Will the world really meltdown?

[Jon123]

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html

Reading this interesting article this morning which highlights a few key facts!
Is the current situation bigger than we would have ever imagined?

Will the EU survive the crisis and was England really very clever not to join the EU?

Jonny

[Eagle]

United Kingdom

I'm sure we'll write-off their debts. :rolleyes:

[tom111]

England really very clever not to join the EU?

Jonny

erm, we did join the EU. Maybe you mean Euro? In which case the answer is 'No'.

[Jon123]

sorry I meant the euro.

Surely if the euro is about to dragged down the drain by the eastern block countrys and the fact the biggest country germany has seen severe downturn in output we have potentially made the right choice not to join the euro.

Jonny

[FireFleur]

There is talk of countries leaving the Euro.

Things were quite simple with different currencies, the Dutch Guilder, the French Franc, the Deutsch Mark, and there was a bit of charm in the world, and Europe, we all lost that.

Perhaps, the Euro experiment can be put down to a fail and we can revert back to better more prosperous times.

[tom111]

sorry I meant the euro.

Surely if the euro is about to dragged down the drain by the eastern block countrys and the fact the biggest country germany has seen severe downturn in output we have potentially made the right choice not to join the euro.

Jonny

Well, you could say that. If the UK wasn't predicted to be the worst affected country in the EU by the IMF. And if sterling wasn't facing the worst currency crises in it's history, and hadn't already faced a 30% reduction in value against a basket of currencies. Also, if the Gordon Brown government hadn't already nationalised a bank (RBS) which has a bigger balance sheet than the entire UK GDP. With other banks of a similar size that are insolvent to worry about, an insurance sector that has had no writedowns but will soon be insolvent, and a national deficit that is soon going to be the worst in modern history.

And, while discussing how it's lucky we aren't in the eurozone, it might be worth considering that the european union is our biggest export partner. Also the fact that under european union legislation, the UK is required to financially support any bailout by the european union of a eurozone economy.

[Comspec]

If the Euro goes down the pan, we'd be there already tbh. Take a wee look at how our glorious pound is doing these days.

I'm not a fan of the whole EU thing tbh, and even less so now we seem to be accepting countries who neither have the infrastructure or play by the same rules as the rest of us.

That said, if we are gonna be in it - we need to be in it properly, and stop hedging around it. It is impossible to have the best of both worlds, so we need to pick a side imho.

[directmarketingadvice]

Well, you could say that. If the UK wasn't predicted to be the worst affected country in the EU by the IMF.

That prediction's got to give you the willies.

The telegraph article says:


"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.

...and, yet, the UK is meant to be worse placed than those two countries? (Austria & Italy)

Exactly how screwed are we?

What would be the appropriate analogy? A "Monetary Charge of the Light Brigade"?

Steve

PS I liked this bit:

Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.

"En plus"?

Pretentious, moi?

(I don't think he even used it correctly - surely the correct unnecessary French expression would be "en fait"?)

[Minuteman Press]

It will melt down - should be on Wednesday around tea time.

[tom111]

That prediction's got to give you the willies.

The telegraph article says:

...

...and, yet, the UK is meant to be worse placed than those two countries? (Austria & Italy)

Exactly how screwed are we?


The UK has the largest financial centre (the City) of any country in the world. All signs are, that centre is bankrupt. How screwed do you want?

[Blush]

better getting growing in your allotments then, the way its going one potato will be worth more than the pound, so we shall all trade and barter in potatoes:p

[stevemcqueen]

There is talk of countries leaving the Euro.

Things were quite simple with different currencies, the Dutch Guilder, the French Franc, the Deutsch Mark, and there was a bit of charm in the world, and Europe, we all lost that.

Perhaps, the Euro experiment can be put down to a fail and we can revert back to better more prosperous times.

i doubt that we will leave with this government. its too far up the e.u's backside

[Gord]

It seems to back up my belief that all major currencies will need to print more money ( on a managed and relative scale ) , either as hard cash or perhaps some new form of abstract currency.
All failing banks will need to be nationalised with this new reserve and in the medium term , controlled by Governments, overseen by the IMF.
These are global issues , not shareholder ones.

I don't think it is possible to distribute any other way without the influx of funds being used to screw up the various markets either through insufficient liquidity or excess demand.

There will, of course, be winners and losers. Better this than all losers

[Jon123]

Well, you could say that. If the UK wasn't predicted to be the worst affected country in the EU by the IMF. And if sterling wasn't facing the worst currency crises in it's history, and hadn't already faced a 30% reduction in value against a basket of currencies. Also, if the Gordon Brown government hadn't already nationalised a bank (RBS) which has a bigger balance sheet than the entire UK GDP. With other banks of a similar size that are insolvent to worry about, an insurance sector that has had no writedowns but will soon be insolvent, and a national deficit that is soon going to be the worst in modern history.

And, while discussing how it's lucky we aren't in the eurozone, it might be worth considering that the european union is our biggest export partner. Also the fact that under european union legislation, the UK is required to financially support any bailout by the european union of a eurozone economy.


However because we are not part of the euro we have the ability to lower interest rates. Our currency which I hate to see low is increasing purchasing from the euro and they import more from us than we import for them.

We have the ability to print money to stimulate which no eurozone country has.

We have the ability to act faster than any eurozone country which could potentially give us an edge. The eurozone is only as strong as its weakest country which I think puts them in the one of the worst positions in the world.

Jonny

[telemax]

If the Euro goes down the pan, we'd be there already tbh. Take a wee look at how our glorious pound is doing these days.

I'm not a fan of the whole EU thing tbh, and even less so now we seem to be accepting countries who neither have the infrastructure or play by the same rules as the rest of us.

That said, if we are gonna be in it - we need to be in it properly, and stop hedging around it. It is impossible to have the best of both worlds, so we need to pick a side imho.

Looking at it the other way, the pound may have been overvalued and has now been corrected. The historical average seems to bear this out.

British goods and services are now way cheaper than they were to international buyers therefore we are more competitive in the export market. It's nothing to get excited about at the moment because every country is skint, but then again, if the pound was still at 2$ and 1.5 Euro then it would probably be even worse for exporters.

It also makes sense that the US Market will begin recovering before us, when that happens our exporters eg Mini, Bentley, JCB, etc will start to sell more, kick staring our recovery. With a nice weak pound our goods will be way more attractive than european stuff.

[andymayhem]

Hi

Great article thanks for the link.

This whole situation is confusing me. Like others have said, IMF have said we will be the worst effected but Europe asa whole is on the brink of colapse, with the Eastern European countries looking like they are going to default. To my very limited knowledge we aren't on the brink of default, are we? We are in the best possition export wise, and we have a proactive gov trying to keep us afloat, so through my eyes all of this hurts my brain, why will we be the worst effected? Have IMF written a report on who will be best placed when the world starts recovery? Surely Britain with its tech and manufacturing sectors will be up there?

I am sorry if this is compleately misinformed however its just the way it looks over here.

[directmarketingadvice]

However because we are not part of the euro we have the ability to lower interest rates. Our currency which I hate to see low is increasing purchasing from the euro and they import more from us than we import for them.

We have the ability to print money to stimulate which no eurozone country has.

We have the ability to act faster than any eurozone country which could potentially give us an edge. The eurozone is only as strong as its weakest country which I think puts them in the one of the worst positions in the world.


(1) IMO, the weak currency isn't a good thing - it's a very bad thing.

It appears that a large part of our problem is that foreign investors aren't lending to the UK banks.

If the pound is weak and looking like it'll get weaker, why would these foreign investors exchange their Euros and Dollars into Pounds, just so they can lend their money to us.

Surely, for them, that's just taking on an extra risk?

(the risk their pounds will be worth less and less)

(2) We can't lower interest rates by much more, so that's no advantage.

(3) Printing money - i.e. lowering the value of our money - is just another reason why foreign lenders want little to do with us.

It's just a liar's get-out - we owe money we can't afford to pay back, so we deliberately screw our creditors by paying them back with an artificially devalued currency.

How many times do you think they'll let us do that to them?

What's more likely is that the UK will then only be able to borrow dollars (or gold) from overseas lenders... and pay back in dollars/gold.

But, to go back to my question: if the Austrian financial system is on the verge of collapse, what else is going on in the UK that makes us worse than that?

(or was Austria not included in the survey of countries "most likely to be up **** creek")

Steve

[chrisweb]

That article is a bit over-hyped. The end of the world is not here but based on a number of sources I've been following (those that predicted the recession) we will:
- See a decline in social mood (more riots and protests)
- Higher taxes
- Increased government debt
- Reduction in civil liberties
- Enter a long period of stagflation in the U.K
- See continued problems with FIAT currencies likely meaning more countries joining single currencies such as Euro and Amero.
- More banks defaulting
- More government defaulting
- More money printed to fight deflation as money disappears as debts go bad and to prod up bankrupt companies and governments.
- Long term is hyper-inflation to devalue government debt.

[estwig]

It will melt down - should be on Wednesday around tea time.

If that could be put off until Thursday morning it would be appreciated, Wednesday night is curry night!!

;)

[Minuteman Press]

Should be OK, sorry to mess you around.

Yes I've spoken to Alistair Darling, he said it will be OK. He has asked me to add that the date is only an estimate.

[estwig]

Thank you, I will enjoy my lamb vindaloo in peace, safe in the knowledge the only thing melting down, will be the inside of my mouth!!

:)

[tom111]

However because we are not part of the euro we have the ability to lower interest rates. Our currency which I hate to see low is increasing purchasing from the euro and they import more from us than we import for them.

We have the ability to print money to stimulate which no eurozone country has.

We have the ability to act faster than any eurozone country which could potentially give us an edge. The eurozone is only as strong as its weakest country which I think puts them in the one of the worst positions in the world.

Jonny

Here's the thing, a lot of your argument assumes the economic orthodoxy is correct. But, at the margins, it isn't as accurate as you would think. Part of the orthodoxy is that the bank of england can set interest rates.

The bank of england can't set interest rates.

The bank of england can set a bank rate, which is the rate at which it lends money. Normally, the interest rate (i.e. the amount it charges to customers) is the base rate plus a margin that incorporates risk, profit, and the shareholders bubbly.

But there are real limits to the ability to set a base rate, and these limits are focused around the cost of borrowing money from the market. In essence unless the BoE prints money, it needs to offset the money it lends by borrowing it from someone else. If the BoE provides money below the market rate, it must increase the money supply really quite dramatically. That is very risky. At an unknowable point, foreign lenders become unwilling to lend to the government and you get a sudden stop. Monetary policy doesn't work any more - you can't fund it - and interest rates are forced up massively to attract foreign capital.

The US was at risk of a sudden stop in september last year. in two hours more than $550 billion was taken out of money market funds. I.e. people were doing an electronic run on the the American monetary system. If it had continued at that rate, the American government would have been in default within a day.

The problem is, people just aren't as confident in sterling as in the euro or dollar. And so, our leg room in terms of interest rates is smaller than the eurozones. You can see it already. The cost of government borrowing is increasing, even though the bank rate is falling.

This is similar to the problem that Germany has been unable to sell its treasuries on a few occasions... in essence, if this continues the German government can't steralise its spending, and so every euro it spends leads to an increased money supply and higer inflation.

The difference is, the eurozone is a massive reserve currency, it can't experience a sudden stop without dramatic consequences for the rest of the world. Iceland was a minor league currency which COULD experience a sudden stop - their interest rate climbed around 8% in a day. So is Sterling. The Bank of England really does not have as much room as you believe.

[dp0848]

If that could be put off until Thursday morning it would be appreciated, Wednesday night is curry night!!;)

I pity any poor sod who has to have a meeting with you on a Thursday morning after you've been scoffing curry the night before. ;)

[estwig]

I pity any poor sod who has to have a meeting with you on a Thursday morning after you've been scoffing curry the night before. ;)

I'll save you an onion Bhaj!


;)

[Mayor]

It will melt down - should be on Wednesday around tea time.

I'll make sure I'm in the pub then !:)

[directmarketingadvice]

Some Bank of England weirdness in the Times today:


The Bank of England’s Deputy Governor warned yesterday that the recession could be even worse than it suggested less than a week ago.

Charles Bean said that there was “roughly a three in four” chance that the economy would contract by more than the 4 per cent predicted by Mervyn King last Wednesday.

If it's 75% likely to be worse, what's happened over the last 7 days to change that prediction?

Or, was the 4% prediction just a hopeful (or policitical) statement, rather than a genuine and honest best guess?

Steve

[LowcostPR]

Well one big catalyst in this is the media, who are doing everything they can to keep the doom and gloom going.

Whenever anyone suggests that some parts of the economy are showing signs of recovery, they're all over them like a rash. "How dare you suggest that" they say, "We have newspapers to sell, Why would you want people to be optimistic".

I'd like to say that the people of this country are smarter than to believe everything they read in the papers, but some of them.........

[directmarketingadvice]

Well one big catalyst in this is the media, who are doing everything they can to keep the doom and gloom going.

Whenever anyone suggests that some parts of the economy are showing signs of recovery, they're all over them like a rash. "How dare you suggest that" they say, "We have newspapers to sell, Why would you want people to be optimistic".

I'd like to say that the people of this country are smarter than to believe everything they read in the papers, but some of them.........

Isn't that just a way of saying you think you're smarter than the people who believe the economy is in deep trouble?

I worked in financial services for over 8 years and everyone I talk to in that industry is far more pessimistic than the media.

Steve

[Dawg]

Both the media and the Financial Services industries have vested interests in talking up the severity of the recession/depression. They both also have unique perspectives on it which darkens their viewpoints.
The media wants to shift product, this is normal. They are however also suffering a further downturn due to new technology, and this extra pain is reflected in their output.
Financial Services want rescuing. They emphasize crisis as calamity to try to justify special status, and thence the use of public money to rescue them. They were first off the cliff and so things do seem a tad more drastic to them.

This is not to decry how serious things will get; they will. But we won't all die, we won't all wander the streets looking for apple peelings to feed on. But heeding the siren voices, and feeding them large amounts of public money as they seem to want, is not the way to go.
We are not all Keynesians now.

[LowcostPR]

No, I don't disagree that the economy is in big trouble, but a factor in this is consumer confidence. If everyone thinks that the world will financially implode about lunchtime tomorrow because the papers told them it will, they will stop spending, thus making it a self fulfilling prophesy.

Businesses (and the economy, for that matter) need people to spend money, and things won't be getting any better until they do. The papers are not helping at all by doing their best to keep people away.

[andymayhem]

I dont think it is in the papers interest to scare monger. they need the advertising money, by scaring people into not spending money they are in turn shooting themselves in the foot. I guess this is why a lot of them are on the verge of administration.

[An Oasis]

No, I don't disagree that the economy is in big trouble...

Some sectors have badly over stretched themselves. However, it is the government and the banks, which have got things badly wrong, through lack of expertise.

The banks we all know about - a monumental cockup. The government through complete lack of skill sets, knowledge and continual bungling and interfering, rather than leave matters to the experts in each field, poor decision making, short-termism and lack of vision, which will affect us all.

Don’t be fooled by all the media propaganda this is the governments tool to distract us from their idiotic mistakes.

[directmarketingadvice]

Businesses (and the economy, for that matter) need people to spend money, and things won't be getting any better until they do.

But, IMO, it won't get better if people spend money they don't have.

That seems to be the government policy: "forget about the debt, keep spending".

What's going to be the consequence of that? Are we just going to sacrifice people - or encourage them to sacrifice themselves - for the "greater good"?

Even if that was good for the nation, on a personal level it would be a crazy choice... and people deserve to have access to the truth so they can choose for themselves.

The papers are not helping at all by doing their best to keep people away.

I don't believe the papers are scaremongering at all - nor do I think they have an obligation to the government to "stay on message" - they're not government controlled... thank christ.

All they're doing is reporting what's happened and what's been said by very reputable organisations. And, they're doing it in a way that's fundamentally hopeful.

There's a ton of stuff that's looming on the horizon - like the huge hole in the nation's pensions - they've either not seen or they're choosing to ignore.

Steve

[An Oasis]

Media bias depends who you read or listen to Steve.

Some are pro Labour, some pro Cons, few are independant...some are in the pockets of the government of the day because they have no choice, due to their funding allocations.

[dagr]

The journalist, AEP, is always predicting collapse and total meltdown. While I don't share that apocalyptic viewpoint, I do believe things will get worse through most of 2009.

For the time being, I'd rather be in the Euro zone than out of it to be honest. Standing back a bit, the UK joining the Euro is a double-edged sword. There are advantages and disadvantages. Surprisingly, most business people "should" be in favour of it, but that doesn't seem to be the case here. I'm always surprised by how much people underestimate the importance and implications of the UK's trade with the EU.

[Jon123]

"I don't believe the papers are scaremongering at all - nor do I think they have an obligation to the government to "stay on message" - they're not government controlled... thank christ."

Politicians hold all power and definately can control whatever they choose to, the goverment can use all there new laws legally to access pretty much everything, not to mention most of the paper owners have strong ties with politicians where if they help each other they propsper further.

Inflation is what we need as it will reduce are debt severely bring on hyper inflation!!

[An Oasis]

Surprisingly, most business people "should" be in favour of it, but that doesn't seem to be the case here. I'm always surprised by how much people underestimate the importance and implications of the UK's trade with the EU.

It cost the UK £1million per hour to be a member of the EU, apart from an additional level of bureaucracy I am unsure what we really get back from it. Plenty of countries from around the world are not members of the EU and trade successfully with...

[Tej]

The journalist, AEP, is always predicting collapse and total meltdown. While I don't share that apocalyptic viewpoint, I do believe things will get worse through most of 2009.

For the time being, I'd rather be in the Euro zone than out of it to be honest. Standing back a bit, the UK joining the Euro is a double-edged sword. There are advantages and disadvantages. Surprisingly, most business people "should" be in favour of it, but that doesn't seem to be the case here. I'm always surprised by how much people underestimate the importance and implications of the UK's trade with the EU.

Would be good if someone posted --in laymans terms ( without the gobbledy gook) as to the pros and cons of being in the Eurozone. You mention disadvantages and advantages.. and as posted above importance and implications?

a layman

[ROY JONES]

But, IMO, it won't get better if people spend money they don't have.

That seems to be the government policy: "forget about the debt, keep spending".

What's going to be the consequence of that? Are we just going to sacrifice people - or encourage them to sacrifice themselves - for the "greater good"?

Even if that was good for the nation, on a personal level it would be a crazy choice... and people deserve to have access to the truth so they can choose for themselves.



I don't believe the papers are scaremongering at all - nor do I think they have an obligation to the government to "stay on message" - they're not government controlled... thank christ.

All they're doing is reporting what's happened and what's been said by very reputable organisations. And, they're doing it in a way that's fundamentally hopeful.

There's a ton of stuff that's looming on the horizon - like the huge hole in the nation's pensions - they've either not seen or they're choosing to ignore.

Steve
people do have money,well some of us have more than others

[directmarketingadvice]

people do have money

Many of them also have debts that far exceed the money they have.

well some of us have more than others

What do you want? A round of applause? A medal?

Steve

[Dawg]

Many of them also have debts that far exceed the money they have.



What do you want? A round of applause? A medal?

Steve

Given his 'Bentley' positioning a large helping of Hubris might be apt.

[ROY JONES]

Given his 'Bentley' positioning a large helping of Hubris might be apt.
Yes pride in my business acumen.

[dagr]

Would be good if someone posted --in laymans terms ( without the gobbledy gook) as to the pros and cons of being in the Eurozone. You mention disadvantages and advantages.. and as posted above importance and implications?

a layman

You'll need to speak to an expert, but the biggest positive aspect is not paying a premium when doing business with another country. In other words, even in a stable exchange rate system where the two currencies are not moving much, you have to go through a middleman (bank, forex service) who will take his cut for doing absolutely nothing. You only think you are dealing directly with your foreign supplier/customer. However, that's nothing. When the currencies start to sharply deviate, as seen recently with the £ vs €, then business (i.e. trade) can even come to a halt in some areas for one of the parties if the drop is too fast and too high, specially in a low-margin business.

The biggest advantage of having two currencies is when there is a major difference in wealth of the two respective countries, and this gap isn't going to close. One country can adjust its currency to better fit new or seasonal conditions.

(It's a bit more complicated when one currency is also a standard or refuge currency, as this will be subject to external pressures).

This isn't specific to the UK pound and the Euro. I seem to remember a study somewhere that showed how a few of the poorer states in the USA would benefit economically overall by leaving the US dollar and using their own currency, that would then be devalued. Obviously, this was theoretical.

[dagr]

It cost the UK £1million per hour to be a member of the EU, apart from an additional level of bureaucracy I am unsure what we really get back from it. Plenty of countries from around the world are not members of the EU and trade successfully with...

I agree that the return on investment, so to speak, is not obvious. This is especially true as even though the UK is part of the EU, it is always portrayed as "the UK and the EU", despite the fact that the UK is playing a key part of EU policy making. If the UK were to leave the EU, then they would have to renegotiate agreements with every country, and like Switzerland and Norway, be forced to agree to the EU's ways of doing things, but without having any say at all. It is true that the more insular the UK is/becomes, the less sense it makes to be part of the EU. If the UK wants to stride out both in business terms and politically, then being part of the EU is a condition sine qua non.

I actually think it will take the UK to leave the EU for it all to become apparent. And this may very well happen.

[directmarketingadvice]

I didn't see this story until today:

(from Telegraph, January 8th (http://www.telegraph.co.uk/finance/financetopics/recession/4163037/Bond-scare-as-German-auction-fails-and-British-debt-hits-danger-level.html))


Germany failed to sell a full batch of government bonds at its annual `Sylvester Auction', which kicks off the debt season. Investors took up just two thirds of a €6bn (£5.6bn) sale of 10-year Bunds

i.e. Germany is finding it hard to get credit on the bond market.

and, from the same article:

Britain is expected to issue £146bn this year, or 10pc of GDP. While a £2bn sale of Gilts went smoothly yesterday, the Debt Management Office has warned of possible trouble later this year.

Robert Stheeman, the DMO's chief, says Britain may be nearing the limits of investor tolerance. "I'm not predicting that we will have a failed auction, but I can't rule that out. It's a big amount of debt to be sold. We are in a different world from a year ago," he told Bloomberg News.

As long as Britain keeps its coveted `AAA' rating it should be able to the tap the bond markets at a reasonable price, but this rating is no longer entirely secure. Fitch says the UK will have jumped from 44pc of GDP in 2007 to 68pc by late 2010, a staggering rise for major country. It usually takes a war to do such damage.

If we're the low man on the totem poll when it comes to borrowing money...
and there are a lot of governments borrowing unprecedented amounts of money... and there's a shortage of credit...

... and that means we can't get people to lend our country money... then what?

Do we have any plan B other than inventing a lot of money?

Steve

[tom111]

I didn't see this story until today:

(from Telegraph, January 8th (http://www.telegraph.co.uk/finance/financetopics/recession/4163037/Bond-scare-as-German-auction-fails-and-British-debt-hits-danger-level.html))



i.e. Germany is finding it hard to get credit on the bond market.

and, from the same article:



If we're the low man on the totem poll when it comes to borrowing money...
and there are a lot of governments borrowing unprecedented amounts of money... and there's a shortage of credit...

... and that means we can't get people to lend our country money... then what?

Do we have any plan B other than inventing a lot of money?

Steve

If that scenario plays out, the only choice is to raise interest rates very, very quickly. You'd be looking at a GDP fall of around 10-15% in a year, with high (greater than 10%) inflation and very high unemployment.

There's not a lot of plan B, the IMF doesn't have the money to bail us out.

[An Oasis]

...If the UK wants to stride out both in business terms and politically, then being part of the EU is a condition sine qua non....

Yes, I can understand and respect that, in life why should any country expect special privileges?

The main issue that I have is not the idea of the EU being layer of bureaucrats helping to coordinate policy across member states, which I can see the need for. My issue is the EU deciding policy for members, which are then rolled out across the EU.

As we all know the larger an organisation becomes the more generalised the decisions and the more inappropriate these decisions become for any country (within the EU) where that decisions are either inapplicable or an issue which not need have been addressed. Multiple this scenario across 100,000’s of instances and the wastage, loss…takes on enormous proportions.

Now combine that with another layer of bureaucrats (central gov and the civil service) as a second tier and then passed on down to the third tier local government, the mix is not one that is conducive to “good” government.

To get back to the EU. The main issues that worry me are the huge levels of secrecy by which they act and the vast numbers of people involved is frankly staggering.

...just to draft and work out how to implement legislation the EU requires a bureaucratic staff of around 62,026 people...

For further statistics...

http://www.openeurope.org.uk/media-centre/pressrelease.aspx?pressreleaseid=82

[directmarketingadvice]

If that scenario plays out, the only choice is to raise interest rates very, very quickly. You'd be looking at a GDP fall of around 10-15% in a year, with high (greater than 10%) inflation and very high unemployment.

There's not a lot of plan B, the IMF doesn't have the money to bail us out.

That's what I think, too.

Steve

PS THe news is saying that the BofE have voted unanimously in favour of quantitive easing. Great, we're betting everything on something that's never been shown to work.

[dagr]

Yes, I can understand and respect that, in life why should any country expect special privileges?

The main issue that I have is not the idea of the EU being layer of bureaucrats helping to coordinate policy across member states, which I can see the need for. My issue is the EU deciding policy for members, which are then rolled out across the EU.

As we all know the larger an organisation becomes the more generalised the decisions and the more inappropriate these decisions become for any country (within the EU) where that decisions are either inapplicable or an issue which not need have been addressed. Multiple this scenario across 100,000’s of instances and the wastage, loss…takes on enormous proportions.

Now combine that with another layer of bureaucrats (central gov and the civil service) as a second tier and then passed on down to the third tier local government, the mix is not one that is conducive to “good” government.

To get back to the EU. The main issues that worry me are the huge levels of secrecy by which they act and the vast numbers of people involved is frankly staggering.



For further statistics...

http://www.openeurope.org.uk/media-centre/pressrelease.aspx?pressreleaseid=82

I admit to being pro-European, but that doesn't mean I wouldn't like to change lots of aspects in the way the EU is run, and I agree with many of the negatives you list above. Moving forward, I'd like the UK to take an even bigger, more active role in changing it. The EU often appears like a rudderless ship, with decisions often seemingly appearing out of nowhere. National governments have a lot to blame for this. In the meantime, the UK should do what the French do if they don't like something - just ignore it.

[dagr]

It may just be semantics, but the simple fact that the government can't even call a spade a spade (i.e. printing money), is very worrying. I reckon they are going to do it, and screw up big time. Hence all the news stories over the last two days about how the inflation rate has fallen, etc. They are preparing the ground. The Germans are still traumatised by hyper inflation, and so would not do it in a big way with the Euro.