Saturday, 19 May 2012

The Storm Must Break

Select any simile you choose; leaden skies before the storm, at the top of the roller coaster, running before the wind - they all mean it's just one-way now, with no going back, no pause. The alternative to the fracturing of the Eurozone is full political and economic union, and this simply isn't going to happen in the time available. Markets are moving rapidly to a show-down, and contrary to comments from the like of Peston and Chote, I think this catharsis will actually prove a boon for Britain.

However, we must insulate the functioning of the economy from the reckless liabilities racked up by the failed financial sector. The bank split into retail and buccaneer must happen not in 2017 but in 2012; interest rates, domestic lending and bank charges must be determined by the profits and losses on retail banking activity alone, and British bank customers must not pay the losses for the banks' mindless foreign avarice. Let the casino banks fall, and all their poison liabilities with them. They gave nothing to British taxpayers, and they should take nothing from them.

The European oligarchy, the noisome coupling of political class and big business, will be as reluctant as a cat with its claws in the sofa to relinquish its grip. They will do everything they can to twist, deceive, load more and more of the financial burden of the Big Lie on ordinary taxpayers. This must be resisted. 

The Eurozone fracture will offer nothing but opportunities for British business; a core Eurozone of the wealthy will keep the MkII Euro exchange rates advantageous. A collapse of Euro banks will leave Euro firms starved of investment and ripe for takeover or replacement by UK firms with piles of hoarded cash. Frankfurt will crash and burn, leaving London as the global centre for insurance, FX and commodities. The stripping away of all those disguised Euro subsidies - everything from DERV fuel duties to CAP knock-on benefits to food processors - will make every British farm and transport company more competitive, will create a level playing field for British SMEs. Our labour market flexibility and advantageous future pension liabilities (made even more advantageous by a booming equities market) will put us ahead of Euro competitors. There is nothing inherently superior about German workers or German productivity; the German boom has been at the expense of Europe's periphery and due to the EU's distortion of European markets. Now is the time for Britain to compete on equal terms. We can do it. 

Oh, and don't anyone try to convince you that the frictional costs of trading a whole basket of currencies rather than a single Euro are significant. They were significant maybe back in the 1970s, in the time of manual ledgers and paper transfer instruments, but technology has made multi-currency trading as costless as if all transactions were in Sterling.

5 comments:

DeeDee99 said...

The admissions that the Euro was primarily a political project are coming thick and fast now - and with them the scare tactics about the catastrophic effects if it collapses.

I too think that, once the initial shock has been absorbed, it's demise will be beneficial for the UK (and probably for most of Europe as well).

If the EU doesn't collapse entirely, it will mean wholesale renegotiation and therein lies our chance to break free.

G. Tingey said...

I tend to partially agree.
I think a form of "trading" EU will (indeed must ) remain - free-trade is good for everybody.
But the political bureaucratic project should fail, following the collapse of the Euro in it's present form.
One MIGHT see two "new Euros" which I might label EuN and EuS emerging. EuN would include Germany, Belgium, Netherlands and the other "northen" countries.
The real question is which EuN/S would France join?

As for Choate, who is pulling his lying strings, and why?

Anonymous said...

After the collapse, we should make sure every European Union institution is razed to the ground and the soil salted.


Elsewise like the undead, they will return.

Anonymous said...

"The bank split into retail and buccaneer must happen not in 2017 but in 2012; interest rates, domestic lending and bank charges must be determined by the profits and losses on retail banking activity alone, and British bank customers must not pay the losses for the banks' mindless foreign avarice. Let the casino banks fall, and all their poison liabilities with them. They gave nothing to British taxpayers, and they should take nothing from them."

Amen to that.

Anonymous said...

I Agree.


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