Cost of Greek exit from euro put at $1tn

The British government is making urgent preparations to cope with the fallout of a possible Greek exit from the single currency, after the governor of the Bank of England, Sir Mervyn King, warned that Europe was “tearing itself apart”.

Reports from Athens that massive sums of money were being spirited out of the country intensified concern in London about the impact of a splintering of the eurozone on a UK economy that is stuck in double-dip recession. One estimate put the cost to the eurozone of Greece making a disorderly exit from the currency at $1tn, 5% of output.

Officials in the United States are also nervously watching the growing crisis: Barack Obama on Wednesday described it as a “headwind” that could threaten the fragile American recovery.

In a speech in Manchester before flying to the United States for a summit of G8 leaders, the British prime minister, David Cameron, will say the eurozone “either has to make up or it is looking at a potential breakup”, adding that the choice for Europe’s leaders cannot be long delayed.

“Either Europe has a committed, stable, successful eurozone with an effective firewall, well capitalised and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the eurozone, or we are in uncharted territory which carries huge risks for everybody.

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PA Pundits - International

By Alan Caruba ~

What is it with the “warmists”, Al Gore and his clones who keep insisting the Earth is warming, that too much carbon dioxide (CO2) will be the death of us, and that we have to immediately stop burning “fossil fuels” if we are to save the planet? They are the most relentless liars on the face of the planet.

They want us to cover the surface of the U.S. with solar panels and the mountains with wind turbines to generate the energy needed for everything we do. These Green energy alternatives are so wonderful they are producing a mere three percent of our current needs, require government subsidies and loan guarantees to exist, and tend not to be all that great when the sun isn’t shining and the wind isn’t blowing.

So why are we still hearing from this discredited and disgraced bunch of charlatans and…

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Eurogeddon Again

MORNING BRIEFING – By Benedict Brogan (Daily Telegraph

David Cameron will be giving a speech on the economy at 10.15 this morning in Manchester before flying to the United Statesfor a summit of G8 leaders.

He is expected to say:

“The Eurozone is at a cross-roads. It either has to make-up or it is looking at a potential break-up.

Either Europe has a committed, stable, successful Eurozone with an effective firewall, well capitalised and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the Eurozone. Or we are in unchartered territory which carries huge risks for everybody.

As I have consistently said it is in Britain’s interest for the Eurozone to sort out its problems. But be in no doubt: whichever path is chosen, I am prepared to do whatever is necessary to protect this country and secure our economy and financial system.”

The full horror of what awaits us if Greece falls out of the euro in coming days is captured by the Guardian’s splash headline: £1,000,000,000, which is the suggested cost to the eurozone in lost output if – or more correctly – when it happens.

The Government is furiously filling sandbags to prepare for the moment, from advice to tourists trapped in a country where the cash machines have stopped working to the legal complexities of enforcing euro contracts with a country where it no longer exists.

The Prime Minister’s speech is the verbal equivalent of grabbing the Germans by the lapels and shouting ‘do something’. I sometimes imagine Dave and George Osborne as figures in Munch’s The Scream, clutching their faces, mouths open in a silent scream of horror as they contemplate what awaits the British economy – and their powerlessness.

FT splash captures the ‘growing alarm in London’. Dan Hannan in the Daily Mail compares the freedom on offer to slipping out of the ERM: you see what he means, but the scale of the respective events is so incomparable as to make it an unhelpful comparison. In Times, Camilla Cavendish uses her column to urge us to follow the money rather than the rhetoric when trying to decipher what’s going on in Europe. She argues that ordinary Greeks are moving their money and causing a silent bank run, concluding:

“What the money trail demonstrates is the fatal level of interconnectedness that means that political leaders cannot build a wall around their own country and sit tight.

The scale of debt is too large to be borne by individual countries: it is only manageable collectively. If Germany wants to keep Greece in the euro and to prevent other dominoes falling, it will have to stand behind some form of euro-bond very soon.”

The Times (£) leader column makes this point more firmly, arguing that now “Exit from the euro is essential and may now be inevitable.”

In the Telegraph, Jeremy Warner says politicians’ rhetoric about the euro is tearing it apart, urging David Cameron to use his speech in Manchester today to not “just to blame it all on the wretched euro” and talk about the underlying problem: debt.

The BBC’s Robert Peston is airing a show on BBC2 tonight at 9pm on the eurozone crisis. The film will be an attempt to put the crisis in the eurozone into its proper historical context.

The show will feature an interview with Benoit Coeure of the ECB, telling Mr Peston that:

“The crisis makes at least one thing obvious and that is we need more of Europe, we need the political union as the only way to save the stability of the euro”.


A interesting set of results have been returned from yesterday’s elections to the executive of the 1922 Committee with many of the executive positions going to the modernising 301 Group slate.

Conservative Home has a helpful colour coded breakdown of the results showing eight positions going to the modernising slate and four to the traditionalists. This is counterbalanced by the unopposed return of traditionalists Graham Brady and Brian Binley as Chairman and Treasurer respectively.

Conservative Home calls it “a change of generation” while the Guardian says it’s a “score draw” between opponents and supporters of David Cameron, using its leader column to conclude:

“The question that really divides the party is whether in the face of austerity it returns to an enhanced core-vote strategy of shoring up the right flank from Ukip by focusing on the traditional crime, immigration and Europe agenda, or whether to keep faith, despite the vastly altered circumstances, in Cameron’s modernising programme and anchor the party to the centre-right.”


Iain Duncan Smith has hit out at Steve Hilton’s request for £25bn more welfare cuts, saying “Steve’s gone totally rogue,” in the Sun.

A DWP spokesperson added:“We have already cut £18bn from the welfare bill. How does he imagine we can cut another £25bn? This is utter nonsense, the figure is ludicrous.” More details are available in the FT (£).


Mr Hilton’s war with the civil service also rumbles on, with senior civil servant Ian Watmore resigning in the face of the aggression.

The Times (£) has a source saying:

“What you are seeing is the pattern of behaviour by some Conservative ministers who simply don’t have an understanding of how to run a department. Michael Gove would be an example, Ken Clarke would not.

Rather than getting the Civil Service to work with them through force of personality, they are simply going to war with them. This is disrupting policy implementation.”

In the Telegraph, Sue Cameron attacks the idea, saying:

“Instead of blaming civil servants, the Coalition needs to employ political advisers who are media savvy and who will prevent ministers from taking bad policy decisions.”

She also suggests that Francis Maude might be pushing the idea as attempt to rehabilitate himself at the Jerry Can affair. If so, Mr Maude, it’s unlikely to work.


On a more frivolous note, Dave has been snapped with and Sam having a “date night” dinner at Oslo Court. It’s sparked a debate over whether he is entitled to take his wife out when William Hague is urging us to work harder. See the Telegraph for the details (and photos).


The SNP’s Angus MacNeil posted a picture of himself with the singer Engelbert Humperdinck last night.

@AngusMacNeilMP: meself and Engelbert … good luck in Eurovision i said 🙂

From the photo, it looks as if he’s about to start singing his classic “Please Release Me”.


Latest YouGov/The Sun results: Conservatives 31%, Labour 45%, Lib Dems 9%, UKIP 8%

Overall government approval rating: -37


In The Telegraph

Peter Oborne: What on earth is Britain doing trying to save the euro?

Sue Cameron: The Civil Service comes under fire from the Coalition but bashing the bureaucrats can only backfire

Leader: Nailing Labour’s lie that there is an easy way out

Leader: The boors in blue

Best of the rest

Steve Richards in the Independent: Loyalty and unity used to be Tory trademarks

Zoe Williams in the Guardian: So now we know whose fault the recession is. Ours

David Aaronovitch in the Times (£): Enough placebo politics. Vote for the geeks

Martin Kettle in the Guardian: D avid Cameron and Ed Miliband: two leaders so alike in their failure of nerve


Today: Theresa May will attend the G6 in Munich where the agenda will focus on protecting EU borders, North Africa and Syria, counter terrorism and fighting piracy.

10.15am: David Cameron gives a speech on the economy in Manchester

10.30am: Energy and climate change questions

10.35pm: Question Time from Cardiff featuring Queen guitarist Brian May, Peter Hain, Maria Miller, leader of Plaid Cymru Leanne Wood and Kelvin MacKenzie

What on earth is Britain doing trying to save the euro?

European leaders were driven by three motives when they embarked upon that ill-fated monetary experiment, the euro. The first was financial: they were set upon the creation of a global currency that was capable of competing on the world stage with the dollar. The second motive was economic. By eliminating exchange risks, they believed they would promote trade and deepen the single market.

But the over-riding purpose was, beyond question, political. The founding fathers of the eurozone were determined to use the single currency to promote political union. By doing this, they hoped to domesticate Germany, which had caused such chaos and devastation across the continent during the first half of the 20th century.

Noble though this project was, it is now possible to judge that it has failed on all counts. The euro has not mounted a serious challenge to the dollar, and it is no longer able to do so. Indeed, Europe is beginning to be held in contempt by the emergent powers of the Far East: hence the recent decision by China to hold off from purchasing any more euro-denominated debt, an overlooked reason why Italian and Spanish bond yields have soared in recent weeks.

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Prosecutors to detail the horrors of Srebrenica at Mladic trial

Prosecutors in the Hague are outlining their evidence of the alleged involvement of former Bosnian Serb military chief Gen. Ratko Mladic in Europe’s worst mass murder since World War Two, the 1995 Srebrenica massacre.

On the second day of the 70-year-old’s genocide trial, Yugoslav war crimes tribunal prosecutors will focus on the bloody climax of the 1992-95 Bosnian war, when Serb forces systematically executed some 8,000 Muslim men and boy in the U.N.-protected enclave in northeastern Bosnia and buried them in mass graves.

Mladic is accused of commanding Bosnian Serb troops who waged a campaign of murder and persecution to drive Muslims and Croats out of territory they considered part of Serbia. His troops rained shells and snipers’ bullets down on civilians in the 44-month-long siege of the Bosnian capital, Sarajevo.

He has refused to enter pleas, but denies wrongdoing.

On Wednesday, the defendant had an angry exchange of hand gestures with the families of massacre victims in the public gallery, separated by the bulletproof glass in the courtroom.

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