Saturday 8 May 2010

Euro it makes sense... or not

The European single currency is having a slight crisis. Since the global credit crunch (what an over-used catch-all lazy moniker that is, plus it doesn't really mean anything) buggered up financial markets good and proper in 2007, some eurozone economies have been struggling in the resulting downturn and recession, saddled with massive budget deficits resulting from an all too voracious appetite for cheap credit (governments and individuals alike).

My point here isn't to go over just how the Greek economy got itself into such a mess, even though anachronisms such as a state retirement age of 53 (yes, fifty three) are worth a mention. My point here is that the euro itself is in very serious trouble. And how did it get to be in so much trouble? Because it was almost certainly doomed from the start.

Let's be clear, as a tourist, I love the euro. I think it's fabulous. We live close to the Belgian border and only this morning we were in Belgium shopping. I adore the fact that I don't have to do any mental arithmetic (good thing, cos I find sums hard without a pencil and paper), or rush to the nearest cash machine to get currency, whenever we travel to Belgium, Germany or elsewhere in the eurozone. How marvellous.

So, great for tourists and also, to an extent, for businesses. But bad for economies. Right from its beginnings, my big misgiving about the European single currency has been the "one size fits all" economic policy approach. It's a bit of a risky strategy, after all. Applying the same central bank interest rates and economic governance policies to economies as disparate as Germany's and Portugal's, Denmark's and Greece's, or Belgium's and Ireland's is never a wise move. How can you expect the same central bank baseline interest rate to suit an economy like Luxembourg's, growing at 5.4% (in 2005) with that of Portugal's, growing at 0.9%? Or control a 1.4% inflation rate in The Netherlands just as well as a 3.2% rate in Spain? Of course not. Central economic policies don't usually manage to suit all regions within just one country, never mind economies from 16 different countries.

On top of this not-ever-so-bright central banking approach, add the question of solidarity between nations. Observe the distinct displeasure amongst Germans about having to stump up 22bn euros to get the Greeks out of bother. It's understandable, after all. And that is why monetary union is such a difficult thing to get right. It's not just about minting some new coins and printing off some pretty new banknotes with forrin writing on. It needs for the taxpayers in all member states to be willing to shore up another country's economy. And that is somewhat complicated. If it was easy, the Greek crisis would never have reached the stage it has now.

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Monday 3 May 2010

Marking my X

I just wrote a big long post about the looming UK General Elections. About how Labour are almost certainly on the way out, but Posh Boy and his Tories haven't got the keys to Downing Street just yet, and that "wee chancer" Nick Clegg from the Liberal Democrats could still be kingmaker. But it was all too convoluted. I confess that a long-dormant and somewhat geeky passion for the workings of government, the British constitution, electoral reform and UK politics in general that had been slumbering within me since I graduated with my BA (Hons) 2:1 more than 10 years previously, came bubbling back to life.

So I'm switching tack. There's an election on Thursday and I don't know which party to vote for. It so happens the constituency I vote in is, historically, a pretty safe Labour seat. As in, give my dog a red rosette and she'd probably be returned. Especially if you told voters she was a former miner. So probably my actual vote won't swing things either way. But still, I shall vote according to which candidate and which party best represents what I want to see from a government.

But I don't know who to vote for. Not voting Labour because of FO Tony, and they are just flailing around uselessly, and even if I respect Gordon Brown for some of his principles (notably Third World debt), he's not cut out for politicking. Am hard-wired not to be able to vote Tory. Voting Tory would only be an option if it were a strategic vote to block the BNP or UKIP (incidentally, UKIP standing in my constituency - will lose their deposit with any luck). So will never vote Tory. Certainly wouldn't ever vote for Droopy and his one-issue joke party. Would at one time have considered the Greens, but no more. Not since they leaped into bed with the Nats at Holyrood. They have sullied themselves. Other candidates standing in my constitution include someone from the Trade Union and Socialist Coalition (Commies?), an "Independent" (requires further investigation), and a Liberal Democrat. Until recently, that would have been pretty much a no-brainer. But last weekend chisel-chinned Nick Clegg declared, in the likely event of no outright majority for any party, his party would offer its support first to Posh Boy and his horrid Tories to form a government. Oh no!!!! What he actually said was don't count on the Lib Dems to prop up Labour if they come third in the popular vote. Which, if I stick to my electoral reform principles, is fair and right. But primitive instinct tells me is wrong. I mean, the Tories?

So I don't know which party to instruct my proxy to vote for on my behalf. I need to find out about this "Independent" chap. And fast.