It is a fair guess that the European Central Bank is seriously alarmed by an apparent u-turn in Berlin on International Monetary Fund help for Greece. As the FT is reporting, an IMF bail-out is now not being ruled out, if only because German law and public opinion might prevent a European solution.
An IMF rescue would amount to a big rebuff for the ECB, which has repeatedly warned against any involvement beyond technical assistance. Its objections are partly about prestige: the fund’s involvement would suggest the eurozone was incapable of resolving its own problems. But the Frankfurt-based central bank has other, practical objections. An IMF bail out would involving surrendering control over the crisis, which would reduce the European Union’s influence over events in Greece. There is also the question of whether the IMF would be able to provide sufficient funding to solve Greece’s problems. If it had to ask eurozone countries for additional help, we would be back at square one.
Breaking Views’ Wei Gu has a must-read piece out examining who controls the currency. Tip: it’s not the People’s Bank of China, described as a ‘paper tiger’.
The Chinese central bank comes 27th in an official list of 28 ministries, behind the Family Planning Commission and only ahead of the National Audit Office:
The past two years of public finance figures have been pretty grim for Alistair Darling. Lows have included, busting unbreakable fiscal rules; watching borrowing reach a peacetime record; and accepting Britain’s debt is no longer internationally respectable. But with 11 months of the financial year gone and six days before the Budget, the chancellor now appears to have choices.
Central government tax revenues are down 6.2 per cent compared with the first 11 months of 2008-09. The Treasury thought they would drop by 7.2 per cent. In a full year, this gives the government about £5bn to play with. Spending is also growing slower than planned, but there might still be a March splurge as departments know the axe is coming down soon.
We all hear a lot about the limited growth opportunities of the PIGS – Portugal, Italy, Greece and Spain and go-go growth in the BRICs – Brazil, Russia, India and China. It’s a shame, therefore that the PIGS are far more important for UK exports than BRICS.
A shame, but true. Britain exports twice as much to Spain as to China, for example. Here is the chart.
The better news – though it is too late for this recovery – is that the export shares are moving slowly but consistently towards BRICs from PIGS – below is that chart: