The Fatally Flawed Eurozone

It becomes clearer by the day that the "eurozone" is fatally flawed.

The European Union is hopelessly mismanaged, its accounts have not been audited for over 17 years, they continue to demand increases in contributions in excess of inflation, they dream up more and more regulations that make member states less and less competitive with the rest of the world.

More significantly a number of member countries have over many years failed to balance their budgets - they have spent more than they can raise in taxation. They have had to borrow the shortfall and this shortfall attracts interest and therefore the amount they owe has grown larger and larger. The amount owed by a number of countries is now so large that it is virtually impossible for them ever to repay without the most stringent austerity measures leading to much lower standards of living and considerable hardship for the majority of people. The Greek debt is so large that banks are being asked to write off 50% of the money owed to them. European politicians are misleading us by saying that this is not a default by Greece. How can it not be? How many of our members would get a warm reception from their banks if they sought a 50% reduction in their loans or overdrafts?

Even with this massive write-down Greece will still owe so much that at the interest rates that it has to pay it will be impossible for them to keep their indebtedness from rising. But Greece is not alone. Italy, Portugal, Spain and Ireland now have to pay such high rates of interest on their loans that they face austerity measures shortly to be as stringent as those being imposed on Greece.

As we pointed out in our blog on 21st October 2011 the Euro is irrevocably doomed to fail. Supporting the Euro is a waste of taxpayer's hard earned money. Simply putting more money into countries that are hopelessly in debt is not the answer and writing off part or all of the indebtedness is an admission of the failure of the particular country to exercise sound financial management.

It was a serious error of judgment by David Cameron not to permit a free vote in the House of Commons on holding a referendum on the UK's membership of the European Union. The argument that we could not survive if we left the EU because 50% of our trade is with member countries is nonsense. Do you think Germany would not trade with us? How many German cars do we import? Do you think France would not trade with us? How much French wine, cheese and other products do you see on our supermarket shelves? Trade takes place both ways and if the price is right goods are sold and goods are purchased.

How long before the Greek Drachma re-emerges?


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