The markets and the Union

As fear takes over the stock markets completely, we cannot but wonder why we are so utterly unable to deal with the financial spirits we called years ago and loved so dearly for so long. The biggest problem though is that we don’t just lack the knowledge of how to deal with our ever-shrinking markets, but we don’t even know who should deal with it.
And it seems as though the market forces we created are now stronger than us. This sounds super apocalyptic, but it is true. The credit crunch became a financial crisis, which is now about to become a perpetual economic disaster. Whilst the stocks crash all across the continents and banks go bust, business owners are already forced to declare bankruptcy. Brokers are seen in tears outside the stock exchanges in London, Tokyo, New York and Frankfurt, even though the central banks cut interest rates like a baker cuts bread. This morning, the value of City shares fell by £200m and stocks in Frankfurt and Paris dropped by 8%, again. The Sun says a cold war started between Britain and Iceland, and the Telegraph thinks the markets will end in a “complete bloodbath”. To make the catastrophe worse, everyone has a cold.
And here the big question: Who can help us and our markets? God? Marxism? Suicide? – I don’t know, really. But it is interesting to see that the one and only big player in international economic cooperation is as quite as a dead person, since the crisis started.
And yes, I’m talking about the EU. For about 60 years we have given more and more economic sovereignty to our friends in Brussels and now we ignore them. We ignore the very institution that could maybe be the only rescuer in this awful situation.Even though it was first planned to try a EU move and centrally coordinate all emergency measurements; at least after the Merkel Move, it was clear that all countries would have to fight for themselves. Hours after a meeting with Gordon Brown, Nicolas Sarkozy and Silvia Berlusconi, promising a EU solution to the crisis, Merkel guaranteed all savings in German banks (the Economist reports that this pledge is worth more than €1 trillion). Those nations fearing that the German move might destroy their banking system (even more), copied the move quickly. Hours after Sweden followed the Merkel move (which actually was the Irish move, as they were the first to guarantee the money in their banks, but the alliteration Merkel move just sounds better in headlines) Swedish banks are said to have advertised in Finland that investors should bring their money quickly to Swedish banks to be save, thus forcing the Finnish government to react as well.
French Prime Minister François Fillon even thinks it’s “logical” that the nation states and not the überstate EU deals with the crisis. But the real reason for this nationalist approach to the crisis was put into words by German finance secretary Peer Steinbrück. He said: “We as Germans don’t want to pay into a big pot where we don’t have control and don’t know where German money might be used.”
He is right, there is this fear that some taxpayers in some countries will have to pay for the problems caused by other countries. For example, many people on mainland Europe strongly disliked the Turbo Capitalism of the City of London and are now scared that they would have to pay for it. In the same way as British taxpayers would not want to pay for the disastrous management of Icelandic banks.
However people feel about it, a EU-European approach would be the best thing at the moment, keeping in mind that we know that the EU has been great in dealing with economy for the last 60 years. Why would Brussels not be able to deal with this crisis?
We should give Europe a chance.
Schreiber

Reminder

Please be careful when making out a cheque, as your bank might bounce.
Schreiber

Crisis in the nordic Paradise

The country has the 5th highest GDP per head; the highest quality of life (shared first place with Norway); is on the second place in the technological readiness index; has the second highest car ownership (632 out of 1000 citizen own a car), and has the 9th highest life expectancy (in fact, it has the second highest male life expectancy, after Andorra).
Which country am I writing about?
I’ll give you another hint. The country I’m thinking off is the probably worst affected by the credit crunch.
Yes, indeed, I am talking about Iceland. Did anyone by any chance check the value of the Icelandic Krona today? – 1 Euro is today worth 145 Krona. That means 1 Krona is not even worth a freaking Euro cent! I remember last year the Euro being worth less that 100 Krona.
In Iceland we see for the first time properly, how the financial crisis can affect the state. Prime minister Geir H. Haarde even spoke about the real danger of “national bankruptcy”.
The Allthing, the Icelandic parliament, even introduced emergency laws trying to fight the financial crisis. These emergency laws allow the state to interfere with the finance sector. However extreme and brutal these laws are, none of the political parties in the Allthing rejected them. This is how extreme this crisis is.
How did it get all that bad? Iceland's banks made a fatal mistake several years ago, offering great deals to people on the ireland and abroad (Britain mostly, but also Germany and the Scandinavian countries). Today, the banks cannot cope with the debts anymore, as they equal to 12 times the size of the entire Icelandic economy.
The government now manages the third largest bank, Glitnir Bank, and the second largest bank, Landesbanki Island HF. However, several experts seem to doubt the government's ability to cope with the disastrous banks. One of the emergency laws that were passed by the parliament ruled that the government does not have to guarantee the money in the banks anymore. Nevertheless, the government wants to save the money for Icelandic citizens, but not for foreign investors. This could hit many Britons hard. However, I have heard from informed sources that the British Government might sue Iceland over British deposits account holders with Landsbanki's Icesave Internet banking.
The danger that Iceland might become the first country that has to declare national bankruptcy due to the financial crisis is as real as the crisis itself.
Schreiber

IS SOCIAL DEMOCRACY DEAD?

I think its fair to say that, from a political point of view, Gordon Brown is as dead as disco. His political insignificance is increasing from day to day, and the chances of him ever winning an election are as slim as Nicky Hilton.
But lets have a look at other countries: How do Labour or social democratic parties do on the European continent?
Many social democratic leaders seem to face (or have faced) similar political problems as Britain’s former Chancellor of the Exchequer. Germany’s Gerhard Schröder for example was once relatively popular, just like Brown. His No to the Iraq war made him be (together with former French president Jacques Chirac) respected by many, even though many other domestic decisions might have been of less greatness.
Today, Kurt Beck leads the German social democrats, after Schröder lost the election in 2005. Mr Beck is now, as junior partner in Angela Merkel’s so-called “Grand Coalition”, even more unpopular than Brown, and I doubt that he will ever be able to become German Chancellor.
The other country in which social democracy faces similar problems as in the UK is Spain. The election in March 2008 was big news across Europe, especially because the Spanish Kingdom was strongly divided. On one hand there was Mario Rajoy, a boring right-wing nebbish who seems like a poor actor trying to impersonate former Spanish PM José Marí Aznar. On the other hand, there was the (already relatively unpopular) PM José Luis Rodríguez Zapatero, who narrowly won the election.
Today, Zapatero is as unpopular as Aldi. This is to a large extend because of the economic situation (Spain’s unemployment rate is 10.7%). Very much like Brown, it is not only Zapatero’s fault that we ended up in this not too entertaining credit crisis, but both are incapable of dealing with the problem. The awful consequence is that this might now lead to Spain and Britain getting two politically incompetent PMs. The United Kingdom might soon have a Frisbee-throwing (how utterly ridicules are the pictures of David C. on holidays?!) PM David Cameron and Spain might return to Aznar-like politics (even though the Spanish conservatives are moving closer to the political centre).
It will be interesting to see if Europe’s social democratic and Labour parties will be able to recover from their leaders’ political inabilities in time for the next elections.
Schreiber

WHAT DO YOU CALL GORDON BRAUN AT THE BOTTOM OF THE OCEAN? A START

When Peter Bolton of the National Association of Estate Agents develops a moral conscience and describes your actions as, “very, very dangerous” you know the end is in sight, or most people would. The only quote missing from the week news was one from the International Bar Association asking for an across the board rate-cut for all its members. To manage in a short space of time to make yourself more unpopular than lawyers and estate agents is perhaps the biggest coup in British political history (although perhaps more so if it had moved the ratings the other way!)

The ‘stamp duty fiasco’, (alas we haven’t managed to coin a better name yet, stamp duty-gate just doesn’t have quite the cut it) is sadly now typical of a beleaguered PM and his bizarrely eyebrowed friend vomiting out last minute policy without having the backbone to make last minute decisions. Perhaps they hoped that in leaking it to The Sun they would avoid the news spreading to people who actually have to pay stamp duty (house prices above £125k) to look active without moving the market and risking failure. Unfortunately they forgot that since the boom of the Frappucino years the only houses worth less than £125k are found in Mr Braun’s own constituency and that noveau-riche people read The Sun! And since it was good news (or would have been had anyone in Downing Street had even a vestige of a backbone left) it was clearly leaked from the colander barge that is the PM’s office, since no-one leaks anything that The Sun can’t put Maddy, Diana or BDSM in the title. The house of Braun is sinking faster than peace protesters rafts in the Medway.

If this had been bad news this delivery would have been fantastic, instantly talk turned to not, whether it was a good idea or not (it actually is, but only when coupled with a non-existent arsenal of other measures) vanished and turned to everyone from estate agents to his own Treasury colleagues attacking him for his on-going silence on the matter, rumour has it he was still trying to decided which pair of socks to wear. Of course in this time, nobody is going to buy a house when they can buy it in a month for 2% less and without stamp duty, of course as the government keeps telling us this is only one of the possibilities and might not happen, mean while the damage has been done. Two minutes after the announcement, sorry leak, when the house of Braun realised what was going on they could have been on the phone to every news editor and agency to affirm of deny, with such a wholly weak measure the difference would have been negligible and Braun and Eyebrows could lurch towards the next crisis.

Iinstead of tackling a greater public resentment than Major nurtured or desperately trying to buoy up a flaccid housing market and reign down fuel costs, Eyebrows made announcements of merit such as “It’s important we’re straight with people” Straight. Straight!? How does leaking a policy and following it up with in-fighting, claims and counter claims count as straight.

Meanwhile, the unerringly quiet and small House of Harman came forward with the reverence of the Christmas message to say how they were “taking politics to the people” by holding a Cabinet meeting in the Midlands. She even expressed delight at the prospect! The Midlands, who expresses delight at going to the Midlands, anything more jovial than mild-apathy stinks of extreme duress. Why take it to the people in the Midlands? No real people actually live in the Midlands, it populated by middle management arguing over wheelie bins and kids shooting up McDonalds because of the above inflation price rise in McFlurrys. There’s a very good reason why Londoners pay £2.50 for a coffee and endure the subterranean jungle that is the tube everyday, this is our tax for being ‘in the action’, listen to us, we’re saying the same thing as those up North (Midlands is Northern) just more eloquently and not ending every sentence with like, like. So come on Mr Braun, stand up, man up, sack the boy who played foreign secretary and give us the leader we need, or resign, we’re beyond caring but just do something! McBloodytastic. Franklin