Beware of bankers offering loans

It may be true that Greece has bought its troubles on itself. They weren't honest about their economic health when they applied to be part of the eurozone.
State and public corruption was tolerated and they borrowed money they never had a chance of repaying.

However some responsibility surely lies with the banks that lent Greece so much money. Even a cursory analysis of Greek finances would have caused most lenders to hesitate, unless they believed that the debts were underwritten and secured by the eurobank or the richer countries within the community.

This crisis is not about sovereign default. It is about the real possibility of major banks in Germany and France going belly up. Commerzbank is apparently owed €130 billion alone.

The German Chancellor and her French partner appear to be buying time for their banks. The help they are providing Greece is barely enough to pay the interest on their loans. The offer of a 50% write down is seen as preferable to a 100% hit on the banks.

The chances of Greece being able to pay back even half of its debts is questionable, so this is a problem deferred not eliminated.

Germany is a rich country, the only major European state with a trading surplus and a sovereign wealth fund. It exports to its neighbours who are encouraged to borrow to buy Germany's products. Countries with sovereign wealth, created by manufacturing exports, are mirrored by countries with deficits.

Martin Wolf the economist noted that one country cannot keep its surplus and fail to finance its customer countries deficits.

Meanwhile financial volatility is everywhere and John Donne's poem ‘For whom the bells toll’, starts: ‘No man is an island...’ and ends ‘Therefore, send not to know for whom the bell tolls; It tolls for thee’.

Sky high taxation

APD is a lucrative tax, generating about £ 2.5 billion in 2011 for the UK's tax coffers. Originally conceived as an environmentally fair green tax, this pretence has been dropped in these hard times.

As a revenue generating tax it is very successful, but as constituted very unfair. Now pressure is building up for reform ahead of the 10% anticipated increase.
At present the tax is paid on departure from UK airports, so domestic passengers flying internally from the UK pay twice as much as a passenger flying from London to Turkey.

The tax paid was intended to be based on distance traveled as follows:



The distance from London is based on where the country's destination sites it's capital, so because Washington is nearer than Jamaica, Los Angeles passengers pay less than those traveling to Kingston, Jamaica.

The Caribbean countries are heavily dependent on tourism and this tax hits them hard.

Sadly everyone in the UK travel and tourism industry has been adversely affected too. Other overseas countries can retaliate or reduce their own version of APD taxes.
The Republic of Ireland abandoned its taxes, which made it cheaper for people from UK's Northern Ireland to travel from Dublin to the USA. Continental Airlines threatened to cancel its Belfast flights and The UK chancellor helpfully reduced the APD for this particular situation.

Now posters in Heathrow have appeared, accompanied by advertisements in the National newspapers highlighting the importance of the tourism industry to the UK and its friends abroad.

Will George Osborne listen?

I suspect that he will address the domestic travel issue, help the Caribbean countries and once again postpone the planned increase. If this happens, it will be a case of "Being thankful for small mercies".