From: Michael Swaby, Hainton Avenue, Grimsby.
IT is perhaps unfortunate that many are discussing the present dire situation as though it were just another episode in the seemingly endless European debate. This is probably because it is often characterised as being “the eurozone debt crisis”, which could be inaccurate in two ways.
In my view, it is more a continuation of a general economic crisis involving the western democracies, that started in 2007. In the USA, financiers had found a new way of losing money, by granting mortgage loans to lots of uncreditworthy people.
The European variation is for banks to make large loans to sovereign governments, whose solvency is in serious doubt. Common features are the absence of due diligence and high self-awarded remunerations.
Emphasising the huge over-indebtedness is understandable, but could be misleading if the peculiar weakness of many widely held assets is overlooked. In Europe, there is continual agonising over book values, i.e. should they be written down and, if so, by how much.
My understanding is that debt instruments issued by the obviously insolvent Greek government are to be written down, by as much as 50 per cent, creating big paper losses for the holders (the so-called “haircuts”).
The yields on bonds issued by certain other governments have risen, meaning that their free market values will have fallen accordingly. Apparently Italy is regarded as being both “too big to fail” and “too big to rescue”. Its bonds are not being written down by lenders, and this is just another financial bomb waiting to explode.
Anxious French banks hold lots of Italian bonds, and guess whose banks hold their fair share of French bonds? Yes, ours.
The USA is experiencing modest economic growth, enabling it to concentrate on its presidential campaign. However, this is only because it “kicked the can down the road” in August, by way of raising its debt limit from $14.3 trillion to $16.4 trillion. Like the UK, the USA continues to increase its national debt day by day.
Put briefly, my proposal is that urgent representations should be made to the USA to reverse its 1971 decision, by way of remonetising gold, at a higher value. The effects would be to immediately lessen the real burden of all government debts, and quickly enable critical balance sheets to be strengthened.
No reform could be more beneficial.
From: Brian Sheridan, Redmires Road, Sheffield.
IS it any wonder that the England is probably the most disliked country on the planet? According to John Gordon (Yorkshire Post, December 14) “our centre of gravity is the world”.
What hubris. Nor have we ever been Europeans, it seems, despite what I was taught at school. Just what is a European, then?
For starters, the French and the Germans are as different as chalk and cheese.
Your correspondent infers that we are great despite 1066. The reality is that the Normans did not impose their language on Britain but played their part in the development of probably the richest language on the planet. As for the xenophobic and sexist reference to “hausfrau” Merkel, didn’t a self-styled housewife run Britain from 1979 to1990?
Another reader interprets Merkel’s unexceptionable claim that the eurozone is preventing a war as a “dark threat” and “extremely chilling”.
The determination of Germany to ensure that her crimes of the first half of the 20th century will never be repeated and their genuine yearning for reconciliation has earned the admiration of the world.
Are we really to believe that Merkel wants to bring about by economic means what Hitler’s military could not achieve?
What I find chilling is that nobody likes us.
From: TW Jefferson, Station Road, Hensall, Goole.
I AGREE with much of your Editorial, “Political brothers” (Yorkshire Post, December 15) in which you urge the Lib Dems to review their pro-EU stance.
They, and your pro-EU correspondents, are unswerving in their zealotry, even in the face of manifest shortcomings. Less heart and more head would make them more credible.
You are also right to state that there is the suspicion that “the deal brokered to save the eurozone will not stick”. The markets know that what Mrs Merkel refers to as “fiscal union” is no such thing. Real fiscal union would require all the eurozone countries to effectively share the same bank account, which the Germans are not prepared to do.
Anything short of that will not convince the markets, so the crisis will keep erupting.
Mrs Merkel says it will take years to solve the crisis. This is because the weaker southern countries have lost up to 30 per cent competitiveness vis-a-vis Germany and the only way to correct that, under the present proposals, is to inflict many years of grinding austerity, until productivity “converges”, as it was supposed to have done at the outset, 10 years ago!
The markets suspect that “austerity fatigue” will set in, thus causing rebellion and loss of nerve.
They also fear that Germany will not continue bailing out those countries indefinitely. Hence the plans lack credibility.
The EU project was set up as a one-way street, with no reversing allowed. Their “vaulting ambition” led us into a blind alley, whereas most of us yearn for the open road!