Malcolm Blair-Robinson's Blog, page 161
July 3, 2015
Bombing Syria
The last time this came before the House of Commons the proposal was to bomb Assad military assets because he was said to be using chemical weapons; a fact that was in doubt because of a good deal of evidence that it was a rebel set up. The vote was No, not least because it beggared belief that after so much mayhem and such spectacular failures, this country would get into yet another fight.
The various failures of policy, strategy, planning and purpose have contributed to the rise of IS which is headquartered in Syria and the sworn enemy of Assad, whose military is no longer strong enough to defeat it. We are already bombing IS in Iraq, while the Americans and others are bombing this terrifying phenomenon in Syria too. IS has just claimed responsibility for massacring British holidaymakers. No wonder there is a cry for revenge. Since IS has abolished the border between Syria and Iraq there seems little need to hold back. If we bomb here we might just as well bomb there. Moreover Assad has already lost control of the area, so we would not be launching against a sovereign government.
However there are two questions. So far no bombing anywhere has worked and most of it has damaged our interests. So a question mark hangs over whether this bombing will be any different. There is a good deal of circumstantial evidence to support the fear that the more we bomb the more we radicalize. We are now in the extraordinary territory of whole families of British citizens setting off to join IS. This is as much a war within as without and the target surely ought to be the communications network through which this doctrine is spread, as much as an arms dump somewhere on the edge of a desert. GCHQ is perhaps the driver, not the RAF.
The second question is this. There are three key allies in the fight against IS whom we fail to publicly recognise, although behind the scenes there are contacts and cooperation. These are Iran, Russia and Assad. Would it not be better to come into the open and form a joint strategy to at least contain IS on the ground. Defeating it is not really a military option in spite of the fighting talk, since although it is very well organised and funded and has seized a good deal of territory in which the most blood thirsty regimen is apparently in force, is is not actually a significant military power. The power lies in the idea it stands for. Until the idea is contested successfully IS is here to stay.
July 2, 2015
Greece: Future Unknown
Yesterday was one of speculation and false hopes, rumour and wishful thinking. It ended without any actual change. The referendum will proceed on Sunday and the Tsipras government urges Greeks to vote No. The IMF and the Euro Group declared that there could be no more talks until after the referendum and that existing arrangements had ‘expired’. Yet there appeared to be cracks in this facade of solidarity including two clips on TV. One was of Merkel ruling out any agreement about anything until after the referendum; the other was of the French president saying that it was imperative that an agreement was reached before the referendum.
Meanwhile nobody is clear what will happen when this referendum is over. If the vote is No, Tsipras thinks he can negotiate a new deal, but that is far from certain, and if he cannot what happens then? And if it Yes, yes to what? There is no deal on offer. So the whole process starts again with absolutely no evidence to indicate that the crisis will be other than ongoing, seemingly for ever. The main reason for this is that there is no sound economic basis underpinning any of the plans. There are only two solutions. Both recognise Greece is bust.
The first, which involves Greece staying in the Euro, requires action by the ECB and a haircut down to grade one for Greece’s creditors. This will involve existing loans either being reduced to 25% of face value or extended to over a hundred and fifty years at peppercorn interest, which would have the same effect. The ECB would then have to print enough Euros to reboot the Greek economy and keep it within Euroland. Germany will have to recognise it has no option but to agree to the printing and help rescue any busted eurozone banks. The resultant devaluation of the Euro will help kick start the moribund Euroland economy. The devaluation will be short lived. The IMF is involved in this rescue only as a creditor with losses. It should never have been engage in the first place on an internal eurozone problem.
The second involves Greece defaulting on everything and going back to the drachma. This will involve bigger losses to creditors and would require the IMF, not the eurozone, to fund the re-boot of the Greek financial system.
Neither of these solutions is on the table. Lending more money to Greece to prop up obligations it cannot meet and thus increase its indebtedness is utterly pointless and will not work in the future any more than it has done in the last five years. What it will do is guarantee a big bang down the line which will sink the whole euro project.
July 1, 2015
Printing Money A Different Way: Worth Looking At.
An idea to stimulate economic growth without further government borrowing. Written in plain English and very easy to follow, this is the only really fresh approach out there to the intractable problems of the UK economy, and it is just beginning to be noticed in important places. Buy! Download only .99p Paperback £2.99
Euro Crisis : The Problem Is Not Greece. It is Germany
The problem in the Eurozone is Germany. As has been previously posted a core principle which allows capitalism to function is the need for all capital structures to fail. This is the case with individuals, businesses, corporations, municipalities and countries. Not only does this principle allow for renewal when things go wrong, it also supplies the space for new innovation and enterprise to seize the opportunities such failures leave open. Greece went bust five years ago, when chickens set free by lax lending criteria and greedy investors who failed their own obligations of due diligence and lent far too much to Greece, came home to roost.
The correct response at that point was to write off most of Greece’s debts so that the mountain was reduced to a manageable hill, which could be serviced by an expanding economy. To achieve that Greece’s economy would have required a reboot; that required not more loans but new money. That meant that the ECB would have to print some to top up the failed financial system in Greece so that it could function and expand. Markets would have been hit hard and Germany would have been faced with its own major bank rescues on the lines of the US, UK and Ireland.
But the crisis would have come and gone and the Euro would have shown that in spite of the fact that it had no government, treasury or person in charge of economic policy, it could function as a regular currency. But Germany said no to the debt write off and no to printing money. It took the line of high principle ‘people and countries must pay their debts’ and bowed to haunted memories of runaway inflation in Germany in the 1920s. It instead insisted on a programme of more loans in the form of a bailout and all kinds of strictures upon Greece’s domestic policy to correct its errant and spendthrift ways.
This was not a coherent financial rescue. It was a mixture of loan sharking (loan sharks lend to those who cannot pay back and then lend them more and more to cover the interest and repayments) and a punishment detail. It also required a surrender of sovereignty by the errant country on a scale previously only known through military occupation. Five years on it has not worked. Indeed the crisis is now worse because it is causing people to doubt not just Greece’s well being, but the integrity of the Euro and the viability of the EU. Exposed by the saga are not just financial issues, but those of governance, judgement, democracy and competence.
It is not yet too late, but to save the day Germany has to abandon its prejudices and get real. It must smile and forgive. After all a smiling world has forgiven it for a good deal in the past. A very great deal in fact. Perhaps Germany is more forgiven than any other country ever.
June 30, 2015
Hot Weather Reading
A gentle yet tense drama which will appeal to readers of all ages who like a romance woven into an atmospheric thriller with engaging characters. Originally published as A Gift of Treason now available under the Tor Raven imprint at budget prices for both Kindle and Paperback.
The narrow, ordered life of a gentle but reclusive artist, Jane Block, is disturbed when a bequest, intended for her dead mother, passes to her. Mystery surrounds the nature of the inheritance and Jane is led on a sinister trail to secrets of the past, forcing her to confront her own fears and inhibitions. She finds herself caught in a frightening quest to unravel a mysterious cover-up from World War Two, and in so doing finds intrigue, love and betrayal.
EU In Crisis : Not Just Greece
The Greek crisis is not only out of control but the means to control it are not there. None of the players has a viable plan. Tsipras threatens to resign if he loses but imagines that if he wins it will strengthen his negotiating position and force the Euro group and the IMF to agree to a realistic write down of Greece’s debts and a growth programme to rebuild the economy. There is scant chance of that. The Euro group and its allies have said that if the Greeks reject their package they will have to leave the Euro. But if that happens the cost will be huge and it will be the end of the Euro in its current form. It will become little more than a currency peg on the lines of the ERM where national Euros are pegged against the German benchmark value and drop off when in trouble.
This might be a very good thing but it is not what the people calling the shots are trying to achieve. If Tsipras loses and the Euro group force a new hangdog Greek administration to accept the package, the Greek crisis will go on an on until it explodes and brings down not only the euro, but the EU with it. The reason that this mess exists is that certain fundamental principles are being violated. These are to do with the rules of capitalism, the rules of currency and the rules of democracy.
Capitalism has at its core the principle of failure. Any economic structure must be able to fail in order to renew. Businesses fail, banks fail and individuals fail. So do countries. Without this renewal is impossible, in the same way that old leaves have to fall off the tree before new ones can take their place. Greece is bust, but it is not being allowed to go bust in an orderly way and then enabled to renew.
A currency of paper is a measure of wealth; it is not wealth itself. It must therefore fluctuate according to the underlying values and costs within the economy it represents. It cannot simultaneously measure the value of several economies of varying characteristics, anymore than ten thousand square feet can be declared to be the floorspace in three separate buildings of which only one is actually that size. A currency is a token not a totem. A token facilitates exchange and trade. A totem is something people dance around in circles. You get the point.
Democracy requires that the people are sovereign and have the final say in who governs them and what they do. In the EU most people taking decisions have not been elected by the majority of those whom their decisions impact, because national leaders of widely differing countries are combining power in their hands which has no democratic mandate. The remainder of the players like the EU Commission and the IMF have not been elected by anybody. To use financial strength to subjugate rather than enable, is morally no more defensible that using the threat of armed force.
So what happens next will tell us what is happening next and no more. It will not tell us how it will end. There is mounting evidence that when that ending finally comes it will not be a happy one.
June 29, 2015
DQE: Resonance For Greece?
An idea to stimulate economic growth without further government borrowing. Written in plain English and very easy to follow, this is the only really fresh approach out there to the intractable problems of the UK economy, and it is just beginning to be noticed in important places. Buy! Download only .99p Paperback £2.99
Greece: It Is Not Over Yet
To recall Churchill’s words about the end of the beginning would, however, be apt. The gloves are off, negotiations are ended. The Greek government has rejected what it considers are unreasonable terms and has decided to take the issue to the people. Its banks are shut and tomorrow it will default. Many would imagine that is that. But as we have come to discover, in Euroland nothing is ever as it seems, nor like some everlasting soap, is anything ever over.
Whether they realize it or not the various authorities with whom Greece has been negotiating left the Tsipras government no option. It was elected on a mandate to end austerity and if it cannot it is right and proper in a democracy, to put the issue to the people. The Greek government has done the right thing. It plans to campaign for a No vote and its political position leaves no other coherent course open to it. Yet it may not win. Now cut off from such money as they still have and facing the possibility of a drachma of uncertain value, the majority may decide that while austerity is one thing, national bankruptcy is quite another. Unfortunately their government has not yet come forward with its plan B, which must explain what happens next if they do as asked and vote No.
As Alex Salmond discovered when he tried to waffle through a currency union between an independent Scotland and the rest of the UK which most said would not work, sufficient numbers of Scots put their money before his ambitions for their future, and he lost the referendum. Anything less than a workable plan to make a fresh start will risk such an outcome for Tsipras. His problem will be that a new drachma would be worth a good deal less than even the currently devaluing euro. Paradoxically Greece urgently needs a devaluation to re-boot its economy.
This then raises once again the muddle which is the foundation of what is fast becoming a cursed currency which threatens the very cohesion of the EU. Not only does the currency not have a government or a treasury, but it is founded on the unsustainable notion that once in it you can never leave. This is fundamentally as absurd as saying that once you get on a train you can never get off. So even if Greece were to go drachma, officially the euro would still be legal tender. This is all uncharted territory because no previous currency has ever been constituted on this basis, for the very reason that such a basis is unworkable.
But whatever the economic implications for the euro and Europe generally of what amounts to a financial war, they are as nothing to the political damage done to the whole EU project. Because the masses have been turned off Europe by undemocratic authorities using financial power to batter a weak state in dire trouble to fall into line and march in a direction its people do not want to go.They are gripped by record levels of unemployment and a flatlining economy. This is the power of capital over labour, of the rich against the poor of an unnerving aspect which, if you think about it, becomes chilling. It demonstrates a detachment by the financial and ruling class from the people they are supposed to represent and upon whom they finally depend. It stretches democracy so thinly that its meaning is lost; demonstrated by the fact that the European parliament has no voice at all in this drama and if it has any views the media do not even bother to report them, because they know they count for nothing.
Greece is bust, but whether it goes bust is in the air. Its economy needs a reboot but whether it will get one is uncertain. What is certain is that the euro is more troubled than ever in its short history and the EU, so recently a rock of timeless durability, is now riven with ominous fissures. The chances have significantly increased of the UK voting to leave. For the EU an even worse prospect is at hand. It will strengthen the campaign for the French right winger Marine Le Pen in her bid to become President on a manifesto to lead France out as well.
