Toby on Tuesday

 ‘Poodles and Politikos’

This week, I don’t want to write about the tens of thousands of “refugees” pouring across Southern Europe, nor about the warning by the director-general of the Security Service Andrew Parker, head of MI5, that “Britain is facing an unprecedented threat from home-grown fanatics who are being turned into violent terrorists within weeks” and who “now see their home country as the enemy.” Instead I want to write about Sunday’s election in Greece where at the time of writing Alexis Tsipras’ left-wing Syriza party and Vangelis Meimarakis’ centre-right New Democracy party are running neck-and-neck. But the truth is that, with both parties committed to the Eurozone’s so-called reform and bailout package, turnout is likely to be low and the sacrifice of Greece on the altar of the Euro-project will continue whatever the outcome.

There is a very simple reason why Greece will never be allowed to follow the classic formula for failing countries weighed down by debt and depression, namely to default, devalue their currencies and then recover. The Capital and Reserves of the European Central Bank amount to some 100 billion Euros. Yet the ECB’s lending to Greek banks now amounts to some 126 billion Euros. A default by Greece would wipe out the ECB’s capital base and effectively bring the whole Euro experiment to an end. In addition, the exposure of the private German banks to Greece at the end of last year amounted to over 11 billion Euros, with the private UK and US banks having only marginally less exposure and Italian private banks’ exposure running at around half their level. But for Germany in particular, with its policy of driving their big banks to lend indiscriminately to purchasers of German exports, the situation is now perilous. 

I am grateful to one of my well-informed Thirsk and Malton colleagues for alerting me to the announcement just over a week ago that Deutsche Bank AG, Germany’s largest, is considering cutting its workforce by some 23,000 jobs, nearly a quarter of its workforce. The reason was that that “a string of settlements and seemingly endless accusations of malfeasance underscored deep seated problems with the bank’s corporate culture.” And in Italy, UniCredit is set to cut its workforce by around 10,000, some 7% of its workforce, across Italy, Germany and Austria. The whole Eurozone is still dancing on the edge and Sunday’s Greek election, whatever the final outcome, will resolve nothing.

And the funny thing is that Britain’s equivalent of Alexis Tsipras, our very own Jeremy Corbyn, who had vowed to take on the whole system before becoming Labour leader, is like his Greek counterpart already buckling under EU pressure and committing his party to a “Remain In” vote for our hard-won Referendum. Whatever Mr. Tspiras’ brave words, office without power is the bitter cup from which all elected politicians in the EU have to drink. Power itself is reserved for the unelected civil servants in Brussels and the officials at the European Central Bank in Frankfurt. So Mr. Tsipras is no different from any other EU politician and the evidence is already building up fast in Britain that the same could be said of Mr. Corbyn. Having promoted himself as the friend of Syriza and Europe’s other parties of the left, his brave words are, like those of Mr. Tsipras, just that! They may be very left-wing poodles, but they are both Brussels’ and Frankfurt’s poodles nonetheless!

Until next Tuesday!

Toby