The Greek crisis has suddenly jolted back into life and if it does 'spread like the Ebola virus' as some claim, then it may be cold hard economics that does it for Gordon Brown rather than 'bigot-gate'.
One clear solution is to provide a stimulus package and let Greece drop out of the Euro to allow its currency to devalue which should aid the recovery.
However, Spain has had its credit rating downgraded as 'El Crises' bites harder, same too for Portugal. If the first financial storm was focussed on banks, this one will be Governments.
I don't know what the 'stress test' is for Darling's budget but the UK has £100bn of exposure to these three countries and doesn't have its problems to seek.
A week of financial contagion in the lead up to the General Election would be extraordinary and on the face of it would kill off Labour's chances.
However, the issue would also draw George Osborne out from whichever cupboard the Conservatives have locked him away in and the idea of this man running our country's finances may crystallize some minds into voting Labour or Lib Dem.
One Telegraph quote on the Greek disaster is "There are some senior figures who would like to see the gangrenous leg of Greece chopped off". Indeed, there are some senior figures in the Tory party who have thought the same about boy George for some time now.
A financial hurricane wreaking havoc in the UK would kill one of the two main party's chances. I just don't know which one.
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5 comments:
Jeff
Surly it would have to be the party that got UK PLC into the mess we are in today. They have had 13 years to almost destroy the UK economy, they want another 5 years to finish the job totally.
Remember "no more boom or bust" at least he got that right, now it is only bust.
Light touch banking regulations anyone?
Jeff,
There should be no single currency for EU members. This is what happens when you do.
That being said, Greece was allowed to bypass the rules for entry. But saying that also, Spain and Portugal are looking to be in danger.
Financial flexibility is key. Devaluation could give Greece a great deal of help.
The problems with Greece started when they fudged the entry criteria, as Steven noted.
That coupled with the restrictions on GDP to debt etc it was going to happen sooner than later.
I heard Gary Robertson make himself look silly this morning interviewing Stuart Hosie.
Jeff, having followed Osborne's career and his speeches on the economy for a few years now, think you are being quite unfair to be honest. Underestimate Osborne at your peril, if he starts to address our economy and steers the UK out of its current problems, that is not good for Independence. Nobody loved Thatcher, but many admired and respected her.
Jeff,
What ERM did for the prospects of UK entry into the Euro, this debt crisis in Greece shall destroy the long-term future of the Euro.
The Euro is flawed. A nation needs control of its interest rates. If we were to become Independent and join the EU, could we honestly influence policy to any great extent? I do not believe that we could. Germany, France, and other big players would gang up on us.
For that reason, national currencies should be retained. To do otherwise would lead to a repeat of this disaster.
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