Ambrose Evans-Pritchard and Louise Armitstead, writing in the Daily Telegraph, link to the fact that Britain may be liable for yet another 'bung' to the IMF; a story to which Helen, Your Freedom and Ours, links. This relates to a statement given by Barroso to the European Parliament about decisions made at the meeting of Heads of State on 8/9th of December, from which:
"EU leaders will decide soon on whether to provide the IMF with up to €200bn more to help debt-stricken eurozone countries."
Helen is quite correct when she writes that there was no mention of this small matter by Cameron when he 'reported' to the House of Commons on that meeting. For the record, this is the Hansard report of his opening statement, one that contained the words: "Let me take the House through the events of last week". By his omission of that little snippet from 'the events of last week' might one accuse Cameron of having misled the House of Commons?
Now I may be a tad confused, however I seem to recall Cameron making much play of the fact that Britain would no longer be liable for bail-outs to eurozone countries after 2013 under the EFSF coupled with the fact I also seem to recall that that was the date when the ESM was to become operative. Herman van Rompuy is on record as stating that he wishes the 'so-called 26' to agree 'terms' so that they can be implemented in March 2012, which one can logically assume is when the ESM will become operative. He also tweeted earlier today "@euHvR I will convene an informal meeting of the 27 heads of state or gov. in Brussels. Date to be decided: end of Jan.- beginning of Feb. 2012", a tweet timed at 13:30. Presumably it will be at that meeting that the decision will be taken by the EU Leaders to 'donate' that €200bn.
Cameron may well believe that IMF resources are for countries not currencies, and that they can’t be used specifically to support the euro, however that form of words is just semantics, is it not? It is worth recalling the €50billion would be 'split' between the remaining 10 non-euro member states. Any bets that Cameron won't pay up?
7 comments:
I dont want the UK to Bung the EU a single penny to prop up their miserable monopoly money currency. However if we are forced to go along withis Dave should negotiate the following.
UK Bungs IMF £30 Billion to be laundered to the EU.
In return UK is granted Provence as an external UK territory. I think it would be rather nice to site a lot of our OAP homes in the warmer climes of the south of France. Yes Provence will do nicely!!
There's generally a will amongst the governing types everywhere that the Euro should not collapse. Surely it's up to the contributors to the IMF to dictate what its funds can be spent on and withold them if need be. The biggest contributor is the USA which does not want to see the Euro collapse. The extent to which they can move to stop the Euro collapsing is tempered by domestic reaction and the dangers of throwing too much at a lost cause. What's worse, it's borrowed money they are throwing. I'd say it's definitely a lost cause but no one wants to say so openly.
One way or another the UK will be forking out as far as its politicians dare, to bail out the sinking ship. None of them are going to say, "Look, it's hopeless. Let's have an orderly launch of the lifeboats while there's time".
My guess is that the time for an orderly abandoning is past anyway. It comes down to manning the pumps while wearing a life jacket and looking longingly at the lifeboats which will sink with the ship.
I think you need to look around the corner.
Due to the rather strange banking system we have the UK is exposed to some 2 trillion pounds of both original dept, hypothecated dept and re-hypothecated dept (sometime "re" by several more times)
A few billion is small change. The entire banking system is bankrupt: literally.
If you want to read the situation as is:
http://www.zerohedge.com/news/why-uk-trail-mf-global-collapse-may-have-apocalyptic-consequences-eurozone-canadian-banks-jeffe
The Nomenklatura are seeking ways to circumvent Art 123 of the Lisbon Treaty, that is why the French are so miffed at Cameron for refusing to do a smoke-and-mirrors job on the Lisbon Treaty.
To circumvent the Treaty they proposed Central Banks giving extra Quota to the IMF which would then French Managing Director willing - lend it back to bail out Sovereign Debt in the EuroZone.
Draghi at the ECB has refused to breach Art 123. Merkel tried to get the Bundesbank to treble its contribution to the IMF to 45 Billion but the Head of BUBA refused, saying the Bundestag must vote on the funds, and it can only be to the General Agreement to Borrow Funds not a special EuroZone Fund at the IMF; and that non-EuroZone countries should pay in too so the Bundesbank does not violate its Charter by funding deficits of other states.
The German Treasury Committee wanted to speak with the Head of the Bundesbank but Merkel's Governm,ent has vetoed it.
Desperate men and a couple of women, are trying to circumvent the legal basis of the EU to bail out their banker friends since they know the banking system in Europe (including Britain) is insolvent.
The only way Britain keeps running is by hollowing out private sector pension funds and destroying Savings by the Bank of England lending Banks the money to buy Gilts; exactly what the ECB is forbidden from doing under Art 123
And if Greece defaults on its loan repayments, or cannot buy its government bonds back, then the UK is immediately exposed to over 350 billion pounds via defaults insurance for the failure to pay the bonds....
Fractional Reserve Banking has a lot to answer for....mainly that the banks are many, many, times unable to cover their liabilities.
Even if the government stopped all its spending we are in deep crap....
Put it bluntly. The US is the world's largest economy with a GDP of $15 TRILLION matched by $15 TRILLION in National Debt
The Total guestimate of Derivatives outstanding globally is $704 TRILLION or around 45 times the size of the US economy. So you need 50 economies the size of the US and sufficient raw materials to feed it......wrong planet.
There are not enough raw materials on this planet to back the debt issued, and that has been the case since 1964 since when global debt has expanded exponentially - and can be plotted on a graph.
In 1964 half the world lived under Communism and could not consume or borrow, now it can. There is so much overcapacity in China and Asia and so much Debt in Asia and The West that the game is over.
The world will return to what it was in 1850 without welfare, without jobs supported by taxpayers, and vast layers of poverty. 57% US children already live in poverty and they have $15 TRILLION in Debt; 40% all jobs in the US are "low income" jobs; 25% Americans live on food stamps.
So what will it be when the have to start paying off debt ? In Greece 100,000 businesses have collapsed and a third of the workforce is unemployed.
Greece has defaulted. Just as huge numbers of homeowners and commercial property owners have defaulted in the UK - the banks simply refuse to recognise the defaults for fear of balance sheet impairment and collapse...this is why the Interbank Market has dried up and banks are seeking collateral....but there is less and less. Maybe they are buying gold ?
Good comments from all of you and some well made points.
I believe TT's are extremely noteworthy - we have to get back to a situation whereby we balance the books, do not spend more than we earn. Also a touch of 'referism' would not go amiss, ie parties present detailed budgets come election time in their manifestos specifying where money is being spent.
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