Life of a (Conservative) Student Part 4

I've written my usual instalment again for Conservative Student you can read it here. Today it is about the news of Greek needing a bailout for the 3rd time. I put forward the case that sticking on the path of bailouts from the Germans and staying in the Eurozone is economic doom for Greece. If Greece wants to sort its house out and achieve any economic growth its needs to default and do it now.

Over The Pond

Today the growth figures for Europe came out. What a mess, is the best description of what is going on.

The best news is that Germany received 0.1% growth in the last quarter, although they probably lost 0.2% from serve snow. Essentially it's not going well, the German economy has lost 1.4% growth in 1 year. The Germans should be a lot higher than this seeing as they're the biggest economy in Europe. The recession in  the rest of Europe is going to hit them hard, I wouldn't be surprised if they go into one as well.  

 The German economy narrowly missed recession today. That may not happen in the Future.

France entered its third recession today, which shows how well Hollande's policy of tax the people till 'they're bled white' (to quote Clemenceau) is going. The problem with the French economy is that it is very inefficient and has been so for a long time. Three hour lunch breaks and some of the strictest employment regulations in Europe says it all. There is very little work because of government intervention and no actual desire form the French people to knuckle down. They'll pay for this very hard, 10.6% unemployment is nowhere near the peak.

Hollande's vision of what makes a good economy is rather clouded. My advice is not to be so wet.

And what of the rest of Europe? Nine members of the Eurozone are in recession. Spain has 27% of its population unemployed. Recently Greece has been re-classified as an emerging economy in line with Botswana or Tibet. There is no hope within the Eurozone because countries are reluctant to overcome their inefficiencies which a single currency demands.

The ECB cannot really help much eithe,; earlier this year it lowered interest rates to 0.5%. That's fine if there is credit in a country but there is none in Europe at this moment because of the ongoing crisis. The wacky smash and grab policy of raiding people's savings will not help this problem. I'd watch out for a banking crisis in the next few years.

The European Economy is getting to a point where countries in Europe are doing worse than some in Third World Africa. 

How do we compare then. Well we have just better growth than Germany of 0.3%. We haven't had a recession since the days of Gordon Brown as the one last year was recently discovered to have never happened. The only way is up for the moment. Nor do we have the problems of a single currency or any of the financial controls placed upon us by being in the Euro. So I think we'll do fairly well compared to Europe in the next few years. This is in spite of having a trade policy that makes it so difficult to trade with anyone not on the continent. And Nick Clegg thinks Europe is the economic future, Greece can't even ship in medicine, most African states can. 

Comparatively the UK economy is doing well. Once we get over the hurdles of our debt we will be doing better than the rest of Europe.

Good Morning Cyprus

Cypriots today received the best wakeup call ever today. The Eurozone has put a one off levy on all savings of 6.75% for any one with less than €100,000 and for anything exceeding that 9.9%. What a great day for the people of Cyprus.

Cyprus is broke, the country has a debt of €15,000,000,000, 74% of GDP. Cyprus has received a loan from the ECB as a bail out and a team of finance ministers with the President, who was elected recently 'to deal with the countries debt', are carrying out a levy on all savings on Tuesday to help pay off the debt. The Euro Team and Cypriot Government have judged that the banking crisis is over so it is safe for this to happen.

If we disregard the whole taxation and surprise thing about this levy, which is bad enough (I hope you have been filled with disgust from the start), there is one big problem. Firstly Cypriot banks are really not that safe this month the two largest on the island posted a €4.5 Billion loss, almost 25% of GDP in the country. Banking has never been in a worse shape, the officials have great timing.

Now it is even worse as everyone is withdrawing money. People are fighting through queues to avoid this 'robbery'. There would have been a run on the Banks if it were not for many of them closing their doors to stop the money from leaving. People can now only use ATMs and those few banks that remain open. And do you think people will use Cypriot banks again? Unlikely. Anyone with €100,000 will definitely be looking for a foreign bank in the future. Who's to say this won't happen again? So now Cyprus has a capital crisis. It's all going down over there.

And guess who these Banks have lent to massively, our good old friends the Greeks. So it's going to go wrong for them even more now. What is more Greece, and any other indebted country, should watch out. This great policy may come to your shores too.

And now for the icing on the cake. Cyprus is about to raise its corporation tax, clearly the best way to get businesses to grow. Who runs this country, the Labour Party? Oh no wait it's the Eurozone and they're just as bad. This is just a prime example of what's wrong with European economics. But I'm not surprised, half of all left wing politicians are ex-Euro Communists.