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What IS independence exactly?

I notice that the SNP via Nicola Sturgeon has raised the issue of currency once again in the independence debate. She states confidently in this article that following a yes vote, Scotland would continue to use Sterling as the country’s currency.

This is in fact a can of worms on several levels. How will this square with the EU? The UK’s opt out will remain with the successor state, which has already been acknowledged by the EU President and the European Commission as being the ‘Remaining UK’ i.e. England Wales and Northern Ireland.

Given that the EU have said that Scotland will be treated as a new state, then the UK opt out on the Euro will not apply. Any new state coming into the EU is obliged to join the Euro once criteria are met so I wonder where this leaves Scotland should we vote for independence?

Quite apart from all that, even if this problem could be overcome and Scotland was allowed to keep Sterling by the EU, wouldn’t monetary policy still be decided in London? And given that the acknowledged main problem of the Euro has been differing fiscal policies within a single currency, and given that Sterling already has particular problems, how would this play out on a small island with a small currency but within it separate fiscal policy?

There is some comfort for the Yes campaign from economist Professor John Kay who states that the EU “would probably settle for some vague and indefinitely postponed aspiration” that Scotland would adopt the euro.

However Kay also believes that “The currency issue is crucial – Scotland would be right to seek agreement on monetary union with the remaining United Kingdom, but it would be difficult to negotiate an agreement that would be consistent with the fiscal freedom sought through independence.

“Scotland should be ready to adopt an independent currency.”

So the SNP want to keep the pound and the Queen. They say that Scotland will be free of Trident and yet even if the vote is yes, there is no guarantee that a future Scottish government would follow that through. I’ve always wondered that even if that government were SNP, if they wouldn’t come to some arrangement with the Remaining UK on the issue.

As someone who has voted SNP in recent years, when it became clear that there was to be a referendum, I looked forward to being convinced that independence made sense.

At the moment I remain to be convinced.

And the clock is ticking….

And the least surprising news of the day is…….

cyprus

Eu’re Not a Euro Any More

When is a Euro not a Euro?

When it’s in Cyprus.

From the Financial Times:

The most important characteristic of a monetary union is the ability to move money – without any restrictions – from one bank to another in the currency area. With capital restrictions, the value of a euro in Cyprus is no longer worth the same as a euro held by any other bank in the eurozone. A euro in Nicosia cannot be used to buy goods in Frankfurt without limits. Effectively, it means that a Cypriot euro is not a euro any more.

Jeroen Dijsselbloem, the head of the region’s finance ministers, seemed to suggest to Reuters on Monday that the island country’s rescue ( a hybrid between a dog’s dinner and a pigs’ breakfast) could serve as a template for future deals, by taxing depositors.

Here’s how that news was received in Italy:

UCG-chart

“Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.”
Albert Einstein

The markets have rallied

How often do we hear that phrase now?

The ‘markets’ are like a bouncing ball.

A country reaches crisis point and markets dive.

The European Central Bank, the IMF and the EU broker a bailout and markets rally.

The effect is only temporary and the country again reaches crisis point.

Markets dive again.

Really it is time for all sane and rational people to realise that the vanity project that is the Euro is on its death bed.

Nick Cohen put it very well in the Observer yesterday “Eurozone leaders cling to the single currency as if it were a tribal fetish. Not even the descent of southern Europe into ruin can shake their faith.”

Cyprus and Europe and all that….

No one can predict what will happen.

However by the Cypriot parliament’s rejection of the bail out package it would seem that they are on course for an exit from the Euro – unless they change that decision.

If they printed their own cash they could re-capitalise their economy, set their own interest rates and get their country back on its feet.

The same applies to Greece.

Iceland have done it and their economy is now well into recovery phase.

They couldn’t have done had they been in the Eurozone.

There is a real danger that if Cyprus is held prisoner by the Eurozone that banks and ATMs all over the continent could be closed as panic and contagion take hold.

And although the UK isn’t ‘in the zone’ (sic), it is so exposed to Eurozone debt that it could be drawn in.

However the fact that the UK has its own currency may turn out to be its saving grace.

There are options open to the UK which aren’t available to the ‘bloc’.

I take no pleasure in saying this, but the loons of UKIP may very soon become an electable party of government.

Head for the hills!

 

Who’s Next?

After Cyprus?

Italy?

Head for the Hills!

Number Crunching

67% – Proportion of UK electorate who voted to remain in the European Economic Community in 1975 in a referendum.

22% – Proportion of UK electorate who would definitely vote to remain in the EU were a similar referendum held now.

40% – Proportion of UK electorate who would probably vote to stay in EU were a similar referendum held now.

51% – Proportion of UK electorate who would probably vote to leave EU were a similar referendum held now.

Source: ICM poll commissioned by The Mail Telegraph The Guardian

Actually, I take no pleasure in this at all. Those at the vanguard of the Euro- sceptic lobby are the self same type of eejits who want the return of fox hunting and the death penalty. I would actually quite like to be pro EU, as such a concept of international cooperation and fraternity suits my liberal view of the world.

However many years ago I noticed that the EU seemed to be based on a whole series of summits where no one could agree on anything.

After each one there would be briefings and statements from the various leaders which made one wonder if they had indeed been party to the same discussions. The impression given in photo calls was a unanimous one. A unanimous smile through collective gritted teeth.

I’m quite old fashioned in that I think that effective government is probably better situated quite near the location of the population affected by its legislation and decisions

That’s not to say that national governments should not cooperate and agree – of course they should, but what is the most likely route to that agreement?

In the housing estate where I live there is a Residents Association. At meetings, residents come along and discuss the various matters which concern them and in the main, can usually (indeed always) settle on the way to go by debate and discussion.

I sometimes wonder what the spirit of cooperation between residents would be like if there were connecting corridors built between each house, members of each household were free to come and go as they pleased and that everyone’s pay was credited to a single bank account.? If one household got into financial problems largely through not sticking to agreed rules and regulations, the others would rally round and bail them out.

It wouldn’t work.

Neither I’m afraid does the EU or the single currency.

The UK electorate it seems has woken up to that fact.

The mainstream parties have to get a handle on this soon, otherwise that jolly old jackass Nigel Farage and his UKIP cronies will continue in their untroubled ascendency.

 

 

 

 

 

 

 

Figure it out

So the Coalition suffered an embarrassing defeat yesterday on the issue of the UK contribution to the EU budget.

Dave and his chums want a freeze. The completely bonkers wing of the Tory party want a reduction. However in this regard they are joined by the entire Labour party, The SNP, Plaid Cymru and the SDLP.

And really, why should anyone support a “freeze” (In reality a near 50% increase) whilst austerity measures, which aren’t working incidentally, continue to have severe effects in the UK?

Private Eye style, let’s do a bit of number crunching:

£9.2 billion – The UK’s current annual contribution to the EU.

£13.6 billion – The amount that will rise to by 2020 with a ‘freeze’ on contributions.

6% – The amount by which debt will rise across the Euro area in 2013 despite due to austerity measures.

£83 billion – The amount expected to be cut in austerity measures in the UK between 2010 and 2014.

490,000 – The number of public sector jobs in the UK expected to go during that time.

€78 billion – The bailout received by Portugal in 2011

€100 billion – The amount which has been shaved off the Greek debt burden THIS YEAR.

32% – The amount by which Greek debt is expected to rise in the coming year.

(Sources National Institute of Economic and Social Research and the BBC )

Writing in the Guardian, Jonathan Portes of the NIESR compared austerity in Europe to a “suicide pact”.

“What we have seen in Europe is the creation of a death spiral of deficit cutting, leading to reduced growth – which leads to reduced revenues and pressure to cut deficits faster. Paradoxically the EU was set up in part to avoid such problems by allowing members to co-operate to secure better outcomes,”

 I’d really like to know if there is anyone out there who has studied the figures and trends who still thinks that the Euro will survive in any recognisable form in 5 years time?

Getting back to yesterday’s vote – Dave and Co will ignore it.

Further awkward questions for Alex Salmond

Further to the subjects I brought up the other day, I’d like to pose a few questions that appear to be unanswered.

Obviously the SNP’s enthusiasm for the Euro has declined somewhat from the heady days where it was defined as the currency of a future independent Scotland. The SNP proposal now is that should the Scots vote for independence in 2014 then the pound would continue to be the currency in Scotland.

If the Euro crisis has proven anything then it is that monetary union does not work alongside fiscal autonomy. Therefore what sense would there be in continuing monetary union whilst severing fiscal union?

I come back to my question posed on Saturday. Which lord and master, or which combination of them do we want? Indeed which will we be permitted? Has Eck taken advice on this?

Another tricky point for Eck to manoeuvre his way around is the developing disenchantment with Europe in the UK. A growing number of mainstream politicians are now openly discussing the UK’s departure from the EU. One MP said recently “I think ultimately it has to go that way, yes,”.

This was unusual in two respects. The MP, Gisella Stuart has represented Birmingham Edgbaston in the Commons since 1997. Not only is she a Labour MP but she was also born in Bavaria.

This article from the BBC’s Chris Bowlby this morning, discusses the current mood in Labour, with a growing number of MPs prepared to question the party’s enthusiasm for, and commitment to, Europe.

One source to that article, Charles Grant is quoted thus: “There’s roughly a 50/50 chance of Britain being in the EU at the end of the next parliament” – a calculation which, in his opinion, applies whether Labour or the Tories are in power.

Now whilst Mr Grant’s opinion may not be the most objective one on the subject, there is certainly going to be an increasing focus on the UK’s continuing membership of the EU.

I wouldn’t like to be in Eck’s position trying to negotiate my way round that lot in the run up to the referendum.

Euro latest

I haven’t written much about the Euro in recent months and that’s because nothing has really changed. The ECB and the EU stumble about trying various solutions all of which are too little too late.

There is more chance of shit from a rocking horse than the long term survival of the Euro.

Yesterday we had the wee game where a big initiative is announced, this time it’s the ECB buying up member countries’ debt. The markets rally and the politicians make the right noises. However it will fail just as all other measures have. Mario Draghi, on the back of announcing the buying of bonds said “Member states will be expected to continue fiscal consolidation and reforms to enhance competitiveness”.

So lets get this right. The ECB is going to shower some Eurozone countries with money, not to fund growth mind, just to help pay the bills. He then wants them to screw the consumers so that they will have less money than they did when their countries got into trouble in the first place.

Remember that consumer spending is the only possible way out of the crisis.

Oh and did I mention that the Eurozone is heading for recession?