Who has the most dodgy economy in the EU after the PIIGS? Oh, it’s us. Britain. Would the Germans and the French be as willing to bail us out as they are Greece and Portugal? Asks Ventilator Blues.
I do hope that everyone is praying for a disorderly end to the PIIGS bailout saga which comes to another hydra-head 21st July 2011. Us Brits much cheer on further stagnation and fudge or we are doomed and here is why.
If there are six men on death row and the first five are pardoned is this good news for the sixth? Does the fact that the authorities have let five men go mean the chance of the last man being set free increases or does it just mean he is next in line for the firing squad?
This little thought game was inspired by the imminent saving (for another 2 months) of Greece and the rest of the insolvents in the Euro area. At the moment the PIIGS are on death row and the preferred option is limited default and roll overs. This is all well and good for Greece but what about the next in the line, Portugal? What will Portugal’s and the markets’ reaction be to seeing Greece getting more lenient treatment and debt reduction simply because it is in a worse position?
As the bond yield jump has dominoed through the PIIGS so, too, will a default domino roll through the Med. I can foresee a time within the next year when all the PIIGS have had a partial debt default and if not saved, then their situation will have been somewhat ameliorated. Now onto the sixth condemned man: the UK.
At the moment this country is sitting pretty by sheer dint of not being perceived as being in as bad shape as the rest of showers in the EU fighting it out to be patronised to death by Merkel, Sarkozy, the ECB and IMF. If the PIIGs suddenly get a 50% haircut on debt then by far and away the worst country in the EU area for debt will be the United Kingdom and who is going to bail us out? Germany and France? The rest of the Euro area? The southern states?
Our gilt yields will climb as Europe’s fall and we will have no trading/currency partner to fall back on. The Empire- that we retreated back into during the Great Depression – went after WWII. We are not in the Euro. We have made a concerted effort to alienate the Commonwealth by courting the EU and our old “ally” the USA wouldn’t give a tinker’s if the mother country went belly up. China ditto.
The last thing the UK needs is the EU to sort out its problems; it will just shine the light more brightly on our own. In any walk of life emergency action is always reserved for the most severe problems: the police will find murderers before burglars, doctors see heart attack patients before broken legs. If the EU clears out A&E of all the PIIGS – even if they only go to the Intensive Care ward – there will only be one little piggy left: us.
So in the name of ever closer union with our Euro area allies and friends… here’s to them screwing it up royally, disastrously, appallingly. Fudge with an extra helping of fudge please, Merkel. Let two competing ideas negate each other so another short term fix is thrust onto the poor buggers in the South and Ireland. It will keep the wolves at the door a little longer and allow those that pay attention to prepare that little bit longer for the UK’s titsuppification.