Bailouts could bankrupt Germany itself

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www.telegraph.co.uk/finance/financetopics/financialcrisis/8160999/EU-rescue-costs-start-to-threaten-Germany-itself.html

Time to stop handing out money to governments and banks which have screwed up.

The euro isn't worth the suffering of millions. Let currencies leave; legislate to allow them to convert their debt to the new (old) currencies. Let the banks who made bad bets take haircuts on the devaluation.

Countries with otherwise sensible fiscal policies like Germany and Britain (now that we have a government committed to cutting excessive public spending) are putting themselves at risk.

And miracle of miracles - I agree with Paul Krugman!

www.nytimes.com/2010/11/26/opinion/26krugman.html?_r=1&hp

I agree that the funding is ridiculous now

The problem being that if one goes, they will all go, exposing the fraud that the Ponzi Banking scheme is.

Is this the end of capitalism as we know it in the offing, I wonder?

I also think the true picture of the level of the banking crisis is being underestimated and definitely hidden from the public at large - only to prevent a run on the banks, which could bring them down in a matter of days, even hours.

I think it is that precarious

LadyBlaBlah Maybe - you really do get the sense that we are living through truly historic times.

On the other hand, this whole crisis should have been manna from heaven for the left - and yet the world seems to be electing more right-wing governments than ever.

I wonder if it is not in fact the end of one of the most cherished dreams of socialists down the ages - the One World Government (or at least, One Europe Government). They will finally have to accept that it is better to decentralise and elect than to centralise and rule by diktat.

It is all one big, huge, terrifying mess.

I think everyone has been complicit in the notion of banking and making money out of nothing. It isn't necessarily a right / left wing thing. I see it that the very fabric of western societies are under threat - and very close to collapse. And we have all been complicit in creating it.

I think it is invalid to be pointing out a leftie view of a One World Government (which is a pie in the sky ideology with no basis in reality - just fiction)

What is going on is all very emperor's new clothes.

Yes - I think you are right.

I do think the idiocy of the political classes in dismissing Euroscepticism so blithely over the years will come back to bite them though.

In some ways, the Euroscepticism is a red herring. Despite the fact we are not 'in', we are still very very vulnerable. The fact that the banks are so interlocked/global is the true problem.

We won't actually be able to stand by and jsut say " thank god we didn't join the euro" if/when it collapses, we will be up to our necks in it too and lucky to survive crashing ourselves !

I agree up to a point.

Despite the interconnectedness, though, there is a difference between banks failing and governments failing - and the euro makes government failure more likely.

It seems obvious that there will never be sufficiently robust global governance structures. There is just no way to reconcile the political and economic needs of so many countries. Even the G8 or the G20 are too big a group to do anything useful. And if you can't do anything about regulatory arbitrage, AND you don't allow banks to fail, then you can't have global free markets.

The solution isn't to compromise on the free markets. It is to allow banks to eat the consequences of their bad bets - though in an orderly way.

Riven really? To me it is about as socialist as you can get.

This is all definitely signalling the end of the European experiment though, which can only be a good thing. The sooner the european parliament is abolished and we are back to something like the common market the better. Just think of all those MEPs, hangers-on and toadies that will no longer have to be paid for out of pinched national budgets. Fabulous.

I do urge you to watch speaking yesterday in the European Parliament.

It is 3.5 mins of pure speech making gold truth telling about the great danger and misery European politicians and Eurocrats are at risk of imposing on European people.

BeenBeta Great speech! The body language of the eurocrats is telling.

They know the reckoning is coming.

We will all be caught in the crossfire though :(

I wouldn't be at all surprised if, in the next coming years, if some of these European politicians end up against a wall.

Riven - I seem to remember that Nazi is short for National Socialist or something similar. Now does it make sense?

I think that is bullshit swc

Are you seriously implying that Hitler was a right winger?

The nazis were very left wing, I always find it strange when the BNP are described as the far right even though they're one of the most most left wing party in british politics.

Going back to topic I think there are benefits of a single market with a single currency but I think that its was done far too quickly and didn't allow for convergence of the northern european economies eg Germany and Southern European economies eg Portugal/Greece and that there needs to be far greater coordination of fiscal policy between eurozone countries.

All that said I don't think its fair to blame the euro totally for the mess, a lot of countries outside of the euro eg UK have dreadful sovereign debt problems so whilst it might sound good for people eg Farage to blame it all on the euro I don't think its entirely accurate.

byrel Our deficit is structural, but at least we have control of monetary policy.

Ireland should have put up interest rates during the boom years. That would have tempered things a bit. Of course, it couldn't, because it was tied into the euro.

Of course the single currency isn't the only factor involved in the demise of Ireland - but it is a pretty huge contributor.

The saddest thing is that the suffering which is going to be unleased in Ireland is far worse than it need be, just because political elites can't bear to see their pet project Euro project lose face.

You think if the Irish had had control of monetary policy they'd have put interest rates up to restrict the amount of credit in the economy, I don't.
The biggest problem Ireland have is they believed the celtic tiger and the economic miracle rhetoric and failed to properly regulate their banking sector, that combined with the ridiculous policy of guranteeing every deposit in Irish banks which has petrified the bond markets
Membership of the euro has taken the option of devaluing the currency away but I don't think you can say that devaluation would solve Irelands problems.

byrel It wouldn't solve the problem but it would alleviate it. It would involve a effective partial bankruptcy - passing legislation redesignating euro-denominated debts into punts - but scary though that is, it is a lot better than their current drip-feed arrangement.