Europe Without Britain

Europe Without Britain (Assessing the Impact on the EU of a British Withdrawal) is the title of a paper by Tim Oliver from the German Institute for International & Security affairs. A paper very kindly brought to my attention by Sean O'Hare in the comments of my previous blog piece.

Undoubtedly the irony will not be lost that the Germans appear to have considered the wider implications of the UK leaving more than the UK itself, despite us being by some distance the most Eurosceptic of all EU nations, a feeling promoted often by ill-disguised German-phobia. As yet we still haven't seen an official 'EU-exit' paper by the biggest Eurosceptic party in the UK.

Instead, as Mark B observes on the same blog piece, when it comes to all matters EU "[the UK's] political class have a tendency to talk to the electorate as if we were like children. The "let's give them one last chance", sounds like a mother warning their wayward child before punishment".

Onto the paper itself, regular readers will recognise many of the themes that run through the paper - themes which have been rehearsed many times on numerous Eurosceptic blogs - only in this case it has been fleshed out to 30 pages and largely concentrates on the impact on the EU of a UK exit.

What the paper acknowledges, far more than our own House of Commons research paper, are the problems the EU itself would face were the UK to leave. It's tempting to take an indifferent view to this, but the fact remains that it will still exist on our doorstop, and we would still have to trade and deal with it. Further exacerbating the EU's problems, and consequently the Eurozone, is not in our own self-interest given that circa 40% of our exports depend on it.

Tim Oliver specifically highlights three problems for the EU on UK exit. The first of these is that it will be unprecedented and until now "something of a taboo". As the report notes:

The withdrawals of Greenland in 1985 and Algeria in 1962 had prompted concerns they set precedents for the withdrawal of a member state, but as overseas territories they provided little by way of a guide to how an actual member state might withdraw.

Not only would the EU be concerned with future relations with the UK but far more pressing for itself and its own survival are internal problems and their resolution. The necessity to prop up a fragile Eurozone would be paramount but also, as the report notes, negotiations would need to take place within the EU to amend its own institutions, voting allocations, and quotas. These are issues which are rarely settled easily. Not least the EU budget which would need to be rebalanced, requiring inevitably more contributions from France and Germany undoubtedly to the dissatisfaction of their taxpayers.

There would also need to be decisions on changes to the system of QMV, so as to reflect the disappearance of the UK with its 29 votes. In the ensuing negotiations, all the nation states will be mindful of the numerous scenarios for how this could change the balance of power within the Council. Undoubtedly this would cause conflict and protracted negotiations between smaller states versus large states, northern countries versus southern ones, protectionist versus more liberal and so on. Given the enormity of the consequences and ramifications both economically and politically of the UK leaving and the uncertainty and vagueness of Article 50 one wonders whether it would better for a smaller country to leave first, ahead of the UK, as a kind of dry run.

The UK's 73 seats in the European Parliament would need to be redistributed. The report notes that the process of allocating seats has always been an unclear one, subject as it is to numerous formulas, solutions and political horse-trading. Depending on the date of a UK withdrawal arrangements may need to be put in place for British MEPs to leave the Parliament before the elections due in 2019.

Other institutional changes would mean the loss of an EU Commissioner, the loss of UK judges from the ECJ. Then the question would be whether English would remain the working language of the EU, as a UK exit would leave only Ireland and Malta remaining as the only countries where English is the official language. Given France's track record on that issue this would be in serious doubt - putting the Eurozone at further disadvantage in trading relations with the rest of the world. All of these problems leave us in no doubt that a new EU treaty would be required as changes have to be made to the founding treaties.

The second issue the EU faces is the lost of one of its biggest members. A country that provides an important link to the United States, a country that holds a unique position in the world and one that gives the EU extra credibility, as a member. The EU is bound to lose self-confidence, feel more isolated and probably move further towards protectionism as a result. It would also alter the balance of power within the EU...

A British withdrawal raises a whole host of possibilities about changes to the balance of power and leadership of the EU. A withdrawal could boost the Franco-German axis. This, however, ignores that both Paris and Berlin have often used London to balance the other, something London has often gone along with in the hope of turning the axis into a triangle. Even with other states such as Poland or Italy filling the UK’s place, we cannot overlook how the Franco-German axis has struggled to provide leadership thanks to the widening of the EU. The Franco-German axis and the wider EU have also struggled to adapt to Germany’s increasingly dominant position. The disappearance of a large state such as the UK, one often willing to use its weight to challenge EU thinking, could further embolden Germany’s position and agenda.

The final issue is how the EU deals with the UK after exit....

Despite what British Eurosceptics and Britain’s critics in the rest of the EU might wish, Britain and the EU will remain deeply interconnected. Indeed, the title of this paper itself highlights a common way of thinking that needs to be qualified: a withdrawal could never mean the end of Britain in Europe, only of the United Kingdom’s membership of the European Union. A withdrawal itself may take several years to action, and there exists the possibility of formal relations continuing afterwards in some way

Both the EU and UK would need to come to terms with the ongoing relevance each would have for the other. For the EU, the UK would remain a European power if not an EU-power. A European power that would remain part of the Commonwealth, the UN and NATO. If the UK leaves it sets a precendent, clearing the way for other members to do so thus unravelling quickly the project itself.

The paper is by no means comprehensive, issues such as; free movement of people, civil aviation, overland transport, agriculture, technical barriers to trade, public procurement, scientific research, Schengen, fraud, education, statistics, environment, media, taxation of savings, pensions, Europol and Eurojus are not discussed in detail.

But what it does illustrate is that negotiations of our exit will be just as taxing for the EU as it will for the UK – a point made via a German paper.

Meanwhile in the UK we have to suffer the superficial nonsense of Cameron at a Tory party conference.

Island Monkeys

As I discovered when I was seconded out to Germany as part of my job over a decade ago and lived there for 2 years, the above term was used often by Germans to describe those who lived in the UK. Like most simple and blunt characterisations it comes with more than a grain of truth, however much the term may prickle.

This description is no more obvious than when tackling our membership of the European Union. Not only according to some so-called eurosceptics can we arbitrary remove ourselves (6th largest economy) without any kind of consequences for the world economy but that many of our institutions are unwilling - or unable - to admit where our real government lies. Every story in the media, every MP's phrase, has to be planted with a UK flag thus ignoring (wilfully or otherwise) the bigger picture.

Nothing illustrates this more than the complete silence from nearly all newspapers, and the BBC, regarding the news today that the Royal Mail is being privatised as a direct result of EU laws - the arguments of which have been rehearsed on here, and elsewhere, many times to the point of tedium. So instead we see, for example, privatisation discussed in purely domestic terms:

And:

Depressingly the insular nature of the reasons that lie behind privatisation of the Royal Mail is echoed in many of the comments, across all media platforms. Words like; "back to the '80s", "Thatcher", "Same old Tories". Phrases that starkly betray short memories of Labour attempting the same in the run-up to the last election. But no matter it seems, everything must be seen in tribilism of party politics, in the false vertical dividing line of so-called left and right. All the while it ignores the fact that it's always a useful guide, if Labour and the Tories agree on a policy - and it goes against their party members' wishes - then more often than not Brussels lies behind it.

But, nevermind, it's conference season so we'll see the same old tribal bollocks trotted out en masse as before. The Lib Dems last year:

The Lib Dems this year

One wonders why bother? It bores me to tears let alone, I guess, most of my readers to keep mentioning the EU's effects on the Royal Mail. And for what reason, when so many cannot accept that therein lies the real cause - that they are in denial. In the words of Kenneth Williams; "what's the bloody point?"

Forcing Greece Out

As previously mentioned on this blog, and by Richard North, and by Mary Ellen Synon, it looks like Greece is on its way out of the Euro - forced by the Germans. It's nice to see the BBC catching up eventually, and the fact they're starting to report it, reluctant as they always are to mention EU matters, indicates how close this scenario is coming to pass.

By Default

It's another Euro crisis, so it's another deadline. It's reported that this weekend bankrupt Greece faces the ultimate decision of whether to stay in the Euro or not.

Now we have been at 'deadline hour' many times before, which has so far always proved false, so a little cynicism is in order. But the indications are that the momentum does appear to be heading towards a conclusion - I do agree with Richard North when he writes "There is definitely a sense that we are moving to the end game".

The pressure on Greece is intense and there seems to be a non-too subtle attempt, on behalf of the EU and Germany, to force Greece to default, and possibly exit the Euro. The likely reasons for the EU's bullying are manifold.

The cost of trying to save political face by keeping all the countries in the Euro has been superseded by the embarrassment of the Greek crisis to the Euro project, which has no prospect of ending anytime soon. Greece is an economic basket case - so the EU needs to get rid of, in part to try to improve the currency's 'respectability'. That Greece will default has always been a matter of when not if - a reality the EU has long known about. After over 2 years, weariness is creeping in. Greek promises are never kept and more importantly for some European politicians elections are due this year. Taxpayer's money to keep bailing out Greece is not popular to say the least.

The constant bailouts, or rhetoric, has also conveniently given time for the Eurozone to prepare for the inevitable Greek default - in short economic sandbagging. As Louise Armitstead argues in the Telegraph:

The bankruptcy of Greece is no longer the threat to the eurozone that it once was. For all the frustration caused by the constant delays - Greece missed four deadlines last week alone - the time has not been wasted. Banks have busily untangling themselves from the thicket of Greek debt; repricing and restructuring debt and taking large write-downs. In total foreign banks have slashed their exposure to Greece by 60pc.

In a note last week, Willem Buiter, Citigroup’s chief economist, said: “In early September 2011, we argued that the cost of Greek exit to the rest of the world would be very high. We now consider these costs to be much lower because the 'exit-fear-contagion’ could be contained.”

In essence preparations are being made to hang Greece out to dry, a view echoed by Jeremy Warner:

There is only one way of interpreting the set of fresh demands tabled by eurozone finance ministers last night in return for agreeing a new €130bn bailout for Greece – that they are now quite deliberately trying to push Greece out of the euro. All pretence at European solidarity has been abandoned, to be replaced by the vengeance of Shylock.

There is now no chance whatsoever of Greece making it in the eurozone. Economically and politically, the country is in meltdown. Richer Greeks...are all getting their money out as fast as they can, as those of us who have been gazumped in the London property market by Greeks bearing piles of wonga know only too well.

It's a disgrace what's going on, little short of the rape of Greece by its own countrymen, but it is an entirely rational and logical response to the grossly overvalued currency they find themselves with.

Greece has very little option now but to impose capital controls and leave the euro. The longer it leaves things, the more desperate will its plight become.

Despite enduring economic, social and political hardship strangely most Greeks still want to be members of the EU and the Euro. Sadly they are about to find out the hard way that membership of the EU, and more specifically the Euro, only works one way - it means doing what the EU orders when a member, and being jettisoned overboard without concern when an inconvenience. The other Euro members are saving their own skin but not without causing economic and social meltdown, without a care, in another country first.

But no doubt if the inevitable Greek default doesn't lead immediately to a Euro breakup, much rejoicing will occur in Brussels, along the lines of 'we're dealing with the problem'. However next up will be Portugal, and then... well close your eyes and put a pin randomly into a map of Europe.

Dehumanising The Victim Makes Things Simpler...

Richard North reminds us that it's the 70th of the Wannsee Conference.

Above is an excerpt from the very unsettling BBC film Conspiracy based on the infamous meeting, which vividly illustrates that people's lives were reduced to that of numbers and 'Dilbert like corporate speak'.

It can, and will happen again...

A Disgrace

You don't need any more evidence than today's Telegraph editorial of the deeply corrupting nature of our membership of the EU. While pretending to be Eurosceptic, like all newspapers (with the suspect exception of the Daily Express) it supports our membership. And look what that contradictory (and bollocks) position of 'in Europe but not ruled by it' does with regard to the Euro:

The Germans are, for historical reasons, desperate to avoid again being placed in a central role at the heart of Europe. But circumstances have conspired to bring this about. Paradoxically, a European Union established to dissipate German power has enhanced it once more. And yet, perhaps because their own economy has performed exceptionally well, the Germans will not face up to their responsibilities. As a modern-day European diplomat, Radek Sikorski, the Polish foreign minister, said this week: “I fear German power less than I am beginning to fear its inactivity.” For a Pole, that was a remarkable statement. The Germans should listen, and act.

Desperate to maintain the Euro, what the Telegraph is advocating here is, not only a German dominated Europe, but the destruction of democracy across Europe including in Germany. Will German voters have a say in a undemocratic fiscal union that the Telegraph is essentially proposing? Or any other European countries for that matter? This...from a British newspaper.

The deepest irony is that the Euro crisis exists because the German Constitutional Court is upholding the basics of democracy and refusing to let Merkel throw it away on a whim just to prop up the Euro.

So in short the Telegraph wants Germany to throw away Europe's democracy for the sake of the EU and then it will viciously condemn it for doing so.

What a disgrace.

Going Going...?

Back to the Euro crisis, events appear to be moving to a conclusion. It's getting hard to work out what exactly the state of play is and what is going on; we're now reduced to guesswork essentially, as Xen rightly concluded in a previous comment on here, and the scary thing is it appears that those in charge don't seem to know either.

What is clear though is that the news chatter is intensifying greatly which indicates panic is setting in significantly. I suggested before that sandbagging maybe happening with gusto but one wonders if they know what they are supposed to be sandbagging against, especially with these rather unusually stark comments from Sir Mervyn King:

Banks should brace themselves to withstand the "extraordinarily serious and threatening" economic situation, the Bank of England governor has said.

Which prompted this analysis:

If anyone was in any doubt about the severity of the eurozone crisis and what it might mean for the UK, they shouldn't be any more.

The governor of the Bank of England delivered his starkest warning yet. It's quite something for a central banker to describe the financial climate as "extraordinarily serious and threatening".

Sir Mervyn King made no attempt to play down speculation about the possible break-up of the eurozone. He thinks banks can weather storms ahead if they set aside more capital. But he acknowledged that the problems were widespread and beyond the control of any UK authority.

To sum up the financial regulators' message - fasten your seatbelts for what could be a very bumpy ride.

It's getting obvious that no-one has the first idea what they're doing and are in denial about the urgent and fundamental problems of the Eurozone....that then leaves only one conclusion and one inevitable outcome. Gulp!

Quote Of The Day

From today's German paper Bild, with the headline:

Britain, America and the EU: All want our [Germany's] Cash,

...the last paragraph says, translated from German courtesy of Google translate (my emphasis):

In plain English: The French want to go to big money - and that may be in Europe at the end, only the German one.

Who Will Blink First

As Eurozone contagion swirls around Germany, Merkel has apparently made her position clear with what appears to be a Shermanesque statement:

"I am firmly convinced that the mandate of the European Central Bank cannot, absolutely cannot, be changed."

So now what? There are two stark options for Merkel; integration or break-up. Instead what we have here is a game of brinkmanship being taken right to the wire where all of our lives are being messed about on a whim. We've been here before, but it won't affect them it will instead affect us.

We should not be accepting this.

Last Man Standing

Contagion contagion everywhere; Spain is being hit with ever higher borrowing costs, so has Belgium, and Italy - bond yields which are again above the 7% level - and Portugal and so on. The markets have already assumed that France will lose its treasured AAA status. Then this morning contagion has hit the last man standing - the benchmark - Germany. 'A disaster' is what the German bond auction is being called (my emphasis):

LONDON, Nov 23 (Reuters) - German government bonds fell sharply on Wednesday after investors shunned the country's auction of new 10-year debt, signalling that the fast-spreading euro zone crisis was eroding the safe haven status of German debt.

Germany drew significantly less [sic] bids than the amount on offer for its Bunds, with investors deterred by very low yields. The euro zone powerhouse was caught between the best and worst possible scenarios on the euro zone crisis.

"It is a complete and utter disaster," said Marc Ostwald, strategist at Monument Securities in London. "If Germany can only manage a 0.65 cover in actual terms for what is going to be their next benchmark then what hope for everybody else?"

"It really tells you that the Bund yields are at the completely wrong level ... never mind that they are a safe haven. There's certainly a partial element of 'they (investors)would rather not have euros' in there."

The decisions by Germany are essential to the survival or otherwise of the Euro. As argued before on this blog, Germany faces an impossible position; it wants the survival of the Euro but is unable to take the steps necessary to ensure this. In a great piece Acting Man calls it An Intractable Problem.

The EU of course is arguing for more integration via Eurobonds as a solution:

The EC is launching a consultation to assess if the 17 eurozone countries can issue the bonds to raise cash.

Mr Barroso's 'stability bonds' plan would see much more investigation and control of the budgets of countries within the eurozone, to avoid a repeat of the bailouts and crises affecting the region.

But the EU must know that this would be illegal under German Constitutional Court rulings, it makes one wonder whether not only is this the last desperate throw of the dice for more integration but the laying of the groundwork for the blame game when it all goes pear shaped - that it was Germany's fault for not listening to the EC and its 'messiah' Barroso. The collapse of the Euro will cause enormous political ramifications and fallout.

The Financial Times has interesting piece that the markets have effectively 'smoked out' a stealth operation by the Bundesbank to try to control the German bond market, which spectacularly failed this morning:

That, alongside the fact that the Bundesbank is retaining an ever greater share of bonds from auction, suggests only one thing to the logical mind. It is the Bundesbank which is cornering the bund market on purpose. And it’s doing so to ensure that the one last repo rate in Europe that can be controlled remains suppressed.

The rate is important to suppress because almost all interbank funding is now done on a secured basis against the best quality collateral. Which implies two important points: 1) that the ECB itself has lost control and depends almost entirely on the Bundesbank to enforce its low rate policy target and 2) that the Bundesbank is having to retain more bunds from the market than ever before just to ensure the last functioning repo rate in Europe doesn’t spiral out of control.

That, we would say, is a big deal.

Whatever the case, Wednesday’s auction suggests the Bundesbank’s stealth operation has finally been outed. The question is, will the Bundesbank now be broken too?

One thing is for sure, though, now that Eurozone contagion has infected Germany, it's game over.

The Enemy Is Within

As expected much will be made of apparent German moves to deny us a say. The fallacy of a German EU takeover was not only highlighted in my previous post, but also in a piece by Englands Freedome, Souldiers Rights:

The Tory press seems to be making out Germany as the villain in the current political shenanigans concerning the disintegrating EU. Those of us in favour of independence should steer well clear of this evocation of the ghosts of past conflicts. This is not about the struggle of nation against nation, but of the parasitical political/bureaucratic class against the common people in this nation and in others.

David Cameron, clueless puppet though he is, should be the object of our ire, not Angela Merkel. He is the point-man for the EU's continued take-over of this country. The fact is that events are blowing gaping holes in the political position of the pro-Brussels gang. In this country they have forever lied to us that the EU was not about ever-closer union, leading inevitably to something resembling the United States of Europe. Elsewhere this has been discussed openly, but the pro-Brussels gang have not wanted such a debate. Far better to mislead the public for as long as humanly possible as to the true nature of the 'Project'.

Absolutely spot on, a point also echoed by Daniel Hannan this week, in a post I've only just seen.

The problem is by seeing the EU as a German 'problem' not only does it identify the wrong enemy, but it becomes in effect a coward’s cult. By that I mean that incorrectly portraying a 'superior' enemy who is all seeing and all powerful (something very common to most conspiracy theories) it in effect, and ironically, renders the critics powerless. As a consequence it thus becomes an excuse for inaction used by those who don’t have the stomach to engage in real political battles. In short it's easier to blame the Germans, than actually do something about it.

The tragedy is that there are more of us than them and we don't utilise that fact; we have the power to bring down the Cameron coalition government in days should we wish - the fuel protests showed the way, we could also have a tax strike or we could challenge the finances of local government. Instead it appears to be easier to blame the Germans and do nothing.

Thus I have a lot of sympathy with Captain Ranty's frustrations.

"10 German Bombers..."

As Richard North wrote on Wednesday "Anti-German sentiment is still only skin-deep in much of British society" and with Cameron meeting Merkel today in what has been described as a tense meeting so it proves. Following on from recent copies of the Express and the Daily Mail, today's Telegraph (pictured above) indulges in a non-too subtle form of 'hun-bashing'. As a result I'm already suffering from 'Godwin's law overload' trying to follow the Euro crisis - and it's still only mid-morning as I write.

But nevermind, apparently German plots are afoot to deny us our say... which is nonsense. If we wanted a referendum in this country we can jolly well have one, there's little the Germans or anyone else can do about it. The real reason we won't get one lies a lot closer to home; more specifically David '3-line whip' Cameron. That somehow the Germans are preventing a referendum that Cameron really wants is ludicrous - at least it gives him someone to blame though.

Not that any of this will prevent outbursts that the EU is really a Fourth Reich or ODESSA-on-steroids. The reality is much different, as revealed by even only a cursory look at the EU's French origins and the consistent manipulation of the EU by France for its own ends, a classic example being the CAP. Rather than a plot, the Eurocrisis has meant that Germany has been reluctantly dragged kicking and screaming into the current limelight primarily because it holds by far the biggest chequebook.

If the EU was really a German plot then this Eurocrisis would not exist. Instead we would have a fiscal union dominated by Germany, playing by German rules, solving at a stroke the fundamental flaws in the currency - the markets would be popping champagne corks.

However we have a crisis because she is doing precisely the opposite. Germany faces an impossible choice between accepting fiscal union, and thus giving up sovereignty (which the German Constitutional Court has ruled illegal) or facing the breakup of the Euro resulting in it being a pariah in the EU - taking the blame for its collapse. Damned if she does, damned if she doesn't.

All of this 'Nazi' blame game though conveniently overlooks the fact the real enemy lies elsewhere. It doesn't reside in Berlin, nor Paris, but in London - Whitehall. The EU never attacked our castle walls with copious Trebuchets and forced entry, instead we lowered the drawbridge, lifted the portcullis and invited them in. Not only that, we also laid on the biggest banquets, gave them the best rooms and told them that they could stay as long as they liked.

One of the first rules of battle is to know your enemy, and if we can't even get past that then we are doomed to lose the war (oops did I mention the war?).

A New Phase

Just my luck, on the day the Eurozone entered a new and more dangerous phase - yields on Italian Bonds smashing through the psychologically important 7% figure yesterday - I found myself on family business which meant I had no internet access.

Not so much as hit the buffers, the Eurozone has instead crashed right through them, as Italy enters bailout territory. One problem, it's too big to bailout. To illustrate the seriousness of this new phase, an orderly breakup of the Euro is now being seriously discussed, in effect jettisoning the peripheral countries and France and Germany going for a smaller Eurozone. But, given the glacial speed of EU decisions, events look set to overtake them - contagion is already reaching Spain and France today. It looks set to be another bloodbath.

One thing's for sure, we are witnessing European history in the making.

Germans Say Nein To Greek Football

From Greek paper Ekathimerini:

The German soccer federation suddenly informed its Greek counterpart on November 2 that it cannot host Greece's friendly game with Romania at Reutlingen on November 15 «for security reasons."

Greece had arranged the friendly in Germany in order to satisfy the huge demand by Greek expatriates to see their national team play, but less than two weeks before the match, the DFB told EPO it could not stage it after all, according to an EPO statement on Wednesday.

How strange...or maybe not:

The German federation's decision came just 24 hours after the Champions League game between local Borussia and Olympiakos at Dortmund with some 4,000 Greek fans in the stands whose behavior could not be faulted.

Speculation in Athens suggested that the decision may be down to the political uncertainty in Greece that could turn the match into a demonstration, although that appears to be quite far-fetched.

It is also likely that the German federation was upset by the behavior of Olympiakos fans in Piraeus during the home game against Borussia on October 19, as they produced a banner (pictured above) that appeared to be offensive to Germany.

EU harmony continuing as normal...

That Bombshell

I wrote yesterday's post about the referendum proposal in Greece in a bit of a hurry. Partly because I was at work when the news came through on my phone and partly because it was such a bolt from the blue. It completely surprised everyone even George Papandreou's own parliamentarians. But whatever the reasons behind his decision, much amusement can be had from the obvious sheer terror he invoked across the EU. Daniel Hannan writes:

I wish I could convey the sheer writhing horror that George Papanderou's referendum proposal has provoked in Brussels. Eurocrats instinctively dislike referendums. They feel that their work is too important and complicated to be vulnerable to the prejudices of hoi polloi.

A referendum at any time would be regarded by European leaders as irresponsible. But a referendum when the euro is teetering on the brink is seen as the height of ingratitude, selfishness and recklessness.

Wondrous joy. As expected the markets this morning have taken on a plummet trajectory - over two months of uncertainty now lie ahead until the vote. That Greece will default is a given, the markets have priced that in; how and when are the key questions. Now with the referendum there's another possibility that's been thrown into the mix, that in the event of a no vote that Greece could not only exit the Euro but possibly the EU altogether.

And it's the last point that means a Greek no vote is not a certainty.

Firstly it will significantly depend on the referendum question asked. If the question is along the lines of the bailout package itself and more austerity then a no vote is a likely outcome. However if the question is couched in terms of a no vote meaning exit from the Euro and the EU, and I suspect strongly that this will be the case, then the outcome is far from certain. Not only do referendums tend to favour the status quo but much scaremongering will be deployed - Greece leaving 'will be a disaster' they will cry.

Secondly the EU will use every tactic in the book; blackmail, threats, coercion and bribes. They have form on this - Lisbon, Ireland anyone? Then there's the infamous EU's last resort of; 'wrong answer vote again'.

A no answer is not guaranteed by any means.

What Papandreou has done though is start a risk of contagion of similar demands in other countries. Already, after last week's deal, Spain, Portugal and Ireland started making noises about getting more concessions from the EU as Zerohedge highlights:

...just as expected, the weakest PIIGS - Portugal and Ireland - wasted no time to start rumblings about a "suddenly slowing economy" in the aftermath of the Greek bail out which achieved nothing but to delay contagion by 48 hours and to unleash demands by everyone else to get the same concessions, in essence pushing Europe into an even deeper hole...

Confirming that the tsunami of demands has been unleashed is today's announcement from the Bank of Spain that not only was Q3 GDP flat (read: negative), but that the deficit target for the year would not be achieved.

How long before they start to make threats of referendums as well?

Another pressing problem is Italy, here the Eurozone has real immediate problems. I suspect that Greek Finance Minister Evangelos Venizelos's hospitalisation due to stress related health problems won't be the last amongst Eurozone politicians.

It Didn't Even Last 2 Days

The latest EU 'deal', which agreed basically nothing, has succumbed to the law of diminishing returns. Designed to reassure the markets, it has failed to even last 2 days. Italy's bonds are still rising to dangerous levels - in short the markets are unconvinced by the EU package.

In a masterpiece of understatement, Annalisa Piazza, a fixed-income strategist at Newedge Group in London said:

“All in all, today’s [Italian bond] auction was not very satisfying,”

Then in a further twist:

A new obstacle to solving Europe's debt problems - already!

Germany's constitutional court has suspended the right of a small parliamentary committee to approve urgent actions required by the eurozone bail-out fund.

The court said it will investiagte whether using the small committee to decide EFSF matters infringed the rights of other politicians.

The nine-member group was set up to get decisions passed more quickly - however there is growing anger among German politicians and voters that they are being dragged into bailing out other nations with little or no consultation.

Reuters reports that the court's suspension of the smalll committee means the EFSF won't be able to start buying bonds in the secondary market because purchases must be agreed in secret, and the full German parliament can't meet in secret.

That leaves the ECB carrying the responsibility for buying Spanish and Italian bonds for a bit longer...

Oh and Portugal's buggered as well:

Monetary contraction in Portugal has intensified at an alarming pace and is mimicking the pattern seen in Greece before its economy spiralled out of control, raising concerns that the EU summit deal may soon washed over by fast-moving events.

Oh and Belgium:

Belgium’s economic expansion stalled in the third quarter as European leaders struggled to contain a worsening debt crisis amid signs the region is heading toward a recession.

And so on...

That Deal (2)

Again, according Zerohedge, the EU's numbers don't add up (this is where the July bailout deal fell apart). The proposed 50% haircut on Greek debt (which hasn't even been agreed yet) is not even 50% but only 28%. Here's his post in full (his emphasis):

Just the math, something Europe is unable to do:

• Greece has €350 billion in total debt including about €70 billion in Troika "post-petition" loans; these are untouched.
• Of the €280 billion, roughly €75 billion is held by the ECB: this, like the Troika loans, will be untouched.
• This leaves just ~€200 billion in actual debt to undergo a haircut.
• Apply a 50% haircut to this debt (ignoring the fact that of this about €35 billion is held by Greek pension funds, and once the realization that Greek pensions have been cut in half dawns upon the population, the result will be the biggest riots ever seen in Athens yet).
• Total debt to be cut: just about €100 billion.
• Hence, of the total €350 billion, just €100 billion is eliminated, most of it used to backstop and service Greek pension and retirement obligations
• €250, or the residual, of €350, the original, means 72%, or a 28% haircut.
  
• Greek GDP was €230 billion on December 31, 2010 and declining fast.
  
• And that is how a 50% haircut is "cut" almost in half

But no worries, shares are all up strongly this morning, so everything must be rosy in the garden.

Thank You Germany

I've just got back, so I'm trawling through today's events regarding the Euro crisis - I hope to expand on this later. It's difficult, amongst the noise, to come to any immediate conclusions but it seems that the farce of non agreement continues.

One piece worth reading is this by Ambrose Evans-Pritchard in the Telegraph, in which he argues that we should be grateful to the Germans. I concur completely, it is with deep irony that the Germans are the only ones in Europe that are prepared to prevent the rest of us suffering from tyranny. As Monday demonstrates, given half the chance our MPs in Westminster would hand over our country, sovereignty, cheque book and democracy, lock stock and barrel to the EU if they thought they could get away with it:

Die Linke (Left) leader Gregor Gysi was electrifying. "It is the arrogance of power," he began, and never let go.

"Every week you come up with a different story about this crisis."

"We were told there would be no leverage and you have reversed everything in a matter of weeks. Now we learn that the 20pc loss will fall entirely on taxpayers. They alone will pay. That is the decision you are taking."

Green leader Jürgen Trittin rebuked Dr Merkel for hiding the true implications of EFSF leverage, particularly the plan to insure the first 20pc of losses on Club Med bonds.

"Why are you shying away from telling the people the truth? You must tell people what this leverage means. You must explain to them what the risk is, and why it is necessary. But you wriggled out of it."

"You came here three weeks ago and said there would be no leverage. This is the sort of thing that unnerves people."

And so it went on, raw red-blooded democracy.

This afternoon, after a jolly at the cinema I took my wife to the John Radcliffe hospital in Oxford for her regular consultation with her neurologist. After the usual discussions about her health, we got onto Monday's vote as part of small talk while she went to be scanned. "I've just joined the TA" he says without prompting. I ask him why. "because very soon I want to be on the right end of a gun". This was the view of a consultant Doctor, in the NHS. Worrying times.

Quite Mad

As predicted by anyone who is 'barking mad' it would seem that today's crucial EU meeting, which apparently would solve all the EU's problems' will end with ...er...well nothing resolved at all. Actually they can't even do the fudge bit right - it's collapsing in chaos. The Telegraph reports:

...leaders last night appeared to be little closer to settling their long-standing differences on those issues.

That firmly comes under the category of no shit Sherlock. But don't worry chaps, we have another meeting this weekend. So that's now a meeting about a meeting about a meeting. I think. I've lost count.

All of which is highly reassuring when, the Italian Government is close to collapse, Italian bond spreads are once again approaching the danger levels of 6%, Portugal is entering Greece territory, Greece is about to default, French banks are on the verge of collapsing and we're about to thrown more good money after bad. At least EU leaders still can find some time to indulge in a spot of personal recriminations. Following on from Berlusconi's insult, Sarkozy has waded in too:

"...she is on a diet and then helps herself to a second helping of cheese"

That would be the 6"4, adonis, David Beckham lookalike that is Sarkozy. (As an aside has anyone else noticed the similarity between Sarkozy and Lumiere the candlestick in Beauty and the Beast?)

I take 'great comfort' that our economic future lies in the hands of such well qualified and talented leaders. As Isambard Kingdom Brunel once said:

"I endeavour to comprehend the present extraordinary state of railway matters when everyone around seems mad. Stark staring wildly mad. The only sane course for a sane man is to get out and keep quiet."

And I intend to do that, keep quiet, well for a couple of hours at least. Didier Reynders, the Belgian finance minister's left the EU gathering on Sunday early to see the new Tintin film and I'm about to do the same this morning - the film opens today at my local cinema. I'll stick a review up later, that is if, while I watch a Belgian save the world, the Euro doesn't collapse in the meantime.

FT Deutschland Is Priced In D-Marks

As England Expects says wow: