It feels like August 2008 all over again. Thin markets, sharp movements in stock prices and credit markets. Europe’s leading bank shares slumping by up to 10 per cent. The world’s financial leaders on holiday.
The bigger picture here: that the speculators piling in against Italy do not believe that Germany will want or can afford to write a cheque for an economy as big as Italy. It is a test of wills. The end game could well require that the eurozone bailout facility be extended to a trillion or two euros.
George Osborne’s new communications mantra is that Britain is a “safe haven in a storm”, that Britain is “stable”. To my occasionally cynical mind this seems to be a tacit admission that the Treasury recognises it has little to boast about so far as regards the economic numbers. The best that can be hoped for is stability. Stability is better than chaos. And if stability means austerity and that means low growth, than for the moment, so be it.
The Chancellor of the Exchequer is “absolutely not for turning”. He did actually say the words to me, fully conscious of their historical resonance.
So the economy hasn’t really grown since the end of September. Forget the snow, forget Wills and Kate, park the tsunami. The underlying picture is not of sluggish growth. It’s no growth.
“I awake in a Europe that is still a continent, but which appears to becoming a country.”
The introduction of a eurobond would solve the eurozone debt crisis, blogs Faisal Islam – and would lead to “the phase fiscalisation of Europe”.
Channel 4 News’ Economics Editor Faisal Islam says we should not write-off the European Banking Authority’s stress tests just yet.
Faisal Islam unpicks the peculiar government response to inflates energy bills.
“You could call this the Great Stagnation, you could call it the Disastrous Decoupling, you could call it Growth without Gain. What it definitely is, though, is deeply bad news for a massive swathe of Britain.”
Faisal Islam blogs on how the British economy did officially shrink in the last quarter – by a fraction of a per cent.
Faisal Islam blogs on the expected rise of interest rates, and asks where now for the Government’s Plan B?
Almost entirely, the institutions that lent money to the RBSs and HBoSs and Northern Rocks, and the Irish banks, that was then mislent, have got away scot free. But according to this Irish Times article, the IMF and EU might be about to change things with a “bail-in” of such creditors.
Our Economics Editor reflects on yesterday’s tumultuous events in Dublin and warns of an unpredictable time ahead for Ireland and Europe.
Gary Gibbon
Our Political Editor recalls the last time the Treasury got involved in a banking bailout – and wonders if there’s another reason George Osborne favours Ireland.