I don't know why there is so much faux outrage at what Angela Merkel has done in guaranteeing German savers' savings. OK, she might have mentioned it to her EU colleagues when they met in Paris on Saturday, but frankly, her job is looking after German interests, not Europe's.
It's not the first time this has happened (remember the events leading up to Black Wednesday in 1992) so why should people be surprised by Germany acting in its own national interest? It's what some of us believe our government should do a little more of.
18 comments:
Fine Iain but Germany is part of a shared currency and just as it shares banknotes and interest rates with others, it needs to share financial planning with them.
This all exposes a flaw in the Euro: a single currency but so many different financial regimes. Beggar thy neighbour writ large...
The "outrage" is simple - it shows Gordon in a bad light. Here he is jetting off to Paris for the economic summit at the Elysee and then comes back and tells the media that he has secured an agreement to act in unison to save the world's economy and then on the very same day he has the carpet pulled from under him by Merckel giving her German savers 100% guarantee which would mean the UK Government doing the same - an expense that they can ill afford.
Darling then announces to-day that he is to attend a summit in Luxembourg tomorrow and that literally an hour before the heads of government in the EU have signed an agreement not to act unilaterally and almost immediately Portugal issues a guarantee to its savers. Whilst Darling is speaking the London Stock Exchange is so impressed by his "waffling" and apparent lack of a firm plan to save the UK Economy that 100 points are wiped off the FTSE while he speaks and £90 Billion wiped off the value of shares to-day alone.
Then to-day Iceland's Banking System virtually collapses and there is doubt whether some of the 150,000 British Investors will be compensated for any loss of their deposits by the Icelandic Government but the tab will have to be picked up where appropriate by the FSA Compensation Scheme if the Icelandic subsidiary is incorporated in the UK.
The Dow continues to plummet well over 700 points down and you ask why the "faux outrage" ?
Simple Brown has to blame somebody for his impotence and the fact that his dithering is unsettling the UK Markets and the Germans are an extremely convenient scapegoat to blame for causing the chaos and whilst the likes of Jon Snow on Channel 4 are berating the German Ambassador for the situation it stops people asking difficult questions of the British Government as to why they are refusing to do the same as other governments and actually do something to stop the massive outflow of funds abroad
We should be glad Germany acted as they did. The reality is that very few British bank deposits are going to be moved to Germany and that by far the greater danger is that EU federalists will be emboldened to push for a 300bn euro bailout program that could easily see British taxpayers losing out massively.
Catch up, Iain! Merkel's already made it clear that her announcement didn't mean any new legislation to protect deposits, but a general political commitment to protecting savers - exactly like that Alastair Darling had already made to British savers.
The answer to your question, Iain, is quite simple: it's in everyone's best interests for us to work together, not apart. Everyone heading off in different directions just creates confusion, whereas what we need is confidence-building. That's the whole point of the EU and why it is needed.
So true Ian.
Most of us are totally pissed off with the UK goverment kowtowing to the EU.
I would wager that not one Greek, Spanish, Italian or most other countries are weighing the wheelie bin contents of its citizens.
I would also wager that not one Greek, Spanish, Italian or most other countries have forced HIPS on their citizens.
Who’s panicking now?
The markets seem to be onto the next thing!
I see it like this,
A big rescue boat has pulled up to a ship wreck, carrying companies, in the middle of a storm, the rescue boat captain has said “here are loads of life lines, grab one each, those of you who are strong enough & fit enough to get to this rescue boat will get a chance to begin again, the rest of you are going to be left to sink, yep! The age old story of the fittest survives.
So! Here’s my Grunts eye view of the financial market & what they are up to.
Where do I start?
How’s about a saying I heard,
Things are bad in the states but worse every where else! Yes! Made me smile too!!
Anyhow!
This package hasn’t turned out to be the super hero they thought it would be has it? There were some of us grunting this from when they first announced this package, anyhow!
This package, it’s just a life boat, the markets realising this are doing different things depending on risk factors, there not waiting to see who makes it to the life boat they are like seagulls waiting to see what pickings they can get before the company gets to safety, it’s going to get a bit messy.
Who’s volatile?
Who can see the bargains out there & correctly work out the various types of risk attached, after all, they don’t want to end up part of the wreck as well.
Some investors are in wait & see mode, they are calling it “Hyper caution” if you can believe that, others are unsure of what tomorrow will bring let alone next week!
There are some in the money market who are talking things up by talking about the inevitable rebound.
There are others who see negativity as a positive catalyst & say things like “When some are fearful others won’t be”!
Still! Got some great new regulation to help calm their fears haven’t they, um! Haven’t they?
The markets say “more regulation means less profit”!
So where do the money people put their money at the moment?
Stocks that are seen as a safe bet at the moment are like Kellogg’s & foods in that vain, they are seen as a defensive stock.
One thing to think about is the trade down & which companies will lose & which will win.
M&S have posted a sales drop, some are saying M&S wasn’t quick enough to see the storm coming! Tesco have seen their profit growth slow because of people trading down to supermarkets like Aldi & Lidl who have seen an increase in their sales.
Sales across the EU are dropping.
It seems Americans could be reluctant to give up their burgers even in times of recession! Wendy’s burger sales have increased, one of the bosses there said that because their burgers are such good quality the people trading down from restaurants are going there!!
Most experts seem to agree America is in recession but can’t agree on how deep yet!
If you look around the world at a glance you see that,
Hong Kong bank of Asia had its first run on deposits in ten years, Latin America is starting to suffer because of the prospect of recession, companies in the gulf, although sheltered from the credit crunch, have seen the value of their companies drop an average of 20%, unbelievably even building work in Dubai is coming to a halt as they can’t get hold of capital!
So where is the money going?
There are lots of bargains out there if you have spare cash.
People are throwing stocks away, some say this isn’t a time to sell but a time to buy!
They are saying that AIG are going to sell assets off to get in the 85 billion needed, AIG has lots of nice stock to sell!
It is said Russians in the banking sector are looking for bargains, although, this is apparently a good time to buy Russian stock because of the turmoil in the Russian market!
There are more & more companies having to sell off assets to expand the more profitable parts of their business & taking a loss on those assets!
I told you its messy!
So this package! How is it going to help?
Some experts are saying that the American tax payer won’t gain much though this package but they won’t lose as much as they would have, I’m sure that makes them fell great, & us! I take it we will see even less of an affect in Britain?
At the end of the day we are on our own, just as it should be!
We don’t need the EU draining our resources, we don’t need any unnecessary drains!
We need to be a more self sufficient country, producing our own goods & keeping our own people in work, it’s a dog eat dog world out there & Britain isn’t a tin of pedigree chum!
I’ll leave you with this comment I heard some expert say in an interview when asked how America got into so much trouble,
“America built too many houses & lent too much money”!
So Gordon will be doing likewise ie looking out for his country's interests
ie Scotland's
A big long post from t england - not sure how useful it is since in a credit crunch the first thing I will cut out is Cornflakes.
I fact it will be the second because I have already cancelled my SKY subscription in favour of Freeview.
I really must write to Rupert Murdoch to tell him that having listened to the tales of woe on his News Channel I have pulled the plug. Serve him right for sucking up to Gordon all these years.
In terms of bargains, whats the odds on Warren Buffet buying Iceland? I mean the country not the supermarket.
And yes, 2199, so clever of Merkel to make this commitment (non-commitment) in such a clear unambiguous way as to send world supermarkets into a tailspin.
The outrage is because actually she didn't. She was actually only making the same sort of fluffy political commitment that Darling has made - that nobody will lose money.
But nobody knew that, so a bunch of other small European countries were forced to actually guarantee their banks' cash to keep the money in he country - effectively nationalising the losses of whole swathes of the European banking sector.
In times like this you need to be very careful with language.
Anonymous: UK depositors will get their money from the FSCS because whether "passported" or UK-incorporated our compensation scheme promises to compensate savers to the full limit. It's just in the former case depositors will have to make a claim on the Icelandic scheme and get the balance from the FSCS, presumably the full balance if the Icelandic scheme does not pay out. Do you really think the the UK Government would leave UK depositors uncompensated? What would that say to all those Northern Rock depositors, all those with money in National Savings etc? They would know that the UK Government could not be trusted and the run on all the remaining UK banks would be of catastrophic proportions. The reality is that all governments have to ensure that none of their depositors lose any money. Otherwise it's not just the banking system which collapses but the whole political system. Darling - like Merkel - is using weasel words to give reassurance but if he gave a 100% guarantee we are still left relying on the UK Government's word and hope that banks don't actually collapse.
Iain you are 100% correct. No government can let its own people down - except ours does continually.
In terms of bargains, whats the odds on Warren Buffet buying Iceland? I mean the country not the supermarket
Its the same thing. Icelandic retail giant Bauger owns iceland.. as well as goldsmiths, house of fraser and a dozen odd others
trevorsden said.....
"Not sure how useful it will be"
No! Neither do I!
I only started doing my grunts eye view recently after many posts I posted about the economy turned out well, I’d been ranting about the looming recession for ages, I just got annoyed that anyone with a TV, watching the right financial channels at the right time could do a fair job in predicting the next weeks/months financial market so why couldn’t the government do a better job of warning us about things?
Anyhow! As I have found this week, it’s boring now (see above post!), although there’s a crisis out there the markets just seem to know what they have to do & are now just getting on with it, good & bad! I won’t be!
If you’re into money horror movies then I suppose there’s going to be lots of blood & guts in the money market as things get hacked up, I’m not in it for that.
I have learnt however, that this country needs to be more self sufficient in what ever way we have to get there!
Anyhow! No more financial ranting, although I’ll be interested to see how the above pans out considering what the BBC is reporting tonight, you’d think the sky was falling in, we will see!
Got to stop now or I’ll rant on & Iain will get peeded off giving me blog space :o)
Where is the EU and the EU Central Bank whilst all this is going on? Are they fluttering their hands and uttering pious sentiments like Brown & Darling.
We are getting on with the job...We will do everything that is necessary - the voters would want us to get on with the job...We are better place than other major countries to weather the banking crisis ...We haven't a clue what to do.
Iain, your viewpoint would be correct, however it is strange that a country which promoted and raified the Lisbon Treaty would fail to uphold obligations it will have under the treaty if/when ratified across the Union.
Article 12 states..."National parliaments shall contribute actively to the good functioning
of the Union"
Article 9 brings the European Council within the institutions of the EU and effectively imposes a supranational obligation on national ministers to further the aims and objectives of the EU.
The problem of political union is that German politics is British politics, Spanish politics is Irish politics, etc, etc.
http://eureferendum.blogspot.com/2007/08/supreme-government-of-europe.html
"so why should people be surprised by Germany acting in its own national interest?"
More a case of people being outraged that liblabcon governments only act in the interests of foreigners, and themselves.
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