What's Cameron's game?

Greece have scraped their New Democracy party into offic and now the Greeks will try to stay in the Euro. Hollande, Merkel and Monti delayed going off to G20 until the result was in. Hollande was obviously also watching his own patch to make sure he could play the game his way with a parliament behind him to strengthen his stance.

Cameron, on the other hand, shot off to do the B20 preceeding the G20. He called on the 17 Eurozone countries to take the steps towards closer fiscal and financial integration which he and George Osborne believe are necessary to restore stability. In short, he is standing on the sidelines and recommending banking and fiscal union to make the present 17 state formal membership plus, of course, the other countries who have informally adopted it and those with a dual currency more cohesive and thus monetary activism and structural reform that he believes are required to deliver sustainable growth and, clearly, if the € survives to grow.

He wants to see what he considers 1930s style protectionist barriers to trade removed and is also critical of the failure to carry out much required longterm banking reforms. The last I find extraordinary because the UK, it strikes me, is as bad as anywhere else in that respect and the latest injection of billions of pounds into the UK economy by the Bank of England appears to be doing anything but setting an example for banks to reform.

What interests me is where he is going. Obama and most of the Euopean leaders are out to rescue and promote the € but the UK seems to be the one that is sitting on the sidelines and sometimes predicting Eurozone and even EU collapse and other times promoting, as in this instance, measures to consolidate the €. Looking closer is Cameron preparing for a time when, should the € recover, he would take the UK into the single currency, playing a safe game by swinging both ways at the same time? Of course, there is the irksome issue of 2014 and the referendum in Scotland and the suggestion that to complete separation if the Eurozone is intact that Scotland apply to join it, which would put the three remaining bits of the UK in a very isolated position politcally and economically. Naturally, some of you will read something very different into what he is saying and disagree: UK and € never you will shout from the highest rooftops.

yep, UK was keeping it's head down until Cameron started offering lower taxes and red carpet treatment to all French businesses in an attempt to get them to relocate to the UK - had les grandes gueules (RMC) on in the car earlier and they were saying that Hollande will soon be going war with Germany and that the Cameron is trying to restart the 100 years war...! their response was to stop brits having carte vitale here in france, I nearly phones in to have a go, I reached for my mobile but I'd left it at home!

love Baroso telling the americans some home truths - as he said, it's their rediculously liberal finance and insurance system that's caused all this, they should be paying the eu rescue packages! I just hope we get the eurozone firmly back on the road and that in years to come (not too many either) the € pushes the $ off it's pedastal ;-)

Like this in the Guardian. To think that the year we lived in Portugal and Barroso was PM and a whinge one at that we classified him as a total wally. He seems to have come to his own with the EU:

'EC president says European leaders have not come to Mexico to receive lessons on how to handle the economy

The opening day of the G20 summit was threatening to deteriorate into a fractious row between eurozone countries and other non-European members of the G20, notably the US, as EU commission president José Manuel Barroso insisted the origins of the eurozone crisis lay in the unorthodox policies of American capitalism.

As Europe's leaders came under intense pressure to act decisively to cure the euro's ills, and a campaign gathered pace to relax some of the austerity programmes laying waste to countries with unsustainable debt levels, Barroso said Europe had not come to the G20 summit in Mexico to receive lessons on how to handle the economy. Asked by a Canadian journalist: "Why should North Americans risk their assets to help Europe?" he replied: "Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy.

"This crisis was not originated in Europe … seeing as you mention North America, this crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market."

Late on Monday , Antonis Samaras, the Greek election victor, announced he had agreed to build a coalition with the head of the socialist Pasok, Evangelos Venizelos, with aides saying they expected negotiations to be concluded by Tuesday. The moderate Democratic Left party may participate as well.

The European council's president Herman Van Rompuy, speaking alongside Barroso, said a draft G20 communique showed "support and encouragement for the euro area countries and leaders and for the European Union as a whole to overcome this crisis".

"We are not the only ones that are so-called responsible for the current economic problems all over the world," he said.

Germany's chancellor, Angela Merkel, is under pressure to soften her hardline stance on the austerity measures Europe imposed on indebted eurozone members, which the British chancellor George Osborne has claimed has killed economic growth. Barroso said he expected G20 leaders to "speak very clearly in favor of the approach the EU is following."

After the Greek election at the weekend, which may have shifted terms of the debate over how to shore up the euro, world leaders meeting in Mexico focused on the European crisis amid strong signs of big trouble brewing in Spain.

Madrid's 10-year cost of borrowing went through the 7% barrier on the bond markets for the first time in the single currency era, the level at which borrowing becomes unaffordable. The Spanish government demanded intervention from the European Central Bank.

Spain's prime minister, Mariano Rajoy, is expected to ask for up to €100bn in eurozone bailout funds for Spain's stricken banks at a meeting of eurozone finance ministers in Luxembourg on Thursday, senior Eurogroup sources said. Voicing exasperation with the European response to the debt crisis, Robert Zoellick, the outgoing American head of the World Bank, warned the G20 summit in Mexico of a growing rift between the Europeans in charge of the bailouts and the IMF.

"The world's waiting for the Europeans to say what they want to do," said Zoellick. He predicted a showdown between the IMF and Europe by the end of the summer in the absence of any decisive action.

Barack Obama was expected to press Merkel, in Mexico on Monday night on the issue of eurobonds – the pooling of liability for single currency countries' debt. But there is no chance of Merkel agreeing to underwrite the debt of other European countries for the foreseeable future.

Britain might have to seek fresh export markets outside the EU as the euro crisis was now facing such entrenched political obstacles that it could be impossible to resolve, he warned. "It may be that the eurozone crisis is going to continue for some time, in which case the UK must do all it can to put its own house in order and link up with the fastest growing parts of the world."

He said a longer term roadmap for a more stable single currency was going to be hard to achieve.

Fresh from his victory in the Greek election, the centre-right leader, Antonis Samaras, promptly tabled demands for a softening of the draconian austerity programme that Greece has to implement for the eurozone bailout.

Samaras, the prime minister-designate pledged to stick broadly to the Greek bailout terms but added: "We will simultaneously have to make some necessary amendments to the bailout agreement, in order to relieve the people of crippling unemployment and huge hardships."

Politicians and officials in Brussels and Germany appeared to suggest that the new Greek leader's demands could be at least partly satisfied by extending the repayment schedule on the bailout loans or lengthening the target deadlines for cutting the budget deficit.

There were also reports that the terms underpinning Ireland's bailout could also be relaxed, giving Dublin a much longer repayment schedule on the loans. The talk of rescheduling the Greek bailout terms surfaced quickly on Sunday night, with the German foreign minister, Guido Westerwelle, suggesting the Europeans could alter the timings. That triggered a row in Germany among the political class over the pros and cons of going easier on Greece.

In Brussels, the respected Bruegel thinktank said: "It is now increasingly clear that the [Greek] programme is severely off track. The [Samaras] victory doesn't change this fact and it has become unavoidable to open a discussion about the shape and form of a new Greek programme. This is a fact now broadly acknowledged by policymakers and in particular by German officials who have openly discussed the possibility of stretching fiscal targets."

Martin Schulz, the German social democrat who presides over the European parliament, added: "The new Greek government will be able to count on our constructive cooperation in possible fine-tuning of its reform strategy and economic targets. If Greece sticks to its commitments, the EU can examine what could be done further to solve the crisis."

From Mexico, however, Merkel appeared to dismiss any easing of the Greek conditions. "The new Greek government has to implement the commitments entered into by the country. The programme framework has to be kept."

The eurogroup source said that Samaras was expected to show up in Luxembourg on Thursday for the meeting of eurozone finance ministers which will grapple with Spain and how to respond to the Greek election results.'

The UK seem to be keeping their heads down at this moment bar the house idiot Osborne throwing the spanner in the direction of Merkel as usual.

makes interesting reading, I think the eurozone will continue like an old inner tube, just keep on repairing the punctures as and when they happen because it'll be too much hassle to stop the bike (the world economy) in order to change the old inner tube and put on a new tyre... but there again I'm just a humble cyclist!

Sky News have reported about the G20 this morning thus:

'Pressure is growing on eurozone countries at the G20 summit in Mexico to find a resolution to what the head of one international organisation described as "the single biggest risk for the world economy".

Despite the victory of a pro-euro party in Greece's elections at the weekend, there was no announcement of the formation of a government in Athens , amid growing signs of impatience among other G20 nations.

World Bank chief Robert Zoellick said: "We are waiting for Europe to tell us what it's going to do."

But European Commission President Jose Manuel Barroso defended the eurozone, insisting "the challenges are not only European, they are global".

Prime Minister David Cameron urged Greece's centre-right New Democracy party to move "decisively and swiftly" to form a new administration, warning that "delay could be deadly".

But he acknowledged that the crisis in the eurozone could rumble on "for some time" and made clear that he is looking elsewhere in the world for trading partners to replace lost demand from the UK's traditional export markets in Europe.

One senior diplomat said that the eurozone faces "a long, hard road that has got to be travelled" before its problems are over.

And Jose Angel Gurria, the head of the Organisation for Economic Co-operation and Development (OECD) , said the crisis was "the single biggest risk for the world economy".

Mr Cameron repeated his call for "core" eurozone states like Germany, as well as the European Central Bank, to take the decisive steps towards fiscal and banking union which he believes are necessary for the euro to function properly.

The Prime Minister said G20 members in the Pacific resort town of Los Cabos were putting "constructive pressure" on Germany.

But he acknowledged that Chancellor Angela Merkel faces political difficulties at home in delivering economic changes which could see German taxpayers making regular payments to support less competitive nations like Greece.

"We have to understand the German difficulties. It is very difficult politically to take the steps that are required economically," said Mr Cameron.

"But nonetheless if you want a functioning single currency you have to take at least some of those steps. You need to have elements of banking union, fiscal transfers and so on."

Mr Cameron said the eurozone faced three alternatives, the most positive of which would involve "action to strengthen the eurozone, to make it more coherent".

Failure to take these steps would mean that "dominoes start to fall, which would have very severe financial consequences across the world and would seriously affect us", he said.

But he made clear that he was taking seriously the possibility that the eurozone will take "enough financial action and just enough political and economic action to keep the show on the road but without solving the fundamental problems", leading to the risk of "perpetual stagnation".

And he indicated that part of Britain's preparations for such an outcome involved building trade links with emerging economies like Mexico.

"It may be that the eurozone crisis is going to continue for some time, in which case the UK must do all it can to put its own house in order and link up with the fastest-growing parts of the world," said the PM, who has brought a 25-strong trade delegation of British companies to Mexico.'

The OECD and World Bank are sitting on the fence too. If the Eurozone recovers watch them open their grubby little wallets and often a few bucks.

Brian I couldn't agree more, as you know, and I appreciate that it is more or less part of your job to do so in order to be able to better analyse and advise. I already "waste" far too much time enjoying chatting on sfn, the only network/forum/site where I do, so then reading around europe would eat up the rest of my "working" day. Or perhaps I ought to refrain from replying to all sfn posts and get on and read...! but for the moment I must get on and do some work :-O

But you see, the reason you do not read the stuff is partly the reason why I do. It saves me from being like the people who only slag France off and then drag Merkel in as the arch villain at every opportunity. As much as I dislike her myself, I don't think she is, nor was Sarkozy who I loathe as a politician. But the UK game is transparent to those who read across Europe from all angles, several languages and right wing to left wing media and whatever between.

Your last phrase sums it up Brian, I think he's playing a game too, the usual "sitting on the fence" game, one foot in the EU one in the US that the UK so often plays. Not surprising that others on sfn criticise France for not being like the UK, perhaps it's more a case of the UK standing alone in Europe and being the odd one out on the sidelines as ever. As you know I very rarely read any anglophone press - it depresses me and annoys me too much, it usually attacks everything from such an anti-EU/euro stance that it doesn't even make much sense to me, rather like those who only read the UK press despite living in France have so much difficulty with coming to terms with how everything works and how people think here...!

I have heard the USA/ratings agencies, the latter being tied to the $ across the board, stories about creating the € crisis several times. Where that seems to be going wrong is that China and one or two other countries are encouraging the € to recover and survive and turning their backs on the $. That might make the USA/ratings agencies all the more vindictive than they already are.

CamBorne may be echoing Obama, but his line on the Eurozone looking after itself also included saying that he hoped it did recover because the USA would be seriously damaged itself by the consequences of its failure. Yes, it is like your bank charges thing, since the ECB and IMF have had a finger in creating then calling in debts in such a way that countries could only go deeper into debt. The German stance has only been quite pragmatic because they have been protecting their own economy but not pumping excessive credit into other Eurozone countries. So yes, I agree, the creditors should now lend a hand to resolve the situation. It was not in their interest to solve it until now, since the imminent collapse of Greece, Italy and Spain within more or less hours of a couple of weeks back has evaporated but is still there as a cloud over Europe. If they now make it worse, they will collapse the EU with the € and lose everything, if they make a credit repayment adjustment they will still get a good profit, so stand to gain.

That is why I believe Cameron is playing that game.

I think that is exactly what he is doing.He is being the politician and waiting it out to see which side is going to come out on top. Strangely enough (or maybe not so), I heard some punter on R4 this morning stating the crisis in the Eurozone has been manufactured by the U.S. through various media including the ratings agencies and that they should have a hand in pulling us through. They are very unlikely to do that with trade (banking) flow being particularly one way at the moment. Now CamBorne has echoed Obama in stating that the Euro currency members need to sort out their own problems. A problem created how? This can be likened on a household level to the post I made this morning about Bank Charges.

OK we had a small problem but the dominant parties put the boot in to make it worse and continue to do so. Perhaps the creditors should have a hand in actively solving the problem rather than sitting on the sidelines. But then again, is it in their interest to solve the problem?