As you might have noticed this has caused some problems recently. Spain has a trade deficit of 10% of GDP, had a huge housing boom and now a huge housing slump. The Irish economy had an interest rate much too low for its own good for many years and similarly had a boom and a slump. Other countries (say, perhaps Italy, certainly Germany for a couple of years) had, in the same time period, interest rates that were too high for their domestic economies, thus stifling growth.

As an economist would put it, the eurozone is not an optimal currency area. And if that small number of countries isn’t such an optimal area then there’s no way at all that the entire world is.

In fact, there are many who would argue that the events of the 1980s showed us that not even the UK is an optimal currency area.

The reason I simply laughed is because these points are blindingly obvious to anyone with even a passing acquaintance with the facts. I assumed you were joking precisely because I assumed you knew such things.

That you now seem to insist that it was a serious suggestion isn’t perhaps the wisest of moves on your part. You’ve revealed that you simply have no idea what you’re talking about.

Better to be thought to be joshing than that, eh?

Cheers John

Bwahahahahaha.

Mr. Makara, you really do tell some good ones. For a moment there you had me going, thinking that you were serious.

Then look at where the regulators have failed, etc in the failure to regulate CDOs properly.

Markets are only human, and so at some point will fail and require intervention.

To talk about having ‘absolute confidence’ in a currency is hocus pocus. There will always be an exceptionally small chance of something going very badly wrong (read Taleb’s ‘Black Swan’, the book de jour apparently). Floating exchange rates in fact manage this risk, by allowing investors in foreign currencies to express their relative confidence in different currencies and in so doing efficiently provide information about weaknesses in currencies. The same goes for shares.

All this talk of world central banks, world currencies, and a new economic order will not help. They will be run by politicians, who will regulate. Seeing how regulation has a large part in this mess, you now propose extending this regime to the entire world! I would rather trust my prosperity to the market than to politicians and regulators. Your proposal stinks of Dirigisme and Socialism.

1 Co-ordinated, global base rate drop, no effect, 3 M LIBOR spread has actually gone up. Central bank base rates now irrelevant, as is MPC.

2 No bank is going to loan money to an entity that will be destroyed in the coming recession, regardless of how much cash [sorry, I mean liquidity], you stuff in it.

3 Our government debt will shift up from £600 billion to at least £1100 billion. It will actually be about £1800 billion, but government accounting will massage this number down for voter consumption. Unfortunately, they will not be able to hide it from the Treasury bond and currency markets.

4 The ONS will have to find new ways of inflating the GDP number. That laptop you bought recently for half the price of the last one you got, will be counted at double what you payed for it for GDP purposes. (It does twice as many things so it is obviously worth twice as much to you)

5 Inflation will be recorded at some unbelievably low figure; because, ONS will assume you are now buying Tesco Value beans instead of the brand leader.

6 We will bring home our troops to quell Public Sector strikes. The government will find a clause in the Terrorism Act to use on the trade unions. Probably the same one they used on Icelandic banks.

- David.

Problem with Paulsons plan, addressing the issue of effectiveness rather than constitutionallity or legality, was and is that the plan does not address the underlying problem – Where are the losses in the banking system – who has them and what are the magnitude of the losses. Rather the plan tried to cover up the liabilities by squirting cash at the problem.

Almost everyone knows that Benanke is nicknamed Helicopter Ben because several years ago now, he made a speech saying there was no problem the Fed couldn’t address by printing more money.

Ben Benanke and Paulson have for some time been dropping US$ from the sky, we can see how futile and counterproductive that policy has been.

David Davis – Michael Fallon – Bill Cash and John Redwood NOW please !

Euro policy agenda number 38 –

We’ve got a committee working on delivering serious proposals based on sound economic principles to the British people at the forthcoming election, and that report will be what we base our policy on as to what we ask the people to VOTE for.

It will be chaired by Ian Duncan Smith !!

At the moment it looks likely we’d be wanting to rejoin EFTA and stick the Federalisation of our country up the Euro bum at the next election which we will WIN because we are the only party which cares enough about protecting our democracy, unlike Labour and the Liberals who want to sell us away.

Come on people – New direction and new focus is required to take back the political ball, back to where it belongs – The people and our party !!!

We must show “LEADERSHIP” .