Only A Matter Of Time

Reports from Reuters suggest that Moody’s rating’s agency has significantly cut Portugal’s credit rating and claims that the country will require a second round of bailouts to secure its finances.

Negotiations over the latest Greek bailout seem to be running into great difficulties, making Portugal’s financial outlook appear far from certain. At the moment the target seems to be the avoidance of default – but as each day passes and the crisis grows deeper then the outcome seems increasingly certain. Once again, it is not a question of if, but when.

Indeed, it could be even sooner than we expect. As the BBC reports, the legitimacy of the bailouts is being called into questions at the German Constitutional Court which will be examining their legality under German law. As Daniel Hannan observes, their legal standing is hardly difficult to ascertain though:

Let me give the judges a hint. All they have to do is look at Article 125 of the Treaty:

“The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State.”

Pretty open and shut, no? Indeed, no one in Brussels seriously tries to claim that the bailouts are within the rules. It is precisely because the bailouts are illicit that the the Treaty is being changed: rather than amending its behaviour to comply with the law, the EU proposes to amend the law to comply with its behaviour.

In reality, the likelihood of the German Courts upholding the letter of the Constitution is rather slim. Their record in this department is not exactly exemplary, given their relatively recent and enlightened decision on German compatibility with the Lisbon Treaty.

As for the Portuguese, like Greece and probably this country too, their days are numbered. Eventually the money is going to run out and even the EU elites will have to give up on the bailouts. It is at that point that we enter a very dangerous period of history.

Public Banking Enquiry

David Cameron has today called for a public inquiry and investigation into the problems with the regulatory framework that led, in part, to the recent banking collapse and economic crisis.

An intelligent move by Mr Cameron, though it did take him some considerable time to get around to it seeing as others had been asking for an inquiry months ago.

However, even if Mr Cameron does get the inquiry he wants, the report may not come soon enough. Already, the great and the good in Europe are pressing ahead with plans to pass the regulation of all financial markets and hedge funds onto the European Union’s undemocratic institutions.

Although it was entirely predictable that the EU would use the financial crisis (which they played their part in creating) as a means to further their process of political integration and ever closer union, it would have been helpful if, just for once, they ignored their political project and attempted to understand the causes of the regulatory problem they are supposedly trying to solve before legislating to correct it in the way they are now.