whole are generally rational reactions to authorities blunders. When Peston, the BBC's voice of Downing Street, broke the bad news about Northern Rock two years ago on a Sunday evening, the Monday morning queues at NRock branches of depositors wanting their money back was a very rational reaction - NRock was bust! It forced the authorities into taking the correct action ie guaranteeing all retail deposits in every UK bank! Unfortunately they had not done their job properly in relation to Icelandic banks taking UK deposits so they have a £3bn debt to try and extract from the truculent and uncooperative Icelanders.

Sarkozy pledged over the weekend that Europe would stand behind Greece, 'if necessary' but ruled out any immediate financial backing. Sarkozy is not prepared to put his money where his mouth is but then words are cheap and money is err... expensive. The Greek government has announced 3 packages of austerity measures designed to placate the EU and the IMF. These are all in accord with Ms Mandy's dictum. But as anyone who has lived in Gordon's UK knows only too well announcements are one thing, even re-announcements, but implementation is the difficult part.

The Greek public sector unions will continue to strike, burn EU flags etc. The Greek self employed will hide their funds from the tax man. The wealthy Greeks will be getting their money into safe havens like Switzerland. The Greek politicos, not Sarkozy, Merkel, Barroso etc will be the ones taking the abuse and violence and eventually, yes they will panic. Panic is a Greek word derived from the god Pan and has a 3000 year history in Greece. Out of their panic might just come the correct policy, leave the Euro and devalue the drachma.

Friday, 5 March 2010

Greeks burn EU flag in Athens

Unlike UKIP the Greeks organise their anti EU protest in their own country in Athens outside the EU building and culminating in burning the EU flag there. How much more effective in undermining the EU in the eyes of the Greek electorate where it has an effect on the voters than Farage's idiotic, rude abusing of van Rumpuy and insulting the whole Belgian nation in the European talking shop that nobody watches. Why does not UKIP organise similar sympathy protests outside the EU bulding in London? The EU now occupy the old Tory Central Office building in Smith Square so even old Tory Lord Pearson might manage to find it without Nigel's guidance. Nigel could always give him a light for his EU flag.

We cannot get out of the EU in Brussels. Only action, demonstrations etc in the UK will influence British voters. All the posturing by Farage and his MEP Cabal in Brussels only benefits the EU. They can claim they are very democratic as they periodically allow Farage to make an exhibition of himself and damage UKIP in the process. I wish ordinary decent UKIP members could see Farage through the eyes of the EU bureaucrats. He is at best as Lenin said as a very useful idiot to the EU and at worst an EU troll bought and paid for by UK taxpayers.

To a great fanfare the Greek 10 year €5 bn bond sale at 6.4 % and as I predicted banks arms were twisted to ensure it was three times oversubscribed. A great success? Well not quite. Greece is funding at twice the German interest rate and the credit default swap, the cost of insuring Greek bonds rose.

The Greek PM is off to see that nice Frau Merkel this weekend but Herr Bruedderele, a member of the FDP that supports Merkel, Mr Nasty Cop is saying not a German pfennig for Greece. I think he can see the headlines in the German papers along the lines, "German taxpayers pay for Greek pensions and long holidays". I am gratified that some members of the Greek parliament have taken up my suggestion to demand reparations from German for Adolf's damaging Greek excursion in the Second World War. Also as I predicted,Germany and France are working on contingency plans under which state-owned financial institutions would directly purchase billions of euros in Greek bonds or offer guarantees to commercial banks that buy them. Meanwhile the other three little pigs, Portugal, Italy and Spain are waiting to see when they can cash in on the German largesse.

Wednesday, 3 March 2010

Nana Mouskouri offers her £14.7k EU MEP pension to Greece

This was reported in today's business DT as Ms Mouskouri's contribution to reduce Greek debt. It restores one's faith in human nature and shames the behaviour of our money grabbing MPs and MEPs. Britons used to make this sort of personal sacrifice out of noblesse oblige and it did much to enhance our worldwide image and reputation. Now most of the British political class is composed of self seeking, talentless non-entities. To twist Jack Kennedy's words, "Ask not what I can do for my country, ask what's in it for me."

Ms Mouskouri was upset by the way Greece had been portrayed around the world. Her action is reminiscent of the spirit in Britain during the Great War. Indeed the Greek prime minister Mr Papandreou has said Greece is now in a war situation. What did the world think of Farage's rude and ill informed attack on Belgium and its ex PM M van Rumpoy. It was a Belgian, d'Hondt, who invented the voting system used by the EU to elect Farage and his ilk. If it wasn't for Begium Farage would not be an MEP!

The Faragistas will no doubt point out Ms Mouskouri's wealth. She however made her own fortune by her own talent. UKIP MEPs like Dartmouth and Agnew are men of considerable wealth. When will they use their money to support the cause of getting our country back?

Farage's UKIP occupies itself by removing its only principled MEP who does give a large proprtion of her salary to UKIP and who does have the courage to stand up to Farage and his odious Cabal. I give Nikki's statement below:

"It is with great disappointment that I have today received a letter from the Party Secretary, Michael Zuckerman that removes me as a UKIP MEP. A decision that has lost UKIP it's status as the official opposition in the European Parliament and the UK's 2nd largest party.

There has been no disciplinary procedure and no right of reply. I find this course of action incredulous after 16 years of service. This decision has been made despite expression of absolute support for the Party and intention to continue as a UKIP MEP/Candidate. There was an agreed position between myself, Lord Pearson and fellow UKIP West MIdlands MEP, Mike Nattrass

With only eight weeks before a General Election I find it absolutely amazing that the Party decided to open a sore wound rather than fight the real enemy.

I reserve the right to defend my reputation, my political career and the aims of UKIP by all available means."

I know Nikki will fight this tooth and nail and I, David Abbott and Del Young who also supported UKIP 100% will support her in her struggle against the self seeking, money grabbing, Cabal who now control UKIP. There are no Nana Mouskouris on UKIPs NEC.

Monday, 1 March 2010

UKIP and the EU Greek crisis

Junius quotes an understandably unnamed UKIP MEP as recently saying of Farage, "Never underestimate his stupidity or his talent for self-promotion".

How true. Farage is a bubonic self publicist and political pygmy propped up by a self seeking Cabal only interested in getting on the EU gravy train. All his abusive personal attack on van Rumpuy and subsequent cringe making performance on QT in Cardiff achieved was to make UKIP look petty, nasty and stupid and every other person on the QT panel look decent, honourable and statesmanlike, even the odious Hain.

What UKIP should be doing is supporting the Greeks at every opportunity in the EU parliament as a small nation being trampled on by the Franco Prussian juggernaut. We went to war in 1914 over poor little Belgium. Can UKIP MEPs not stand up and defend poor little Greece in Brussels? It would make them some allies in Europe not only amongst the Greeks but also the other smaller nations. All Farage has achieved is to make enemies and ally UKIP with some of the nastiest European neo Nazi groups.

UKIP needs allies not enemies and definitely not Nigel's nasty Liga Nord neo Nazi friends who like him are on the EU gravy train for all its worth!

The Greek politicos themselves are already whipping up anti German sentiment by talking about the 300000 Greeks killed during the German Nazi occupation in 1939 to 1945 and calling Merkel and her government incompetent Nazis. Propping up the Greek economy could be seen as war reparations for the damage the Germans inflicted on Greece in the war.

On the UK home front UKIP should be pointing out our financial position is no better than Greece's and we can expect the same treatment from the EU that is being dished out to Greece. The Greeks today us tomorrow and link it to the appeasement of Hitler in 1938! Its the same scenario, German bullying of small countries. Now that might resonate with the UK public many of whom fought against German in the war.

There are General Election votes in this strategy for UKIP as it attacks the EU ruling power group, the Franco Prussian axis. UKIP should aim at the organ grinder not the monkey!