Jobless levels in the eurozone were at 12pc in February, the same rate as in January, according to Europe’s statistics office, Eurostat. It estimated that 19m people in the eurozone were unemployed in February, a 33,000 rise on the previous month.
Eurozone unemployment levels are horrifying. Greece and Spain now have levels far worse than the United States during the Great Depression. In order to save the fortunes of an elite fiat currency, millions of Europeans are being forced in poverty and obscurity just to appease the Bundesbank.
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A few hours ago, the Eurogroup President has admitted the Cyprus bailout is an experiment and should be used a “template” for the rest of the Eurozone. If anyone has €100,000+ in a Eurozone bank then I would be very worried right now. You might be about to finance a very expensive and painful bank reconstruction across Europe.
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In a moment of sheer insanity, brutality or just economic incompetence, the European Union has destroyed the Cypriot economy and left untold destruction. The off shore banking system is in ruins and the domestic credit supply has been broken into pieces; capital controls effectively suspend Cyprus from the internal market and only the German Parliament will get a vote on the bail out terms. Not the Cypriot politicians who are forced to agree with unfair and draconian terms.
Between now and 2017, the Cypriot economy will lose 20% of its GDP in a designed depression to rescue the banking system and prevent bankruptcy of the country. Anyone with deposits over €100,000 in Cypriot banks will help pay for the bailout – regardless if you’re actually a millionaire or a pensioner, who saved up for retirement. In the eyes of the Bundesbank and the German Finance Ministry, you’re paying for it. Not them.
Brussels have decided the unravelling of the Euro and the wider European Project is unthinkable; in order to save the post-World War II consensus, principles and agreements are now void. The Euro must be saved at all costs. Merkel has resigned to accepting the end will justify the means; a banking and political union must occur, regardless of the path of misery that awaits the periphery. A promise of co-operation, mutual respect and European democracy is currently suspended. We are discovering a disturbing reality of the European Union not being this equal playing field. Transforming smaller members into slave states, dependent on ECB funding, is a dangerous experiment which could create generational hatred towards Brussels and most notably Germany.
The hubris nature of the European Union and its contempt for national parliaments is quite telling. Ordinary citizens of Cyprus will have no say in whether or not these terms are fair and acceptable to them. If the people don’t like it, they can leave the Euro – which is precisely what the Eurogroup told the Cypriot President. It is unnerving that the 2012 Nobel Peace Prize winner now resembles a 19th Century imperial power and not a regional body which was meant to offer a brighter future to a war-torn continent. I struggle to understand those who still defend the actions of the European Union after the untold economic damage to Greece, Spain, Portugal, Ireland and now Cyprus. The pro-European arguments are sounding like apologists, who refuse to recognise a broken system in need of reform or to be halted altogether. There is nothing pro-European about terrifying levels of unemployment, poverty, economic collapse and misery; yet, EU advocates still celebrate the bailouts and punishing terms.
What is remarkable, though, is how the European Union has managed to achieve all of this with little or no opposition. There would be riots in northern European countries or the United States if their respected governments tried to transfer private savings into the hands of the banking system; those nations would become ungovernable in a matter of hours. Yet, the European Union managed to persuade the Mediterranean into submission; Rome had to use thousands of Legions and slaughter people in the tens of thousands to achieve a similar result. That is quite impressive and horrifying. I hope Brussels know what they’re doing.
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“Sometimes I think that a parody of democracy could be more dangerous than a blatant dictatorship, because that gives people an opportunity to avoid doing anything about it.”
Aung San Suu Kyi
My good friend Frances Coppola wrote an excellent analysis
of the bailout conditions imposed on Cyprus and the allege “tax” on savers deposits.
A 6.75% one-off “stability levy” will be imposed on deposits covered by deposit insurance (under 100,000 Euros). The levy on larger deposits will be 9.99% – not a great difference, really, and much less than might have been expected: after all, depositors could lose 100% of deposit value above 100,000 Euros. Additionally, there will be higher withholding taxes on interest. These penalties will be applied to all deposits, including those in well-managed banks that don’t require bailout.
Germany gave Cyprus two options: indiscriminately tax bank deposits or face expulsion from the Eurozone. The ECB started to send signals of two possible bank failures in Cyprus. A democratically elected government had no choice, but to submit to these blackmails and threats; a “bail-in” has happened. All electronic transactions and ATM’s have halted to ensure no one can withdraw cash in large amounts. Some depositors have managed to gain access to their accounts and a minimal bank run is occurring.
This was deliberately calculated to begin on a holiday weekend in Cyprus to ensure a major bank run did not arise. But individuals will find ways to withdraw savings and the inevitable bank run will have catastrophic consequences.
The ECB said it has no plans currently to extend this bail-in to Spain, Portugal, Greece or Italy. Fears are understandably growing across southern Europe; if the ECB can target deposits in Cyprus, why not PIGS? The Rubicon has been crossed and the Euro has entered dangerous territory. Markets will be nervy after a significant, and potential disastrous, economic taboo has been broken. Norway tried taxing bank deposits in 1938. It almost destroyed their banking system and economy.
In order to protect a failing monetary union the ECB has begun the final act of desperation: it has turned on democracy. If the price to save the Euro is coercing countries into raiding bank deposits and punitive taxes, then so be it. Mario Draghi has transformed the Eurozone into a dictatorship, backed by Bundesbank, and turned Europe into a graveyard for democracy.
Sovereignty lies with the people and national governments. If it doesn’t, then we no longer have a democratic system; it is a totalitarian state.
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It was inevitable and the markets have already priced in the rate cut months ago.
But losing the prized AAA rating is the least of our worries; debt is over £1 trillion and Sterling is in free fall. Government spending is still increasing and the Coalition are failing to insure Britain can live within her means. The downgrade will have little or no affect on interest rates due to the Bank of England being the majority holder of the national debt. This will not become an issue until the central bank has to sell its holdings back to the market.
Then the shock will hit and Sterling could possibly be destroyed.
Our deficit is not the real problem; it’s the government naively increasing debt and hoping to inflate the problem away. It has not occurred because the Eurozone has collapsed. The BoE planned to use inflation to deal with the size of the national debt, which is a clandestine partial default. Nobody expected a deflationary depression and Britain becoming the 21st Century Japan.
But it has happened.
Now the markets are telling us to stop spending . We have no choice, but to listen. The downgrade will force the hand of the Treasury to do what must be done. Parliament now has to address the economic reality; there are many pleasures that we, as a country, can no longer afford.
And we cannot simply tax the problem, either. This debt was accumulated, over a decade, without our consent; the taxpayer should not be held responsible because the government cannot control its spending. Why should we be made to suffer? This problem began in 2002, when the debt fueled boom was born. The boom turned into an economic nuclear bomb.
Now, in 2013, we are left with £1 trillion debt and a fractured financial system, partly owned by the taxpayer. A morally and financially inept health care system, expensive welfare state and a corrupt political franchise. In other words, the real downgrade occurred many years ago.
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So much for SDSR and balancing the budget..
Yesterday, a senior Government source said that Prime Minister David Cameron did not “resile” from comments in 2010, when he said that defence spending would rise after 2015.
Responding to a report in The Daily Telegraph, that the comment meant defence spending was protected in the next 2015/16 spending round, the Prime Minister’s spokesman insisted his comments had been misinterpreted.
The very premise of deficit reduction is not ring-fencing or promising expensive areas of expenditure.
The Prime Minister wants to have above inflation defence spending (post-2015), whilst the budget has a overall -8% deficit and national debate of £1 trillion. Yet again, the state cannot live within it means. Oh dear…
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Posted in Debt, Economy, US Politics, tagged 4Q, GDP, US on January 30, 2013 |
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This is an interesting question, proposed back in November (which I sadly missed). Adrian Pearson makes a decent and very articulate argument;
So, against this backdrop I am pondering a big question: could we abolish corporation tax in the UK?
I am thinking that tax should logically be levied on people not corporations.
Since corporations are ultimately owned by real individuals, and any profits a company makes eventually find their way into the pockets of people one way or another (as dividends, salary, benefits in kind or capital gains on liquidation or sale), why should the company pay tax too?
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