It is a measure of how preoccupied the media has been with the phone-hacking scandal and the associated stories of the aborted NewsCorp takeover of BSkyB that prior to Thursday, one or other aspect of it formed the subject of Robert Peston’s previous sixteen blog entries. It is without doubt a major and developing story and fascinating to the Westminster Village as it involves so many of them. But momentous though it’s consequences may be, it’s still not the most important ongoing story of the moment.Fascinating to the Westminster Village? Indeed, and meanwhile in the real world...
That story is the debt crisis. Seant commented earlier this week about the parallels between the financial events of this era and those of the Great Depression and there are many. That crash, like this one, was caused by a mixture of private and public debt getting out of control; banks lending against ever-increasing asset values which they assumed would continue to inflate; borrowers eager to buy a piece of the action with money they didn’t have; governments happy to spend the taxes the activities appeared to sustain. There are of course significant differences too, the actions of the central banks in keeping the money supply flowing being one of the most important.PB concludes:
The hacking scandal will subside, leaving a trail of former journalists and maybe even proprietors behind but ultimately papers will continue to be published, TV stations will go on broadcasting and the public will buy what appeals. Meanwhile, the world is changing - not quite as quickly but far more fundamentally.Eight EU banks failed the less than stringent tests last week* (One German bank, Helaba, withdrew), and even the EU is prepared for a bumpy ride on the markets on Monday:
“I think next week could see chaos. It’s clear the tests the EBA has done are inadequate. We now have the weekend to work out what the banks really need,” said one analyst at a major European bank.And the Spectator suggests that:
Investors and market analysts are preparing for ‘Black Monday’ after only 8 banks failed the test and must now raise £2.2 billion between them to stave off ruin.And Greece runs out of money by Tuesday:
Such news though in the main press is relegated to the business sections - the possible collapse of a major currency is not deemed as important as the self-perpetuating bun-fight in the MSM on the Murdoch scandal.
EXPERTS last night warned Europe has only 48 hours to save the single currency amid concern over the failure to seal a new rescue plan for debt-laden Greece.
The inability of politicians to agree a solution to the financial crisis threatening Europe sparked market jitters as continued uncertainty threatened to undermine the eurozone. One City executive said: “We need to come in on Monday morning and see something happening, otherwise I fear the worst.”
*A Boiling Frog tip; avoid investing any money in Santander.