Crunch time

As George Osborne says, we have 6 weeks to save the world economy. It's amazing how badly the world leaders are performing. David Cameron and the Chancellor are doing their best to gee the major economic powers up to do something, but to no avail.

Greece cannot be saved within the Euro. Fact. It will default. Accept it, let it happen in as orderly way as possible and shore up the other Eurozone economies. It will be awful, but the delaying tactics are making the day of reckoning look worse and worse.

Day by day, rating agencies are downgrading banks and countries. The Eurozone banks are in danger, they desperately need to be recapitalized, like the UK banks were in 2008. It is a fact that there has been no Eurozone bank to bank lending in the last 10 weeks. That is very unusual and shows that we are already in another credit crunch.

There needs to be some grasping of nettles, grabbing bulls by horns, and some leadership.

Angela Merkel needs to grow a pair, and stop worrying about her election prospects. If she can help turn the Eurozone around then she'll deserve re-election. As of now, she doesn't. The writing's on the wall for Greece and she needs to recognise that.

There needs to be another round of quantative easing in the US and UK. We need to move some money around to kick start capital projects without adding to the deficit.

Italy needs to have a firm plan for deficit reduction. Spain needs a new Government with a similar plan. France needs to desperately recapitalize their banks. A reduced Eurozone (without Greece and a few others) needs to issue Eurobonds. There needs to be closer fiscal consolidation in the Eurozone.

We can thank Gordon Brown for recapitalizing our banks, and for keeping us out of the Euro. But we can also curse him for flouting his own "golden rule", throwing lots of money down the drain and giving us a large structural deficit. we now have little room for manoeuvre.

Hopefully the G20, maybe inspired by David Cameron, will come to the worlds's aid. We can only hope.

Squiffy