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Osborne right to be gloomy – politically we’re out of the euro but economically we’re all in this mess together

Posted on 22 October 2011 | 5:10pm

I promise I am not going soft, but I am beginning to feel a little bit sorry for David Cameron and George Osborne.
As a regular attendee of European summits when Labour was in power, I always feel a bit sorry for anyone who has to eat into the weekend to go to some soulless conference centre, glad-hand, smalltalk and occasionally do a bit of genuine debate and negotiation which gets something done.
As Trevor Kavanagh of The Sun used to delight in pointing out, I was always a little bit more Eurosceptoc than TB, and it was in part the regular ridiculousness of summiteering that made me so. It also made me see the fundamental flaw in the single currency – that its driving force was every bit as much political as it was economic.
The political imperative of the EU – peace and prosperity across Europe- is a good one. But too much political capital was expended on the fixes and the broken rules that got as many countries as possible into the euro, which is now creaking under the weight of its own contradictions.
So why the sympathy for DC and GO? Well, because as George arrives in Brussels today, he righhtly said there had to be a comprehensive solution to the eurozone crisis. But he could not say, and certainly cannot much influence, what it is likely to be. But the reality is that he has the worst of all worlds – politically we are out of the euro so don’t call the shots, yet economically we are to all intents and purposes in it, as if the crisis doesn’t ger resolved, the UK economy risks being hit just as hard as the big eurozone economies.
Meanwhile, Cameron becomes the latest in a long line of Tory leaders to find that what Ed Miliband rightly calls ‘barking’ Eurosceptic backbenchers have the capacity to make his life he’ll. And as it to underline his impotence on the eurozone, be is off to Australia when German Chancellor Angela Merkel meets President Sarkozy of France next week.
I’m not feeling terribly sympathetic towards Angela Merkel. Well, I sympathise with the weight on her shoulders, with every major government in the world saying she has to take a decisive lead. But the Germans, for all their reputation for financial rectitude, turned a fair few blind eyes to the economic realities of smaller countries when they let them in.
It is all a bit of a mess, and with huge consequences. In recent days I have been in Albania, Macedonia, Norway, Germany, France and the UK. In the non eurozone countries, the eurozone crisis was as big a worry as it was in the eurozone itself. I detected very little confidence it is going to be satisfactorily resolved any time soon. No wonder George was looking so gloomy.

  • Is it minutely possible that George is gloomy because:

    1 – he can no longer blame Labour’s fiscal policies with any credibility?
    2 – he knows there’s no way out (as said above by our own leader)
    3 – he can’t be seen looking ecstatic due to the ongoing severity of the financial situation?
    4 – he is not at home this weekend and Mrs O is not best pleased?

    I note (from that George said:

    “We’ve had enough of short-term measures, sticking plaster that just gets us through the next few weeks,” 
    Where does he get his plasters from? The corner shop, you know, those First Aid supplies that have been in stock since the turn of the century (20th)?

    Such plasters never stick and George’s certainly haven’t. Not in terms of remedial aid to the injured part. Instead, the injury is steadily allowed to become infected and gangrene sets in.

    That is why the Hardest Hit ( have been out in force today, showing George & Co just what they think of his plasters.

    No wonder George was gloomy…he’s been rumbled.

    PS Could we discuss the referendum vote – would love to hear your thoughts, Alastair.

  • MicheleB

    Can’t help wondering how the Euro crisis will affect Finland!

    Hope I don’t actually come up as Wiwi again 🙁

  • The way to find a solution is to connect up the people below the PMs of Europe through mass online free discussion.

  • Robert

    Seeing as we are at Diwali, a good measure of how depressed the economy is is the noticeable lack of fireworks this year – yes there are a few going off now and again but nothing like the pall of cordite smoke of past years nor a continuous fizz and roar and banging.

    No doubt we’ll see a quiet Guy Fawkes night, too. 

  • Olli Issakainen

    The moment of truth has now arrived.
    There is only a couple of days to save the world economy. But the problem is that the globalist elite decided in 2009 to cause a depression, and depression it will get.
    Many politicians and central bankers whose job is to “save” the economy, are, in fact, in this plan.
    People should realise that the Federal Reserve, for example, is a private bank owned by banks. It is not owned by the US government.
    Now the worst case scenario will happen. Private investors in Greece´s debt will be forced to have “haircuts” up to 60%.
    When these people lent money to Greece, they believed Greece was as safe as Germany because of the eurozone.
    Now they will realise that Portugal, Spain and Italy are not safe. Investors will withdraw their money, and the “Club Med” countries will collapse.
    Greece must default, but it must also leave the eurozone and have its own currency.
    After the investors withdraw their money, banks will collapse. EUR100bn recapitalisation is not enough. Twice the amount, at least, is needed.
    And even if EFSF is increased to EUR2tr, it will not be enough.
    The problem in the eurozone is that Germany and countries like Greece have different economies. Same economic policy with same interest rates does not fit them.
    Euros´s fatal flaw is monetary union without fiscal union.
    The plan from the beginning was that monetary union would make fiscal union inevitable.
    The globalist elite will now use the crisis as a pretext to turn the EU into the United States of Europe. This new EU will be one zone in the total of 10 similar unions which will form the world government the globalists have always dreamed of.
    China´s currency will be added to IMF´s SDR, and this expanded SDR will replace the dollar as the world´s reserve currency. IMF, by the way, is a unit of the United Nations.
    Needless to say that the Rockefellers donated the Manhattan land for the United Nations, and were involved with the CFR in drafting its charter.
    The Rockefellers have also funded a lot of UN programmes.
    As for Britain, we now know thanks to new IMF paper that the plan A cannot work even in theory.
    1% fiscal consolidation causes a drop of 0.75% in private consumption and a fall of 0.62% in real GDP.
    Expansionary fiscal contraction has been scientifically proved to be false. It cannot deliver growth or recovery.
    As Lord Skidelsky has explained, the money the cuts are supposed to “save” simply disappears because unemployment goes up.
    When I first saw plan A, I immediately realised that it cannot work even in theory – let alone in weak world economy.
    For about a year I thought that Mr Osborne was simply incompetent. Then I had access to confidental papers and changed my mind.
    All economists and investors know that the best time to make money is a crisis. So usually you can know the truth by simply following the money.
    This time the key is to follow the power.
    As George Monbiot has stated, the biggest battle of the 21st century is between democracy and big corporations.
    Big banks and corporations will now use this crisis to take power from governments. They will simply withdraw their money, and nations will collapse into insolvency.
    I know that 99.99% of people will not believe what I say. It is of no use for me to give links on internet were there are articles about all this.
    People will only believe when they see this all with their own eyes. But it will be too late then.

    Ps. There appears to be a pattern here. When I wrote on this site that inflation in Britain would rise to 5%, I was immediately told that it would never happen. Now it is 5.2%. When I a couple of months ago wrote that there will soon be a global economic crisis 2, and that it would be much harsher than the first one, no one agreed with me. And when I two years ago said that Scotland will become independent, it was said that this will never happen. People in quality papers said that the election system in Scotland was fixed in a way that made it impossible for SNP to gain a majority. Now the majority in Scotland support independence. About six months ago I wrote in my comment that Greece will not be able to pay its debt. All EU leaders and top Eurocrats denied this possibility. Same will happen now. It will be said that Portugal, Spain and Italy will not collapse. It will be said that banks will not collapse. It will be said that expanded SDR will not replace the dollar as the world´s reserve currency. And it will be said that the United Nations will not form a world government after the economic collapse. And then, of course, all of this will happen. But people must see it with their own eyes. I understand.

  • Richard

    How lucky Ed is to be leading a party which is totally united about Europe.

  • Ehtch

    The Dollar has been trying to destroy the Euro, you COULD say, since it started, à la communism?

    Just a thought to discuss.

    Le communisme et l’Euro – chose que la même chose à nos amis yankees à Wall Street? Vous jugez. Cocos sont passés, maintenant l’Euro?

  • Libdem

    The likelihood of that happening is about zero. The level of democracy in Britain and the rest of Europe is at an appallingly low level witness the need for the 3 main UK parties to ‘whip’ their MPs in tomorrow’s debate. None of the establishment wants us to discuss the merits of the EU unless it involves us approving their proposals. We need an ‘arab’ spring when it comes to our political class.

  • AC totally agree it’s the fault of the Germans, therefore as we are heading for a two speed Europe, we need a new EU Referendum, as your blaming the Germans for this mess and the new EU Treasury will be in Germany or France can we take it as a given you will supporting GET OUT OF EUROPE Campaign.

  • Chris lancashire

    Have you left Kazakhstan out of the list of recently visited countries?

  • Ehtch

    Gloomy, toomby, as a grave, if he can save, himself. But hope not. Life on the street has more spirit.

    hope Georgie has educated himself this weekend, and not be so harses in my english stable-like.

    A song for Georgie, my new semi-capitalist friend,

    No George, I can’t make for afternoon tea Tuesday with your aunties. I will have to bell you, sorry budd…

  • Dave Simons

    You don’t understand that sounding like a combination of Jeremiah and a voice in the wilderness persuades no-one. You are stating your opinions as if they are hard facts when really they are just your opinions, which may or may not be borne out by events. You say that there are only a couple of days to save the world economy. A couple of days soon passes. Let’s see where we are on Thursday morning. A meteorite might hit the planet but I suspect Thursday morning will feel a bit like now, Monday morning. I might be wrong – I often am – but your ‘hard facts’ tend to put your credibility on the line. If I were you I’d quit preaching and stick to discussion, and keep in mind that the world is a big place, bigger even than the minds of George Monbiot, Robert Skidelsky and yourself put together.

  • Gilliebc

    I believe Olli is entirely right on this issue.  He may be the only one posting on this particular site to say this, but he is not alone on the http://www.  Many people are saying exactly the same thing and not just the usual suspects either.

    The hard evidence is indisputable imo.

  • Gilliebc

    That’s a rather “naughty” comment Chris.
    Just because AC used to work with/for Blair, it doesn’t mean he still does.
    Does it?

  • Ehtch

    Sikkim, or however you spell it, that country right up the himalayers, should be interesting to visit. Hasn’t even yet got electricity yet, let alone roads.

    I wish to visit the himalayers before I visit the end of my mortal coil, and visit Shimla in Northern India especially, before going on my buddhists trip in the the far high up hills.

  • MicheleB

    I was uphill from Kasauli during Divali ’09 Ehtch, it’s the other end of the train line from Shimla, around the mountain on that rickety little mini-guage railway.

    Stunning stunning place but I hope never to to have an outside-edge car journey on those roads again.  I almost prayed!  Much more terrifying in the daytime than at night.