No more euro deja vu

What the Greeks need is a bit of Quantitative Sneezing.

If the ECB would just simply print un billet or two all would be well.

And the European equivalent of The Gilt Edge Mischief Makers will also make a butterbrot or three.

Send them Magical Merlin King, he’s your man.

What have we learned in the last year or so:

Banks are too big to fail.....but countries are not?

Post-modern economics.

Hi Stephanie

Thanks for the update even if it is a slightly depressing one! I see that you agree with point two of notayesmanseconomics plan for dealing with Greece. Of course with one country saying one thing then another saying something else we only end up with confusion. How would Germany operate a plan on her own? What would the rest of Europe do?

Maybe these EU finance ministers would be more successful if they didn't spend so much time dining together!

It's the dog that hasn't barked: Values of Bonds for major countries do not reflect media anxieties about the future of the Euro, Dollar or Pound. Institutions who invest in Government Bonds appear unperturbed.
As at 3.40pm today, Bloomberg was reporting the US 10 year T Bond as yielding 3.63% and German 10 year bonds at 3.18%. Which levels and difference are a fair reflection of the present value of each when inflation prospects are accounted for. UK 10 year Bonds yield three-quarters of a percent more than German Bonds which also reflects the inflation differential over the next ten years.
A real calamity of Greece becoming perceived as unable to meet its obligations would deeply unsettle all Euro Bonds.
That dog remains silent despite all the fuss!

Come on people - whats the surprise ?! All the PIGS economies were basket cases before accession to the Euro (AKA the Deutschmark + France). There were many very good reasons for this - and none of them were to do with infrastructure or investor bias. I go to these places regularly, and unfortunately the work ethic is significantly different to other economies and thats the problem. Give PIGS lipstick and they are still PIGS. In the EUs case - the really blinkered thinking - give them free money (our money I hasten to add) and they will grow, which will benefit us all. Sadly it seems the free money (Billions of Euros) was gladly taken, infrastructure rebuilt (try and find a pothole in all those lovely new roads!)but the deficiencies that plague these economies are deeply rooted in misplaced feelings of cultural superiority and a lack of work ethic in the mainstream labor force, thats why post-war they couldn't trade their way out of a paper bag. They still can't. I suppose one good thing was that Banks from these economies got very very rich on heavily subsidised economies and were able then to cherry pick the best of OUR institutions at a massive discount. You couldn't make it up. I say give them back their old currencies so the open market can clearly judge exactly how good or bad these economies are run, rather than an opaque, politically driven multi-institutional credit market fudge that no-one can really understand. At least then I get a cheap holiday :)

Great analysis Stephanie, particularly the bit about the conflicting messages and the consequentially higher cost of any solution. Perhaps you could help the politician readers of the Joint Intelligence Committee's well crafted assessments to understand the consequences of their actions?

Well, the news according to Jean Quatremar is that the US hedge funds have thrown in the towel and sold their Euro holdings - at a loss but not as big a loss as they could have achieved had they hung on.

Their play against the Euro could lead to some serious problems for hedge funds in general. The Euro countries are said to be so annoyed by this attack that they are more than ever determined to screw down on (ie regulate) such funds than they were before. Well done, chaps.

Well, now will they accept that you can't run a single currency without total dogmatic central control of everything (and how did that work out for USSR)

The Euro is dead -and good riddance to the dim-witted bureaucrats who rigged the books to bring it in. Long live EFTA, that is all we need.

There is quite a lot of anti European sneering going on here today concerning the troubles in the Eurozone. Yes it was probably ambitious to try and harmonize the infant economies of Spain, Portugal, Greece and Ireland under one currency and fiscal controls but this paternship may eventually save these troubled economies. And if we are to include Italy as one of the "basket cases" economies where does that put our own. Their economy is now officially for a 2nd quarter bigger than our own, they have an industrial base and capacity we can now only dream of and although their public finances are a bit messy their levels of personal debt amongst the populus are amongst the lowest in the western world. I have never been an advocate of Britain joining the Euro but had we been a member then it's fiscal controls may have prevented this government from getting into the fiscal mess it has done and in a few years time unless a brake is applied to government spending we might be casting envious eyes back across the channell

Post 6 raises some pertinent points in that many of the Southern European countries in the EU saw the Euro as a panacea and have ridden the ride for a number of years subsidised by false dreams.

Anyone with any nous surely realised that the party must come to an end and structural reform must take place. It hasn't and a one off opportunity for convergence was missed. The re-alignment will happen soon and it will be messy.

The German's economy was hamstrung for ten years paying for reunification. The German voters simply won't accept a bail out of the Greeks and possibly the Spanish, Portuguese and Italians as well.

Shorts of these three countries following the Irish in severe retrenchment there will be a disaster.

I for one am glad we are outside rather than inside the Euro at the moment.

#8 frenchderek,

You may be celebrating just a tad too soon my friend. This whole mess has shown that the Euro has very large problems. It has a very predestrian leadership and is still in the thrall of the politicians. Add to that it still cannot cope with the diversity of economies.

The carnivours willnot be put off that easily I assure you.

The sneering is because only fools would have believed the "growth" stories of the PIIGS. You here all this rubbish for example about the Italian economy (amongst others) being this shining beacon we should aspire to. Give me billions of free Euros and watch my growth curve zoom !! Comparing the UK to these economies is a ridiculous exercise. The UK takes its ills an woes way too hard, and the rest of the world picks up on that. I'd like to know where you get your figures from regarding Italy, as it can't even efficiently tax a large proportion of its population. Maybe those figures come from the same place as Greece was getting theirs ? For all its problems and our magnifying them, the UK is extremely transparent, and hardly corrupt at all by the standards of certain other countries (our leader doesn't own the entire media for example, though he'd probably like to). We have a historical record that reads like a bible of economic power and competence - though yes we have made mistakes - but there is still an enormous amount of investor good will towards us because of it. Compared to certain other economies our politics is incredibly stable and our economy wide open to the world, it plays by the rules, and is a very transparent, safe place to do business. Even our currency was the worlds reserve until WW2 intervened and bled us dry. Intangible things like our history, transparency and relative stability all point to an investor confidence that so far has kept us going and our Gilts selling. To compare the UK to an overinflated, chaotic, politcally bickering, massively subsidised, opaque, quite corrupt economy with labor market rigor-mortis and a government with little ability to control its own fiscal or monetary destiny without direct permission from another country (whose interests probably diverge) is absurd. In my opinion Germany and to a limited extent France are the sole engines of Euro-zone growth. Anyone who believes otherwise believes in anything.

The EFTA comment - you hit the nail on the head!

Ms Flanders you have said :

'German officials have told the FT...'

WHAT THEY TELL the FT and WHAT THEY MEAN perhaps are different.

The Germans know but dislike the fact that they must defend the PIGS as though they were one and the same in brotherhood. Or eurohood. They reap what they SOW.

Any other suggestion would be 'Schweinerei' in MHO.

_________________________

On another aspect colouring your recent blogs : PIGS as an acronymn - some bloggers have been rightly upset that this is potentially disrepectful and insulting to the people who have the current misfortune to live in these countries.

But further, the use of this 'amusing' label may also show lack of sympathy for real pigs. An abuse of their good name as fine animals of the sty and farmyard.

Pigs in the main do not study at Harvard or Finishing School. Do not have careers in Parliament or the BBC. And receive their degrees in the University of the Abbatoir.

Please, Ms F, show more courtesy to pigs of all types. And stop libelling them with the near alternative label STUPID.

Oink oink, Ma'am

This has all gone a bit quiet.
It might be a rather simplistic question but it is approximately six months to the peak holiday season and the Euro stands at approx EUR 1.14 to GBP 1 and EUR 1.10 to GBP 1 for tourist rates.
Anyone want to hazard a guess what it will be come the last week of July when the School holidays in England begin?

Good blog. A bit on the pessimistic side? No, not really. I think that this is a highly likely scenario.
If it comes to actually parting with any cash, Germany and France will send the PIGS to the slaughterhouse.

Euro officials know the risks of re-living the past. Let's hope they avoid them.

I think what Euro officials and most of the rest of the world want to avoid to relive most is a finance bubble like the one UK created. So lets really hope that international wholesale finance for British mortgages will be a matter of the past forever!

Too bad the Greeks can't resort to QE like the US and the UK can:
https://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWfxlkq_ryMs

OK - all the speculation herein about Portugal, Ireland, Italy, Greece or Spain leaving the Eurozone is a nonsense non-starter promulgated by economic flat earthers. This piffle holds as much currency (pun intended) as the prospects of California and the Old South leaving the US dollar, Tasmania leaving the Australian dollar, Scotland and Northern Ireland leaving the UK Sterling, Andhara Pradesh leaving the Indian rupee, or Xinjiang leaving the Chinese yuan for similar reasons.

What is required is that the IMF, the ECB and the EU ALL go into Greece together and help the Greek Government restructure Greek administration to meet the needs of Greeks in a way the Greeks can afford. Then let the Greeks get on with it. This process is already underway in Ireland, at the outset in Portugal, and in the pipeline in Spain, and probably Italy as well.

Get real people, get lives, and get on with them. Leave the fluff in other peoples navels to them, and worry about your own fluff!

Although I am not an economist, I have to say I never understood how the euro could work without political union to underpin and administer it .

At 9:13pm on 10 Feb 2010, Michael Parkes wrote:

FYI -

https://en.wikipedia.org/wiki/Sterling_Area

I don't recall a political union here. Your point, please?

Dear Stephanie,

Thanks for your informed article. However, I believe that the the use of the term Pigs to refer to the nations of Portugal, Ireland, Italy, Greece and Spain is highly offensive and thus inappropriate for a respectable international agency such the BBC.

Three days ago, the BBC blog moderator decided that the use of pigs does indeed contravene the House Rules and removed the offending material.

I am certain that you are not using 'pigs' deliberately to offend your readers from these countries, and this is why I would like to remind you and every one else that using this term denotes cultural prejudices and implies a derogatory attitude towards the nations of the EU periphery.

No nation should be clustered into a group under this name, and no educated and respectful person should use it.

Just so long as the UK sticks to it's guns and does not give any money to Greece or any other country to bail them out. The current shambles of a government we have bullying it's own civil servants into pay cuts, while bailing out useless bankers and claiming illegal expenses, if they give even 1 penny to other countries from now on, the entire civil service in this country should walk out on strike, our government treat us like 2nd class citizens and it will backfire eventually

The problem for the PIGS, and for the UK, is that each country has overspent way beyond their income and supported that habit by borrowing vast amounts of money. The overspend has come both from supporting banks who had lost their money on the international casinos and by the governments spending the next generations wealth on projects to try to buy votes for their next election. The mix varied from country to country. Ultimately each will have to take a dose of the "Irish solution" to pay themselves less and reduce their standard of living to divert their incomes to paying these debts. This means less public spending, higher taxes, reducing imports and encouraging exports. In the UK we can let the exchange rate drop so that our exports can be more competitive and imports become more expensive to grow net income. The PIGS do not have that option as they have no influence over the Euro exchange rate. Therefore sooner, rather than later, they have to divert their wealth to paying off their debts, or default on their debts. If Greece defaults, the cost of any future borrowing for them and the other PIGS (and the UK) will surely go up as they will all be seen as considerable credit risks. Although we have an advantage of not being in the Euro, we must hope that the PIGS do not default as the impact on international credit will certainly damage the UK as well.

I believe the Greek government is conservative and prone to looking after the interest of the more afluent population. Perhaps you should compare Europe with the actions of the Rudd labor government in Australia. Jobs are growing and Australia's schools are being modernised after years of neglect by conservative governmens, both federally and in the states. Under this program Australia did not go into recession.

can someone explain how the single surrency area of the US dollar works when one US state cannot pay its debts?

"But the at least some German officials are coming round to the idea that IMF involvement - of some sort - would give the deal greater credibility in the markets."

Europe sees itself as this important bloc in the world. On a par with the USA, China, India and say Russia. So it is.

However let's say we compare it with the USA. California could be considered in the USA like Greece (proportionately it's bigger, I know). California is bust. Just as bust as Greece or the other miscreants in Europe.

Why isn't there the same issue with California and the USA? Because California is part of the USA. If push comes to shove, somehow the USA (the Fed) will support it.

So, in my view, the key problem is that Europe has set up this loose affiliation of countries under the one Euro umbrella with out the fiscal/monetary infrastructure and rules to support it.

It seems crazy that Greece's poor monetary and fiscal management is calling into question the whole Euro zone structure. It is only 3%, I believe of the Euro zone GDP!

To imagine the USA bringing in the IMF to bail out California would be a nonsense. So why are the Eurozone not cleaning up their own mess?

I can't see a downside for Germany delaying doing anything. By not bailing out Greece they keep their finances intact, while the uncertainty devalues the Euro to the US Dollar... making an opportunity to their exporting manufacturers. The Euro is about 15% lower than it was in November... it will be interesting to know if the car manufacturers are seeing a boost in sales to the USA, and their government know this.

what-will-be-the-effect-on-the-UK--if-the-Republic-defalts-and-goes-into-meltdown-it-will-be-difficult-for-Northern-Ireland-,things-are-extremely-hard-there-at-the-minute-I-cant-see-how-they-could-cut-any-deeper-without-major-civil-unrest

Greece is not bust! It 'owes' a series of zeros to people who believe that zeros are important. It will give them their zeros back - just not right now or as quickly as they would like.

So why the hell do some of you want to see their population suffer just to satisfy the predilictions of a few financiers? It doesn't make sense.

Stephanie, I'm getting hooked on your blogs and the less pedantic commentators. It's interesting to note that poor management of a country that is 3% of Euro GDP can influence its "mother" currency. However it appears to me that when the PIGS or STUPID (or whatever other acronym you fancy) are integrated into this mess, the fun begins. Being a boring engineer/coder I'm used to deriving algorithms from analysis! BTW I believe the worlds bankers avidly watched tonight's Horizon on the many flavours of infinity. Not too long before it's applied to economics?

So we can bail out banks to the tune of trillions of monopoly money, but we can not help a nation like Greece. I am sure we have our prioraties wrong. Working People in Greece are demonstrating about how they will pay for the total chaose wrought by the ruling classes. Revolution only brings about a replacement of one blood sucking regime by another. What can we replace our failed system with ?.

28. At 10:57pm on 10 Feb 2010, dontmakeawave wrote:


To imagine the USA bringing in the IMF to bail out California would be a nonsense. So why are the Eurozone not cleaning up their own mess?

Essentially it comes down to sovereignty. Greece is sovereign, California is not.

This means that the Greek government is free to make a mess, but must either clean it up itself, or with the help of others, but will have to accept preconditions for that to happen - particularly and acutely in the provision of accurate statistics (EuroStat could perhaps temporarily step in), and in tax administration (perhaps the stunningly successful transition fellow Eurozone member Slovakia managed here might be a useful template to similarly help Greece). So Greece is a bit like an adult in international affairs, one who has let the house and garden get badly out of hand, and the Residents' association on the Eurozone estate are mightily displeased, but for the good of the estate will muck in to help a neighbour in need, but keep a surly eye on affairs in future.

As I understand the US system, California by contrast may best be understood as a spoiled surly teenage minor running up huge debts on trinkets without heed or care as to how they are to be paid. Contrast Texas who always cleans his bedroom, prays, and saves his money. Federal authorities will have to intercede like an embarrassed mother to try to make good for spoiled California, but without tapping Texas (Not too sure here - US commentators please provide counsel - can Mom tap Texas to bail California out? ).

Rosy - Except Mom herself is already tapping credit from the Chinese family down the block...

Greece is responsible for it's own mess - Mom cleans for California

Steph's blog - 10 Feb 2010:

"German officials have told the FT that they are considering a bilateral support programme, with the likes of Germany and France either lending directly to Greece or agreeing to buy Greek sovereign debt."

Greece's prime minister, George Papandreou - 28 Jan 2010:

"We need no bilateral loans, we have never asked for bilateral loans," he told reporters after the Davos panel. Asked if he was talking to France or Germany about loans, he said: "No."

https://www.guardian.co.uk/business/2010/jan/28/greece-papandreou-eurozone

What were you saying Steph about EU "leaders each give clear, but completely contradictory answers"...?

As they say, a day is a long time in politics, let alone a fortnight...

Morning Stephanie,
A troubling aspect of this Grecian crisis is that Mr Darling (our Chancellor) says that sorting this out "is a matter for the ECB". It is as if this has nothing to do with us as we are not part of the Euro.
Well, may I remind Mr Darling that we ARE part of the EU who will have to pay via the EU structural funds for whatever solution is agreed. Once you are part of the EU club then all of the running costs are bourne by its members.
Fast forward now to Spain, Portugal and not forgetting Ireland, they are going to cost the UK plenty in the future.
Perhaps, Stephanie in a future article, you could spell out what it means in £ terms for the UK?

In 1990 interest rates in the UK and across Europe were divergent. Italy's short term rates 18%, France 10% Spain 15%, Germany 6%. Six years later the rates were forced to align with Germany ahead of monetary union. It created an environment of phoney low interest rates and declining real rates of return. Banks and investors naturally looked to find the returns they were used to. Hence the higher risks they took resulting in the the credit crunch. I just hope economic reality will hold in check the political ambitions of the EU that are nothing short of megalomania.

What everyone here has failed to realise is the most important aspect of the decision on Greece is the consequence and precedent set for future bailouts in the EU:

While Greece has a high level of public debt to GDP now, the UK and other Western countries are only beginning the long Japanese march of converting private to public debt. In a year or two the situation in Greece now will be a fraction of the crisis sitting on top of the UK and other similar nations.

The EU has to be careful what it does with Greece today, because it will be repeating this process on larger scales further down the line.

By the way - on the topic of debt to GDP - be aware that the stats being thrown around on the BBC omit that the true debt to GDP ration in the USA today is in the order of 600 to 700%, if you include social security. US social security is not technically counted as debt, as the state has no obligation to pay it, so when you see figures like 300 or 400% for the US, this is only on the assumption that no one will get any kind of state pension or support.

#8
.....yes I agree it is a shame to see those parasitic short-selling hedge funds get burned especially as they perform such a productive function through the jobs that they create and the taxes that they pay from their Monte Carlo lairs. Let's hope that we don't see too many reoccurances of this unfortunate incident as the world really could do with more hedge funds.

#39

Yes that's right. Can you imagine some future world where the supply chain is almost entirely automated and mechanised and so most people in this highly developed world do non-jobs like analysis for hedge funds, information management, knowledge management, computerised semi-automated clerical jobs and general speculation on the future direction of further mechanisation and technical infrastructure, while a few poor people from outlying regions of the world do the really dirty work and give up all their resources in return for foreign aid and debt?

...or is that the world today?

#34 I don't see anything turning on the fact that Greece is a sovereign State while California is not. Both are independently able to tax, borrow and spend: and both, if mismanaged, can end up in a situation in which they cannot repay their debts.

The medicine, for both, is to tighten their belts: come to some arrangement with their creditors: and sort things out.

In both cases, there are monetary rules governing the process.

Why, in either case, this should lead to crisis in the Euro or Dollar is a different question. It turns on whether you believe that the central, financial authorities will bail Greece/California out in order to prevent a default. If they will, then the Greek/California debt becomes less risky - but at the same time the diluted risk transfers to the central authorities.

Is it not the case that the systemic risk to the currency comes from trying to help rather than letting them sort it out for themselves?

Intersting blog and discussion, but I feel that nost comments miss the point:

1- If you want to discuss the impact of the Euro on the stabilisation of economies, probably the question should be "How would Greece fare today had it not been in the Euro Zone".

The start of an answer can be found in Iceland maybe?

2- If you want to discuss how to "save" Greece, the question should be "Does Greece need to/want to be saved in the first place?"

They seem to believe they can sort out their own problems. It is other countries that feel the need to envisage an "intervention"


However, the real question, IMHO, posed by this blog and echoed by some of the comments, is how to ensure in the future a smoother workings of the "sum of different parts" that is today Europe (and yes the UK is one of those parts). How the EU reacts in a time of crisis is just a very visible and mediatic highlight of this issue. The current responses are not very encouraging re the maturity of our political system, politicians or public opinions...

For those who believe that the EU is a pile of mess and that the UK should leave, I trust that the demonstrated pragmatic side of the UK(students of History are free to argue) would have gone out a long time ago, if the UK was not benefitting from its membership.

For those who believe that EU is great and the panacea for all problems, well, let me know what drugs you are on, I want some.

The truth is probably in the middle. The EU is a very very young entity. Is is at most 52 years old (Treaty of Rome) but more likely a little more than 10 in its current form (notwithstanding the eastern expansion). Economical and political systems need time, patience and dedication to build.

Personnally I still believe in Europe, it was built first and foremost to avoid wars, and so far has been succesful at this. Is was then developped to create a single european market, where all people, goods and services move freely, thus developping trade and growth, and although the jury is till out for some on the latter (growth), the former (trade) has been achieved to such extend that it is now a model for many FTA's around the world.

What we need are visionaries to help build this future. Crisis have always been time of difficulties, but also time of great opportunity for development of our societies. Let's hope Europe does not miss this boat.

things might have been fine if they hadnt smashed all those plates.

Further to comment no 22.
Stephanie Flanders introduction to her piece on Greece for last night's BBC1 ten o'clock news alluded to my concerns. This morning on Radio 4's Today programme at 8.15am, both she and Norman Lamont were far more explicit. Fundamentally it boils down to "who runs Europe ?" (or rather, the Eurozone). Chancellor Kohl at the time famously stated that "you can't have monetary union without political union". An EU bailout is illegal under The Maastricht Treaty and the Stability and Growth Pact has NOT been enforced.
Further to comment no 28.
I agree, and only when a United States of Europe is more or less in place, will the credibility and strength of the Euro be secure. But is there the political will within the EU for such a federation ? I doubt it .

#40
Swap future for present and you might be in the money.

...or is that the world today? - Yes

Once again we have our heads down in the weeds rather than looking at the whole picture. Yes, Greece is in difficulties and Yes, it will need propping up. However it is not just Greece we need to be looking at, it is all the so called other PIIGS. As Stephanie correctly pointed out last night on the the 10 o'clock news and was reiterated by her colleague on newsnight, it is not the 3% of Greece that is of concern, it is the 20+% of the group as a whole that is cause for concern.

Can the ECB / EU support all of these countries, the answer is no. So there is grave concern of a run starting. If Greece is shored up, who will be the next? There are also other countries outside the group of PIIGS who could soon be following suit.

Can Germany and France stand behind all of these countries, once again I fear not. For both have a number of issues that need attention and along with their commitment to maintain a significant stimulus package. There is just not enough to go around. Also you would have to question the support they will have from home, "robing Peter to support Paul".

Then we need to look further afield, those in the EU but outside the Eurozone. How many of these club members are on the edge, does the EU turn it's back on these in favour of the Euro member states. Question; Does that mean there is now a two tear membership of the EU. Answer; If yes does it mean the end of the club for a number of members as they will breach the membership rules. If No then who will stand up for these?

Finally you may all be questioning why do they all not want the IMF to step in. Well the answer is simple, the IMF will expect action to be taken. Action that would not be accepted by those receiving the aid. There are already, I was going to say undertones but that would be the understatement of the decade, resentment from the public in Greece. They are questioning what has been proposed by their own Government, does anyone expect them to agree to guidelines set out by Germany and France or the IMF. They have been sold a dream by their Government and the EU that the Euros would keep on rolling in, but the tap has been shut. This is the same as Ireland who, while the grants Etc were pouring in from the EU had a Tiger gold rush. One built on an economy with no foundations. The people living off a housing boom that was doomed to crash. The Euros stopped flowing in and the property market became unsustainable. There were issues with all of these countries prior to the banking crisis. It is just that the larger countries were enjoying the good times so much they chose to ignore the signs.

The question has to be asked, where to now? I fear that is back to the drawing board as there have been too many cracks shown up during this debarcle.

The Euro if it is to survive has to have a strong single government supporting it. There are conflicts as not all EU members are in so would have little appetite as has been show to take action to support the Euro at any to themselves. The only other option is for Europe to become a federal group, hence member states would relinkwish control of fiscal matters to the central Government. How many countries are ready to sign up to this?

We had enough!
Greece cheated its way into the Euro zone in 2001 by fiddling its statistics and failed to curb its budget shortfall in the boom years.
Greece made fools out of the rest of 15 countries in the Euro zone when cheated again on their statistics about the budget deficit last year. The real facts revealed that the zone’s 3%, allowed budget deficit, was blown up and the actual figure is 12.7%, more than four times above the limit.
What I really don’t understand is why Greeks cheat on the history as well. They spent every penny in their propaganda and vilification against Macedonia in the so called “name dispute”.
If Greeks had the guts to cheat on their allies about the budget deficit, what makes you think they don’t cheat the rest of the world about Macedonia?
Instead of working out the deficit, over the last decade and so, they try to steal the Macedonian history from Macedonian people and to block Macedonian Euro and NATO integration.
Some people never learn. Before lending more of our tax payer’s money to Greece, I hope at least one of the ministers in the Euro zone will ask Greek officials how much money was wasted in this dim-witted adventure.

Are you watching Gordon "Papandreau" Brown?

Why is it time for the Greek Government to cut public spending but not time for "Papandreau" to do the same in the UK?

To "Paul":

Paul and anyone like yourself who tries to see these events from a very simplistic angle I can tell you this. Most Greeks don't want any EU money to get out of this situation because we know what the consequences are. A few points for a lot of people in here:

1. If the EU gives money to Greece it will be a loan, I repeat a loan not a gift. That means that no taxpayer from this country or any other country will give money without getting it back. We the Greeks and our children and grandchildren will have to pay that back with an interest and with certain political agreements.

2. Behind all this is the aim of many european nations to sell weapons to Greece. Today the Greek government agreed to purchase 6 warships from France and 30 eurofighters from Germany. This is all happening while France and Germany are talking about supporting Greece.

3. Someone talked about work ethic in Greece. Generalising from personal experience is not a good thing and leads to extremes. Most Greeks work ridiculous hours to survive and have 2 jobs. We are going to be the ones who get to pay all these EU loans.

4. Can someone please tell me which government hasn't manipulated its statistics? Noone talks about the discrepancies in Spain, Portugal, Italy or even the UK.

Finally Paul as a Greek Macedonian I can only tell you that according to history Macedonia is only Greece, visit the sites in the north and you shall see. What you think is only the opinion of a few people with an identity crisis.

There is quite a lot of comment on this and other blogs expressing relief that, given the current crisis, the UK is lucky to not be in the Euro. There is a flip side to this which is that the Eurozone countries are very probably equally relieved that the UK is not a member.
Given the relative size of the UK economy, the levels of public expenditure required to bail out our banks and the debt ratios we have (according to the recent McKinsey report on sovereign debt the UK is only just behind Japan at a debt ratio of about 450%) the risk of a run on the Euro would have been that much greater if the UK was a part of it.

What is this I keep hearing about lack of work ethic regarding those living around the edges of the Mediterranian.

Would you rather work long hours, in over stressed employment conditions under the failed Anglo-American capitalist model. Then travel home on its overcrowded potholed roads, ( the roads in Egypt are better than they are here - I have seen them ), Britons are still officially the least efficient workers in W.Europe so the long hours are obviously part of the problem especially for those on the lowest rates of pay. Is this condusive to a healthy lifestyle of body and soul and psychological balance?

Prior to the Industrial Revolution agrarian workers worked hard at the task in hand as natures cycle demanded.
Then they danced and partied!

I would rather live under the Sun amongst the vine and olive and work to live rather than live to work. Thats what God intends for us:

"Man does not live by Bread alone."

49. At 10:14am on 11 Feb 2010, Dimitris wrote:
2. Behind all this is the aim of many european nations to sell weapons to Greece. Today the Greek government agreed to purchase 6 warships from France and 30 eurofighters from Germany. This is all happening while France and Germany are talking about supporting Greece.
--------------------------

Dimitris, thank you for the information. Do you have any sources about these arm deals today. It all true, it only shows the usual political hypocrisy by Western nations towards the Balkans.

A conditional help is no help it's harassment!

20." Mickalus"

Well said. It is the Pound that has collapsed 25% against the Euro these last 30 months. Johnny Foreigner sets the value of our Currency.
Not us. Therefore; a vote of no Confidence in the Government,Economy, or the People of Britain.

Euro now please, immediately.

#51

and the chicks are hotter too

Thank you to Mark #6, your lipstick on a pig reference made me chuckle, a first for me on one of these grim economic's blogs.
The Greeks (along with all the other little piggies)know they can't fall down. Normally what happens to a country with this amount of public debt, fiscal and current account deficit, is that the currency devalues, automatically if it's free floating or by the central bank if it operates under some kind of dollar pegged system. The currency devaluation means that the economy should start to rebalance towards export driven growth, and thus painfull restructuring is driven automatically through market forces. This is essentially what is happening to the UK right now although the export side of things will take a bit longer to achieve. But for Greece there is nothing driving this structural change moreover the high value of the Euro will do the opposite and discourage investment in export industries. The Euro has automatically created the moral hazard of not requiring countries to maintain balanced economies, the weak and lazy economies can live off the prudent and productive ones. The only viable solution in this situation is that if countries allow themselves to get into this kind of mess then the penalty is devaluation of the currency for all. The ECB could achieve this through QE.

49 Dimitris

Some good points. The EU could be a very good idea and great benefit to all Europeans but only if the officials and politicians that manipulate it (note not manage or run it) for personal ends (usually financial) were removed from office. Yes the Greek government lied about it's true financial position, but this is also true of the EU whose financial books have not been certified as correct by the auditors for more than a decade.

Whilst it is understandable that the richer nations should subsidize the poorer ones the very nature of large amounts of money sloshing around bring out the worst in human beings in terms of greed and theft. The Common Agricultural Policy is a very good example of this where all sorts of people have milked the system - you could call it Euro Billions.

I have never been in Greece, but it does strike me is that some of the Mediterranean countries appear not to make or produce anything of note. I know Greece has shipping tycoons with merchant fleets. Italy has a fairly strong industrial base, Spain less so and Portugal well, nice holiday spot. Yet all these countries have benefitted from huge hand outs: so where has it all gone? Where is the return on investment?

As to the UK, are the government's figures to be trusted? If we did not have such a snivelling and sychophantic media (one exception is Andrew Neil and independent bloggers) in this country, the British people might have a better idea of how much debt we face.

I suppose we should draw parallels with what is happening in Greece with our own debt problems. Both countries have the same amount of debt, which is worrying. We will know what it will cost us individually as soon as the General Election is out of the way. Only then will the true picture come to light. Will we have to go to our European partners cap in hand for financial help? I think this is more than likely. Unfortunately we are no longer a producing nation and rely too much on imports. These are worrying times, especially at a time when the majority of voters have very little confidence with MPs and the parties they represent.

41 - tFoth

The comparison between Greece and California is appropriate - both represent the thin end of the wedge.

According to the Center on Budget and Policy Priorities, 48 out of 50 states in the USA faced budget deficits equivalent to 28% of their budgets in 2010. Even after making heavy cuts, 41 states are now facing new deficits in 2010 as tax revenues fail to meet budget projections. Initial indications are that they will face the same or bigger deficits in 2011, ranging from 1.7% to 54.6% of their total budget.

https://www.cbpp.org/cms/?fa=view&id=711

Not suprisingly, as of June 2009, Obama's administration was refusing to bailout California, even though it is effectively bankrupt:

"Federal officials are worried that a bailout of California would set off a cascade of demands from other states.

"[Meanwhile]... with an economy larger than Canada's or Brazil's, the state is too big to fail, California officials urge.

"This matters for the U.S., not just for California," said U.S. Rep. Zoe Lofgren, who chairs the state's Democratic congressional delegation. "I can't speak for the president, but when you've got the 8th biggest economy in the world sitting as one of your 50 states, it's hard to see how the country recovers if that state does not."

"The administration is worried that California will enact massive cuts to close its deficit, estimated at $24 billion for the fiscal year that begins July 1, aggravating the state's recession and further dragging down the national economy."

"A fiscal meltdown by California or any other large state or municipality would surely destabilize the U.S., if not worldwide, financial markets," [State Treasurer] Lockyer wrote. If the state were to default, it could shake bond markets and undermine investor confidence in a still-fragile financial system."

https://www.cbsnews.com/stories/2009/06/16/politics/washingtonpost/main5092135.shtml

So if California doesn't make cuts it will neither sell bonds not get a federal bailout and will go bust, but if it does make cuts it will put its economy further into recession, extending future budget deficit through lost tax revenue. Damned if you do and damned if you don't.

Another comparison with Greece lies with the difficulties California faces in making cuts to its spending:

"Governor Schwarzenegger... has only limited ability to manage finances thanks to California’s obsession with “direct democracy” in which small interest groups can enact laws by electoral “proposition”.

"Property tax has been frozen for many homeowners since a proposition passed in the late 1970s. A separate measure, introduced in the 1980s, means that income tax cannot be raised without the agreement of two-thirds of the state’s lawmakers.

"Meanwhile, previous borrowing means that roughly 10 per cent of all California’s cash is required to service its debt... [while] only a quarter of Mr Schwarzenegger’s spending is considered “discretionary.” The rest has been “earmarked” for a particular cause.

"The result is political gridlock. A minority of Republicans at the state senate and assembly, most of whom were elected on the back of “anti-tax” pledges, are able to block tax rises – while the majority of Democrats refuse to countenance spending cuts."

https://www.independent.co.uk/news/world/americas/jobs-terminated-as-california-goes-bankrupt-1624892.html

It may be the case that Greece will be bailed out by the EU, just as it may be the case that California will be bailed out by the federal government. Given the endebtedness of their federal neighbours, however, I doubt that will be an end to their problems.

#42 wrote
"1- If you want to discuss the impact of the Euro on the stabilisation of economies, probably the question should be "How would Greece fare today had it not been in the Euro Zone".

The start of an answer can be found in Iceland maybe?"

This is exactly the moral hazard, what should be happening to Greece right now(and possibly the UK in the not to distant future) is what is happening to Iceland. They are having to take some painfull measures to restructure and rebalance their economy, and the last time I looked this hasn't yet led to mass suicide or civil war there. If market forces aren't allowed to drive them to rehabilitation then the problem will only get worse with a much greater impact in the future.
What should happen is this, Greece should largely be left to it's own devices, if the private debt markets decide they will no longer support their government debt then it should go to the IMF for emergency loans who will provide the temporary credit in exchange for whatever fiscal constraints it deems necessary. If Greece start to renege on these fiscal constraints then the credit will be removed and it will be left with no other choice but to dramatically slash it's budget. This is the only way to achieve the rapid and painful restructuring this country desparately needs(just like Iceland). It is a lot easier for Greece to do this, it has the advantage of having the value of it's currency maintained by the rest of the EU. It needs to reduce it's dependence on the state to provide economic growth and get it's people working on genuinely value added private sector economic activities. These are the choices a lot of countries face, we have to allow market forces to determine economic structures, unfortuantely this free market free trade system is being severely handicapped by the Chinese manipulation of the Yuan and until this flaw in the system is resolved then most countries will find it increasingly difficult to balance their books.

Re Comment 49 - Dimitirs.

Is it true that Greece stands to eventually buy more EF2000s than the UK? A contact of mine persists that Greece will probably be the last major client for the type after ordering the first batch of 60 to a projected total of 180 units. Which I should add is probably more than what the UK has now.

The ECB could do quite a lot without being seen to be acting in a way that introduces moral hazard to the PIGS countries fiscal management. It could expand QE to further bring down euro bond rates, it doesn't necessarily have to buy Greek debt but there is no reason why it couldn't, this should also have the effect of lowering the exchange rate, which is what all of these countries need. To further reduce exchange rates it could go and purchase lots of foreign curreny assets, just like the chinese do. The Euro needs to devalue and as painful as this would be for the surplus economies (like Germany), it is the only way to prevent these countries form bankruptcy.

49 Dimitris

"1. If the EU gives money to Greece it will be a loan... We the Greeks and our children and grandchildren will have to pay that back with an interest."

You have my sympathies - it is always those at the bottom of the political ladder who pay for the mistakes of those at the top. However, the concern here is that Greece needs new loans as there is a distinct possibility that it cannot pay back its existing loans. And if Greece defaults on its new loans it is OUR children and gandchildren who will have to pay for it. Or at least it will be if the UK joins the Euro anytime in the next 25 years...

How rubbish must Greece be at economic management. Since joining the Euro the only thing it had to make sure of was that it didn't spend more on the public sector than it received in taxes. It didn't have to worry about it's current account deficits/surpluses the value of it's currency or it's productivity, all it had to do was make sure it kept it's fiscal account in balance, simple. It could have let Germany do all the grafting, the productive real work, whilst it went shopping, had it's nails done and let someone walk it's dog. Can you imagine if the Uk had joined the Euro, we would have quickly worked out that we didn't have to worry ourselves with horrible manufacturing anymore we could have consumed like Americans safe in the knowledge collectively the Euro was too big to fail. They really are not deserving of this Rolls Royce status the Euro allows them.

59 FearandLoathing

Although it would be very very painful for the world for years and years I do wonder if you're right.

Debt is borrowing for from future earnings.
Therefore, debt is future consumption now.
Therefore, our future consumption must be less than current consumption.
A reduction in consumption results in a recession.

[with a nod to ChrisMartenson.com]

Maybe we have arrived at 'the future'?
We have had record levels of debt - i.e. record levels of future consumption - over the last decade.

Consumers and nations are now at the point where they have already spent much of their future discretionary money. The official solution - to provide ever more credit (QE = govt loans against future tax revenues) - will only exagerate the eventual recession as we spend even more of our future earnings now.

The more I think about this crisis the more I think we may have to take the pain now, as the end result is inevitable and delay will only exacerbate the final outcome. Perhaps depression is as much a part of the economic cycle as recession??

"There is no means of avoiding the final collapse of a boom brought about by credit expansion.

The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved."

Ludwig Von Mises - Austrian Economist.

So it looks like a deal for saving Greece may be on the cards and the hedgies have stepped back from targetting the Euro, somehow I don't think the hedgies are going to go back to their caves to lick their wounds, they will now be on the lookout as to how they can recoup their losses, Sterling crisis anyone ?

31. At 11:46pm on 10 Feb 2010, foredeckdave wrote:
'Greece is not bust! It 'owes' a series of zeros to people who believe that zeros are important. It will give them their zeros back - just not right now or as quickly as they would like.

So why the hell do some of you want to see their population suffer just to satisfy the predilictions of a few financiers? It doesn't make sense.'

Because the institutions who are owed 'the zeros' have the capacity to make life very unpleasant for EVERYONE if they are not given what they want, why do you think the French and Germans are falling over themselves to come up with some form of words which will appease the markets? Under normal circumstances they wouldn't give a toss about Greece or its citizens, but the potential damage to their own economies if Greece was just allowed to default is not worth thinking about..

no 49 Paul - Sorry - exactly where has the UK ever deliberately mislead in terms of its national economic data ? I can't think of a time when UK stats were ever under serious question. Ever. As for other countries who knows, but to compare the UK's credibility levels to say Spain, a country that has only been a democracy since the 1980s, is stretching it a little. I'm really fed up of commentators lumping the UK in with these other countries. Would you bundle the US or Canada in with Argentina or Mexico or Panama on a credibility basis ? Of course not, so stop doing it with the UK. Yes the UK economy is of a similar size to other European countries, but the credibility and influence of its politics and economy has been built on over 2 or 300 years of continuous, uninterrupted stability and reliability. Its institutions have remained intact and resolute through the trials of centuries and past tests that have pushed them to the brink of destruction. I can't think of a single nation on Earth that can boast that record, let alone countries that until the Euro handouts had currency devaluations as an annual event and changes of government seemingly for fun. That's of course unless they were a dictatorship. If credibility is ever an issue, the UK I'm afraid, as much as I know certain Europeans seethe to hear it, is in a different class entirely. The EU is creating a terrible moral hazard if it bails out the PIGS, but political expediency means that yet again the taxpayers in France and Germany and others (though, thank god, I believe that when he was tapped up the other day, Gordon Brown told the EU to stick it where the sun doesn't shine) will have to pay through the nose to support economies that simply don't deserve it. Nobody bails out me when my business hits the skids. My opinion is to let the PIGS go, they clearly can't sustain their economy with a currency that's as strong as the Deutschmark (sorry, Euro) :)

Oh and I go to Greece on holiday - its a beautiful country, but economically speaking its not Germany, so why does believe it has to suffer with a currency as strong as a German one ?

67. Mark

"Sorry - exactly where has the UK ever deliberately mislead in terms of its national economic data ?"

According to the Office for National Statistics:
61 million = UK population
38 million = those of working age
2.46 million = unemployed
8.05 million = "economically inactive"
7.71 million = work part time
6.65 million = public sector workers (not on ONS - from other source)

https://www.statistics.gov.uk/cci/nugget.asp?ID=12

Which means only 13.13 million people in the UK are in full-time private sector jobs - but better hush that up or the bond markets might doubt our ability to pay our debts and then borrowing (the natural source of income for this country) will become too expensive to maintain the illusion of a vibrant economy - one example of which is that 3/5's of ALL new jobs created by Labour are in the public sector. Not sustainable so better fudge those figures too.
https://business.timesonline.co.uk/tol/business/economics/article7009695.ece

Apparently, a deal has been agreed to help out Greece. It will be interesting to see if the help given is conditional on whether Greece controls its public expenditure. Given the painful steps taken by Ireland to reduce its deficit, they would be far more deserving of any help and would be entitled to feel aggrieved if any bailout was not applied equally to themselves.

I await with interest to see the reaction from Portugal, Spain and Italy to see exactly what 'help' is given. Anything that encourages even more reckless spending on their part should be avoided like the plague.

If one is to beware of Greeks bearing gifts should one welcome Greeks seeking loans?

Avoid joining the Euro.
It is a bankers' construct for their private profit at public expense all in the guise of development.
Just like we have here, but bigger.
The only way forward is to put the money supply system under scrutiny.
Get yourself educated via money reform sites.
There are plenty, like ProsperityUK.com or go watch "Money as Debt" on YouTube. Then see how much we are not told.
No part of the establishment will tell you simply because they are the establishmnet and they are doing rather well, thank you.

Can the UK offer Super Gordan to Grease to sort out their mess on a no fee no return basis?

67 - Mark wrote: exactly where has the UK ever deliberately mislead in terms of its national economic data ?

Quite often... or do you really buy unemployment figures for example??

This 'Euro' problem is only as big as what the gamblers want you to think it is (guess what - most of them are based in the US/UK)... the extreme media coverage (BBC leading on this one - by quite a margin) seems motivated by other reasons... like trying to move on the focus outside the country?

The Greeks have to take the pain now for their own miss-management - as any sensible economy would do... (note the UK did not...). I still think the PIIGS problem was fuelled anyway by the 'UK/US way of life' of recent years (remove UK investors from Spain - and the Spanish housing bubble would certainly not even exist...)

The fact of the matter is that Euro is in a far stronger position than the $ - and light years ahead of the £ (the $ is only saved as it is the reserve currency ... for now..)

At least some UK reporters agree the 'enormous' strike does not reflect the resignation of the general public. The mentality on the continent regarding personal economic aspiration is nothing like the US mentra we have incrusted over here... The Greeks know this is an internal problem - and trust me they are very happy now to be in the Euro.

I love when people say the UK is in a far better position - as the Gvt debt is far more manageable... the personnal debt should not be taken into account...
The UK (and the US) model was going on for so long, even the sceptic socialists in Europe were drawn to this never-ending source of wealth (sorry WOTW - I meant money 8-) .. this time is gone and will take at best decades to come back (if ever...)
So confidence in the UK.... gone!
And guess who will pay when the default of the UK huge personnal debt will mount up.... the gvt - who was so desparate for the 'confidence' to come back (hoping for a return as usual in very short order) is now with most of it in their own hands (the not really nationalised banks we have over here).

The Chinese are now in the battle with the US regarding the reserve currency and its meaning... The Euro guys are just the 'hard to move' block in the middle (China knows mainland Europe is out of reach for huge growth - they are not solely driven by 'liberal free market' non-sense...) / but they also know it is a stable block, allowing them to secure some of their goods.

It will be interesting to see where we all are in 12 months time... and where the Euro sceptic will be then.

Just thought I would quote Martin Wolf in the FT, who has come at this from a different angle: "the only way for eurozone countries to slash huge fiscal deficits, without their economies collapsing, is to engineer another private-sector credit bubble or a huge expansion in net exports. The former is undesirable. The latter requires improved competitiveness and buoyant external demand. At present, none of this is available. It is difficult to regain competitiveness when the euro is strong, partly because Germany is so competitive, and eurozone inflation also so low." He is considering the long term solution for the PIIGS within the Eurozone assuming some package of short term support and associated retrenchment is forthcoming. The external market financing the debts of the PIIGS needs repaying (through economic growth) but if government spending is slashed precipitately, growth will suffer as the private sector is unlikely to be able to pick up the slack (whether through cultural issues or lack of credit). This requires that Germany adjusts its economic habits and stimulates demand in the Eurozone through consumption over the long term, rather as China needs to stimulate demand for imports at a global economic level. So Germans need to eat more Baklava( I prefer Halva myself). I am certain the Greeks do not want to see Germans parachuting in [again] for any reason.

74 Cedric. I take it your french?! :)

The very fact you have quoted those figures proves my point. They are hidden or fudged, it means they are out in the open and have been rigorously analysed by the press and investors alike. Any bond market investors worth his salt will be very well aware of what you have just said! If the figures are ever inaccurate its a mistake or an area of genuine uncertainty. All nations play a little with their figures and dispute or adjust things. However, deliberately lying about the size of the deficit ? Please. Yes the UK is in the mire just like everyone else, but my point was its credibility as an honest, open and transparent economy clearly fighting its own way out of a bad situation is better. For me that's a ton more credible than any Euro game of subsidy smoke and mirrors costing me my hard earned money.

74 - Cedric the Frenchman? :)

To imply the UK is responsible for Spains problems pushes things too far. Dear oh dear. I don't where to start tearing that argument apart, considering the Spainish economy and its Peseta was a laughing stock right up until the Peseta disappeared and billions of free Euros flooded in - and that's where the problem comes from, NOT UK tourists buying holiday homes. The Spanish encouraged an property oversupply that was classic PIGS mismanagement that their weaker currencies in the past reflected. All those free motorways, and structural renewal providing jobs that evaporated as quickly as the money did. Don't even get me started on the Lira or the Drachma - remember those walking disasters? There isn't enough space here to go through those. If you know anything about forex, you will know that a strong currency is a political virility symbol but an economic disaster for economies like the PIGS (and for the UK when we tried it). If you are saying there is no confidence in the UK, then how much confidence can there be in the PIGS ? Answer = none. The only reason the PIGS haven't been flushed away is the German economy, period. Sterling has revalued in the open market on its own and found its own level, and that's healthy. Look at the 10 year bond yields and the CDS spreads and compare.... exactly where is your mythical evaporation of confidence in the UK economy ? I don't see it. I'm not, and never have said, that the UK economy is in a good position, but at least its clear where it stands and because of its history has more credibility. That why it hasn't had the same problems as the PIGS so far.. In essence, the figures simply don't match the rather piqued crowing by countries who have been GIVEN a status they haven't worked for, and have been found out by the markets.

67 - Cedric

As for the Chinese in battle with the US over the worlds reserve currency. Well, free markets don't really like totally non-transparent, corrupt dictatorships. Please please tell me how a currency that's not freely traded, artificially fixed, and linked to capital markets that aren't really open to foreign investors can be the worlds reserve ? As I'm from a country whose currency actually was the worlds reserve within living memory, I point to the action on the ground rather than anti-american commentary. China is important (and how an economy with forex reserves of $3 trillion can ever be called "developing" is beyond me), but a switch away from the dollar will never happen, regardless of how weak the US economy gets. There are much more powerful, entrenched beliefs that keep a reserve currency in place than the size of its home economy. Sterling stayed the reserve currency for at least 50 years after UK economy was eclipsed by bigger ones, and even then it took WW2 to remove it permanently. The only switch away from the dollar, if in some fantasy land it ever did happen, would be to gold - the only true store of wealth for thousands of years. If the dollar fell, it would be because of a crisis of confidence in fiat money - which all paper money is these days. Interestingly, notice which currency the entire world buys up when there's even a wiff of crisis.... hint: it ain't the Yuan. So my conclusion is that in a full blown currency-confidence crisis, the dollar would be the last one standing, shortly before it too became worthless.

Despite Ms Flanders and the BBC finding justification in the fact that (some) analysts use the term PIGS, I still think that the use of this acronym is downright insulting: just take a look at the jokes left here by some commentators. It is my humble opinion that it should be replaced with a less offensive term.

#79

GIPSI?

Dear Stephanie:

Re Terminology and PIGS

We are told the term PIGS is just for fun, "True, it is disrespectful. But you have to let economists have some fun." Stephanie Flanders, 9/02/2010.

Many readers (including this one) are not fooled by your justification.

Behind your enthusiastic use of the term lurks a revealing and ingrained world view in the British Media: Insular and condescending if not downright offensive towards its European neighbours with which the UK has more in common than you care to face up to.

Looking at the indicators you put on your blog (notice how you only put the one that accord with your thesis), they seem to underline the commonality between the UK and her neighbours. As a matter of fact, in some aspects the UK appears to be in a worse shape.

There also appears to be a certain schadenfreude at the prospect of the EURO suffering a crisis. It is the same attitude which marginalized the UK when the Foreign Office sent an official to Messina in 1955/56 when all of Europe was drawing plans to institute the precursor to the European Union.

Your cavalier attitude does a disservice to the ethos of a public service (the BBC) which should distinguish itself from the jingoistic terminology so enthusiastically taken up by the tabloid press.