German Constitutional Issues

The decision of the German Constitutional Court that the bailouts agreed by the German government are constitutional has had a great effect on the world's stock markets although I fail to see why since the eurozone is still in crisis and as likely to implode today as it was yesterday or at the very least is likely to end with the expulsion of Greece and possibly one or two of the other PIIGS countries if not them all. It is thus difficult to understand why Osborne is not advising the eurozone countries that it is better to organise an orderly re-arrangement of the zone's rules and members rather than suffer a disorderly implosion which must be to everyone's, including our, greater detriment rather than an orderly change. It is also difficult to understand why Cameron and Osborne are not seeking to amend our relationship with the EU to one which most people in this country can live with. There is a significant number whose preference is to leave the EU altogether but if this is unlikely to happen then that number plus those who want our relationship with the EU to become more like the Swiss or Norwegian relationship are thought to command a majority of voters. It is not only on the EU that Cameron and Osborne seem reluctant to act but also on the 50p tax rate. What is holding Cameron and Osborne back? Is it a lack of guts or is it because they are holding their fire until a moment they consider more propitious? For the time being they can have the benefit of the doubt but if there is no movement on any of these fronts in the next three or four months we will be forced to believe it is because they want a quiet life.

Lies and 38 Degrees

When awakening from the days of innocence a long time ago it came as a great surprise that the USSR would put out statements that were so self evidently completely untrue. It was an even greater surprise to hear people in this country believing quoting from or merely repeating such statements with approval. No doubt some of them believed what they had heard although there is no doubt that a number knew the true state of affairs but published the lies nonetheless in order to push their own particular political agenda. On the collapse of communism all civilised people hoped that the communist form of propaganda would be put back in its bottle but sadly and to our shame this did not happen and a form of it was used in this country to change the electorate's perception of a political opponent. Alistair Campbell with the encouragement of Blair was a past master of this particular dark art, of which thank goodness there is much less these days. Sad though that the left still thinks this kind of practice is justified. Unless of course they're thick and do not understand the legal advice they've been given why else would a left wing organisation called 38 Degrees (pretentious title) be misrepresenting the effect of the NHS reform bill now going through Parliament other than in the hope the lies they tell will persuade those who are prepared to listen that the reform bill would make certain changes which the bill simply does not address.

Germany and Greece

Jeff Randall Live is back after a 3 week absence. It went missing in action during one of the most torrid Augusts in recent memory. A pity since the intelligent comments Jeff and his team bring to business issues and the people they interview on financial matters give one a good understanding of what is going on in the economic world. Yesterday evening for example Jeff interviewed former deputy finance minister Dr Flassbeck who said that by undershooting its inflation target over the last few years Germany had enhanced its own prosperity to the detriment of its fellow eurozone members and should now help make amends. Flassbeck's view is probably not shared by many of his parliamentary colleagues one imagines but it is nice to know that there is at least one German who takes a view similar to other observers which is that German exports and thus its economy have benefited enormously from the lower exchange rate that being in a monetary union in which countries like Greece are also members has achieved. Jeff had not been totally idle during his 3 week absence from the screen however since he had undertaken several interviews in Greece during that time in one of which he was told that Greeks refused to pay tax since the government could not be trusted to use the tax collected for the benefit of the country. It is difficult not to have sympathy for such reasoning. How many times has one been tempted to refuse to pay tax where it is being spent on things with which one simply disagrees. Perhaps for Greece to get over this problem it should allow each taxpayer to nominate how what he or she pays is spent on. Clearly there would have to be complete transparency concerning the outcome with the government setting the tax rate and indicating how much it wants to collect for each category of expenditure with money over collected for a category then used to make up the shortfall in another category.        

Lagarde's Progress

Liam Halligan has a good piece in the Telegraph today in which he praises the new head of the IMF Christine Lagarde for having stated the other day that banks need urgent recapitalisation but castigates her for not going on to spell out what needs to be down to sort out the problem the Western banks are in. He doubts that she knows. Halligan believes that the only way to fix the banks' problems is for them to be forced to disclose all their losses and that they will then have to be recapitalised by the taxpayers as it is now too late for private investors to do so. Furthermore Halligan believes that the banks must be made to  restructure as a quid pro quo and that such restructuring involve writing off loans and forcing investors to take haircuts. The other big problem Halligan mentions is the euro straitjacket and he wonders whether Lagarde understands that the euro is economically incoherent and doubts that she has the economic understanding to lead the IMF. The failure of our leaders to sort out this mess of their making has just gone to show that all the spin, all the hype put about by or on behalf of politicians to make us believe they are supermen was a load of old cobblers. One has to say though that Cameron seems to have recognised this and although the government does still spin things it is is somehow at a much lower level and within acceptable bounds.    

Break up the Bloody BBC

The BBC is becoming more and more of a problem. Its disgraceful bias against Israel will unquestionably have encouraged the thugs to disrupt the Israeli Symphony Orchestra. What I cannot understand is why none of the thugs were arrested since their antics were likely to lead to a breach of the peace. I wonder how many of them work for the BBC? The BBC whipped up sympathy for the Palestinians is manifestly misplaced. They sold their land fair and square and now want it back. They could of course buy back houses in Israel as they come up for sale but they don't. Is it because they want to steal it back? Looks like that to me. For those parts of Israel that it took over in the wars against it it would be mad to give back until a settlement is reached with the Palestinians and its other neighbours but clearly the Palestinians do not want a settlement. They want to keep crying 'poor little me'. The BBC is also biased against the Republicans. Only snide remarks are ever made about Republican Presidential candidates but no word is uttered about the Bummer without his praises being sung. Any impartial reporters would point out his obvious weaknesses and his failures in office. A third example of bias is the way the BBC is now reporting the riots. Cameron was remarkably refrained in his criticism on the Today programme but he was absolutely right in what he said. We are forced to pay for the outpourings of the BBC but what satisfaction do we get from it. Let those who like its left wing bias pay for it but let those of us who don't pay for own on TV and radio. It is contrary to all reason that we should have to pay for this monopoly whose tentacles in the last few years have spread ever wider. Why for example do we the licence payers have to pay the BBC to produce films for the cinema? Why doesn't the Competition Commission investigate the BBC?        

Yvonne the Cow

Those who want out of the EU know exactly how Yvonne feels in her desire to escape from the Common Agricultural Policy and to live free with her sister and calf and we wish her every happiness at her new abode in the sanctuary run by the Gut Aiderbichl. Freedom is a strong bovine emotion and seemingly as strong as any that runs in the human breast. One has to wonder whether Yvonne has also studied the Wealth of Nations and understands all about free markets since the kind of farm she escaped from was probably like many German farms which by our standards would be called a smallholding which with many French farms was just the kind of thing the CAP was set up to protect. Good for the producers but bad for consumers which of course was rightly strongly disapproved of by Adam Smith.  Yvonne clearly wanted a bigger horizon, somewhere where she could feel in control of her own destiny and to produce milk in exchange for wide pastures. As it is with Yvonne so it is with those of us who oppose the mercantilist view now being pursued by Germany in another field, no pun intended. Open Europe reports that according to Marco Zatterin, La Stampa's Brussels correspondent, Germany is trying to get the EU Energy Commissioner to propose that all new energy deals between EU members and third countries be examined by the EU before they are closed. This is because Germany is apparently worried that the UK, France and Italy have stolen a march on it by already doing oil deals with the new Libyan regime. Yvonne would clearly think that was tough luck as after all a free market is a fee market. Yvonne would be right and like her we must say no to any market rigging.

Wolf Cries

So Alain Juppe, the French Foreign Minister, says that the collapse of the eurozone will lead to the collapse of the EU and then possibly to war. The French pretend to be masters of logic as after all those who don't do maths for their baccalaureat have to do philosophy instead. Mr Juppe must have failed his exams as there is no logical reason why one event should lead to another. Indeed in my view it is more logical to assume that any fight is likely to be between the haves and have nots locked into the eurozone. If you wanted evidence of this possibility you only had to watch the riots that took place in Greece earlier this year. MEP Guy Verhofstadt, the Liberal gang leader in the European Parliament, has also written  something similar in a letter to the FT about the consequences of a break up of the eurozone, "the likelihood would be that monetary obstacles, foreign exchange rates and possibly even border controls would be reintroduced, as nationalism once again took hold across the continent. Within a fairly short time we would witness a dismantling of the internal market." Mr Verhofstadt would not pass a logic exam either since there is no reason why monetary obstacles, etc would be reintroduced as a result of the euro's collapse although it is true that  members of the EU are even now trying to reintroduce border controls to stem the unmanageable tide of immigration sweeping into the EU. If the break up of the eurozone did lead to the break up of the EU I for one would be very happy as we would undoubtedly be much better off out. Sadly I do not see that happening and thus as a second best it is to be hoped we can renegotiate our relationship with the EU to one similar to the Swiss model. As for Mr Juppe and Mr Verhostadt they are just trying to frighten the horses for their own political ends but by crying wolf will end up being ignored. Couldn't happen to a nicer pair.