Too big to bail-out? Spain and the future of the Eurozone

Open Europe  and FAES panel debate 11 July 2011,  Bishopsgate meeting room, Liverpool Street.

Chaired by Matts Person, Director of Open Europe


Alvaro Nadal Spanish MP (Secretary of Economy and Employment of Partido Popular)

Vick Ford MEP (East of England)

Anonio Garcia Pascual  (Chief Southern European Economist, Barclays Capital, ex-IMF)

David Oakley (Capital Markets Correspondent, Financial Times)

Megan Green (Eurozone Economist)

The panel members spoke for an hour or so to open the meeting.  All the panel members bar Megan Green showed a remarkable lack of concern for anything other than the preservation of the Euro (and by extension the EU) at all costs and hang the consequences for the masses. Green, who had recently been in Athens and seen the growing anarchy fuelled by the rage of the Greek have-nots (a rapidly expanding part of the population) went as far as raising the possibility of civil war if the present demands being made on the Greeks were not abated.

The rest of the panel simply peddled the economic advantages of the Euro, yes, I did say advantages, and the dire consequences if the Euro was not preserved.

Nadal trotted out the line that “You cannot have a single market without a single currency” as though this was explanation enough for its continuance and then  claimed that the Euro had brought “8 million new jobs to Spain” of which six million remained even after the economic toils they are now in. This Nadal thought was a most tremendous boon, although he rather marred the picture of a contented Spain by saying that three million of the jobs had gone to immigrants. (One imagines the hombre in the calle  has a rather different view of the joy of diversity which comes with 3 million immigrants).

Vicky Ford said nothing much and said it very well, but it was clear she saw the present situation as a chance to engage in “market reforms” (translation: reduce social provision and make employment insecure). So did Pascual who, as might be expected from an old IMF apparatchik, appeared to see society as no more than a series of economic relationships.

The Greeks would have been most surprised to hear from Oakley that the Euro had been good for them and the Germans might have cocked more than an eyebrow to learn that it was in their interest to continue bailing out the likes of Greece, Portugal, the Republic of Ireland and any other of the Eurozone who became the economically halt and lame.  The latter  judgement was based on the premise that the Euro had made German exports more competitive because the Euro’s value against other currencies was lower than  what an independent German Mark would have been. This ignores two rather contrary facts, namely, that Germany with the Mark was remarkably competitive internationally (even with the burden of a newly absorbed East Germany) and the amounts Germany stand to lose if they keep  propping up the Euro lame duck economies are so colossal  they would dwarf any benefit gained from the
Euro’s lower exchange rate.

When Matt Persson called for questions, he used the old chairman’s controlling trick of saying he would take two or three at a time then get the panel to comment. This allows awkward questions to be ignored with a fair chance that most of the audience will not notice. Sure enough it happened.

The first questioner was that well known opponent of the EU and campaigner on other causes Idris Francis. The second questioner was me.

Idris attacked the idea of the Euro as a doomed enterprise from the start and ended by pointing out that not one of the speakers had adequately addressed the question of the effects on most people. In a note on the meeting he distributed afterwards he paraphrased his words at the meeting as :

“Do you really believe that millions of Greek people are going to accept that they have to live in poverty for decades to come, to pay 15%, 17%, 20% interest on enormous debts that they can never repay – and pay the money to wealthy banks?”

“Do you seriously believe that millions if Irish will do the same? In recent times people started flooding in to Ireland – now they are leaving again in their droves. Who in his right mind with ambition for a decent life will start where the only prospect is of permanent poverty? They won’t do it.”

“Its all over, its finished, stop pretending.”’

I then put my question, but engaged in a little preamble. I said that I not only hoped Spain was not to big too fail,  but that it failed and brought the rotten edifice of the EU down around it. I added that the creation of the Euro was an act of criminal recklessness because it was obvious before it was created that it would not be sustainable because of the widely differing Eurozone economies. Finally, I pointed out that we were being asked to allow the people who had led the EU to its present pretty pass to carry on occupying the positions of power. I  then put my question “Why should we trust those who have created the mess to clear up the mess? “

When the panel  were called to  comment they made some attempt to answer the question of why the masses in the Euro states in financial trouble should be expected to bear the  deprivations – Nadal in particular suddenly became dreadfully  concerned about “the people”, doubtless because he realised that his opening comments which paid no heed to the ordinary Spaniard would not have gone down well in Spain.  However, as he was still saying what a wonderful thing the Euro had been for Spain, it was difficult to take his “concern” seriously.

There was no  attempt to answer my question. Nor did Persson ask them to speak on it  when they failed to address it off their own bat. This was unsurprising because the question is the most difficult one Europhiles face, for there is no  rational reason why those who have shown themselves to be at best grotesquely incompetent and at worst ideologues blind to anything but their creed should be allowed to continue in office  and every reason to remove them from any position of power and influence.

After the panelists had spoken, Persson  called for more questions but added that Eurosceptic speakers  should keep their remarks brief. He made no such request of Europhiles. I will leave readers to  judge his motive for this imbalance.

The rest of the meeting saw a gradual shift from the unselfconscious “forget there  are real people involved” attitude they began with, but it was all for show because with the exception of Greene, they  still cleaved to the idea that when shove came to push  the EU and the Euro must continue at any cost.  However, when Persson ended the meeting by asking how the panel thought the Eurozone would look in 2014 there was a reluctant majority amongst them who thought it would be smaller.

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  • efgdefgd  On July 18, 2011 at 9:27 am

    This is excellent and has helped me with my views on the EU. Time for the EU to not only be smaller asap, but for countries who need bailing to leave and for countries that are still in be allowed a vote to either remain or leave – no secondary voting if the vote says get the ***** out.

    I am not against a union or rather an association of countries trying to have good economic and social relations but the EU has become a Leviathan monster and is impoverishing the ordinary people rather than making life easier for everybody.

    Time to say it did not work. Too big and too isolated from reality. Too many concessions and subsidies to non productive outmoded working practices in certain countries. Time to dismantle the EU tower before it crashes down and crushes us beneath it.

    Once again a pragmatic and excellent blog. Thank you for sharing.

  • stop fascism  On July 29, 2011 at 4:24 pm

    Very nice article! Thanks for sharing it with us!

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