Sunday, May 23, 2010

Christopher Booker is a long-standing British opponent of the EU. Or at least of the way it has been set up and managed. The title of one his books – “The Great Deception” – fairly reflects his standpoint. It was inevitable he’d have some pungent comments on the latest developments and here they are. A sampler – “It was always above all a political not an economic project, to be driven through at any cost, which was why all those ‘Maastricht criteria’ laid down to bring it about were repeatedly breached. But as expert voices were warning as long ago as the 1970s, when it was first put on the agenda, there was no way economic and monetary union could work unless it was run by a single all-powerful economic government, with the power to raise taxes.”

As for our Ambrose’s basic attitude, I’m not entirely sure as to whether he thinks the EU is a good thing or not. But he certainly believes Brussels is going about things the wrong way to preserve the union. And he’s particularly critical of the German response to the crisis. His latest Jeremiad concern is the risk of the Far Left making political capital from the current/imminent social unrest in those members forced to implement what he considers to be counter-productive austerity measures. You can read him at length here but, again, these are sample quotes:-
 - The Left is starting to offer the only coherent critique of what has gone wrong with monetary union and why there can be no durable solution until the EU creates full fiscal union (which creates its own problems of permanent subsidies) or until this latter day Gold Standard is broken into viable halves.
 - The only way out is for the European Central Bank to lift Club Med off the deflation reefs by monetary stimulus, and allow these economies to work off their debt in an orderly fashion without shrinking nominal GDP. That means quantitative easing a l’outrance - not "sterilising" bond purchases it has done so far - and that in turn means that Germany must accept 5pc inflation. Will Germans tolerate such an outcome? The civil peace of Europe demands that they do, but I am not hopeful.
 - The North-South divide within EMU has been allowed to go so far that any solution must now be offensive to either side, and therefore will be resisted. The euro is becoming an engine of intra-European tribal hatred. Brilliant work, Monsieur Delors.

And here are a few more quotes I’ve noted over the weekend, though I’m not sure of their provenance now. Possibly in this article asking if/how the euro will survive.:-
 - Part of the reason why southern European nations like Spain and Greece are currently in so much debt is that the northern European nations were prepared to lend to them the cash in the first place. The construction boom in Spain, for example, wasn't financed out of nowhere: it was fuelled by enormous sums of cheap cash borrowed at very low rates.
 - There were huge imbalances within the Eurozone, so you had big export surpluses in Germany which were being channelled into housing and construction booms in the south. Most of the growth in those southern economies was built on debt, and now they can't get out of it.
 - So far only the smaller, less important economies like Greece and Portugal have been tipped for a possible exit [from EMU]. For France and Germany, the marriage will survive for better or worse, no matter how much the love affair may have cooled.

Meanwhile, down at the domestic level, I see that the cash-flushed Pontevedra council is paying for live music to be played adjacent to the temporary gardens set up in four or five of our squares. As my visitor has said, maybe last year’s budget has to be spent, however inappropriate certain expenditure looks right now.

Which reminds me . . . There was an article in a local paper yesterday detailing just how many businesses have ceased operating in the last year, against the pitiful total of start-ups. For the latter, of course, one can never be sure – along this coast – just how many are genuine and how many are fronts for money-laundering. Particularly now that property is a not very attractive route for this.

Finally . . . And to return to the North-South theme - I see that Spanish competitiveness has fallen 20% against that of Germany since 1996. Inflation here has been around 45%, against only c. 22% in Germany. And the story is the same for the nine years I’ve been here – too much cheap money, chasing too many hastily-built properties. And inflation at double the German level. Which some of us did predict years ago could only end in lots of tears. Makes it rather hard to see how Spain can export its way out of the current mess.

Fotos of the gardens tonight.

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