Debt forgiveness and the €uro



Katie Price – no, sorry, that’s a Freudian slip – I mean Vicky Price, estranged wife of climate criminal Chris Huhne, has come up with her economist’s take on the €uro crisis.  She says that the Eurozone’s indebted economies can never pay off their debts, so that the only way to get the show back on the road is debt forgiveness. 

In a way, she’s half right.  If you lend someone some money, and they then effectively go bankrupt, there is simply no point in pursuing them further.  Can’t pay, won’t pay.  There comes a point when further collection efforts are a waste of time, and you have to accept that it’s a bad debt, and write it off.  That’s what Vicky Pryce is advocating, although “debt forgiveness” sounds so much more compassionate than “bad debt”.

But it’s only half of a solution.  The give-away is that phrase I used earlier – “getting the show back on the road”.  Because if we leave the €uro in place, it’ll be business as usual.  So the intrinsic imbalances of the single currency will simply reassert themselves over time, and in ten or fifteen years we’ll be going through the €uro crisis trauma all over again.  Indeed there’s an element of moral hazard here.  If the Club Med countries get the idea that they can run up unsustainable debts and then look to be “forgiven” – bailed out – by their creditors, they have every incentive to do the same again.

No Vicky.  Debt forgiveness would be nothing more than a painful palliative.  It does seem that supporters of the EU and the €uro want to maintain their reckless currency experiment, at any cost to the economies involved.  It is as if an oncologist declared that he was going to save the cancer, even if it killed the patient.  A currency is not an end in itself (although of course the €uro was little more than a political gesture).  A currency exists to facilitate trade and exchange.  It is a working tool which is necessary to deliver a successful economy.  If a badly designed currency clearly fails in that objective, as the €uro is failing, then there is no point in throwing good money after bad.  It needs to be dismantled, and a new solution found.

It’s an unappealing feature of the European institutions that they can never admit to failure.  Over and over again, they go for a sticking-plaster solution when radical surgery is required.  Their recent “back-loading” initiative with their failing Emissions Trading Scheme is a case in point.

A recent study from a team led by Professor Jaques Sapir at L’École des Haute Études in Paris concludes that an orderly dissolution of the European currency would offer major benefits to Club Med countries, including Spain, Italy and Greece.  I find it interesting that this analysis comes not from some eurosceptic Anglo-Saxon think tank in the UK, but from the heart of one of the most “European” countries in the EU.  It is time that the apparatchiks in Brussels faced reality.

And I know you were looking for a Katie Price photo.

Katie Price third marriage

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7 Responses to Debt forgiveness and the €uro

  1. Chris Huhne clearly has a thing for women who look like men, and we all thought he had chosen Vicky Price for her intelligence,,,it appears not! The second Price could perhaps have managed a more intelligent solution, but if not, at least she’d have been more interesting to observe as she struggled with the problem

    • MartinW says:

      Your first sentence, EUtopian phobe, is unpleasant, unwarranted and has nothing to do with the topic. I hope Roger Helmer will remove your comment as soon as possible.

  2. borderside says:

    Full marks again for your analysis of the Euro situation .
    Martin W re EUtopian phobe’s remarks . Get a life and stop being so sensitive ! Sticks and stones etc., etc . Too many people these days taking umbrage over nothing .

    Jim Hutchinson .

  3. David says:

    Ill go with your take on this Roger rather than the ex cons.
    There, a bit more naughty mischief for some to rail at.

  4. ex Expat Colin says:

    I agree with V. Pryce, simply because the figures outstanding and continuing are catastrophic. I suspect nobody really knows the bounds of this extremely serious error.The EU are primarily causal and continue to be with continuing attraction to the central area.

    The DT (Ambrose E Pritchard) has it largely and the figures I cannot verify, but at the levels expressed appear (and are) to be horrific to say the very least. Its damned dangerous.

    What I would like to hear is that the Club Med states tell the EU et al to go away because they cannot pay – and won’t pay. Will the EU threaten apart from the Cyprus template ? Can it and how? When does the EU Army walk in for instance? Hitler missed it really.

    If it does come to conflict (armed intervention), I hope that the UK Gov (any colour) does not get into the ad hoc killing and maiming of our young people. As is their ever want.

    The record is really v. p*ss poor ranging from EU to Afgan. Meanwhile sleep safe in the knowledge that the whole BS has to surface somewhere.

  5. Emily says:

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