Saturday, May 14, 2011

This is news?

Anyone who has been remotely following the situation in the fringe euro economies will know that it is only a matter of time before Greece, Ireland and Portugal crash and burn. However, for the MSM – or, at any rate, The Daily Mail - there seems to exist only the "spectre" of a further round of bailouts, following the line taken from the EU commission.

In its latest round of "Armageddon for dummies", the paper is running the line that debt levels in bailed-out countries are "expected to soar significantly higher than first thought". Thus, the Janet & John narrative has it that all three countries are "trapped in vicious high unemployment levels, low economic growth and falling tax receipts, which will prevent governments from tackling their crippling national debts".

What is not explained, however, is how saddling these three governments with even more debt, at rates which are far from generous, is actually going to help them out - or how they are going to repay it. And in this, the Daily Mail does not seem to be able to link to its own pieces, such as this one, that talks gaily of default, a racing certainty when the Greek debt will be 166.1 percent of gross domestic product (GDP) by next year.

Despite this, one gets the impression from this current piece that the bailouts are being touted as alternatives to default, when in fact they can do little more than delay the inevitable and make the outcomes worse. The same line, incidentally, is being pushed by Reuters, presenting a highly distorted picture. Yet, despite the misleading headline, it looks as if Germany is getting ready to pull the plug.

The great concern is that, if default is on the cards, it is going to cost us dear. Finance ministers of EU member states are expected on Monday to approve a £68 billion "rescue" for Portugal, which will require an input of £14 billion from the UK – money which we haven't got and will have to borrow.

With a poll of investors putting the odds of Greece defaulting at 85 percent, Portugal cannot be far behind. We are thus facing the situation of having to borrow money to lend to basket-case economies, which are not going to be able to repay the debt, leaving hard-pressed British taxpayers saddled with even more liabilities.

But this is not the news the media wishes to give us. What we are getting instead is a pastiche – a scenario so vague and unthreatening that, when reality hits, it will come as a complete shock.

Then it will be news – but only after it is too late to do anything about it. One suspects then that it will be presented almost in terms of the unavoidable, no hints being given that the plug could have been pulled earlier, saving us all a great deal of grief.

One has to wonder, therefore, in whose best interest is this attempt to delay the inevitable. It is certainly not in the interest of the British taxpayer.