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.

One Minute To Midnight For The Euro

Pro-EU Tory MP William Hague once said:

"[the Euro] is a burning building with no exits"

In that he was correct, however it doesn't mean that exit is entirely impossible. It's clear in the current circumstances that, due to a lack of proper exits, a form of 'mouse-holing' is occurring - to exit rather than enter. The flight from the eurozone is gaining momentum and by any means necessary.

Both Merkel and Sarkozy are grandstanding with statements of their relevant positions that haven't changed in substance in months if not years. This no longer has anything to do with saving the Euro but protecting their legacy especially with their domestic audiences. And everyone else has cotton on. The breakup of the Euro is increasingly being discussed less like an option but more as an inevitability. China has given up:

China tells Europe: You are on your own

China, one of the few countries with pockets deep enough to buy up Europe's debt, cannot use its £2 trillion in foreign exchange reserves to rescue other countries, Vice Foreign Minister Fu Ying said yesterday.

CEOs of major companies are giving up:

It is one minute to midnight for the euro

That is the view of the chief executives of European giants Shell, Philips, Unilever, DSM and AkzoNobel, revealed in a letter to Dutch paper Het Financieele Dagblad. They are running out of patience with Europe's politicians.

"It is one minute to twelve and is therefore of the utmost importance that there will come a strong handling of the euro crisis in the short term," they wrote, demanding "political courage" to create stability."

And Sir Mervyn King has given up:

But in my several decades as a financial and economics commentator – covering banking crises dating back to the early 1970s and the Latin American debt catastrophes of the early 1980s – I have never heard a sitting governor talk in such apocalyptic terms about the parlous state of the global financial system.

It's all over chaps, please get on with it and in the most orderly way possible. Thanks.

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.

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.

Things Are Really Bad

Contrary to my previous post, it seems, unexpectedly, that the EU is not even going to try to fudge Sunday's meeting - they instead have postponed any announcement until a second meeting next Wednesday. Blimey that means the crisis must be very serious!

Bruno Waterfield from the Telegraph tweets:

I feel for them I really do.

No Surprises

In news as unexpected as seeing bears heading towards the nearest wooded area clutching newspapers, the German parliament has backed the expansion of the European bail-out fund, in an apparent 'crucial' vote this morning.

This is the same package that was discussed in July - it's only taken a couple of months. Meanwhile the Eurozone crisis has moved on, The vote is irrelevant.

Italy has paid a record Euro-era high for bonds, the Greeks are still revolting, oh and Spain is still in trouble.

A Euro Summary

Stock markets are up today so far, on rumours that the EU might at last do something and that the Germans have met up with the Greek Prime Minister George Papandreou to give him a bit of a telling off. Cue lots of grandiose statements as a result of the meeting. But what has changed? In a word; nothing:

• Greece is still bankrupt.
  
  
• Eurozone leaders are still pretending it isn't.
  
  
• Some other Eurozone countries are bankrupt.
  
  
• Eurozone leaders are still pretending they aren't.
  
  
• The usual 'we have a grand solution' before an EU meeting turns out to be more of the same, with no changes since July's agreement.
  
  
• Greek Prime Minister George Papandreou claims that Greece will rise again with help of his European 'partners'.
  
  
• EU leaders are split on how to deal with the crisis.
  
  
• The solution of fiscal union cannot get pass various Eurozone governments.
  
  
• The EU response to a rapidly moving crisis is being conducted (as always) at the speed of a valium-taking tortoise.

Anyway in the midst of all this economic gloom, one TBF tip*, buy shares in Fuller's brewery. Because when the Euro goes pear-shaped (and despite all the problems it will cause) I will be doing my damnedest to improve their share price by consuming industrial quantities of my favourite ale for days, in way of celebration.

*Disclaimer:
The information contained on this blog post is for information purposes only. The Boiling Frog does not hold himself as providing any legal, financial or other advice and does not offer any advice regarding the nature, potential value or suitability of any particular flawed currencies or investments.

Remember shares can go down as well as plummet.

Another Euro Crisis, Another Meeting

European finance ministers are meeting in Poland today for a two day meeting along with US Treasury Secretary Timothy Geithner to try to 'solve' the Euro collapse, something that they seem incapable of doing.

The options in reality are stark, which Merkell has not made clear to the German taxpayers, either Germany accepts full fiscal union including fiscal transfers of their money to other countries, and giving up its sovereignty all of which is unpalatable to the Germans, or there has to be an orderly breakup of the Eurozone which is equally unthinkable to other EU leaders.

Once again I'm sure that some fudged so-called solution will be thrashed out, but time is running out fast; that the world banks are coming to the rescue by pumping dollars into the market is a clear indication that something is very wrong. A 'major event' is due. Some real hard decisions have to be made. Ed Balls MP on Wednesday's BBC Newnight (circa 22 mins in) didn't even give the Euro weeks to survive in its current form.

The Euro looks set therefore to crash in chaos, and historically chaotic currency collapses lead to war, a sentiment echoed by economic advisor George Magnus on the same programme.

Maybe it's slightly overblown but the complacency of our media of the possible consequences of the eurozone problems, and collapse, is starting to feel like that sunny care-free Bank Holiday Monday on 3rd August 1914.

Quote Of The Day

We can always rely on Silvio Berlusconi to amuse us whilst we wait for the collapse of the Eurozone:

"Angela Merkel is unfuckable lard-arse"

European harmony carrying on as normal then

The End?

I've always been reluctant to call time on the Euro, the capacity of the EU elite to do whatever is necessary to save the project should never be underestimated. However there does seem an air of acceptance of its fate and subsequently there's panic and posturing to pass the blame for its inevitable collapse.

China and the US are urging the EU leaders to sort the mess out, seemingly preparing to pass the buck to Europe for any fallout as a result of a Euro crash:

Reflecting the anger of Americans who are blaming Europe for the current economic turmoil, the President called for eurozone leaders to show global markets they are taking responsibility for the crisis.

Merkel is shifting the blame onto Greece for failing to get its house in order and EU Commission Barroso has waded into the mix:

European Commission (EC) President José Manuel Barroso left the door open for eurobonds on Wednesday, as he delivered a stark assessment of the eurozone described as “the most serious challenge of a generation”.

Barroso must know that, despite approving the current bail-out of Greece, the German Constitutional Court has specifically outlawed, in its recent judgement, eurobonds in the future as highlighted here:

While the German constitutional court may have approved bailouts last week, anyone who says this was good news for the eurozone did not read the fine print in that 29-page document.

That's the opinion of Wolfgang Munchau, a longtime FT editor who writes a weekly column on the affairs of the European Union.

In an editorial published yesterday, he points out that the constitutional court virtually ruled out permanent mechanisms like the European Stability Mechanism (the would-be successor to the EFSF) and the economic authority necessary to back up eurobonds because they would impinge upon the sovereignty of the German state. An expansion of the EFSF is only legal because it is temporary.

Panic and preparation for the blame game appears to be in full swing The end is clearly on the cards - it's all over, please get on with it.

Back To School For Merkel

Courtesy of the Purple Scorpian I spot this 'breathtakingly stupid' remark from Merkel:

"History has shown that countries with a common currency never wage war against one another, and that is why the euro is far more than just a currency. If the euro fails, Europe fails. It must not fail, and will not fail,"

Purple Scorpion does the business of frisking this here. Merkel's comments can also be dismissed with one simple word: Yugoslavia.

No Surprise

As expected the German Constitutional Court has thrown out the challenges to eurozone financial rescue packages, but Merkel's and the Eurozone's problems are far from over.

"War On Every Front"

Ambrose Evans-Pritchard in the Telegraph writes that this coming month, or even next couple of weeks, will decide the future of Angela Merkell, Germany's destiny, and the fate of the Euro:

German Chancellor Angela Merkel no longer has enough coalition votes in the Bundestag to secure backing for Europe's revamped rescue machinery, threatening a consitutional crisis in Germany and a fresh eruption of the euro debt saga.

Mrs Merkel has cancelled a high-profile trip to Russia on September 7, the crucial day when the package goes to the Bundestag and the country's constitutional court rules on the legality of the EU's bail-out machinery.

Mrs Merkel's aides say she is facing "war on every front".

There are ever louder concerns being aired in Germany about the lack of democracy in a fiscal union which the Euro survival depends on:

Christian Wulff, Germany's president, stunned the country last week by accusing the European Central Bank of going "far beyond its mandate" with mass purchases of Spanish and Italian debt, and warning that the Europe's headlong rush towards fiscal union stikes at the "very core" of democracy. "Decisions have to be made in parliament in a liberal democracy. That is where legitimacy lies," he said.

Merkel therefore faces defeat which would surely start the unravelling of the Euro. But I wonder if, despite their reservations, the Germans really will put their concerns above the EU knowing what the ultimate consequences will be? Would they be prepared to take the inevitable blame over the fall of the EU?

I doubt it. The German Constitutional Court has a track record of wriggling rulings out in favour of the EU on these issues (it will do so again) and then there's the boundless stupidity of the German Government as AEP acknowledges (my emphasis):

While the bill is likely to pass, the furious debate leaves no doubt that Germany will resist moves to boost the EFSF's firepower yet further. Most City banks say the fund needs €2 trillion to stop the crisis engulfing Spain and Italy.

It's important to appreciate the almost limitless determination to keep EU and the Euro going come what may. So a bumpy September awaits the Euro but I suspect it will continue albeit in an even more crippled state than before.