Some Chicken, Some Neck

That phrase, coined by Winshton back in the dark days of World War 2, came readily to mind when I saw that there has been yet another tirade against the European single currency, or Euro, this time in the right leaning land of make-believe that is ConservativeHome.

Messrs Montgomerie and Isaby have published a piece by North West Leicestershire Tory MP Andrew Bridgen, who pitches the unequivocal and memorable line “the Euro was a political project that was destined to fail”. In case anyone missed his message, he then says “The Euro project was always doomed to failure”.

Bridgen, sadly, does not have the soundest of grasps on the countries on which he is passing judgment. He claims that Portugal “has had a socialist party Government for most of the last two decades”, while not realising that the PS is a socialist party in name only: It is very much a mainstream Social Democratic party.

He also deviates from his subject by throwing in attempts to frighten his audience: there are “suggestions” and “rumours” of new taxes, and VAT being “taken directly”, which it isn’t going to be. He also confuses a loan guarantee over the Portuguese bail-out plan with an actual contribution.

What may happen in the various Eurozone economies I do not know. But I’m damn sure that Andrew Bridgen doesn’t know any more. He has no reason to suppose that measures will not be taken in the supposedly weaker members of the Eurozone to deal with their debts. And he fails to float the idea that there may be a so-called “haircut” for some of the debtors in what will amount to a debt restructuring.

This will not come as a surprise to those lenders who are lower down the food chain than the ECB and other Governments: that is why interest rates have been so steep for some countries recently. As the saying goes, on the risk part, it’s “priced in”. My feeling is that the haircut will come sooner rather than later. Look to Greece and Ireland first.

In any case, the markets do not share Andrew Bridgen’s pessimism: at the end of last week, the Euro was trading at over 88.5 pence, and over 1.48 US Dollars. As Winshton might have said, shome project, shome failure.