Farage: EU is the New Communism

I am no supporter of UKIP (the party that wants to take the UK out of the EU), far less of their wilder flights of policy fantasy designed to appeal to the worst instincts of their supporters (notably their rampant homophobia), but Farage is 'on the money' appropriately enough with his remarks on the Euro, the currency currently used by 17 of the 27 EU member states:

- although before the Euro was launched I was attracted by the idea in principle, I was of the view then (as I am even more now) that the idea of tying such widely disparate economies into a common currency and interest rate regime could never work in the long term. The last 5 or so years, in particular, have amply demonstrated the shortcomings of this currency experiment and the increasingly desperate measures to shore up the edifice (confiscating money from people's bank accounts in Cyprus and proposals to levy additional property taxes on those deemed 'wealthy' in any future bail-outs) reveal how flawed this whole experiment has been. As Nigel Farage rightly observes, these measures will only lead to many sensible investors taking as much of their assets out of the Eurozone as they can. The real longer-term solution for many of the Eurozone countries is to take themselves out of the currency union and to revert to using resurrected domestic currencies. None of the options available to the troubled Mediterranean economies (Spain, Italy, Greece, Cyprus and some others) is particularly palatable in the short-medium term, but if any of these countries is to avoid the increasing pauperisation of their populations the immediate need is to re-establish their own currencies and at least as importantly their own interest rate regimes - the short-term result of such a policy would likely to be extremely painful as there would be a dramatic revaluation (i.e. devaluation) of domestic asset values in all categories, but within 5 years and with policies designed to harness natural entrepreneurial flair I feel certain that countries prepared to take the difficult decisions in the short term would begin to see a real economic resurgence. A continuation of current policies will only make matters worse as the months and years pass, and make the eventual need to face economic reality all the more harsh and difficult.

Will any of the affected countries have the courage and vision to take the painful steps required, though?

UKIP's Farage on the Euro and ESM bailout vehicle

I'm not a supporter of UKIP (although I wouldn't entirely rule it out in the longer term), but Nigel Farage is one of the relatively few MEPs, along with Conservative Daniel Hannan, worth listening to. Here is Farage lambasting both Herman van Rompuy, President of the European Council and Manuel Barroso, President of the European Commission for their lack of credibility in the international markets for the latest moves to support the Euro to have much chance of bringing any more than very short term relief from the systemic problems inherent in the Euro. He also told Barroso, quite rightly, that he had made himself and all of us look like out-of-touch idiots by having the temerity to lecture others about 'democracy' when he is completely unelected himself! Anyway, watch Nigel Farage at work demolishing these small men, completely out of their depth to provide coherent strategies to even begin the job of rescuing the Eurozone from the mess it has got itself into and who seem intent on dragging the rest of us down with their doomed policies:



By the way, when is the European Union going to get its accounts in order - it has not done so these past SEVENTEEN YEARS! (Sources - here and here, but there are many more to choose from.) I repeat that - SEVENTEEN YEARS!

Eurozone agrees lend Spain upto 100 billion Euros

As a result of a lengthy (2 1/2 hour) 'conference call' yesterday afternoon between the finance ministers of the 17 Eurozone countries, it was agreed that Spain could borrow upto 100 billion Euros (about GBP 80.7 bn, or USD 125 bn) to shore up its shaky banking sector, specifically its 'savings bank' sector, hit particularly badly by the property crash.

Spain will be deciding over the next week, once an 'audit' has been carried out, precisely how much funding to ask for.

Assuming this plan goes ahead, it will undoubtedly put off the 'day of reckoning' for some time, but whether it will provide any long-term solution is less clear (to me at least), unless the productivity of the Spanish economy (just like the much smaller Greek) can be 'pole-vaulted' up much closer to German levels. It remains also to be seen how the German electorate will react in their elections next year. I fear all this latest scheme is doing is to 'kick the can down the road' a little farther. I think the Euro has fundamental flaws in its design which only stand a fair chance of being resolved either by:
- some of the weaker economies in the Eurozone leaving it and starting to use other currencies (presumably their former currencies or near relatives) and allowing them to find their own value against other currencies, including the Euro; or
- by the Eurozone countries agreeing, sooner rather than later, to pool their fiscal (and in reality their political) sovereignties into what would effectively be one unified political unit. Mrs Merkel broached this subject a few days ago, qualifying the process as 'gradual' - whether that would be good enough, even if the other countries (*) agree to go along with this idea, is anyone's guess, but their resolve would certainly be tested ferociously by the money markets along the way.

(*) - for example, both the French and the Dutch electorates already rejected the EU Constitutional Treaty in referenda, which effectively invalidated that idea then, although it was later resurrected under another name, the Lisbon Treaty.

Well it is warm and sunny here and the food and wine are good, so I suppose like most people who can I will simply carry on at least for the present enjoying myself. What will happen, though, should the music stop on the 'musical chairs' game being played trying to reconcile the irreconcilable?

Sources (just a few from amongst the hundreds, because this is a very major issue):
Spanish
- El Mundo
- BBC Mundo (in Spanish)

English
- Wall Street Journal
- Reuters

(This article is cross-posted from my Spanish blog, because of the importance of this issue)