Last December, the ratings agency, Standard & Poors (S & P), placed the debt of all 17 Eurozone nations on ‘negative watch’. This may sound sophisticated but in a nutshell, it is saying that the debt of these countries is not as solid as many (including S & P) thought originally. Even Germany was caught in S & P’s blanket potential downgrade although, conversely, the UK has retained its top notch credit rating. It’s not often Blighty gets the upper hand in this relationship; we may be second rate at exporting, Christmas markets and penalty shoot-outs but in the battle for debt credibility, our towels are already on the sun loungers.
Of course, knowledge is power. We should be grateful to S & P because without its intervention, we may have missed that the Euro currency bloc had been having a spot of bother. Talk about shutting the door long after the horse has bolted; Lester Piggott was a stable boy when this particular nag escaped. If S & P can maintain the same level of perspicacity, we may learn that grass is green, Chicago is windy and vehicles exhibiting ‘baby on board’ stickers should be overtaken immediately.
It has certainly taken time for the shaky foundations underpinning the Euro to be laid bare. However, the Euro elite are still nowhere near coming up with a credible plan. They have been to more summits than sherpa Tenzing but concrete proposals remain elusive.
The Germans remain implacably resistant to any form of money printing (apologies, a slip of the pen; I meant quantitative easing) and yet, in reality, that is the only way to amass a big enough war chest; passing the hat round to cobble together real money just won’t raise enough. It would have been akin to offering Oliver Reed a half of shandy. The German preference is for a much tougher fiscal regime throughout the Eurozone. However, greater prudence (apologies, I meant German influence) is not something Europe’s reprobates are queuing up to accept.
Since Cameron refused to play ball last month in Brussels, Britain has found itself isolated. European and domestic politicians have stated that the UK will be ‘left behind’. Left behind by what, though? A debt ridden dysfunctional currency union? An experiment managed by an economically illiterate elite? A system that entombs the majority of its members in an exchange rate straightjacket, thus depriving them of a currency that can depreciate? Mmmm ……. that’s like being left behind by the Titanic.
John Newsome can be contacted on: 01423 705123 or email:john.newsome@williams-im.com
