More money for bailouts
Parliament voted in July by 274 to 246 to increase Britain’s contribution to the IMF by £9.3 billion. Many Labour MPs were “unavailable” or abstained, although their party recommended voting against. The IMF will use this money to fund futile bailouts of eurozone countries. The IMF told the EU to end its “unproductive debate” over debt restructuring and to integrate faster and more deeply, an unprecedented intervention in EU affairs.
The European Central Bank warned that it may remove 50 billion euros in liquidity from Anglo Irish Bank and Irish Nationwide if the Irish government forces their bondholders to take losses. The ECB backs bondholders and not people, or even governments.
On 8 July, the ECB raised interest rates to 1.5 per cent, even though the eurozone is deep in economic trouble. Even Germany could only grow 0.1 per cent in the last quarter. ECB President, Jean-Claude Trichet, hinted it may soon impose another rise.
Expensive for Italy
On 11 July, Italy’s cost of borrowing reached its highest point for nine years. Eurozone finance ministers proclaimed their “absolute commitment to safeguard financial stability in the euro area” – with no idea how that might happen.
Since they joined the euro, unemployment has doubled in Greece to 16 per cent, more than doubled in Spain to 20.7 percent and more than tripled in Ireland to 14.7 per cent. Meanwhile, the Centre for Economics and Business Research says that if Italy and Spain try to pay back the debt, they will have to cut their people’s living standards by 19 per cent and 13 per cent respectively.
Nick Clegg said on 8 July, “It’s not my role, or the role of the British government, to predict the future of a currency union we’re not a part of.” His government has anyway decided to back full fiscal union for the 17-nation eurozone. ■