Europe: 'a worn-out welfare society.....'

So here, after much devilling on my part, are the runners and riders in the great Euro Sweepstake (I have popped in US and Japan for comparison. My source, which I have now forgotten, said that the Japanese figure was sovereign debt but it is so out of kilter it may include domestic debt, but the point is made nonetheless). The UK bond rate is now 2.2% whereas we are told that the ‘real’ rate for Greece is 30%.

    Country            %GDP        

1.          Sweden            36                 

2.          Switzerland     52                 

3.          US                      63                 

4.          Holland             65

5.           Spain                 67

6.           Austria              72

7.           UK                      80

8.           Germany          82

9.           France               86

10.            Belgium             94

11.            Portugal           106

12.            Ireland              109

13.            Italy                   121

14.            Greece              165

15.            Japan                238

Spain is a bit of a puzzle because sovereign debt is not the obvious cause of its woes. Without research, I am guessing that theirs is a ‘sub-prime’ problem caused by the mad dash into speculative property development on the back of cheap money – same as Ireland but exacerbated by criminality and the confiscation without compensation of expats’ homes legitimately acquired, which has effectively killed that huge segment of the market for all time, plus appalling unemployment (over 40% amongst the young), an over-paid and unsackable public sector, low productivity and an unaffordable and  unsustainable welfare structure.

An interesting dimension is that the UK is Spain’s biggest debtor by far, so at least they will be getting their money back, and not in Euros, either.

The biggest kick in the teeth this week has to be China’s contemptuous description of Europe as ‘a worn-out welfare society’.

The EU has now brought down 6 of the elected governments in the 17-strong Eurozone, and installed unelected Eurocrats as Prime Minister in Italy and Greece. One of them confessed to not knowing what a CDS is. I bet he knows now! The Greek joker was the one who fiddled the books (with the help of Golden Sacks) to get Greece into the Euroclub in the first place, so presumably he will be equally adept at prising  them loose again. Meanwhile, they are rolling a snowball downhill.

As for Italy, over the past 10 years only Haiti and Zimbabwe have had a lower growth rate.

Back here, the big worry is not sovereign debt but stagflation. We have a stuttering growth rate and high inflation. We are told that to get the economy moving we need to spend more. Well, to a simple old country boy like me the answer is obvious. You put more money in peoples’ pockets. You do this by cutting taxes and raising the bank rate. The latter not only brings down inflation, making the pound in your pocket worth more, but it increases the incomes of the millions who have bank deposits. But what do I know?

May you live in interesting times.