Tuesday, 31 May 2011

Welcome to the EU Paul Tucker

Paul Tucker is Deputy Governor of the Bank of England and my old boss when I worked at the BoE. 'Bank Regulators warn over harmonisation of EU rules' is the page 1 headline on today's DT Business. Paul, Hector Sants and Andrew Bailey also ex BoE will run the new Prudential Regulatory Authority , PRA, a subsidiary of the new BoE. They have just discovered that under the 'maximum harmonisation' a Brussels initiative there will be no leeway for them as regulators to go above or below the European standard and as Mr Sants put it, " all we would be doing is policing European fixed standards."

Well that is the EU way. It ensures they keep control, take the credit and the national authorities act as a cloak for the EU rules. Its a bit surprising to read Paul saying,'Having made the decision to leave regulation at national level it doesn't make sense not to leave any tools with the national regulator'. Grow up Paul, that has been the EU way since  we entered in 1972! All real power is held in Brussels. Sense has nothing to do with it!

It is depressingly naive because Paul Tucker is a bright lad, next governor of the bank some say, a rumour Paul  does not discourage! What adds real piquancy to this heartfelt cry is that this whole new financial structure was largely dreamed up by one Matthew Hancock, ex BoE and now Tory MP for West Suffolk when he was George Osborne's chief of staff. The same Matthew Hancock  was Paul's bag carrier for a while at the BoE! Obviously Matthew did not tip off his old boss about the real politik of EU bank regulation! It just shows you can't trust anyone in this life.

I expect Matthew to be appointed a member of the Treasury team at Dave's first reshuffle. Wee George will be missing Matthew's ideas at HMT particularly on who to make next governor of the BoE! Pip pip!

Monday, 30 May 2011

Greece is now up for sale

Thus opines the leader in today's FT going on to say,

"Particular controversy surrounds the government’s promise to raise €50bn in privatisation proceeds by 2015. State holdings in utilities, banks, the former telecommunications monopoly and other businesses such as Opap, the lottery and sports betting company that is the biggest in Europe, are supposed to be put up for sale. Eurozone governments and the International Monetary Fund are determined to hold Greece to its word. Some policymakers even want the disposals to be placed under the control of an external agency to ensure the integrity of the process."

Wow that really is nasty medicine for the Greeks and I cannot see them or any other nation state swallowing it. Anyway €50 bn will not solve Greece's economic problems. Its just a fig leaf for the EU/IMF but it should make it abundantly clear even to the Lib Dems that by joining the EU Eurozone Greece and every other small country gave up its sovereignty. Greece is now run by the EU paymasters in Berlin.

Given that even the EU fisheries commissioner is talking of a Greek exit from the Euro and return to the drachma why should any sane person want to participate in these privatisations when the same assets will soon be available at a cheaper price.

As I previously warned the Greeks have now taken to the streets. Reuters report a hardening mood against the IMF event with Madame  Lagarde. The Greeks want the IMF out of Greece and leave them to run their own affairs. I recollect the same sentiment held sway in Sudan 25 years ago following one of the IMF's interventions there doubled the price of sugar. When a government loses control of the main streets and squares of its capital it looks out of control on the world's media. It can only survive with recourse to brutal military suppression which requires the media to be silenced as well. I doubt if the Greek  government have the stomach for this. The Greek army might but only if they take over the government and what will the EU do then? Its Sarajevo all over again as George Bush would say.

Meanwhile like Obama Lagarde has been touring the world polishing up her image in Brazil and India. That tells the truth about M Lagarde. She is a politician with huge political ambitions just the sort of person you don't want running the IMF as her decisions will be driven by her own personal political agenda. I cannot believe Cameron cannot see this even while on his pedallo in Ibizia. Liam Halligan's piece in the Sunday telegraph was headlined, ''IMF boss.. must be willing to be unpopular". Exactly and that is why it should not be a politician!

On a slightly lighter note the Alex cartoon strip in today's DT hits the nail on the head about the EU phrase, 're-profiling' with Alex replying to Clive the dim, "No one has any idea but it should buy them a bit of time before the inevitable meltdown". Exactly and of course as always it will mean what the EU says it means. Like Alex I have never heard the phrase in financial circles.

On a similar line in today's DT Roger Bootle makes the point that when the meltdown comes it won't be called a default. The EU does not like words beginning de like defeat, devalue decline, default, it prefers meaningless re words like rebirth, renewal, restructure and its latest contribution re-profiling.

As Bootle says the current EU approach is 'delay and pray' and like Mr Micawber hope something will turn up. Meanwhile I leave you with the Reuter's picture of the protesters and the demonstrators who took over Syntagma Square, in front of parliament. These were families, from children to the elderly, who had no class wars to wage.

Sorry my video camera has gone phut. If I can get it fixed I  will post.my take on  UKIP navel gazing gazing.