Apparently the Government are to support the local authorities that risk losing money on the Iceland Bank Collapse because they are convinced that no authority had acted improperly or recklessly in investing in the Icelandic banks. They said the financial framework for local authorities, under which they have to strike an appropriate balance between the security of investments and the returns on their money, appeared to have been kept to.
No body acted improperly or recklessly in booking their holidays with XL either but the government didn't step in then did it?
It is now emerging that 108 councils, 15 Police Authorities and Transport for London have a total of more than 890 million pounds in Icelandic Banks. Biggest exposure is at Kent County Council which has 50 million pounds at risk followed by Nottingham City Council which has 42 million.
Anyone looking for a silver lining to the crisis could consider that it might be the beginning of the end for the European Union. Last Saturday European leaders talked about solidarity even though President Sarkozy’s US-style bail-out plan had already collapsed into the dust. The German Chancellor then decided for the first time in years that German interests come first and European interests come second. After she acted she received, again for the first time in years, loud applause from her own electorate.
Finally it is being seen that the only way to stop countries acting in their own national interest is to take that power away from them, to form a treasury department, (in Frankfurt!), that has power over tax, and power over government spending. Indeed some of the EU extremists are using this crisis to call for that.
Hopefully it is more likely that what has happened in the last week marks the beginning of the end. The markets are saying it already. Italian government bonds now yield 1% more than German or French-issued government bonds. The markets are saying that economic and monetary union will not last. Nigel Farage, UKIP Leader, summed it up in the EU Parliament this week when he said "The credit crunch is hitting and hurting all of us, but I see a speck of light at the end of the tunnel. I see a dividend: possibly the beginning of the end of this whole mad and unwanted (European Union) project."