December 20, 2011

Britain, the IMF, and the world's richest beggar

'Get on with it and stop begging' (Photo: AP)

Euro rage is reaching new heights over Britain's latest outrage.

Our refusal to pony up a further €31bn we cannot afford, to prop up a monetary union that was created against our wishes and better judgment, and launched with the malevolent purpose of accelerating the great leap forward to a European state that is inherently undemocratic.

It is being presented as treachery, Anglo-Saxon perfidy, and the naked pursuit of national self-interest.

Let me just point out:

1) The UK never agreed to such a commitment in the first place. The line was written into the December 9 summit communiqué in an attempt to bounce Britain into handing over the money.

2) The UK does not consider the rescue machinery to be remotely credible as constructed.

3) The eurozone has the means to tackle its own debt crisis, if it is willing to use them. These include fiscal pooling and the mobilisation of the ECB.

As eurozone politicians never tire of reminding us, their aggregate debt levels are lower than those of the UK, US, or Japan. They are right. So get on with it and stop begging.

Euroland is of course entitled not to deploy eurobonds or the ECB if these mean a) a breach of the German constitution b) violate the ECB's mandate. But that is entirely their choice. Both the Grundgesetz and the ECB mandate can be changed.

It was EMU members who created this dysfunctional currency. They are now trying to shift the consequences of their error onto others rather than taking the minimum steps necessary to fix the problem at root.

If they are unwilling to save EMU by serious action – ie fiscal union – they should organize an orderly break-up.

4) The UK is willing to back more funds for the IMF, but only in line with our IMF quota and proportionate to other members around the world.

5) the UK budget deficit is dangerously high, again as critics never tire of pointing out.
Eurolanders want it both ways. They bask in their fiscal superiority, yet they demand an external rescue.

Excuse us benighted Little Englanders if we cannot quite see things their way.

6) The eurozone rescue does not in any case deal with the cause of the crisis, which is the 30pc intra-EMU currency misalignment between North and South.
It merely perpetuates a deformed system that is draining the lifeblood out of half Europe.
I always feared that Britain would somehow be blamed for the demise of monetary union. My nightmare is coming true.

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