Iknow I'm being really naive, but why can't the banks just keep their interest rates lower for Italy etc rather than escalating the problem.

I'm not surprised that's what George Monbiot thinks. I am surprised you think his point of view has any sway at all with the Coalition - the Tory end of it in particular.

The technocrat versus democrat point isn't especially sinister, to use a metaphor the question NN was asking (and only asking, not deciding) is, if the whole country's fortunes depended on ballroom dancing, would you go for one of the celebrities on Strictly, or one of the experts? They're not proposing doing away with democracy, just saying skills, rather than personality, will be electorally desirable. And thank heaven for that after Berlusconi.

We may soon be entering the age of the "technocrat" vs the "democrat".

Will we get a referendum on it, will we have our say.

What colour clothes will the "technocrat" wear? The technocrat will be dressed in green, so many people will welcome and follow the technocrat.

Did you watch Newsnight last night?

They had a "technocrat" on. He told us that governments should listen to "technocrats", because they are experts in economics, unlike the elected politicians.

Some people want "technocrats" to be able to impose their solutions on the people. Democratic politicians might not do it fast enough, they may listen to the people instead of to the "technocrats". Berlusconi is on the way out because he wasn't getting the "reforms" done fast enough. He obviosuly wasn't a "technocrat".

Of course, what the expert "technocrat" didn't say was if these "technocrats" are such experts why didn't they foresee the financial collapse? Didn't they know about the dangers of the derivatives markets and the collateralised default swaps?

Lots of people did know about them, but they weren't "technocrats".

This is an example of the type of low growth, reductions in growth type thinking that I believe lies behind the austerity. It is from the environmentalist George Monbiot

'Bring on the Recession

How else will the destructive effects of growth be stopped?

If you are of a sensitive disposition, I advise you to turn the page now. I am about to break the last of the universal taboos. I hope that the recession now being forecast by some economists materialises.

I recognise that recession causes hardship. Like everyone I am aware that it would cause some people to lose their jobs and homes. I do not dismiss these impacts or the harm they inflict, though I would argue that they are the avoidable results of an economy designed to maximise growth rather than welfare. What I would like you to recognise is something much less discussed: that, beyond a certain point, hardship is also caused by economic growth.'

www.monbiot.com/2007/10/09/bring-on-the-recession/

I think there are people who really want to stop growth, who want the public to stop growing and expanding. The austerity being inflicted on so many countries is stopping growth.

No, not at all. This is about powerful elites forcing reform on ordinary people -increases in pensionable age, cuts to healthcare, increased costs of education, reduced pensions, reduced welfare, reductions, reductions, reductions. "Markets" and environmentalism are only tools that are used to impose these reforms and austerity and low growth on the people.

The elites don't believe in "radical environmentalism", they merely promote it to help impose low growth, austerity and reforms on the people.

Claig - you think all this is radical environmentalism?!

What is it really all about?

Stopping growth. Putting countries into straightjackets to stop people growing. They are shrinking growth, they want to shrink the population. Welcome to a green world of low growth. It's going to last for years, because someone has decided to impose austerity and low growth on the public. They call it being "sustainable".

On Newsnight a few weeks ago, we saw the Tory MP, Douglas Carswell agreeing with the Greek communists that Greece should be allowed to leave the Euro in order to allow them to grow and escape from the terrible austerity that is being inflicted on them by the "markets".

The only politicians who are saying that Greece should leave teh Euro and be allowed to grow are the much derided right wing Eurosceptics and UK Independence Party. They are saying that these countries have lost their independence and effectively their democracy.

The doom and gloom reporting and the "markets" rewarding changes of governments all help to move forward the policy of reforms. If they were to ease interest rates etc., then Berlusconi would not have to go and reforms would not be so urgent.

Will they be allowed to default?
They should default, but the "markets" and politicians won't let them. If they default and leave teh Euro they could start the process of growth after a devaluation.

But all politicians are urging Germany to throw ever more money at teh problem and all politicians are demanding "reforms" in those countries. They all wanted Berlusconi out because he was not delivering "reforms" fast enough. "Reforms" are cuts to the public sector and selling off state assets into private hands. All teh politicians want "unity governments" because they think they will be able to deliver the demanded "reforms". But teh "reforms" and austerity are not delivering growth. They don't want these countries to "grow", they want them to "reform".

What will happen if teh people don't accept "reforms" and teh unity governments can't deliver it. I think we may see dictatorships brought in, who will force through "reforms" for teh bankers and people demanding reform.

None of this is about economic growth, it is about teh opposite, austerity and reforms. The people won't be let off lightly until they have been reformed.

Italy is almost entirely dependent now on the ECB buying its bonds. Without the ECB literally printing electronic money and buying Italian bonds Italy would already be bankrupt. There is virtually no investor in The World who will buy Italian or Greek bonds now - no matter what interest rate on offer.

The ECB printing money and being buyer of last resort won't work though. Portugal, Italy, Ireland, Greece, Spain will all default in the end. Its just a matter of when and not if.

I have been glued to the DT finance pages and the updates at intervals during the day. Loved the bit about S&P downgrading France!

yes mortgages re my second post

let's hope they can hold their nerve if the shit really hits the fan

"work with people who are having trouble with their mortgage rather than move to repossess."

I think you'll find that's actually happening. Repossessions are holding very steady, considering. 0.08% of home loans with no change in the last six quarters. Low interest rates are one factor. Also, the banks know that if their lenders walk out and hand back the keys in a slow market, they won't get as much money back as if they keep the lender in the house and change the terms so that they can keep paying something.

It's not the banks setting the rates, it's traders in Italian bonds. When the Italian government wants to raise money it sells bonds. If no-one wants to buy those bonds because they're worried that they won't be honoured then they ask for big interest as an incentive. Like a mortgage company faced with a customer with a less than stellar credit rating, they demand a higher interest rate.

A couple of video clips you might find useful
What are bonds and why do they matter?
Why is Italy in trouble?

I agree about the concentration of bad news in the media. They have to report it, of course, but the 24/7 news format and constantly updated internet pages mean that the same bad news is hashed over and speculated on 20 times daily. When a lot of the information is quite technical and when they miss out crucial bits of info like 'what this means for the man in the street', it can be unsettling. I try to limit my exposure to the gloom these days and instead focus on making life in Cog Mansions as bullet-proof as poss. :)

Although I think the govt has told the banks and the banks are more flexible re mortgages than they used to be.

Shame they aren't applying the same ideas to whole countries.

Agree with you both.

It happens large scale and small scale eg it would be better for banks to work with people who are having trouble with their mortgage rather than move to repossess. Unfortunately many financial institutions take a rather short term kneejerk view and the result is everything that we see around us.

I think there needs to be change but I don't know how.

I know what you mean, it sounds so straightforward, but it's probably to do with the risk of them not paying (which I agree is higher if you have to pay more )

I also think the powers that be should be trying to coax the media into more balanced reporting on the financial situation. If everyone is being told it's dire and we're heading for another recession, businesses (and consumers) are less likely to take the risks necessary to stimulate the economy. I do realise we need to know the facts but if everyone thinks they're about to lose their jobs they aren't going to spend so businesses will fail etc etc.