Saturday, January 09, 2010

Greece shows us one potential future tragedy for the UK

The Greek Socialist party won their recent general election on a set of blind refusals to accept reality that look a lot like Gordon Brown's refusal to own up to the staggering debt crisis he's created.

Their chickens are now coming home to roost very quickly indeed.

There is an ongoing debate in the UK about spending plans not adding up. Labour tried to claim Conservative plans don't add up - by making them up from Labour figures and with highly questionable use of civil servants time. Its of course laughable to take a lecture on this from Labour, but they know that - they are just trying to create a sense of general despair out of fear uncertainty and doubt.

Until the snow coup this week Labour were again in denial about the need to cut the public sector budget to reduce the deficit ( they are not even targeting reducing debt due to an economists trick of expecting GDP to grow so that whilst debt may expand or stay stationary as a proportion of GDP ).

Now Alistair Darling seems to have won the concession, extracted from Gordon Brown over the barrel of this weeks events, but he's sticking into the carry on digging till the debt hole till after the election strategy.

My guess is that Labour are now going to have to go long for the general election, and the risk of a currency/gilts crisis is now very real - and Darling knows he has to signal to the markets that Labour are lying to the electorate just to win votes (at least that line's credible), but will pay back the creditors when returned to power.

So perhaps Labour, as they are now reconfigured , may make some vague future promises in the budget they still claim to want to stage. But a few weeks before a general election it will be a purely political affair that makes the PBR look like an exercise is selfless statesmanship.

But still the bills must either be paid, or no more money will be leant. The UK is now reduced to its ability to borrow more money to put of facing up to the structural deficit Labour has run for almost a decade.

I imagine their will be riots and violence in Greece, and wouldn't rule out the same thing here.

1 comment:

James Higham said...

The currency crisis is only being staved off artificially at the moment. We're dead meat later in the year.