So Spain needs a bail out after all

After the usual repeated denials of the inevitable Spain asks for a bail out of 100bn€. The markets have an initial bounce but there are however a number of unanswered questions and problems with this bail out and as with all the previous bailouts I expect it will rapidly unravel when the details are scrutinised


First, the obvious question, where does the money come from? Well the Brussels has not announced whether it will be the temporary EFSF, European Stability Facility, or its permanent replacement, the ESM , the European Stability Mechanism. Either way like IMF loans other Eurozone members will be tapped for the cash. Only Germany has spare cash and it will push indebted Italy further into the mire. Oh dear!


Worse if it is done via the ESM then that like IMF loans will be the first to be repaid in event of a default with existing commercial loans subordinate to ESM loans. Now would you want to buy ordinary Spanish bonds under these conditions? Obviously not. Spanish ordinary bond yields will rise and bond prices fall and it will be the same as a Greek haircut. Spain will be locked out of commercial capital markets and totally dependent on ECB and EU finance which means other Eurozone countries.


So the Eurozone will have a rising number of borrowers and a diminishing number of depositors. Its a bit like the UK benefits and tax system.


Politically its been rushed through before the coming Greek elections can cause further instability. This is typical EU unsmart thinking. The have handed a superb stick to those Greek parties that oppose their bail out with all its horrible austerity requirements to say me too. Ireland most of all will want the nrew austerity lite loan and quite right too!


The Spanish have been conned by their bankers as we were. Independent estimates of their bad property loans are in the rang 350bn to 450 bn€. So Don Juan will be back for more very soon.


In Spain its the poor that are paying for the rich bankers but without our generous social security system they will suffer much more. There are no jobs in Spain. You cannot sell a house or flat to cover your mortgage loan. Its melt down.


These mortgage bank, cajas in Spanish, should have been allowed to go bust but that would be the end for all the Spanish political elite's careers. We went through the same thing with our mortgage bank, Northern Rock. That should have been allowed to go bust. I had shares in NRock as did all its pensioners and employees but it would have been the best and cleanest solution. Death is not nice but its clean and inevitable. Attempts to avoid the inevitable end in disaster.


The least pain solution that keeps the Euro is for Germany to leave the Euro but it will end like Hitler at Stalingrad and Napoleon in Russia.

The EU's conceit is fatal for us ordinary people

Allister Heath edits  City AM a news sheet that is widely read in the city. He is worth reading and his well founded opinions makes him one of Andrew Neil's favourite and frequent interviewees. He has written an excellent piece today, click on link to read it. The piece is entitled 'Our fatally conceited elites are being confronted with reality'. Its a good title and sums up his piece but as I say in my title its the ordinary people who will do the dying not Rumpy, Frumpy, Barroso and Farage.

Crunch time for the EU

Things are converging to the mother of all crises in Euroland. My biggest mistake has been to underestimate the insanity and selfishness of the ruling EU political class. They will now push for a full federal state using every dirty trick and scare story they can muster. They have already turned Greece into a third world state and destroyed democracy in Italy but still they push on with their idiotic policies.


They have plenty of previous in this area. The great French hero Napoleon lost half a million men in his Russian campaign yet still he is regarded as a national hero! A century and a half later Hitler repeated the error. He lost 250000 men at Stalingrad refusing every request from the commander on the ground to try and break out. The British of course have their great General Haig whose obstinacy cost hundreds of thousands of British soldiers their lives in WWI.


I remember a discussion I had with Trevor Colman some years ago on the Euro crisis where I opined the crunch would come when Spain started to crumple. That time has now arrived and the crisis is upon us. The politicians clearly don't know what to do other than have another meeting which achieves nothing.


The Eurocrats however do know what they will do. For them its a beneficial crisis and the solution is more of the same medicine increasing their power, salaries and influence. Watch Cameron & Merkel tonight on TV to see how bad things are. Merkel thinks Cameron's position is laughable. The Eurocrats will win because there is no effective opposition. The Britsh FCO will not push for radical reforms. That would be "irresponsible" in their view. The FCO clearly sees its responsibilities lie with supporting their fellow bureaucrats not the British people who pay their salaries.


There is now a gathering momentum for some sort of EU referendum in the UK. This will of course be fixed to get the result the EU wants by the wording of the question(s) and the weight of media coverage. What is the EUKIP leader Mr Farage doing to prepare for this referendum ? Ordering another round in Murphy's bar I bet.

Nailing the EU trade lie

John Redwood has a brilliant mind. You don't get elected a fellow of All Souls at 21 without being one of the brightest of your generation. But besides that John Redwood is an outstanding communicator. I reproduce below an email he sent out on the EU trade lie which he entitled, 

Germany will still sell us her BMWs if we change our relationship with the EU

I reproduce it below.

The main argument that advocates of our current EU relationship advance is that we do more than half our trade with the EU so we have to maintain full membership to keep all those jobs. It is the most stupid argument in current UK politics. It is extraordinary that it has been trotted out uncritically for more than fortty years, and still many in the media fall for it.

It is often based on the lie that more than half our trade is with the rest of the EU. This figure ignores our very profitable trade in services, where well over half is with non EU countries. It ignores the Rotterdam and Amsterdam entrepot effect, where trade with the rest of the world passes through these large ports and is counted as EU trade when it is with places further away.  It fails to take into account that our trade with the rest of the EU is in heavy deficit, whilst our trade with the rest of the world is in good surplus.

Worse still, it assumes if we tried to change our relationship or if the UK electors voted to leave, that trade would be lost. Are they seriously suggesting Germany would no longer sell us BMWs and Mercedes? Do they think we could not manage by buying cars we make here, if they will no longer sell us cars they make over there?

Do they not grasp that EU countries are signatories to international agreements on trade which would prevent any such interference in trade with the UK?  Why do they wish to bind us into close union with countries which they think have such ill intent towards us that they would seek to damage trade with us as revenge for our wanting more independence?

It is all absurd. The rest of the EU has too much to lose from its lucrative UK trade to want to damage it, and would be restrained anyway by the legal requirements of the international trading system.

They sometimes go on to argue that we need to be inside to have influence over the rules and regulations that apply to goods and services we supply to the rest of the EU. We have no such influence over the rules and regulations imposed by the US or China on our trade with them, but they never argue we should join some type of political union with these countries to sort this out. The problem with belonging to the EU is that we need to apply EU rules not just to goods and services we supply to other EU countries, but they also  make us apply them to products we want to sell to third countries. As often the UK ends up with more rules and regulations than it wants or needs, this can make it more difficult to sell outside Europe.

It's a strong well presented argument that I can't improve on. Its a pity EUKIP have no one of similar intellect and skills

How EUKIP is as undemocratic as the EU

I do not call Mr Fartage Cabbage's cult EUKIP without good reason. The similarities are considerable and the differences few. Both are ruled by a self perpetuating elite. Both claim to be democratic but as Goebels said if you are going to tell a lie tell a big one. In fact the EU is more democratic than EUKIP in the sense it allows the idiotic Cabbage air time to slag off Barroso, Van Rumpy, Frumpy etc. No one is ever given platform time at an EUKIP event to criticise the ruling cabal. Useful idiots are of course frequent platform speakers at EUKIP events and welcomed.


EUKIP's Fartage controlled NEC plays an exactly similar role to the European Parliament. Both are powerless organisations whose function is to rubber stamp decisions made elsewhere and hence give the rulers the imprimatur of democracy.


EUKIP's so called democratic MEP  representatives will now be solely chosen by Mr Fartage. Even the Tories do not allow Dave to control their choice of MP candidates. That's why Warsi had to be sent to the Lords. No constituency would have her. She was unelectable.


EUKIP has no such problems. Its branches, that match parliamentary constituencies, thanks to voting through the latest Fartage  'modernising' changes to the EUKIP rule book they have given away their powers just like the ruling UK elite gave away our country to the EU. Yet these are the people who claim they were conned by Heath. Can they not see that they are being conned even more by Fartage?

Fartage, the Tory mole in UKIP

News that Fartage is concocting yet another deal with his Tory friends can come as little surprise to those who know him. The deal of UKIP not putting up candidates to oppose allegedly Eurosceptic Tories is the same one Pearson, another old Tory, was pushing before the last General Election. That undermined the campaign of half a dozen good UKIP candidates in the West country but what did Pearson care.


You need allies in politics but the time to do it is after not before the election where Clegg and Cam have shown parties can do what they like and don't have to worry about the electors for another 5 years. Fartage's stupid strategy just costs UKIP votes. It of course brings his bum nearer the red leather he salivates after.


When I used to be invited to speak on UKIP platforms I was asked from the floor the question should UKIP members vote for such Tories in preference to UKIP candidates in Tory marginals. I replied look at history. Who took us into the Common Market? The Tories. Who signed the various treaties since then extending EU powers? The Tories. Who got us into the Euro's precursor the ERM and bankrupted us in the process? The Tories.


The answer is self evident. Vote Tory if you want to get the UK further embedded in the EU mire. That must by now be obvious to even the dimmest Fartage supporter. 

Nuttall and McShane on Siunday Politics

This was an interesting follow up to my previous post on the increasing probability of an In/Out of the EU Referendum. It showed how little UKIP and comrade Nuttall had thought about this development. Ah well the flesh pots of Brussels are so much more enticing. The debate to flatter the discussion will be on the BBC web site for any one interested.


The Eurozone slow motion disaster increasingly reminds me of the outbreak of WW I. Inevitable and driven by bureaucratic imperatives. I am a bit more concerned about my wealth preservation strategy in the face of the coming disaster.