An Inconvenient Interference

Politicians do not like democracy. It is an inconvenient interference in the running of the places they govern and reminds them, too clearly, that politicians are servants, not masters.  Continue reading

The Beginning of the End for the Dollar?

Russia recently passed a law which levies nearly $2.9 billion on Mastercard and Visa, in efect a charge for their continuing to be able to use their profit generating cards in Russia. The fee is supposed to be equivalent to 25% of their profits each year, but Mastercard and Visa say that the fee is more than their profits they earn by operating in Russia. Continue reading

Scottish Independence – What If..

I was listening to some Scottish people debate whether Scotland should become an independent nation. It struck me that the politicians in the debate mostly tried to reduce the argument into one of whether Scotland would be economically better off or worse off as an independent nation. The people who are not politicians were not buying into what the politicians were selling. Good for them.


I cannot see that the present proposals for an independent Scotland would make Scotland genuinely independent. I do not think a nation can be truly independent unless it controls its whole economic policy. The proposals for independence would enable Scotland to control most of its economic policy, but would tie Scotland to the most important and effective economic policy of the rest of the United Kingdom because Scotland would still use as its sole currency the pounds sterling.


For decades now monetary policy by control of interest rates has been the most effective lever of economic policy of governments everywhere. We have seen that the key problem with the euro is that different nations cannot set interest rates at levels that suit them; what suits Germany does not usually suit Greece. With interest rates in Scotland being set in London, as opposed to being set in Edinburgh, an independent Scotland would be dependent upon the rest of the United Kingdom for this major way in which governments can control, or attempts to control, the economy. Continue reading

How to Borrow Money and How to Repay Borrowing and How to Avoid Borrowing

In the United Kingdom the Bank of England base rate is a mere half of one per cent, the lowest it has been in modern economic times. If you deposit money with a large bank or institution you will get a rate of interest tied to that half per cent; it may be a few points higher or a few points lower, depending on how long you are prepared to trust the bank with your money. In any event it will not produce a real return or even keep up with inflation, which is running comfortably more than 2.5% a year. Continue reading

The Long Bank Holiday

After the longest bank holiday in Cyprus (and probably in Europe) the banks are open for business. People can draw as much as euros 300 a day in cash. There are controls to prevent the flight of capital out of the country, because who, in his right mind, would not cut his losses in Cyprus if he could and who in his right mind would invest in Cyprus in circumstances when he knows that (a) he is not permitted to get his profits of his investment out (b) the European Union has taken a set against Cyprus and is punishing Cyprus for economic problems created by the profligacy Greece and a business model based on that of Luxembourg and Switzerland? Continue reading

The Cyprus Bank Tax

When Adolf Hitler and his mob had invaded a small nation it was important to them to give their conquest the appearance of legality. They did this by getting the leaders of the conquered nation to sign a document, chasing them around the table or making physical threats if necessary. It seems old habits die hard. When I wrote about the proposed Cyprus bank deposit tax last Sunday, I believed the story put out by all the news media that this tax was approved by the government of Cyprus as part of a deal with the European Central Bank. It now emerges that the ECB had rather chased Mr Anastasiades, around the table, but Mr Anastasiades did not sign. He said he would sign after the Cypriot government had approved the tax. It now emerges that the tax was dreamt up by the technocrats of the ECB and the European Union, not by the Cypriot government. Continue reading

The Euro in Intensive Care

You can get used to almost anything. It may be that we get used to things because we are innately resourceful, or it may be that we get used to things because custom and time blunts the barbs of troubles, but we all of us get used to almost everything.

Sometimes an illness creeps upon you in very small steps that you confuse the disease with aging, and believe that you will always feel like this as you get older. There is a financial illness that afflicts the world today. Continue reading

Which is Scylla and which Charbydis?

In Greece the people are listening to final arguments about whether they should continue to use the Euro as their currency or abandon the austerity in the hope that in doing so they will abandon the poverty that has afflicted Greece since austerity measures were introduced. It is presented as a choice between good and evil by some or a choice that makes no difference by others. It is more likely a choice between Scylla and Charybdis.  Odysseus chose Scylla as being the least bad option. He lost some men to the sea monster but did not lose the whole ship to the whirlpool of Charybdis.
The problem for the modern Odysseus is that no one knows whether staying in the euro is Scylla or Charybdis. My feeling is that Scylla is leaving the euro: it will cause harm and problems but fewer problems than staying in the euro, but in the nature of things, we shall never know which route was the least dangerous.

Bailout, what bailout?

The euphoria over the EU deal to bailout the Spanish banks lasted just a few hours, as the market eventually understood that the “deal” showed more indecisiveness from the European Union. As a result share prices tumbled, the Euro became less valuable and countries like Spain and Italy are now borrowing at higher rates of interest that medium sized businesses pay for their money (if they can get it) in the United Kingdom. I rather suspect that the deal and the markets’ reaction to it will not encourage the Greeks to vote to support continued austerity. What is the point, after all, if you are better out of the euro than in it?

Huffing and Puffing to Blow the Euro House Down

When politicians do not know what to do, they hold a summit in the hope that the noise will be mistaken for action and the publicity of the event will mask the lack of ideas generated by it. The present meetings and statements about the crisis that is affecting Greece and the Euro is a case in point. There are no ideas except that the Greeks must make huge sacrifices to repay their debts. Continue reading