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Money | Anorak - Part 40

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Money in the news and how you are going to pay and pay and pay

If An NGO Goes Bust Without Government Money Is It Really An N- GO? Environmental Protection UK It Not Independent

THE definition of NGO is Non-Governmental Organisation. Supposedly those nice people outside politics with ideas about how to make the world a better place who campaign to make the world a better place.

Which makes this slightly odd:

The UK’s oldest environmental NGO has been forced to close after government cuts to local authority budgets drastically reduced its income.

Formed as the Coal Smoke Abatement Society at the end of the nineteenth century, Environmental Protection UK provided expert analysis on air quality and, more recently, contaminated land and waste issues. But over the past two years, the Brighton-based charity has faced severe financial challenges due to the coalition’s cuts to local authorities, which purchase its products and services.

If an NGO cannot survive without government money is it in fact a non-governmental anything at all?

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Posted: 28th, November 2011 | In: Money | Comment (1) | Comments RSS feed:RSS 2.0


Kate Middleton To Join Public Sector Strike: Official Royal TUC Strike Fridge Magnets Raise Millions

PUBLIC Sector strikes are coming on Wednesday. And the big question is: will anyone who works notice? The right-wring press warn of queues at Heathrow Airport, pupils learning nothing in school and the country’s borders being porous. Again we ask: will anyone notice the difference?

Well, one difference is that the Guardian’s website is expected to be busier than usual and more people will watching Neighbours. Also, people on their way to work will be able to see the striking public sector workers and ask them what it is they do.

Francis Maude and Danny Alexander say the strikes will pose a “significant hit to the economy at a very challenging time”. It’s a warning that talks up the importance of the strikers’ jobs.

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Posted: 28th, November 2011 | In: Key Posts, Money | Comment (1) | Comments RSS feed:RSS 2.0


So Where Are All The Bond Vigilantes? Doubling Rates For the Italians

WHERE are all the Bond vigilantes? Not buying Italian debt is the short answer.

Italy paid a record 6.5 percent to borrow money over six months Friday and its longer-term funding costs soared far above levels seen as sustainable for public finances, raising the pressure on Rome’s new emergency government.

The auction yield on the six-month paper almost doubled compared to a month earlier, capping a week in which a German bond auction came close to failing and the leaders of Germany, France and Italy failed to make progress on crisis resolution measures.

Well, OK, OK, they managed to sell them so there were buyers: but with bonds, the fewer buyers there are the higher the interest rate you’ve got to offer to attract them. That’s what is happening here.

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Posted: 25th, November 2011 | In: Money | Comments (2) | Comments RSS feed:RSS 2.0


That One About Politicians and Their Lips Moving Again: Chris Huhne’s Green Shirts

TODAY’S  edition of politicians are not like you and me comes from Chris Huhne:

Households currently pay £89 a year on their bills for the green energy drive, but this will increase every year to reach £280 by 2020, according to the Government’s Department for Energy and Climate Change (DECC).

The ‘taxes’ will provide almost £8billion a year towards the £200billion cost of vast wind farms, nuclear power stations, a new pylon network, and to put up solar panels.

But in a bizarre statement, energy and climate change secretary Chris Huhne told the House of Commons that his policies mean consumers will actually be better off.

He said: ‘By 2020, we expect household bills to be 7 per cent – or £94 – lower than they would otherwise be without our policies.

‘Britain’s homes will be cheaper to heat and light than if we did nothing.’

The big lie here is that he’s talking, with certainty, about what prices are going to be in 9 years’ time. This simply is not possible, it’s a gross effrontery for anyone, politician or not, to stand up and try us anything in that level of detail for that far in the future.

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Posted: 24th, November 2011 | In: Money | Comment | Comments RSS feed:RSS 2.0


Nurse! The Greenies Need Their Pills Again!

THERE really are some loons out there in the environmental movement. I think we all share the aim, a cleaner, greener, better world for us and our children? Good, yes, I thought so.  What worries though is that the actual methods proposed, how we get from here to there, are all too often entirely insane. Take this for example:

Shale gas exploration also supports fewer jobs than renewable energy generation – hundreds of thousands of jobs could be created in offshore wind, solar power and other green energy, but drilling shale gas wells requires minimal manpower.

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Posted: 23rd, November 2011 | In: Money | Comment (1) | Comments RSS feed:RSS 2.0


Some of Our Money The Politicians Aren’t Going To Get: The Party Funding Game

ALL most amusing over the financing of political parties.

Here were the basic positions going into the whole let’s talk about reforming it process.

Tories: we get lots of money from rich donors in great big wads. So we don’t want to stop that, not unless Labour also stops getting great big wads of money from the unions.

Labour: we get lots of money from unions in great big wads. So we don’t want to stop that, not unless the Tories also stop getting great big wads of money from rich donors.

Lib Dems: we don’t get rich donors or union support so instead we should be given taxpayer money. You know, a few quid for everyone who voted or us.

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Posted: 22nd, November 2011 | In: Money | Comment | Comments RSS feed:RSS 2.0


Dear God the Tories Can Be Stupid Sometimes: Cameron Wants A UK Fannie Mae And Freddie Mac

THE latest brainfart from David Cameroan and Number 10: the government’s housing strategy, to be launched on Monday, will also include:

• A new scheme, running to hundreds of millions of pounds, to underwrite a small percentage of mortgages for “new-build” homes. The scheme is designed to reduce the size of a deposit, particularly for first-time buyers, by shifting the “loan-to-value” ratio. Banks are currently demanding deposits of up to 20% of the value of a property from first-time buyers.

If the housing market suffered a severe downturn, the taxpayer could ultimately be responsible for a part of the loss under the scheme. But homebuyers would first lose their deposits and the loss to the taxpayer would be shared with the bank.

This has been tried before. By the Americans: remember them? The people who had the most enormous, gigantic, housing bust just a couple of years back? The one that crippled all the banks? That’s the ones, sure you remember them.

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Posted: 21st, November 2011 | In: Money | Comment | Comments RSS feed:RSS 2.0


How the New Europe Really Works: Germany Calling The Shots

THIS is just a lovely little story telling us all how the New Europe, the much improved and extra special wonderful Europe, really works.

THE GOVERNMENT has complained to the European Commission over the release in Germany of a document disclosing confidential details about new taxes to be introduced in Ireland over the next two years.

In a deeply embarrassing development the document – identifying austerity measures of €3.8 billion in next month’s budget and €3.5 billion in budget 2013 – was made public after being shown to the finance committee of the German Bundestag yesterday.

The document, seen by The Irish Times , confirms the Government plans to raise VAT by 2 percentage points to 23 per cent, which would generate €670 million. Next month’s budget would also contain a €100 a year household charge, yielding €160 million, it says.

Doesn’t sound like all that much really, does it? Except this is the German Parliament reading the Irish budget. Well, OK, it still doesn’t sound like all that much really. Anyone can read anyone else’s budget can’t they? Most governments do actually print them and allow people to do so.

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Posted: 18th, November 2011 | In: Key Posts, Money | Comments (4) | Comments RSS feed:RSS 2.0


Yes, It’s Getting Worse! How The National Debt Works To Make France Go Bust In 10 Years

THIS eurozone thing again: yup, it’s just getting worser and worser.

Spain and France faced sharply higher borrowing costs on Thursday, struggling with bond auctions that highlighted the threat of larger euro zone economies succumbing to the debt crisis that began in Greece and is now threatening Italy.

What you need to remember about all of this: when we say “higher borrowing costs” here we don’t mean that the country has to cough up more on all its debt…….ah, no, let’s start more simply.

When a government wants to spend more (read, give more goodies to people so they’ll get elected) money than it collects in taxes it issues a bond. This is an IOU saying that we’ll pay you back in 1 month, 10 years, 30 years, promise, and in the meantime we’ll give you some interest. That interest rate they have to pay to convince people to lend them the money is the borrowing cost or the yield.

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Posted: 17th, November 2011 | In: Money | Comment | Comments RSS feed:RSS 2.0


Just So You Know, Yes, The BMA Are Damned Liars: Smoking In Your Car Is Fine

AS Dizraeli pointed out there’s lies, damned lies and statistics. However, it is in fact possible to people to come out of the other side of statistics and start shouting damned lies at us: pretending they are statistics.

There is now strong evidence that smoking in vehicles exposes non-smokers to high levels of second hand smoke which is known to be damaging to heath, the BMA said.

Because of the small enclosed space inside a car, smoking creates 23 times more toxins than found in a smoky bar, it was claimed.

Now when I say that this is a damned lie I’m not talking about people playing with statistics or anything. I mean that it’s a flat out, untrue, known to be untrue, statement.

It’s also a damned lie that they’re waving around to try and ban anyone from smoking in their own cars.

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Posted: 16th, November 2011 | In: Key Posts, Money | Comment | Comments RSS feed:RSS 2.0


What’s Really Wrong In The Eurozone: The ECB-Triggered Depression Looms

HOW we got here is something that we can all argue over. Workshy Greeks, idiot politicians, bankers’ greed, whatever, knock yourself out with your favourite explanation. However, where we are is easier to explain.

We’re just before a Depression. Yup, one just as bad as the one 80 years ago. And yup, for exactly the same reason.

No, that’s not workshy Greeks, bankers’ greed but it is idiot politicians and central bankers. What turned the 1929 Crash into the 30s Depression was the way that the money supply was allowed to contract. It just didn’t have to happen at all.

What’s happening now over in the eurozone?

Greek banks are insolvent, it’s true, if you mark their sovereign debt exposure to market. But to a first approximation, no other banks are. Mark French banks’ holdings of Italian sovereign debt down by say 10%, and they’re still fine; their capital drops, of course, as it would with any write-down, but certainly to nowhere near zero.

What is true is that Europe is in the middle of a textbook liquidity crisis. Banks are not lending to each other — and the ECB isn’t stepping in to solve the problem. This is a serious structural issue with the way that the European monetary system was constructed: the ECB is tasked only with guarding inflation, and not with ensuring the health of the banking system. Individual national central banks are meant to do that. But they can’t print money — only the ECB can. So when there’s a liquidity crisis, no one’s able to step in and solve it.

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Posted: 15th, November 2011 | In: Money | Comment (1) | Comments RSS feed:RSS 2.0


Sign This Treaty or the Treaty Gets It: Merkel Makes Demands

I’M not really all that sure that our EuroMasters have quite got this idea of blackmail quite right yet:

Angela Merkel, the German Chancellor, has warned Mr Cameron that unless he accepts unconditional changes to the Lisbon Treaty a split will take place, leaving Britain isolated and in a voting minority within the EU.

“She explicitly told Cameron that if there was no treaty change at the level of the 27 EU members then others will peel off, which is not what she wants,” a senior EU diplomat told The Daily Telegraph.

So let’s try and run through that one, shall we?

We have two options here. The first is that Britain signs up to anything that everyone else wants. No regard to national interests, what we might want to get out of it, just sign here and we’ll tell you what you’ve signed later.

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Posted: 15th, November 2011 | In: Money | Comment | Comments RSS feed:RSS 2.0


Does The SEC Let Warren Buffet Win In A Two-Tier Stock Market? We aRe The 99.99999999%

WARREN Buffet bought $10.7bn of IBM stock though his Berkshire Hathaway fund without making the markets notice. How?

The WSJ’s Deal Journal gets an idea:

Check out the footnote to Buffett’s latest disclosures of his investment holdings released by the SEC:

“Confidential information has been omitted from the Form 13F and filed separately with the Commission.”

In other words, Buffett got permission from the SEC to keep some of his stock holdings secret. This isn’t unusual for Buffett. Most big investors have to publicly reveal their stock investments every three months.

Problem is, when other investors get wind that Buffett is buying a stock, the price tends to zoom up — meaning the price goes up for Buffett to buy more. So Buffett periodically asks the SEC to keep some of his stockholdings a secret.

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Posted: 14th, November 2011 | In: Money | Comment | Comments RSS feed:RSS 2.0


Pension Funds To The Rescue! Raiding Private Capital To Build Public Assets

PENSION funds to the rescue! This is being greeted with glee over in leftyland:

Ministers are finalising a radical plan to boost investment in UK infrastructure and stimulate the economy, with proposals to pool the vast assets held in British pension funds and use them to back an ambitious programme of road and house building.

Pension and insurance funds are to be encouraged to invest up to £50bn in improving infrastructure, including private and social housing, power stations, super-fast broadband and motorway toll roads.

Hurrah!

Those huge pots of private capital are to be mobilised to build the public assets and infrastructure we need! Take that capitalist bastards!

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Posted: 14th, November 2011 | In: Key Posts, Money | Comment (1) | Comments RSS feed:RSS 2.0


Why The Eurozone Is Screwed: Blame The European Central Bank

EVER wonder why the European economy is screwed?

No, it’s not just the euro itself, not just the insane idea that 17 different nations could all share the same currency and the same interest rate. There’s also human agency involved. A large part of it is the fault of the European Central Bank.

Here’s Milton Friedman:

But when Anna Schwartz and I examined the history of that period in detail, we found that the situation was very different. In the United States from 1929 to 1933, the quantity of money declined by a third. Similarly in Britain, it declined till 1931, when Britain went off the gold standard. In France, the reason the contraction kept on until 1936 was because France insisted on staying on the gold standard and kept the money supply declining. To go back to the United States, at all times from 1929 and 1933, the Federal Reserve had the power and ability to have prevented the decline in the quantity of money and to have increased the quantity of money at any desired rate.

So in our opinion, the Great Depression was not a sign of the failure of monetary policy or a result of the failure of the market system as was widely interpreted. It was instead a consequence of a very serious government failure, in particular a failure in the monetary authorities to do what they’d initially been set up to do.

A bit wonkish, agreed, but the basic point being made is that if the amount of money in circulation starts to fall then the economy is going to fall, contract, along with it. So the first thing you have to do as a central bank is make sure that the money supply doesn’t fall.

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Posted: 11th, November 2011 | In: Money | Comment | Comments RSS feed:RSS 2.0


China Sets A Minimum Wage: Send For The Tibetans

IN Guangdong, China, workers will get a new minimum wage from Jan 1. Wages could go up by 20 percent. Will prices for goods go up? Or will China just make the stuff you buy somewhere else?

For decades, Guangdong province and China’s Pearl River Delta have been at the heart of China’s economic rise. And while larger manufacturers and state-owned companies have contributed greatly to the boom, smaller and medium-sized private firms have also helped propel China to become the world’s second-largest economy.

As wages, raw material costs and other costs rise, those smaller businesses say they’re being cut out of the mix.

Lau said at the current rate, he expects 30 percent of factories in Guangdong to reduce production or close down this year, in the wake of a minimum wage increase last year. Another 18-20 percent pay rise would decimate the industry.

But Crothall is less than sympathetic, noting that although China’s inflation rate has slowed somewhat, China’s workers still need more to get by.

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Posted: 11th, November 2011 | In: Money | Comment | Comments RSS feed:RSS 2.0


Scotland Can’t Afford Independence: Windmills Will Bankrupt It

SCOTLAND can’t afford independence. This is a fun little set of numbers:

David Cameron has endorsed an expert report that warned Alex Salmond’s plan for a renewable energy revolution would increase the average household power bill by £875 in an independent Scotland.

Here’s how the number works out.

All those lovely windmills, the solar panels, the attempts at clean coal, all these different methods of trying to make sure that Gaia doesn’t boil us all, are paid for through the electricity bills. There’s no actual tax money (or very little rather) that goes to fund them, the cost of all these things is added to the ‘leccie bills through the feed in tariff (FIT). For example, solar panels installed before now get 45p or so per unit of ‘leccie produced (coal perhaps 10p) and we pay for this by all of us (no, not just those who sign up for “green power”) paying more on our ‘leccie bill.

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Posted: 9th, November 2011 | In: Money | Comments (6) | Comments RSS feed:RSS 2.0


Better Than What the Cat Dragged In: Battersea’s Collars And Coats Celebrity Gala Ball

ON November 11th, I’ll be video blogging from the Collars And Coats Celebrity Gala Ball on behalf of Battersea Dogs Home hosted by Peter Andre, who undoubtedly empathises with the cause.

There will be a headlining performances from LULU, straight off of Strictly Come Dancing and Status Quo putting the “old dogs new financial tricks question“ to the test.

Battersea has rehomed over 3 million pets since it’s inception in 1860 and the deliciously  luxurious auctions from fashion labels  like Alexander Mcqueen, Prada and Aspinal alongside  holiday packages will finance aid to the constant influx of needy dogs and cats dependant on donations.

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Posted: 9th, November 2011 | In: Money | Comment (1) | Comments RSS feed:RSS 2.0


Malinda Dee: One Alleged Crooked Banker Gets Close To Severe Smack On The Wrist

BankerincourtANOTHER in Anorak’s occasional studies of the banking beast.

Meet former Citibank manager Malinda Dee(aka Inong Malinda) left, being shepherded into a Jakarta District Court today. Lots of pushy journalists were making her planned haute couture entrance a smidgeon shabby. Malinda is accused of embezzling around 17 billion Indonesian Rupiah (about a million quid) in customers’ funds, and faces up to 15 years in prison and Rupiah 200 billion in fines if found guilty.

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Posted: 8th, November 2011 | In: Key Posts, Money | Comment | Comments RSS feed:RSS 2.0


Some Good Sense On The Robin Hood Tax

THIS, it’s absolutely correct in every single particular:

The Commission itself points out that a European financial transaction tax would have a serious impact on European growth. It would hit the UK economy, it could reduce European GDP by up to 3.5pc. The Commission takes the central view it would only reduce European GDP by 1.76pc. That is their central estimate that is going to cost 500,000 jobs across the European continent. Those are not my figures, these are the commission’s figures. We have just spent the whole of rest of the morning about how we can get the European economy going, how we can create jobs, how we can make sure we are not priced out of the global economy and then we have discussion about a proposals that commission itself says is going to reduce growth and costs jobs.

“We have to be realistic and truthful to our publics about who pays this tax. There is not a single banker in this world who is going to pay this tax. There are no banks who are going to pay this tax. The people who will pay this tax are pensioners, with pensions. They are taxpayers through their governments because they have to raise money on through sovereign debt auctions. This is not a tax that is paid for by bankers or banks. I am all in favour of taxes that are paid by bankers and banks that is why I have introduced a bank levy in the UK paid for by banks and their shareholders. A financial transaction tax is paid for by the end beneficiaries of financial transactions and that is pensioners. So if you want to go and introduce a big tax on pensioners that is the end result. But at least be honest about who pays this tax.

“We are not being honest about the revenue that is supposed to come from this tax even if all the business didn’t leave the European continent and we were able to collect it. This money has been spent four times over by the people around this table. It is supposed to be contributing to the EU budget, which is the commission’s proposal. It is supposed be helping national government’s fill the hole in their public finances. The third use, is to spend the money on the aid commitments that some countries around this table have not delivered on. The fourth idea, is that it should be spent on climate change commitments. So the same money has been spent four times over.

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Posted: 8th, November 2011 | In: Money | Comment (1) | Comments RSS feed:RSS 2.0


Yes, Europe’s Going Bust!

YES, Europe’s Going Bust! I think we all pretty much knew this was happening, there have been enough stories about it just recently. But it does really rather look like Europe really is going bust.

Eurozone finance ministers will on Monday night begin a frantic search for new sources of capital to boost the area’s main bailout fund to €1 trillion after the US and emerging powers refused to commit fresh funds at the G20 summit last week.

Here’s the thing you need to understand. That €1 trillion bail out fund, the one that’s going to save everyone and everything. They want to go and borrow the money for that €1 trillion bail out fund. And no one wants to lend them the money: quite wisely really.

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Posted: 7th, November 2011 | In: Money | Comments (3) | Comments RSS feed:RSS 2.0


Finding Complete Bollocks In The Guardian: Banking Balls

NO, no, I know, it’s not a total surprise is it, finding something in The Guardian which is simply complete, total and utter bollocks. And yes, it’s in the comments section but it is still important. Important both for who said it and for who believes it.

Of course banks handle deposits, but as anyone who has reviewed rates available to depositors for the last few years will know just how contemptuous banks have been of those who wish to use their services for this purpose. There is good reason for that: banks do not (and never have) needed depositors for enable them to make loans. The simple fact is that the money banks lend is created by them out of thin air. It’s offensively easy for them to do so. All that happens when someone asks for a loan is to credit a current account with the amount of the loan and debit a loan account with the same sum. That’s it: that is how 97% of all money in the UK is created, but as is clear, deposits play no part in that process. Instead banks literally create the cash they lend and can get away with this trick so long as people think they’re good for their promise to pay – which they will be so long as, as is now the case, the government clearly considers them too big to fail and explicitly and implicitly guarantees all they do. The insult to the injury is that having made this cash out of thin air they then charge heavily for it – vastly more than they pay for deposits. No wonder an organisation that can costlessly create what it sells is so profitable.

Bob Diamond acknowledges none of this, and the fact that much of the profit he and his colleagues supposedly generate is effectively licenced to them by the fact that the government has failed to claim for itself the right to he profit made on the creation of money; money which only the state can legitimise, but which banks have claimed for thei own benefit and which they have used to speculate at considerable social cost to society at large, as Adair Turner and others have noted.

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Posted: 4th, November 2011 | In: Money | Comments (5) | Comments RSS feed:RSS 2.0


The Robin Hood Tax Will Give London The Entire EU Financial Market

THIS has to be the best paragraph in any of the newspapers today. The Guardian reports:

Treasury sources said Britain would hit the 0.7% target without an FTT, adding that the European commission’s plans would see individual countries using the extra revenue for deficit reduction rather than development. They added, however, that the UK would not seek to prevent other countries introducing an FTT if they wanted to do so.

It’s all about the financial transactions tax, that Robin Hood tax thing. The idea being floated at the moment (‘coz Bill Gates supports it) is that in comes the FTT, then the money is used to provide aid to poor countries. Or, as the European countries are suggesting, to prop up the shaky finances of the European countries.

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Posted: 3rd, November 2011 | In: Money | Comment (1) | Comments RSS feed:RSS 2.0


The New £50 Note Is An Object Of Desire

HAVE any of you been fed a new £50 note? Right now, only four cash machines in the UK hold the note. Can you guess where they are? Hull? No? Tony Blair”s wallet? Could be. The City of London? Yes!

 

 

 

Posted: 3rd, November 2011 | In: Money | Comment (1) | Comments RSS feed:RSS 2.0


Ultimate Greek Tragedy: A Tale of Well-Heeled Swine Bankers

swine “EUROPE’S leaders should have paid more attention to the distress of ordinary Greeks and less to the distress of well-heeled European bankers. Rather than trying to punish the “profligate,” they should have thought about the consequences of condemning Greece to years of negative growth, soaring unemployment and rising taxes with nothing promised in return except that maybe, a decade from now, its ratio of debt to gross domestic product might get back down to the problematic levels of 2008-9.”

So says the The New York Times.

An opinion most could agree with:

Maybe We Finally Get to Jail A Banker: The MF Global Dream
Bankers: Prosecute The Swine
Sexy Fred Goodwin’s Grubby Secret: Shagging On The Glass Ceiling

As the The New York Times Comment says in its punchline paragraph:

“Chancellor Angela Merkel of Germany, President Nicolas Sarkozy of France and others are now rushing to blame the Greeks for the summit package’s rapid unravelling. They need to take their own full share of responsibility for this crisis — and finally fix it. “

Posted: 3rd, November 2011 | In: Money | Comment | Comments RSS feed:RSS 2.0