European Commission wants to take control of financial regulation

A report by the European Commission has recommended that the banking systems in EU member states should be supervised by an EU-side regulator.

The report says that the banking system is too complex for national supervision and recommends that an EU organisation should be set up to supervise all the national banking systems at the same time with more involvement from the EU Central Bank.

There is no indication as to how a single body supervising the financial systems of 27 countries, all with their own rules, regulations and priorities is less complex than the 27 countries having their own financial services regulators supervising their own financial systems according to their own national laws and priorities.

The reason is quire simple, of course - the European Commission doesn't really believe that a pan-EU financial services regulator will be efficient, it's just using the recession as an excuse for a power-grab.

If the EU wants to set up a financial regulator, they should start by regulating their own finances. Maybe then they'd be able to get their own in-house auditors to sign off their own accounts instead of writing them off as fraudulent every year.

European Commission predicts 1.9% shrinkage of eurozone economy

As a general rule, it isn't the done thing to mock the afflicted but in the case of the EU I think we can make an exception.

The European Commission has predicted that the eurozone economy will shrink by 1.9% in 2009 and will grow by only 0.4% in 2010. Estimates for the UK economy range from anywhere between 1% shrinkage to 2.9% with the economy predicted to return to full growth in the second half of 2009.

Of course, it's the Tartan Taxman that is doing the predicting for the UK economy so it needs to be taken with a pinch of salt but even if the UK were to experience the full 2.9% shrinkage of the economy, the early return to growth will put the UK on the road to recovery that much earlier.

Over the last week, the Euro has dropped against, amongst others, the Albanian Lek, the Angolan New Kwanza the Cuban Peso, the Gambian Dalasi, the Kazakhstan Tenge, the Moldovan Leu, the Rwandan Franc, the Somali Shilling, the Tongan Pa'anga and the Zambian Kwacha (source: oanda.com). In fact, the only currency the Euro seems to have rallied against in the last week is the Zimbabwean dollar which went from €21.5m to the Z$ to €22.8m to the Z$.

Telegraph: Monetary union has left half of Europe trapped in depression

Monetary union has left half of Europe trapped in depression

Events are moving fast in Europe. The worst riots since the fall of Communism have swept the Baltics and the south Balkans. An incipient crisis is taking shape in the Club Med bond markets. S&P has cut Greek debt to near junk. Spanish, Portuguese, and Irish bonds are on negative watch.

Dublin has nationalised Anglo Irish Bank with its half-built folly on North Wall Quay and €73bn (£65bn) of liabilities, moving a step nearer the line where markets probe the solvency of the Irish state.

A great ring of EU states stretching from Eastern Europe down across Mare Nostrum to the Celtic fringe are either in a 1930s depression already or soon will be. Greece's social fabric is unravelling before the pain begins, which bodes ill.

Each is a victim of ill-judged economic policies foisted upon them by elites in thrall to Europe's monetary project – either in EMU or preparing to join – and each is trapped.

As UKIP leader Nigel Farage put it in a rare voice of dissent at the euro's 10th birthday triumph in Strasbourg, EMU-land has become a Völker-Kerker – a "prison of nations", to borrow from the Austro-Hungarian Empire.

This week, Riga's cobbled streets became a war zone. Protesters armed with blocks of ice smashed up Latvia's finance ministry. Hundreds tried to force their way into the legislature, enraged by austerity cuts.

"Trust in the state's authority and officials has fallen catastrophically," said President Valdis Zatlers,
who called for the dissolution of parliament.

In Lithuania, riot police fired rubber-bullets on a trade union march. Dogs chased stragglers into the Vilnia river. A demonstration outside Bulgaria's parliament in Sofia turned violent on Wednesday.

These three states are all members of the Exchange Rate Mechanism (ERM2), the euro's pre-detention cell. They must join. It is written into their EU contracts.

The result of subjecting ex-Soviet catch-up economies to the monetary regime of the leaden West has been massive overheating. Latvia's current account deficit hit 26pc of GDP. Riga property prices surpassed Berlin.

The inevitable bust is proving epic. Latvia's property group Balsts says Riga flat prices have fallen 56pc since mid-2007. The economy contracted 18pc annualised over the last six months.

Leaked documents reveal – despite a blizzard of lies by EU and Latvian officials – that the International Monetary Fund called for devaluation as part of a €7.5bn joint rescue for Latvia. Such adjustments are crucial in IMF deals. They allow countries to claw their way back to health without suffering perma-slump.

This was blocked by Brussels – purportedly because mortgage debt in euros and Swiss francs precluded that option. IMF documents dispute this. A society is being sacrificed on the altar of the EMU project.

Latvians have company. Dublin expects Ireland's economy to contract 4pc this year. The deficit will reach 12pc of GDP by 2010 on current policies. "This is not sustainable," said the treasury. Hence the draconian wage deflation now threatened by the Taoiseach.

The Celtic Tiger has faced the test bravely. No government in Europe has been so honest. It is a tragedy that sterling's crash should have compounded their woes at this moment. To cap it all, Dell is decamping to Poland with 4pc of GDP. Irish wages crept too high during
the heady years when Euroland interest rates of 2pc so beguiled the nation.

Spain lost a million jobs in 2008. Madrid is bracing for 16pc unemployment by year's end.

Private economists fear 25pc before it is over. Spain's wage inflation has priced the workforce out of Europe's markets. EMU logic is wage deflation for year after year. With Spain's high debt levels, this is impossible.

Either Mr Zapatero stops the madness, or Spanish democracy will stop him. The left wing of his PSOE party is already peeling off, just as the French left is peeling off to fight "l'euro dictature capitaliste".

Italy's treasury awaits each bond auction with dread, wondering if can offload €200bn of debt this year. Spreads reached a fresh post-EMU high of 149 last week. The debt compound noose is tightening around Rome's throat. Italian journalists have begun to talk of Europe's "Tequila Crisis" – a new twist.

They mean that capital flight from Club Med could set off an unstoppable process.

Mexico's Tequila drama in 1994 was triggered by a combination of the Chiapas uprising, a current account haemorrhage, and bond jitters. The dollar-peso peg snapped when elites began moving money to US banks. The game was up within days.

Fixed exchange systems – and EMU is just a glorified version – rupture suddenly. Things can seem eerily calm for a long time. Politicians swear by the parity. Remember John Major's "soft-option" defiance days before the ERM blew apart in 1992? Or Philip Snowden's defence of sterling before a Royal Navy mutiny forced Britain off the Gold Standard in 1931.

Don't expect tremors before an earthquake – and there is no fault line of greater historic violence than the crunching plates where Latin Europe meets Teutonia.

Greece no longer dares sell long bonds to fund its debt. It sold €2.5bn last week at short rates, mostly 3-months and 6-months. This is a dangerous game. It stores up "roll-over risk" for later in the year. Hedge funds are circling.

Traders suspect that investors are dumping their Club Med and Irish debt immediately on the European Central Bank in "repo" actions.

In other words, the ECB is already providing a stealth bail-out for Europe's governments – though secrecy veils all.

An EU debt union is being created, in breach of EU law. Liabilities are being shifted quietly on to German taxpayers. What happens when Germany's hard-working citizens find out?

EU vote on Working Time Directive

MEPs are voting later today on whether to abolish the UK's derogation on the Working Time Directive that allows workers to choose whether or not they want to work more than 40 hours per week.

The EU is a socialist behemoth and naturally supports abolishing the rights of workers to decide how many hours they work but in the real world businesses and workers are worried. For some people, working long hours is the only way to pay the bills.

In the soviet dream-land occupied by most European politicians, a brain surgeon and a road sweeper should get the same pay but on planet earth that's not the case and it's never going to be the case and so tens of thousands of people have no choice but to work long hours to put food on the table.

The latest estimate is that there may be up to 3 million unemployed people in the next year or so as businesses cut costs and shed jobs to cope with the global recession. Employing more people to do the same amount of work as their current workers is simply going to drive a thousands of employers out of business. The cost of an employee isn't a simple calculation of x pounds multiplied by the number of hours they work, there are insurances, admin costs, equipment costs, etc. for every employee before they even do an hours work.

Struggling companies don't need these extra costs. If the EU is serious about wanting to tackle recession then the last thing they should be doing is increasing the burden on employers.

Germany shuns EU for unilateral action on economy

Our beloved leader, President McBrown, threw carbon footprint to the wind and jetted off to Europe at the weekend to decide on a common EU response to the economic problems but when push came to shove, national interest came first for our federalist colleagues over the water.

The Republic of Ireland announced it was guaranteeing ever last penny cent of savers' deposits and the EU started flapping.  Then Greece followed suit and announced that it, too, would guarantee all of savers' money.

How very un-European of them not to adopt the common EU policy of doing bugger all.

Then it got interesting because the German Chancellor, Reichsführer Merkel, announced that Germany would also guarantee all deposits.  Quiet panic spread round EU governments - the EU's Minister for Propaganda has done something without telling them what they should do!

Now Austria and Denmark have guaranteed savings and the European Bundesbank Central Bank has said that it will give the European banking sector whatever liquidity it needs for as long as it needs.

None of this has helped though - stock markets around the world are taking massive hits.  The FTSE has dropped well below the 5,000 mark for the first time in years and the UK economy is in recession.  Major banks have failed and governments are still throwing billions of pounds at them in the vain hope that things will get better.  They won't, not for a year or two.

If the current economic troubles have shown us anything, it is just how weak the EU is.  The federalists claim that we are stronger together, united in our aims, yada yada yada.  But when it comes down to a straight choice between national interests and EUish interests, the whole thing falls apart.  Eurosceptics should draw small comfort from the duff economy - money is going to be tight, some people are going to lose their homes and jobs; but the EU has been exposed for the sham that it is and our economic recovery will be a damn sight quicker without interference from our masters in Brussels.