Pigs, troughs, bankers and other related stories.

The financial crisis and the EU, will it ever, 'go away'?

The future of the euro?The future of the euro?
Well the Greek financial crisis is back in the news again. Mind you there's been some stiff competition of late, the royal wedding and the death of Bin Laden for example. But what we read about Greece is different, less dramatic, stale even, as it's about a year since the Greek bailout was announced. Also the root of the problem goes back such a long way it seems boring. It's not only Greece too, since their problems became newsworthy Ireland and Portugal have taken a turn. All the way through this saga there have been suggestions that the euro was, as a grand project, ill conceived and has been poorly managed since its introduction. The past behaviour of euro-stalwart Angela Merkel, taken as an example, shows that nerves are frayed. In real business, as opposed to the make-believe of the EU, there's a point when a failing venture is closed down. It goes into bankruptcy to avoid 'pouring good money after bad'. The point to remember with the EU is those doing the pouring are using other people's money. It's not for them to face up to reality.

The climate change warriors always like to tell us that weather is not the same as climate. Thus last winter when very low temperature and harsh conditions made life difficult they clung to their global warming creed with astonishing vigour. They had to keep up the pretence, this false separation, at all costs. Similar delusions can be found with the supporters of the EU. Here the delusional are forced to accept that 'something' is afoot with the PIGS, and indeed with the PIG trio, Portugal Ireland and Greece it's a rum do alright, but it's nothing to do with the euro. This they would have us believe is just coins and notes, so it's irrelevant, it's like blaming an innocent bystander for a road accident. The same problems would have happened if these countries had used the dollar or the yen. Is that so!

But the fact is it all went wrong for the PIG trio while they were both in the EU and part of the single currency. And another fact, while they may have been 'poor' as independent countries in their pre-EU days, was it ever this bad? For this trio is now totally ruined. The youth of these countries will be very old before the debts are cleared. First the membership of 'the club', entry into the EU, then the adoption of the single currency gave a false sense of security and worth that was founded on faith and not fact. It's common to hear the word 'confidence' used to describe some aspect of world finance and markets. You get the impression that confidence is more important than common sense.

But we should not let this idea that the euro is innocent pass. One reason is that behind this lie is a motley crew of the usual suspects plus some bankers. Following the bursting of the property boom just about everywhere the granting of mortgages on stupidly generous terms came into focus; why did this happen, who was to blame? Using Ireland as an example you can also see that the government played no small part in the problem. For it was the government that gave the nod and wink to the 'developments' that have scarred the landscape and in reality were not much better than money laundering scams. But while many Irish politicians were voted out most Irish bankers stayed put. And the difference between the two? Ah! That's the trick question, as the one cannot function without the other.

Here in the UK the focus on banks brought about banker bashing. The mess must be their fault, right? Only partly true, but this mood did pave the way for the Vickers report, the work of the Independent Commission on Banking. The collapse of Northern Rock and the near collapse of Lloyds made the bankers look foolish. However, they have fought back and some of the more painful options for their future that were being talked about prior to the setting up of the Independent Commission on Banking have been dropped. This means that the breaking up of the banks need not happen, instead the sectors of savings and investment banking will be 'ring-fenced'. This is quite a victory, even so it has not satisfied HSBC who are considering moving out of the UK because of it. So how was this battle won? Well throw your weight around, like HSBC, the banks are big remember, and use terms like 'global competitiveness'. This has been rather scary for some London based politicos, they, pushed by the bankers, have harped on about London as the world financial centre. The end result is that banking oversight in the US and Hong Kong looks tougher. What if this makes it better?

Now financial downturns are not new, but when trouble returns, it always does, what then? When this present round of trouble was at full height Gordon Brown liked to tell us "it started in America". This was classic blame shift and victimology stuff, what the left is famous for. If, when the next round of financial trouble strikes it starts off in the UK we are going to look very silly. But then what of the future? If there's one thing the euro crisis has shown us, it is the mutual dependency between bankers and politicians. They might not like each other but the one is stuck without the other. So far the politicians have failed to make the euro work as they would like.

As we have seen in the UK when the government and the bankers fight there's no clear winner, it's give-and-take. The same could be said of the euro countries. If Merkel were not so stupid, so arrogant, she would not talk of the financial world in a negative way. For it was she who said of the hedge funds she wanted "to bring them to heel". It could be different, a lot better with these people onside, perhaps Merkel should be told these people work hand-in-glove with the banks. For it could be that only with more help from the banks will the euro stand a chance of survival.