Greeks bearing debts

The euro was a bad idea in 1999, and it's a disaster now.

I have a long memory, and a thin skin, and often lie awake at night, grinding my teeth, reliving the insults born by Tories in our wilderness decades. I suppose it's too much to expect an apology from the politicians who were pro-Euro hysterics at our general elections, until quite recently? People like, ooh I don't know, Chris Huhne?

If we get rid of sterling and adopt the euro, we will also get rid of sterling crises and sterling overvaluations. This will give us a real control over our economic environment. (Chris Huhne, 2004).

Substitute "Greek drachma" for "Sterling", and that sentence reads really well now, doesn't it Chris? (Hat tip to Dan Hannan for a list of many similar, delicious-with-hindsight comments).

Setting Huhne's points aside, it's worth recalling the argument repeatedly made by those of us who didn't want to join the euro, because -- with respect to the Greek tragedy currently unfolding -- it was all so entirely predictable.

We said that a monetary union couldn't work, because a single interest rate for a continent of such disparate economies could not be suited to them all. Since the interest rate was likely to be set low to suit the productive Germans, it would spell inflationary doom for countries like Ireland and Greece.

No-one ever had an answer to the single interest rate dilemma. Part of the reason it was so compelling to most Conservatives (Ken Clarke, as ever, an honourable exception) was that we had lived through two examples where UK interest rates led to devastating domestic outcomes. The ERM fiasco of Black Wednesday is well-rehearsed. Less commented on is that we had all lived through what happened in the north of the UK in the 1980s, when an interest rate was necessarily set to control inflation in the south. If it's hard enough to make one rate suitable for a single state, it beggars belief that anyone imagined that a single rate could suit economies stretching from Dublin to Athens via Berlin.

As of course, it could not. The banking crises only exacerbated what was already evident: some countries had embarked on uncontrolled (by the ECB's central rate) inflationary bubbles of debt-funded spending. When the credit dried up, the crises set in. Now Greek government debt is worthless, and its people are rioting against the austerity measures imposed on them by the IMF, and the obvious route open to a country in such a terrible situation -- devalue your currency and hope for growth in exports -- is shut off from them, while they remain locked into the euro.

William Hague was derided in 2001 for likening the eurozone to being locked into a burning building with no exits. With apologies to the late, great Bob Monkhouse: they laughed when we said we didn't want to join the euro. They're not laughing now.

Not that being right in 2001 is any cause for cheer ten years later. In the morose phraseology of Douglas Carswell MP, we may have avoided the trap of monetary union, but we appear to have signed up for the accompanying debt union regardless. Still: leaving the euro must be Greece's least worst option. I know that exposure to Greek debt is worldwide, but (I'm sure an economist will tell me otherwise) would suffering that exposure be worse than throwing more good money after bad? Until which point?

Fans of the euro used to insist that it wouldn't, it couldn't be allowed to fail. I wonder how much of a soaraway success it feels to the people of Athens, today?

Graeme Archer is the 2011 Orwell Prize winner for blogging.

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Exclusive: Labour MEPs call for Jeremy Corbyn to resign as leader

Letter demands Corbyn's departure and attacks his office for "promoting" the work of the Leave campaign. 

Labour's MEPs have called for Jeremy Corbyn to resign in the latest challenge to his leadership. In a letter sent to Corbyn and leaked to the New Statesman, Glenis Willmott, the chair of the European Parliamentary Labour Party (EPLP), wrote: "We find it hard to see how any Labour leader can continue in that role if they do not have the support of their MPs." Corbyn yesterday lost a no confidence vote among the Parliamentary Labour Party by 176 to 40. The letter also attacked the leader's office for an "official Labour briefing document" which "promoted the work of Kate Hoey and Gisela Stuart for the Leave campaign."

The demand for Corbyn's resignation is described by sources as the "majority position" of Labour's 20 MEPs. Their stance could prove crucial if the leader is not automatically included in any new contest (a matter of legal dispute) and is required to seek 50 nominations from MP/MEPs (20 per cent of the total). 

The letter reads: 

"The European Parliamentary Labour Party met today for its first meeting since the referendum and concluded that we should send you this letter today.

"The EPLP has always striven to have a loyal and constructive relationship with our party leader, and we have worked hard to cooperate with you over recent months. However, we have very serious concerns in the light of Labour's defeat in the referendum campaign.

"Responsiblity for the UK leaving the EU lies with David Cameron. That being said, we were simply astounded that on Friday morning, as news of the result sank in, an official Labour briefing document promoted the work of Kate Hoey and Gisela Stuart for the Leave campaign.

"Labour's loyal and dedicated teams of activists had just spent weeks on the doorstep and on street-stalls making the case to remain in the EU and countering leave campaign arguments. Yet you and your office authorised a briefing that put the whole Labour campaign on a par with two Labour politicians who had been appearing for weeks alongside right-wing politicians, such as Nigel Farage and Boris Johnson.

"Separate from the referendum issue, it has become clear in recent days that you do not have the confidence of the Parliamentary Labour Party. We find it hard to see how many Labour leader can continue in that role if they do not have the support of their MPs.

"So it it with a heavy heart that we urge you, for the sake of the Labour Party and for the people in our country who need a Labour government, to reconsider your position as Labour leader."

Yours sincerely,

Glenis Wilmott MEP

On behalf of the European Parliamentary Labour Party 

George Eaton is political editor of the New Statesman.