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LadyEllen -> RE: Rioting escalating in Greece, will the rioting spreak to the UK? (5/6/2010 5:07:00 AM)
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I dont think we ought to see what happened yesterday as anything more than what it was - a lawful protest that got out of hand with terrible consequences. People are angry and rightfully so, at being put to poverty to make up for the wheeler-dealing of bankers and the fraudulent accounting policies of the previous Greek administration. The protests will continue I'm sure, but it would require massive escalation from what happened yesterday before we could even consider whether the system was breaking down. The Greeks can be a wild lot but theyre clever enough to not risk an even more dire consequence on themselves by such escalation.
As for the global marketplace the effects of this one incident were marked - stock markets fell all over and the Euro dropped to its lowest level against the dollar in months. Because oil and oil products are traded and priced in dollars this had an immediate effect on fuel prices - already more than 10% higher over the month before - in Europe. This cost increase affects everyone and notably affects the industries which we are relying on to help pull us out of this mess. The 15c per litre diesel rise equates to 5c/km increased transport cost or €600-00 a month on an artic truck providing transport services. Customers cant pay this - hauliers cant accept additional losses (few were making money anyway) - it will be interesting.
Apart from this threat, the next problem we have (assuming the Germans approve the rescue of Greece and put themselves into potential problems) is whether the rating agencies do to Portugal and then Spain and maybe Ireland and the UK what they did to Greece. The Greek rescue is at the limits of the abilities of the Eurozone - it might just be possible to throw a lifeline to Portugal or Ireland too, but if Spain needs rescue then all bets are off. The UK meanwhile is on its own apart from the IMF. Meanwhile there is disturbing talk of Italy being downgraded too - that would be a disaster beyond rescue in its own terms, let alone with the rest taken into account.
What follows from such nightmare visions is simple - no possibility to borrow money to fund social welfare, withdrawal of all forces from worldwide conflicts (not only unaffordable in simple terms but impossible to fund), all trade and commerce stymied - including the import of food worldwide and gas from Russia, mass unemployment and so civil unrest as millions find themselves with nothing much left to lose and more to gain from challenging the situation. At least the troops will be at home to maintain order -they and the police will be the only public services receiving pay rises.
Much hangs on our election today. The markets want a Conservative regime to take power and do what they did in the 80s and 90s - cut spending, raise taxes and put the big picture economy back on track - and this (again) with no regard to the social consequences on ordinary people and disinterest as to whether this provokes a serious recession prior to recovery. Nearly everyone I know wants a Lib Dem/ Labour coalition - the same drastic cuts and tax rises are necessary to restore national fortunes but over a longer period that doesnt wipe out millions in the process just to satisfy the markets. Either way it will be bad, but hopefully, as long as we can maintain the confidence of the markets (on whose teat we are utterly reliant) the latter should be better for everyone.
E
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