EUROBLOWN: JUST WHEN YOU THOUGHT IT WAS SAFE TO BE UNDERWATER…

The Slog

by John Ward

EU or eurozone, the problem is the same: zero problem-solving

One chart that very neatly makes two points of great importance about ezone meltdown:

1. As the red arrows show, the ClubMedders are even more exposed to sovereign toxicity as they were when the solids hit. Supporting what we already know – ie, that the money just keeps moving round in circles from bank to Treasury via Frankfurt – it does clearly separate the wheat from the chaff…with good news for Dubliners because, being wise, as usual the Irish zigged when everyone else zagged. (The Greeks aren’t on here because it is now no longer possible to tell where banks end and sovereign begins there: the country is effectively under Troika occupation. This is not good news).

2. Although making a good fist of not getting any more exposed, the ‘safer’ nations too are nevertheless pretty much as vulnerable to backwash as they were five years ago…thus forever exploding the myth that everything is fine in Northern Europe. Of course, what we can’t see here is whose sovereign debt they own; but worrying about that sort of small detail assumes you think any EU sovereign debt might be a good thing to have in the assets larder at the minute.

Sadly, other myths are still with us – most notably that of the now “firmly established” UK recovery. I was going to pen yet another piece in the light of today’s “1.9% growth” news, but for once the Daily Telegraph’s Jeremy Warner nailed it before I got there. This extract sums up the bloke’s view:

‘Unbalanced and unsustainable – that’s the correct message on the UK economy to take from today’s fourth quarter GDP figures, not that things are magically turning on a six pence. This is a recovery being driven by a combination of strong growth in London and in consumer spending; it’s plainly better than no growth at all, but it’s not yet the sort of recovery we were hoping for.’

I wouldn’t concur with every word by any means: but the nub of it – that Osborne has spectacularly failed in any way to address the legacy of Thatcher (all paper and no manufacturing in our gdp) – is firmly intact here. At the bottom line, George is a preppy with no idea about how manufacturers start up and then get their knees brown. The son of a draper, he’s OK with accountancy bullsh*t and distribution, but really clueless when it comes to why all his City mates are getting in the way of remodelling the production economy.

We are never going to get any glaznost from the Government, but some perestroika would be good. Just don’t hold your breath. Warning: the value of breath can go up as well as down. Stay long in breath and exhale regularly.