Ferdinand Foch allied commander said after the Treaty of Versailles : "This is not a peace. It is an armistice for twenty years" Well it would prove prophetic; World War II started twenty years and sixty five days later. It must be about 20 years since German reunification and they are at it again !!! ... 
The all-important spread between the 10-year French government bond and its German equivalent touched yet another euro-era high last week. Spain, also, despite its relative fiscal strength, just paid a crippling 6.9pc on 10-year money. Yields on paper issued by the EFSF, the bail-out fund meant to reassure eurozone creditors, are now spiraling out of control. Investors beyond Europe, deeply disturbed at the region’s economic incoherence, are even questioning German bonds. How much louder do the alarm bells need to ring before time is called on this absurd monetary experiment? There may be “no such thing as an orderly break-up”. But there is a very big difference indeed between embarking on a tough transition to a smaller eurozone with a coherent plan agreed by respective governments on the one hand, and a hugely-damaging systemic meltdown on the other, to be followed by years of pan-European loathing and mutual recrimination. Maybe Merkel will attempt to “muddle-through” - printing a bit here, a bit there, trying to keep it all under wraps. If so, she will learn that the status quo really isn’t an option. The euro in its current form is incendiary and explosive, a macro-economic weapon of mass destruction. It simply must be defused.
The all-important spread between the 10-year French government bond and its German equivalent touched yet another euro-era high last week. Spain, also, despite its relative fiscal strength, just paid a crippling 6.9pc on 10-year money. Yields on paper issued by the EFSF, the bail-out fund meant to reassure eurozone creditors, are now spiraling out of control. Investors beyond Europe, deeply disturbed at the region’s economic incoherence, are even questioning German bonds. How much louder do the alarm bells need to ring before time is called on this absurd monetary experiment? There may be “no such thing as an orderly break-up”. But there is a very big difference indeed between embarking on a tough transition to a smaller eurozone with a coherent plan agreed by respective governments on the one hand, and a hugely-damaging systemic meltdown on the other, to be followed by years of pan-European loathing and mutual recrimination. Maybe Merkel will attempt to “muddle-through” - printing a bit here, a bit there, trying to keep it all under wraps. If so, she will learn that the status quo really isn’t an option. The euro in its current form is incendiary and explosive, a macro-economic weapon of mass destruction. It simply must be defused.
7 comments:
The pressure being put on Germany is breathtakingly shallow, short-termist and contemptuous of democracy, dominating any cogent thought about political outcomes or considerations of liberty. Jefferson would have had something to say about America's response to Europe's travails but there are no Jeffersons now.
The world has abandoned any pretence at libertarian concerns in a headlong rush for an authoritarian economic solution. Meanwhile, European countries, unfortunately much too used to authoritarian solutions within their recent histories, are rolling over. There seems to be a sense that the situation is too serious for mere democratic considerations. I thought that weighty desision was only reluctantly taken in times of war.
Things are not good. I see no sign that the PM or the Cabinet even understands the speed of what is happening and the implications for the UK if Germany acquiesces, ignores its constitution and its people and agrees to lead a vast, politburo-run, authoritarian and unaccountable neighbour.
For against all Germany's instincts, and the aspirations it has held for decades, what else could our neighbour be?
And what else would we be, except perceived as fractious, difficult, stupidly independent and evntually a mere subject for annexation?
Vote for UKIP now.Get out.Just leave.What are you waiting for?If you don't act soon London will be swept by hordes of evil Germans,that want to control your budget.By the way, considering the work of your last chancellors, we will do a much better job,than Osborne or Brown.If the public is so scared of us,those ugly Teutonic monsters from the Continent,why wait?By the way-me being a Kraut,I am against British membership in the euro and I have no idea, what Schäuble is smoking to suggest such nonsense.I was for the UK membership in the EU,but now I think it is useless.Britain and Europe have completely different interests-we are clearly not a good team.Where are the British patriots-go on the streets and protest against Germany,burn our and EU flags,throw stones at the embassy,boycott our products-after all, we apparently have a sinister masterplan to enslave you!Team up with America,oh wait you are already doing everything they want of you.Then how about this-form a Commonwealth super trade block from Canada to Australia,that is a good idea isn't?Just make up your own damn mind and do whatever you wish and quickly before your Anti-German hysteria deals a permanent brain damage and insomnia.Considering your Empire history,we really should not give a damn about what good old Britannia thinks of ClubMed sovereignty and Teutonic fiscal dictatorship.I can't recall happy populations all over the Globe for being British colonies-in fact they all fought to get rid of you and have their independence.My post is getting to long so I will just stop and wish you all the luck in your quest for EU secession.The sooner,the better for both you(supposedly a desperate population under German yoke) and us(the evil slave-masters from Berlin who according to the British press face a continental-wide rebellion).
I am however anti Dictatorship. The EU has grown too large, too powerful, and too quickly. This one size fits all assumption simply will not work. We are talking about trying to mould numerous different Countries, with different Economies, Cultures, work Ethics, etc into one harmonious group all singing from the same Hymn sheet. Well its all sounding terribly discordant right now.
The problem lies with the all powerful few, trying to dictate to the frustrated bewildered tax paying many.
It is simply the EU in its current state that many people in the UK have a problem with, not the peoples of the Countries that make up the EU per
The risk that the euro could break up is now so pressing that Nomura Holdings is advising investors to check the small print on their bonds, as legal frameworks may determine whether the assets stay in euros, or switch into "new" currencies that are expected to rapidly depreciate.
The Japanese bank's report, released Friday, is thought to be the first major practical study of what a splintering of the 17-country currency would be like for investors, and is a sign that the once improbable prospect of euro disintegration is becoming a serious concern.
"Breakup risk is for real," said Jens Nordvig, senior currencies analyst for Nomura in New York and author of the 12-page paper.
The report, which focuses on Greece, urged investors to "pay close attention to the redenomination risk of various assets" and whether the euro-area bonds or other instruments they currently hold are issued under English law, or local law.
Bonds issued under local law, such as Greek law, would likely be converted from euros into a new local currency—a blow to any investors left holding the paper. "New" currencies, such as a new drachma, could rapidly fall in value by as much as 50%, according to most estimates.
Foreign-law debt, on the other hand, would be more likely to remain in euros, assuming a smaller euro still existed at all, the bank said.
If the euro broke up altogether, contracts would likely be redenominated into the currencies tied to their base country—a complicated task in itself—or they would be settled in a new European Currency Unit. In the most likely scenario, each currency would be linked to the ECU, as they were before the euro's birth in 1999.
Moody's has issued a warning on France's credit rating.
A rise in interest rates on French government debt and weakening growth prospects could be negative for the outlook. Fears that France has the weakest economic fundamentals among the euro's six AAA countries has pulled the Republic, the second largest economy in the eurozone, into the firing line.
"Elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications," said Alexander Kockerbeck of Moody's.
The spread between French and German 10-year government bond yields rose above 200 basis points last week, a new euro-era high. It means France pays twice as much as Germany to borrow, with 100 basis points roughly equating to an extra three billion euros a year in funding costs.
Moody's has issued a warning on France's credit rating.
A rise in interest rates on French government debt and weakening growth prospects could be negative for the outlook. Fears that France has the weakest economic fundamentals among the euro's six AAA countries has pulled the Republic, the second largest economy in the eurozone, into the firing line.
"Elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications," said Alexander Kockerbeck of Moody's.
The spread between French and German 10-year government bond yields rose above 200 basis points last week, a new euro-era high. It means France pays twice as much as Germany to borrow, with 100 basis points roughly equating to an extra three billion euros a year in funding costs.
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