The good news keeps coming for Brussels

Or rather it doesn't. Bloomberg have just produced their quarterly survey of their subscribers and it makes pretty dire reading.

About three-quarters of those questioned this week said the euro-area economy will fall into recession during the next 12 months and 53 percent said turmoil will worsen in a banking sector laden with government bonds, according to the quarterly Global Poll of 1,031 investors, analysts and traders who are Bloomberg subscribers. Forty percent see the 17-nation currency bloc losing at least one member in the next year.

And it gets worse

Fifty-six percent said they will reduce their exposure to the euro in the next six months and even one in three inside the region plan to. Half of all investors said they expect the Euro Stoxx 50 index to fall.

and worse

The debt crisis is raising questions about whether the 12- year old currency bloc can maintain its current form. While 4 in 10 respondents said they expected a nation to leave within a year, a further 32 percent said a member would leave in two to five years. Fifty-one percent said the euro zone would collapse at some point although only 8 percent expected that to occur in the next year.

That is a full 72% reckon that in the next few years at least one country will be forced out of the Euro.

Posing the question to get the right answer

Tim Montgomery, now that he has a Sunday column has to find something to write about. So he has uncreasingly turned to his monthly surveys of Conservative Home readers thoughts to provide himself with copy. His latest survey will be no exception, with a general overview of policy and his normal who is up, who is down surveys of the Tory cabinet memmbers. Indeed this week it will be particularly apt coming as it does after the Lib Dem conference and no doubt to be revealed during the Tory bunfest in Manchester.

So my gut feeling he is planning to cause Cameron some damage comes when we look at queston number 7,

If Cameron could have THREE of the following people in his Cabinet who would he choose? Don’t choose who YOU would like but who you think David Cameron would prefer.

John Redwood
Graham Brady
Vince Cable
Nadine Dorries
David Laws
Bill Cash
Boris Johnson
Simon Hughes
Nick Clegg
David Davis
Tim Farron

I mean, we are talking who Cameron would want, and to be frank it is a no brainer isn't it? He would have David Laws, Nick Clegg and Vince Cable. The Tory options would bring him out in hives.

Thus Montgomery is setting out to prove that the Tory membership think that Cameron is happier with those of a different tribe than their own.

Naughty, Naughty Tim.

Junker: I was wrong to be honest about being a liar

In a rather shambolic exchange between UKIP's Nigel Farage and Jean-Claude Junker, President of the Eurozone, Junker comes up with an interesting point.

"Yes I lied, but I was wrong to have be so honest about it."



Worse he refuses to answer the important question, which is whether Greece can default and remain in the Eurozone.

Legally it can be done of course. It would take one hell of a lot of rewriting of contracts and would be a bureacratic nightmare, but it can be done.

However politically it is very interesting.

What will the EU say to Ireland for example? After all why should the Irish pay back 100% of their bailouts while the Greeks get a 50% cut.

Or what will he say to Italy who will read the lesson that it doesn't matter about too much austerity as the Eurozone will allow a default on its debts?

Neither of these key issues is addressed, and leaves the whole issue of Greek default is still a Gordian knot.

Lib Dems call for more Climate taxes

Sir Graham Watson, the republican Lib Dem MEP for teh South West (who refers to his constituents as 'Them') is out there demanding that people pay more tax to pay for his hobby horse,

"This campaign comes at a crucial time, as the EU's overall spending plans for the 2014-2020 budgetary period are being drawn up as we speak. We are calling for €2 bn a year for research and €3 bn per year from structural funds for building a European supergrid and supporting large-scale renewable energy installations."

Of course it comes at a crucial time, a time when the entire continent ios flat broke and pouring money into the sand is just not the way to go. Who does he think will have to pay for this 'surge'?

'Cast Iron Cameron' - How much is his word worth?

I only ask because it isn't just us UKIP types that are getting fed up with his vaccilating and dishonesty over his Euro promises.

Here he is back in 2006 signing an uncontroversial little petition, you know, the one that says wasting  £150million a year on Strasbourg is daft.

Today at the Conservative conference David Cameron became the first UK party leader to sign the 1,000,000 strong petition to terminate the Strasbourg parliament.


He signed the http://www.oneseat.eu/ campaign which aims to persuade the European Commission and the member states that Brussels must be the sole seat of the European Parliament and that the monthly parliamentary sessions in Strasbourg bring the reputation of the EU into disrepute.

On the day David Cameron and Timothy Kirkhope MEP, Leader of the Conservatives in the European Parliament, launch the new Movement for European Reform, Mr Kirkhope said:

“David Cameron’s endorsement of the campaign is a symbol of how we Conservatives want to reform Europe. To be in Europe, leading in Europe is our aim. Ending the Strasbourg circus is a first step on the road to reform.”

Dear Timothy showing that touching belief in Dave so prevalent amongst Tory MEPs and apologists. It was a symbol he said, of how Conservatives were about to reform Europe.

Yeah right. Timothy. You know what happens next, because it is so obvious, so predictable.

Only in May here he was reconfirming his support for the campaign, but now it seems that he has bowed down to the French,

The leader of the UK Tory delegation in parliament has launched a withering attack on his own government for refusing to 'intervene' in the row over the assembly's 'travelling circus'.


Martin Callanan's attack comes after the UK coalition government declined to make representations to an ongoing court case over parliament's split-site arrangement.

France has taken a case to the European courts objecting to a vote by MEPs to reduce the monthly plenary sessions held in Strasbourg.

All member states have the opportunity to 'intervene' in the court case and all the mainstream British political parties expected the coalition government led by David Cameron to do so.

However, the coalition has controversially decided it would not formally declare its support for the MEP vote on Strasbourg.

How many more times does Dave have to let down his own side before they realise that his heart isn't in it. He is never going to do anything to defend Britain against the excesses of the Eurocrats?

It is rather sad, but as Desmond Swayne, Cameron's PPS put it in a letter to a constituent,

Anyone who believes that this government can expedite our escape from the EU is living in a world of illusion

Having given up on an industrial future, the EU concentrates on its industrial past

It is a sad day, but there you have it,

The 2011 European Tourism Day event will be entitled " Industrial heritage: differentiating the European tourism offer " and will be held on 27 September 2011, on the occasion of World Tourism Day.

And what is the lead item in this overview of European Industrial Heritage,

The Hanoi-Kunming railway
The Sino-Vietnamese Railway was built by France to connect Haiphong in Vietnam with Kunming in the Yunnan province of China. The 855 km line opened in 1910. The Chinese section of the railway is currently only used for freight but projects are ongoing to open it again to passengers transport.

Yup, something in Indo-China that's main purpose today is to help our competitors.

Lagarde takes her cues from Breugel

All this stuff we are hearing today in the press about a new solution to the debt crisis in the realms of financial fiction, trillion dollars here and there must be ringing bells amongst the participants in a recent think tank role playing game.

This is what is being talked about,

Europe takes centre stage as a new rescue plan seems to be taking shape. EU monetary affairs commissioner Olli Rehn said that Europe’s leaders are talking about extending the EFSF rescue fund possibly to the tune of EUR2 trillion. The EFSF is currently EUR440bn, but it could leverage its size by insuring the issuance of member states’ debt and linking up with the ECB. There is also speculation that the European Stability Mechanism that was due to come into action in 2013 could be brought forward.

The Brussels based think tank Breugel had. with the backing of Peterson Institute for International Economics and major city players Tudor and Blackrock dragged a number of key finacial types, policy makers and so on and billeted them in a castle near Chantilly on the 13th-14th September.

And here they played a game,
The solution?
In the war game the EU/IMF decided to expand the European Financial Stability Facility (EFSF) to between $3 trillion (£1.9tn; 2.2tn euros) and $5 trillion (£3.2tn ; 3.7tn euros). This was done by leveraging the 440bn euros supplied under the EFSF legislation going through European parliaments this week, plus match funding from the IMF. And by the ECB issuing "collateralised finance".


That is, by pledging around 700bn euros, they borrowed up to $5tn and then lent it to European banks and countries, starting with Greece. They got the money by mortgaging the assets of Europe basically, because $5tn is a lot. They mortgaged the EFSF money, and then the ECB borrowed money against the future tax revenues of Europe.

There were two interesting outcomes:

1. They saved the euro. Greece, Ireland et al stayed inside, now protected forever - certainly for the lifetime of the participants, who were mainly on the upside of 35 - by the wedge of money conjured from thin air.

2. It didn't solve the structural problems facing the periphery - but simply gave them more time to sort it out.

An account of the game reports:

"The large new lending facility was seen by some players as free money for errant countries without sufficient conditionality."

Interestingly George Soros spoke the day before, and wasn't very positive,
Update
I note that Paul Mason of Newsnight covered this self same story last night.

This Breughel document is doing the rounds in Washington DC, and contains an uncanny blueprint for what might now be about to happen. However the term "war game" always summons up a defensive reaction in me. Not because I am against them: I am a bit of an addict. But they can be deceptive.


The Soviet high command shot and imprisoned staff officers who, between 1938 and 1941, argued that war game evidence suggested a mobile defence against a German blitzkrieg would be necessary. They relentlessly shaped the war game evidence towards the USSR's swift victory in a WW1-style "war of position". They did this by ignoring key facts.

Now, call me cynical but assembling 50 well-heeled types at Chateau Les Fontaines in Chantilly might not have given us the best hands-on understanding of how the actual people of Europe might take the issuing of $5tn of free money to once again save the banks.

Viz: the Germans and Finns might revolt against it, the Greek workers might take it and run with it, and Europe's trade partners/rivals might see it as a tad in breach of every global rule on the planet.

It was of course, Breughel the elder who painted this.

That's not cyncial, that is reasonable

An orderly Greek default and exit from the euro may be necessary; a disorderly default could precipitate a meltdown

On the second day, a simulation game took place among the conference participants in what amounted to a stress-test for European debt policy. The game was directed by Andrew Gracie of Crisis Management Analytics. Gracie is a former member of the Bank of England’s Financial Stability Group with a strong track record in running simulated games for central banks globally. No sitting officials participated and the game was held under the Chatham House rule. Participants played the roles of the governments of France, Germany, Greece, Ireland, Italy, Portugal, and Spain; decision-makers for the ECB, IMF, and United States; and decision-makers in commercial banks in the countries involved and non-bank financial market actors. In addition, in response to successive rounds of the game as it unfolded, other participants provided expertise in the areas of credit ratings, legal and accounting issues, and political repercussions. As the simulation unfolded, a solution to fend-off speculative attacks was found