A Panglossian Perspective on the EU summit

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In our turbulent times, it it reassuring to know that certain things remain unwaveringly true. One of those things is that regardless of any grand statements, national interests override supranational ones. Nowhere was this more in evidence than at the European Summit overnight. Interestingly enough, despite that, most of the major countries got their way and will not walk away unhappy.

Purists Germany stopped the ECB from actually solving the Eurozone debt crisis by letting it act as a proper central bank and prevented the ESM/EFSF from getting banking licenses of their own. The UK protected itself from a heavy extra burden of financial regulation in the City, a key driver of our economy, while not preventing the Eurozone from beginning the process of integrating into a more meaningful fiscal union with the real and necessary restrictions of national sovereignty required for a currency union to work. And the French got to maintain the pretence that they are the key diplomatic player in the EU, the power behind Germany’s economic throne, by loading the proposed treaty with so much of that financial regulation as to force the UK to veto an EU-wide treaty. And on an EU level, at least the Eurozone debt crisis has a bigger temporary sticking plaster to kick the can down the road a bit longer.

Let us be clear: Germany holds the Eurozone’s pursestrings and if any nation can be said to have got its way more fully than the rest, it is Germany. They have imposed their economic model on the rest of the Eurozone. It may not quite be an iron hand yet, but the velvet glove is certainly off. In the meantime, the EFSF will run concurrently with the ESM for about a year, which together with other resources pledged, brings the total amount of money in the EU bailout pot for profligate PIIGS to a bit over a trillion euros. That’s still not enough, really. Two would be nicer. But it’s not a bad sticking plaster – certainly better than the ones we’ve had so far – and might just be enough to calm the situation. Time will tell; it’s a little too early to judge that today.

The UK was forced to wield its veto. The usual suspects have begun hand-wringing about “isolation”, but as Terry Smith of brokers Tullet Prebon amusingly suggested this morning: “the UK as isolated as somebody who refused to join the Titanic just before it sailed”. To have signed the treaty would have subjected the City to a huge potential increase in regulation. Like it or not, the City contributes about 10% to our national wealth, a far greater percentage than any other EU country’s financial intermediation services. Add in financial services more generally, and the figure rises to about 1/3 of GDP. Even just considering the taxes it pays (yes, it does actually pay a lot of tax, despite what some would have you believe), that’s an important cash-cow for the UK government to preserve. Subjecting it to a new swathe of regulation is hardly conducive to profit, especially in such fragile times.

The French are very aware of this of course, which is why they insisted on including so much financial regulation in the proposed treaty. Unable to persuade the Germans to give the ECB proper banking powers, they were at risk of appearing impotent in the EU. And if there’s one thing that a French President with a looming re-election campaign can’t afford to appear, it’s impotent. As no other EU nation has as large a financial sector as Britain, it was easy for them to ensure that the other countries would not object; the impact of the regulations would be negligible to them. This ensured that either Britain would capitulate (handicapping one of its traditional strengths, benefiting France) or it would have to veto the treaty (allowing Sarkozy to frame the outcome as British isolation, boosting his domestic prospects).

The UK’s relationship with the EU will certainly now be very different to before. A veto, once wielded, is no longer a frightening spectre to either British PMs or our EU colleagues, but merely a tool. It will likely be used more frequently. I suspect the likely outcome will be a multi-speed EU, with the eurozone (and its likely future members) moving towards a more integrated political and economic union, and the UK and any other permanent non-eurozone members remaining in a looser alliance with the eurozone. The key thing the UK has to negotiate is the maintenance of a single market when it comes to no cross-border tariffs, minimising internal national subsidies, and the other key free trade tenets currently enshrined at an EU-level. Everything else can gradually be allowed to drift apart, which in the medium term will make it easier to begin cutting back on some of the more intrusive bits of current EU social and regulatory legislation.

It is undoubtedly in the UK’s long-term economic interests to remain part of the free-market aspects of the EU (although Channel 4′s relatively impartial FactCheck suggests its benefits may often be overstated). The challenge will be maintaining the UK’s free market relationship with the EU while the Eurozone members integrate further politically. Given the free market aspects are already in place, this should not be an impossible challenge. A delicated balancing act, certainly. But not impossible.

In the longer term, the UK can develop into a low-tax offshore gateway to the rest of the EU, with less regulation than the mainland, attracting global investment precisely because of that lower regulatory burden. A jumbo-sized Hong Kong, if you like. This would not be possible if the UK were part of a more integrated political, fiscal and monetary union with it. In the very long term, the balance may shift again. We cannot predict what the EU or the World will look like in 50 or 100 years. But for today, and for the short and medium terms, David Cameron did the right thing for Britain.

And funnily enough, leaving aside the relative sideshow of financial services regulation, the Eurozone may just have done enough to stave off imminent disaster too. Well, as the title suggests, I am an optimist.

Honey, I couldn’t be happier than if they were based on real grades

Hand-drawn (by one of the negotiators) diagram of the eurozone deal, via Reuters. Note the many question marks...

We have an eurozone deal. The huge sense of relief felt by worldwide markets was almost palpable in its intensity, with global indices soaring in unison.

Of course, it’s a massive temporary fudge with large blank spaces that need filling in over the next few weeks. And in itself it does nothing to address the underlying structural problems of the eurozone (more on that later).

But it’s a lot more than I expected last week, so I’m pleased that enough heads could be banged together to at least come up with something. More importantly, it really felt like some tough decisions had been made.

Which brings me onto the difference between substance and appearance, and the vital importance of psychology in bridging the gap.

The title of this post is taken from the grossly underrated mid-90s movie Clueless. For the uninitiated, Clueless follows Cher (Alicia Silverstone), a Californian high school girl with a talent for manipulation and a fondness for matchmaking. The plot is loosely based on Jane Austen’s Emma but is shrewd enough in its updating to stand strongly as a work on its own.

The title quote is spoken by her father, proclaiming his delight at her ability to deftly manipulate her way into getting higher grades than her academic ability deserved, by pairing up two of her hard-grading but lonely teachers, improving their mood, thus making them more lenient graders. Reality becomes be a malleable function of applied psychology.

The movie has a lot more of these satirical, bitingly-accurate little asides. For instance, when Cher is asked her opinion of violence on TV, she replies, “Until mankind is peaceful enough not to have violence on the news, there’s no point in taking it out of shows that need it for entertainment value”. If you’ve never seen the movie, perhaps dismissing it as fluffy/superficial rom-com, you should definitely watch it. It neatly dissects the 90s as Heathers did the 80s, except it does so with affection rather than disdain.

The eurozone deal is currently based on ephemera. It has little real substance to it, as the details of the bank recapitalisations, haircuts and EFSF expansions are yet to be fleshed out. But what it achieves is psychological; it draws a line in the sand around the problem. To paraphrase Churchill, it feels like the end of the beginning. And that may be enough of a psychological sleight-of-hand to persuade markets to react accordingly, which will then translate perception and appearance into reality.

The American investor Benjamin Graham is famous for saying, “In the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine”. What he meant was that day-to-day fluctuations are based on volatile emotion & appearances but over the years, profitable businesses with a future will outperform unprofitable businesses.

For the eurozone to profit from the breathing space granted by the psychological drama of today’s deal, they must turn around their core business: they need to remedy the structural problems of monetary union without fiscal union. There are signs this will happen. EU President Barroso is pushing for deeper fiscal integration within the eurozone. Essentially, the richer countries will gain some control over the poorer countries’ budgets in return for helping them fund their economic deficits. This would certainly help mitigate the structural problems, though of course no-one really wants to talk about the potential democratic deficit created by such a move.

On a more parochial level, the UK may potentially be able to get the best of both worlds, benefiting from a more stable eurozone while remaining outside it, and retaining relative economic independence while still being part of the EU single market. It’s an exciting, if unpredictable, situation. There is a saying, popularly though inaccurately attributed to an ancient Chinese curse, “May you live in interesting times”.

We are certainly doing that. Better try to enjoy it.

Rebuilding Greece

As global markets rise on the hope that the Eurozone may finally be mustering the courage to grasp the political nettle of the problems generated by a single monetary policy but multiple fiscal polices, it seems appropriate to post this photograph of the Parthenon being rebuilt. Taken during a recent break I enjoyed in Athens & the Ionian island of Kefalonia, the imagery of the Parthenon gradually being reconstructed, reversing the damage caused by years of neglect, resonates neatly with the wider challenge faced by the Greeks.

This was my first visit to Greece in many decades, and much has changed. Despite its current woes, it is undoubtedly a richer and more sophisticated country than I remembered. It has benefited from the influx of funds brought about by EU membership and the cheap borrowing costs it initially experienced as a Eurozone member. The debt has caught up with it and my personal opinion is that all the current austerity measures & bailouts are simply buying time to manage a more definitive restructing of the debt in due course. Call it a default if you prefer, for that is what it will be in effect, but it will be done in a contained way once the rest of the Eurozone has finally erected sufficient economic defences to calm any subsequent financial concern.

Greece itself faces a long period of reconstruction. It is a proud country, with a glorious past (some aspects of which I intend to blog about soon) but it must realise that many of its current problems are of its own making. Poor tax collection, profligate spending and overgenerous public sector conditions are an unsustainable and toxic mix.

I witnessed first-hand the anger and sorrow that the population are feeling. From large protest marches watched over by riot police, to individual stories of woe such as the young museum worker who hadn’t been paid in four months, Greece is struggling to transition. The risk is of an increasingly angry population causing severe unrest requiring military intervention, and a subsequent coup. This may seem outlandish speculation but it is only a few decades since Greece was under military rule. With the current political class widely reviled, it may not take much more pressure for the public to permit a coup.

The following images of the Parthenon show more of the restoration work taking place. I hope the Greeks can manage to rebuild their country with equal care.

Euro Farce

The Eurozone remains en route to implosion. But it’s a slow-motion train wreck.

I first blogged about this almost exactly one year ago, and again last November; I doubt today’s post will be my last. I won’t rehash the detail from those posts, but reading them in light of ongoing events proves their points.

Eurozone central bankers and politicians have consistently failed to definitively address the fundamental structural economic flaw generated by a unified monetary policy and nationally disparate fiscal policies.

That’s because there is no way to address this mismatch, short of unifying fiscal policy to a much greater degree than stronger countries’ economies (and voters) are prepared to accept. Or breaking up the monetary union, which Euro politicians and central bankers refuse to accept.

Paul Mason, BBC Newsnight’s economics editor, is just one of many journalists now publicly discussing scenarios previously considered verboten. His idea of Euro bonds would be one way of addressing the structural problem, but fails the litmus test, as I doubt it would be palatable to German voters. His final point, quoted below, paraphrases one I made in my earlier articles:

Whether we hit the barriers of political unacceptability or a market attempt to take down the ECB first is a question everybody hopes we never have to answer, but markets have staged attacks on central banks before.

Where I differ from his perspective, is that I hope the question is answered, and soon.

What is needed is clarity and finality, not ongoing slow-motion crisis and farce. Euro currency fragmentation will be intensely painful, but as with a sticking plaster, it’s best to act decisively to limit the overall agony. It’s been over a year since this crisis started, and the hope then was that temporising measures would buy enough time for economies to recover, and that growth would be enough to disguise the underlying problem. If it had happened, it would have worked.

It hasn’t happened, because what Greece, Ireland, Portugal (and Spain and Italy) desperately need in order to grow is rapid and major currency devaluation relative to other world currencies, to make their economies competitive again. They cannot get sufficient devaluation within the Euro, as the relative economic strength of the northern Eurozone countries keeps the currency as a whole moderately attractive internationally. It is falling in value somewhat, despite that, but not nearly enough to save the periphery. The ECB’s recent interest rate hike simply underlines how monumentally destructive the Euro is proving to the peripheral economies, not to mention their citizens.

Solving the problem demands decisive political action to either break up the Euro, or drive the Eurozone significantly towards  fiscal union. Forgive my scepticism but I doubt we’ll get either. Just more muddling through with temporary bailouts and other weak measures. In short, keeping fingers crossed, hoping it buys enough time for natural growth to kick in, and praying the market is too stupid to see what’s going on in the meantime.

Hmm, good luck with that…!

Equality is not Fairness

 

The impact of women on male insurance premiums

The European Court of Justice ruled today that it is illegal for the insurance industry to use of gender to determine risk.

It contravenes the European Convention on Human Rights (ECHR) which requires that wherever possible, each gender should be treated equally in order to prevent discrimination. The result of this attempt to mandate equal rights has led to the bizarre situation of the Court being forced to rule that an industry which distributes the cost of insuring risk according to the eminently fair principle of riskier individuals bearing more of the cost, can no longer do so.

And I doubt that anyone really expects the outcome of this to be that men’s car insurance premiums will fall by more than a token amount. Instead, the more likely outcome is that women’s rates will increase instead, making the population as a whole a lot worse off. The impact on the wider insurance industry will affect pension annuities too: men generally get higher rates because statistically they are likely to die before women. Now both sexes will get something closer to the lower female rate.

This ruling is a beautifully accessible example of the difference between equality and fairness.

Treating everyone equally – assuming that just because they are all human beings, they all deserve the same treatment – is fundamentally unfair. People are not equal. Fairness and justice should be about equitable outcomes, not equal ones. Confusing these concepts leadings to well-meaning but ultimately self-defeating creations like the ECHR that do a disservice to the population they are meant to protect.

Individual variation resulting in inequality and differential outcomes is not something to be feared. Fairness demands that our society is freely able to distribute its bounty equitably – albeit unequally – between individuals.

Now, preventing discrimination is vitally important. But stopping discrimination is about preventing inequitable outcomes to individuals because of their group membership, not to prioritise the group membership over the individual, which is what the ECHR does.

The Court had no alternative but to rule the way it did, because the ECHR is deliberately phrased to emphasise the gender identity sub-group rather than considering humanity as comprising a mass of individuals who just happen to fall into various sub-groups.

Membership of a sub-group should never lead to inequitable outcomes; gender (or religion, race, sexuality, and so on) should never be used as a reason to inhibit rewards to a particular individual. But membership of a sub-group should never be used a reason to mandate equal outcomes with other sub-groups.

The way to avoid this is to bypass the importance of sub-group membership altogether: value the individual instead.

Related Articles

• This insurance ruling trivialises human rights | Stephen Booth (guardian.co.uk)
• EU court bans insurance sex discrimination (foxnews.com)
• Gender case hits insurance costs (bbc.co.uk)
• “UK insurers face “large-scale adjustments” over ECJ gender ruling” and related posts (insurancedaily.co.uk)

An eye on the main chance: Britain in a future global economy

Summarising recent efforts by Citigroup and HSBC to peer into the crystal ball of global economic development, Ambrose Evans-Pritchard ‘s Telegraph article makes fascinating reading.

The two reports agree with the conventional wisdom of BRIC (Brazil, Russia, India, China) countries continuing their inexorable rise up the GDP league table, as traditional Western powers gradually slip down, but vary hugely in the degree of the change by 2050.

Citigroup projects a world heavily dominated by the East, with China and India together adding up to four times the GDP of the USA and Indonesia alone surpassing the UK, Germany, France and Italy combined. HSBC favours a more modest scenario of China taking the leader’s jersey from the USA, but then slipping back somewhat. The differing outcomes are largely due to variation in methodology between the two reports in how they account for demographic changes.

Living in the UK, I was impressed to see that even in Citigroup’s vision of Asian economic supremacy, we would be the sole EU country to retain a top 10 GDP ranking. This is mainly due to the UK’s population growth creating more workers to minimise the financial impact of an ageing population in a way that other EU countries cannot. Or as Evans-Pritchard cheekily puts it: “the UK faces a less disastrous ageing crisis than much of Europe… thanks to our unrivalled leadership in unwed teenage pregnancies.”

Of course, all modelling exercises are to some extent intellectual navel-gazing, especially when projecting so many decades into the future. Forecasting models get worse the more distant the outcome being scrutinised. Small errors in initial assumptions used are magnified, and microfissures in methodology become gaping crevasses.

But despite these caveats, it’s still fun to play in the sandbox.

The overall trend is one where the division between rich and poor will be less about which country you live in than about your access to capital and your skill-set. The middle-classes in currently advanced countries will face an inevitable squeeze in living standards, relative to the growing middle-classes of currently developing countries. World GDP will boom, but more so in the youthful large countries than the mature ageing economies. This will be politically difficult for the leaders of these older nations to manage. It may be good for the world as a whole, but individual countries will face a very different future with a different range of incomes than they’ve become accustomed to.

And the UK’s role in such a world?

For decades, the UK has worked hard to (often successfully) punch above its economic weight in world affairs. It’s done this through historic global diplomatic ties and through military expenditure. In the future, even if it slips to 10th in the economic league table, it will still gain position – in relative terms – compared its European neighbours.

By that time, the EU will have either sunk or swum its way through the current Euro debt crisis. It will be a looser alliance of free trading states with a more tightly integrated core; or it will be a closely-linked federated structure. And given events of the past month or so, it may well include elements of North Africa. The UK’s relatively thriving economy would give it a louder say than at present and that opens up intriguing possibilities. Would it be able to tilt the economic axis of the EU rightwards? Would it encourage transatlanticism? Or would it return to its historical roots and advocate a global approach to trade?

The relatively-thriving island of the UK could end up being surprisingly influential as a central broker in a world with disparate economic centres of gravity. A multipolar economic world (albeit with the relative heavyweights of the USA and China) represents an opportunity for vibrant middle-ranked countries to wield disproportionate influence that a world with just one economic axis does not. If the UK keeps an eye on the main chance, the future isn’t so depressing after all.

Related Articles

• Will ‘Chindia’ rule the world in 2050, or America after all? (telegraph.co.uk)
• Growth Forecasts Should Open Europe’s Eyes (online.wsj.com)
• London set for biggest boost in GDP growth says Citigroup (telegraph.co.uk)

Beyond the Tipping Point: preventing a global collapse

The fundamental principle by which the modern world works is that increased efficiency reduces costs and therefore quality of life increases as each individual can either afford more of what they like or they can step up to improved quality at the same cost.

This is the basic driver behind every business endeavour: the delivery of content that would be too inefficient in terms of overall cost to quality of life for an individual to provide for themselves, and for which they are therefore willing to pay another to provide to them.

This core function of any financial transaction is true regardless of technological level, historical era, or magnitude of transaction. It applies just as much to the wool trade of mediaeval England, as it does to a hedge fund in 2011; and to the purchase of a loaf of bread by a citizen in the Roman Empire, as to buying a house today. Even hunter-gatherer tribal societies apply this principle by dividing the hunting and gathering (and other tasks of life) between different subsets of the tribe, thus improving overall tribal efficiency. Communist societies are no different either, with the profit motive being abstracted into (and distorted by) a central authority, still existing through quota allocations. While there exists a limited amount of resources to be divided amongst a number of people, the drive for efficiency will always accompany humanity.

There is therefore a permanent drive built into society to increase efficiency as to do so increases the economic power of any given transaction. This is to the benefit of both the seller and the purchaser as both have potential to get more out of the transaction: more service gained by the buyer, and more profit accrued to the vendor.

The limiting factor to this activity is the stability of the mechanism by which efficiency is increased. For every step up in efficiency, there is an increase in complexity. A highly unstable mechanism becomes unpredictable, and so costs rise, negating the initial efficiency gain. Risks to the system occur when unstable mechanisms are implemented in an attempt to extract the efficiency gain (and so extra profit) before the system is stable enough to endure implementation. If this happens, the net cost to both parties actually increases: the buyer purchases a faulty item or service, and the seller has to fix the problem.

This is the root of moral hazard, the financial risk associated with implementing any new system. It is the loss of this connection between risk and return that concerned central bankers so much during the financial crisis (both with regard to the way debt was repackaged/resold and with the bank bailouts thereafter), and continues to ripple outwards in examples as diverse (but connected) as the risks attached to European sovereign debt levels and credit availability in the mortgage market.

A more prosaic example can be found in the recent discovery of toxic dioxins in German eggs used in various products in the UK. Here the system is the interconnected nature of the global food industry, and the efficiency gained by leveraging mass industrial processes to feed populations at a cost they will tolerate. Without this complex logistic web, food would be significantly more expensive. The flipside is that the when the system fails, the negative effect ripples outwards much more than it would have in an earlier era.

Technological advances drive efficiency gains, which lead to more refined and extended logistics chains, delivering more affordable products to more people, driving up purchasing power and so, quality of life. The challenge is how to ensure systems that are implemented to improve efficiency are also sufficiently robust to reduce the risk of systemic collapse to a tolerable level. In other words, how not to push the system beyond the tipping point.

The question is what level of risk is tolerable? Any logistics chain is inherently risky. Equally, surviving independently of a wider economic network would be a subsistence and lonely existence. Redundant systems (or their abstract corollary, the insurance industry) stabilise complex system, but carry their own costs and so are themselves prone to the same failings (viz. the failure of collateralised debt obligations/CDOs to protect the banks in the way they expected).

Understanding how complex and chaotic systems interact with each other will be crucial to safeguarding our ever more complex and interdependent society.

But even that does not provide a solution to the fundamental conflict between efficiency and stability. I wonder if such a solution exists?

The only possible theoretical way out I can think of would be a the equivalent of a perpetual motion machine: a way to get something for nothing, a lifting off the pressure on resources. Perhaps developing fusion power would allow that, at least for a while? Virtually free unlimited power would increase efficiency of every other system, though of course we would then be dependent on yet another fragile system (the fusion power generation network). Still, I think it no random coincidence that every single major world power is investing in that fusion research. Certainly, I can think of no other project that has unified China, the EU, the USA, Russia, Japan, Korea and India in common purpose.

Euro Crisis: Domino Rally meets High Stakes Poker

Ireland has now followed Greece’s example in accepting a bailout after acknowledging that it cannot continue propping up its failed “economic miracle”. This does not surprise me, and in fact I discussed the intrinsic problems of Euro earlier this year.

More detail can be found in that article, but the crux of my opinion is that currency/monetary union without fiscal union – and inevitable full political union – is completely unsustainable. The market will always identify countries of relative economic weakness within the Eurozone. When these countries had their own currency, they could allow the currency to weaken to compensate for that weakness, as well as setting an interest rate suitable to their own peculiar conditions. Being part of the Euro, they lose this flexibility as the Eurozone interest rate will always be set to favour the Eurozone as a whole (de facto the large economies of France and Germany) while still being unable to benefit from the perceived fiscal stability of those larger countries in the bond market.

There are only a handful of routes out of this structural crisis:

1. Blind luck/bluffing – this is the route the EU is currently desperately pursuing. They hope that by successively bailing out bankrupt peripheral countries, and so displaying confidence in the Euro system, they can ride out the storm, allowing the wider economy to recover in time to prevent a catastrophic collapse. Economically this is very risky, as contagion has already spread from Greece to Ireland and Portugal is next in the firing line. If Portugal falls, the much larger Spanish economy will be next in the domino rally and its economy is too large for a bailout without bankrupting the entire Eurozone. This first option is however politically the easiest option, requiring little more than inertia, and so is the EU’s preferred strategy.
2. Full fiscal (& political) union – if this occured, the financial problem would be solved at a stroke. It would be the equivalent of the USA being able to absorb a downturn in one state by relying on its overall country-wide credit rating. While this makes financial sense, it is politically impossible to do quickly, and so is not a realistic option. There is also the question of whether the general public of the Eurozone countries would wish it, but EU governments have historically worried little about this, so we can consider their potential resistance a mere trifle.
3. Break up the Euro into two zones, with two floating currencies – This allows quarantining of the weak peripheral Euro economies from the strong core. There would be a weak currency for the peripheral economies and a second, stronger one for the core economies. Over time, countries would be able to migrate from the weak currency to the strong one, once their economies truly stabilised. The EU would hate this option, as it would mark a significant reverse in overall EU project. There is also the question of whether it would work financially, as the weaker zone may simply bankrupt itself anyway and still come crawling for a bailout from the stronger zone.
4. Expel weak countries from the Euro - this would force them to revert to their national currencies. This would serve to separate the weaker economies in a more drastic way than option 3. It would have many of the same political and financial drawbacks, but would probably be seen as more financially credible, as well as providing a genuine incentive for high-spending debt-ridden peripheral Euro countries to finally curb their state spending.

It is difficult to see the future clearly, but my hunch is that if option 1 continues to be followed, Portugal will end up accepting a bailout within months. To use a bit of poker terminology, we will then be in a heads-up, all-in situation with Spain. If the markets call the EU’s bluff, and Spain is unable to finance itself, the bailout costs will cripple the EU for a generation and the sustainability of the Euro will be seriously questioned. Chances are, it would collapse.

If Spain holds the line, these questions may still be raised, but the financial imperative will be removed and the EU will continue to drift towards greater political integration, solving the longer term economic problem at the expense of national sovereignty.

Chancellor George Osborne declared earlier today, in justifying the UK’s loan to Ireland despite his long-standing scepticism of the Euro, that “I told you is not much of an economic policy“. This is true, but those of us who have shared his Euroscepticism and foresaw the problems of monetary union without fiscal/political union, will still be feeling regret that others did not see the situation in the same light. Incidentally, the drivers of the EU integration project have always recognised the need for both, though they have tried to downplay it for fear of scaring national electorates.

We’re entering the endgame. The future of the Euro hangs in the balance. Personally, as the UK remains outside the Eurozone and this mess will ensure we stay out of it for years to come, I don’t really care what the outcome is, as long as the decisions are made swiftly and with conviction. We’ll still be affected here in the UK regardless of Euro membership, of course; the Eurozone is a key trading partner. But as we’re outside the Eurozone, the damage can at least be minimised and absorbed nationally.

I just want certainty, one way or another; the current death of a thousand cuts is not good for the market.

Related Articles

• Ireland’s huge bailout brings the country only brief respite (guardian.co.uk)
• IMF and EU bail out Ireland amid fears of Eurozone contagion (guardian.co.uk)
• IRELAND BAILOUT: Government in crisis after coalition partner calls for election (dailymail.co.uk)

Who will be left to treat you when you’re sick?

As someone who left full-time NHS practice after specialising, this recent article caught my eye.

In summary, it points out that about a quarter of doctors who qualified in 2008, and who would now be eligible to begin their speciality training, did not do so. This staggering figure means that those doctors either postponed their careers or chose to leave the NHS or work aboard. Considering how much it costs to train doctors up to that level (5-6 years of medical school, plus two years working as foundation-year junior doctors), it also represents a massive waste of the public money spent on their educations.

There is no doubt that applying for speciality training remains competitive, as the article later points out, but the trend is very concerning. Already almost a quarter of doctors are not applying. If that continues, one would be forced to wonder about the quality of doctors who choose to remain.

What I found most amusing was the statement from the British Medical Association that “there has been little indication among junior doctors of significant issues”. This is laughable to anyone who has spoken to a junior doctor recently. There are so many significant issues: pay scales; the implementation of the European Working Time Directive; the increasingly abusive and impersonal way employers treat medical staff; the pointless bureaucracy imposed on doctors; the burden of current appraisal and upcoming revalidation procedures; the many inefficient ways of working that riddle most Trusts; and the general feeling of not being adequately valued by the organisations they work for.

The vocational aspect of the job has been eroded away over the past decade or two and what is left is a robotic bureaucracy. It is not surprising that so many rebel against living that way. Treat people as numbers, and they will respond by voting with their feet.

Looked at in that light, it is perhaps surprising that about 75% chose to stay and apply for speciality training. I wonder how many of them will do the higher training, and then leave later, as I did.

Related Articles

• Junior medics ‘leaving training’ (bbc.co.uk)
• Junior doctors spend ‘too long on admin’ (telegraph.co.uk)
• What is the EU doing to our doctors? (telegraph.co.uk)