A Night at the Opera …

… with apologies to the Marx Brothers

On the evening of 19 October, the FT’s rolling blog reported, the most senior politicians, diplomats and officials of the eurozone (EZ) and with Christine Lagarde (of the IMF) in train, gathered in Frankfurt. They had an appointment – a night at the opera with M Trichet ECB president (retiring) and Draghi ECB president (incoming). They also decided to go through a pretence of wrestling with deep policy issues on the future of the eurozone with M Sarkozy dramatically dashing from a Parisian maternity ward to get to Frankfurt on time.

With the passage of the past few weeks one has gone from initial disbelief to growing incredulity to the final realisation that actually, in both the EU and the US there is a now almost complete incapacity to formulate and implement anything approaching a coherent set of economic and financial policies capable of addressing the series of interrelated problems besetting both economies. In Europe there is on the official view first the Greek problem, second, the banking crisis and third, the finalisation of EFSF2 – the package agreed in outline (which is to say not agreed at all and no more than a fraudulent pretence) three months ago.  All three issues are inter-related but they are also three quite separate bits. In the US the EZ crisis also has real implications for American banking – and thus the prospective triggering of a global contagion.  To be fair to the Americans they have banged on at the Europeans (Obama and Geithner in particular) but to no avail whatsoever. Again though (Democrat) Washington also is paralysed: a Republican/Tea Party politics, deeply reactionary but entirely coherent holds the political balance. They are using it in effect to unpick those small remnants of the New Deal and Johnson’s Great Society (as well as their antecedents in nineteenth century progressivism) that have survived the last couple of decades. They also believe the wrong side lost the Civil War, the Federal Government is unconstitutional, the Federal Reserve is adulterating the dollar – and an awful lot else. They have a visceral hatred of banks (but hate Washington much more) – something they share with Occupy Wall Street. Read the rest of this entry »


Mr Two Percent’s Tobin Tax …

… To Bin Or Not To Bin?

‘O Presidente’ in his ‘state of the union’ vanity show address yesterday unveiled among other things the European Commission’s proposal for a ‘Tobin Tax‘ or officially a Financial Transactions Tax (FTT). It would fall on monetary and financial institutions (MFIs), banks to ordinary people. It would apply to inter-MFI transactions within the EU and between EU MFIs and third country MFIs. In the commission’s own words,

The financial sector was a major cause of the crisis and received substantial government support over the past few years. To ensure that the sector makes a fair contribution to public finances and for the benefit of citizens, enterprises and Member States, the European Commission on 28 September put forward a proposal for a financial transaction tax (FTT).

So:

Through the FTT, the financial sector will properly participate in the cost of re-building Europe’s economies and bolstering public finances. The proposed tax will generate significant revenues and help to ensure greater stability of financial markets, without posing undue risk to EU competitiveness.

Read the rest of this entry »


While Athens burns …

… Brussels fiddles on Road to Ruin 

From the outside looking in on the latest phase of the GFC (no it never ended) unfold the brain oscillates between utter disbelief and (when that is successfully suspended) mad hilarity – and then one realises it is actually all for real. One such transitional moment was the announcement by Tesco last week that it had decided to throw stg£5oom at (staple) grocery price cuts. Clearly Britain’s biggest bruiser in the grocery business had decided that its home market is in deep recession and home-makers’ budgets are seriously squeezed. It has said as much: reported consumerist web site bitterwallet,

Tesco top knob Richard Brasher said: “Across the country families are telling us the same thing: their budgets are under real pressure. They want more help today to afford everyday essentials. We have listened carefully and, for families facing hard times, the Big Price Drop will cut prices on the products they need to buy the most.

Another obviously, more recently, was the Rastani Moment (or RM as I’ve taken to call it). This truly was transformational – all the way from disbelief to hilarity and awakening reality. Watch it here (or if you’ve already seen it just pull the duvet over your head). Read the rest of this entry »


Shelter from the storm?

I was burned out from exhaustion, buried in the hail

Poisoned in the bushes an blown out on the trail

Hunted like a crocodile, ravaged in the corn

“Come in” she said, “I’ll give you shelter from the storm”

Bob Dylan

It is now clear what the Schlieffen Merkel game-plan is – and that she has Sarkozy under her thumb in pursuing it. It is to support Greece to the hilt in the present shambles. The Greeks will get their €8bn – and soon. There will be no more quibbles or threats from the troika or any of its components and nor will there be, to the best of her ability, any more rude noises from her ministers. The next tranche will be handed over despite the fact that Greece is not currently meeting – and will not and cannot meet – the targets laid down in the memorandum of understanding and work-out plan agreed with the troika.  If there is any doubting that the French have been brought to heel by Merkel, then simply look at the utterances of French government spokeswoman and budget minister Valerie Pecresse Sunday 11 September, that France would stop lending to Greece if it did not deliver on its part of the bailout program. Read the rest of this entry »