Tag Archives: eurozone crisis

Markets Collapse on Greek Referendum

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Markets across Europe have fallen heavily following the news that Greece will hold a referendum on the latest bailout plan. Eurozone leaders had agreed to write off 50% of Greek debt but the deal may now not go ahead. A no vote will probably lead to a disorderly Greek default and Greece leaving the Euro. That could lead to severe financial contagion across Europe. Worryingly opinion polls in Greece suggest a No vote is probable. The vote is unlikely to take place until January potentially creating months of uncertainty for the markets. That uncertainty could damage confidence throughout the world.

The FTSE is currently down 3.5% while the Dax was down almost 6%. The French bank Societe Generale was down 17%. Credit Agricole was down 13%.

A confidence vote on the Greek government is due to take place on Friday. Many in Greece are now calling for early elections.

Next IMF Head – Brown vs Lagarde: Why We Should Stop Feeling Sorry For Brown

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As I came home on the train today, I found the Evening Standard filled with articles questioning why Gordon Brown hasn’t been put forward by Britain to be head of the IMF. http://www.thisislondon.co.uk/standard/article-23952636-we-have-muffed-our-chance-to-lead-the-world.do

George Osborne has now backed the French favourite to secure the job, Christine Lagarde.

The paper’s tone suggests we should be being more patriotic. ‘The French know how to look after their own,” it says, referring to Lagarde. I’m disappointed with the paper’s view and the justification for it. Trying to raise nationalist feelings is a low blow, particularly in this time of crisis.

The Eurozone debt crisis is once again rearing its ugly head. We can’t afford such petty nationalist feelings. It is in fact very much in the UK’s interest that a European candidate takes the top job.

Lagarde is now the overwhelming favourite precisely because Europe has united behind her, putting common interest first. Other economic regions have failed to unite behind one candidate.

As the Standard itself even highlights, Brown has a host of failings.

Brown was heavily responsible for the recession (despite his continued efforts to blame world markets). It was he who oversaw the nation’s finances for over a decade as a chancellor. He who oversaw the colossal rise in government spending and it was he who failed to properly regulate the banking industry.

You can blame the global markets all you want, but countries such as Germany, Australia and Canada have coped perfectly well with the crisis. There’s no doubt Britain was not alone in its mistakes and many other countries have suffered as well, but in my mind that does not excuse Brown, who, we should also remember, inherited a budget surplus when he came to power.

When it was convenient, Brown ditched his famous, ‘golden rules’. Why? Because Brown was always a politician. He did it for political reasons. People forget his role in helping take the UK into the European Exchange Rate Mechanism. Is he partly responsible for the previous recession as well?

It’s simple really. Brown would never get the post even if Britain did back him because he has a record of failure. We should take the best and only viable European candidate we have and support her all we can.