Eurobust inevitable?

As a Greek default looms large, will the Euro bite the dust?.

There seems to be a consensus now that the sewage is coming perilously close to contact with the revolving air conditioning system. The doubters who fretted about a currency without a Government, and were ridiculed by the Europhile mob, were right all along. I still haven’t heard the LibDems, or the Europhiles from the other parties, admitting their mistake.

France and Germany are still making solidarity noises in public, while in private they work out how to inflict least damage with an orderly Greek default.

Greece is insolvent. Greece is going to default because there is no way they can carry the burden of the debts they now have. Loads of banks in Greece and elsewhere in Europe are sitting on Greek Government iou paper which they have tucked away in their assets column. Those assets will shrink by at least half, more likely three quarters. Some of these banks will then be, technically, bust and require injections of capital from somewhere.

A United States of Eurozone Europe could solve the problem, because aggregate public debt across the Eurozone is not especially high. But a United States of Europe isn’t going to happen because the voters won’t have it. And even if they did want it, it would take too long to bring about. Eurobonds that would be backed collectively by all the Eurozone countries would buy some time, but they aren’t going to happen either, because the Germans will not countenance the idea of taking on, in effect, several more East Germanys. The Italians made loads of promises in return for a loan, pocketed the loot, and reneged on many of the promises within weeks. Would you lend them your life savings?

Quite what happens when the proverbial does hit the fan is anybody’s guess, but it won’t be a pretty sight, which is why the politicians have been kicking the Eurozone can down the road for so long.

Then again, I was wrong about interest rates going up this year.

'Helpful' banking

A year or so back I had cause to natter to the local NatWest. They had a neat wheeze going. Use their ‘Accelerator’ Mastercard and get a bonus rate on your savings account. You had to spend pretty freely on the card, but you got another 2% on the savings account.

No more, it seems. They have written to say they “are making important changes to simplify our range of accounts”. The Accelerator Credit Card is going to be simplified. It will no longer accelerate. I can have a new one that will get me some M&S vouchers.

I don’t want this, so I’phoned the given number to tell them. A computer answered, and the deed was done, signing off with a polite message to confirm that my card “will not be upgraded”.

Too right it won’t. It’s in pieces in the bin, and when I get home my decelerated savings will have to find a new home, because Natwest are going to pay a princely one tenth of one per cent. There is a word that was invented for banks paying nowt on deposits and charging double digit numbers to borrowers: extortion. Or in regulatory speak, treating customers fairly.

The eejits who ran the thing into the ground in the first place must still be in charge.

Read this article at http://www.candidmoney.com/articles/article245.aspx