Maybe it was always thus, but the relentless wrong-headedness of the Europeans, their insistence on seeing their crisis as something it isn’t, and responding with actions that deepen the real crisis, has been a wonder to behold. In the 1930s policy makers had the excuse of ignorance; there was nobody to explain what was happening. Now, their actions amount to a willful disregard of Econ 101.

Paul Krugman, writing in his blog.

Nicely expanded on in this New Statesman piece.

In summary, they are:

Myth 1: That it is only celebrities and politicians who suffer at the hands of popular papers.

Myth 2: That egregious abuses of privacy happened only at the News of the World.

Myth 3: That in attempting to deal with the abuses of some sections of the press you risk throwing the baby out with the bathwater.

Myth 4: That any attempt to regulate the press means we are heading for Zimbabwe.

Myth 5: That current privacy law under the Human Rights Act muzzles the press.

Myth 6: That judges always find against the press.

Myth 7: Privacy can only ever be a rich man’s toy.

Myth 8: That most sex exposes carry a public interest defence.

Myth 9: That people like me want to be in the papers, and need them, and therefore our objections to privacy intrusions are hypocritical.

Myth 10: That the tabloid press hacks are just loveable rogues.

Very sharp comment by Damien Tambini of LSE.

His latest testimony in front of the Culture, Media and Sport Select Committee showed that James Murdoch is in an impossible situation. To Parliament he basically has to say he knew very little of the industrial scale illegal intrusions on privacy that we now know were going on at News International. To his shareholders however, he has to maintain that he and his executives were in control of the company. In his testimony he has now had to repeatedly claim that he forgot meetings, did not follow up on information given to him and in particular that he appears to have had a ‘cavalier’ approach to in signing off a number of out of court settlements that cost the company a total of several million pounds. The allegation is that the payments were knowingly made at such high levels in order to close down the story, but Murdoch has claimed throughout that he approved the astronomical payments without any knowledge of the wider implications of these cases to the company.

Given the situation he finds himself in, James Murdoch gave a reasonable performance. But Murdoch is not an elected politician, and the performance itself is a secondary issue for shareholders. They have to ask a range of questions: whether the testimony demonstrates that James Murdoch was in effective control of the company and continues to be and in particular whether his testimony makes it likely that there will be a significant change to the business and regulatory environment for the company.

Interesting commentary by Robert Peston.

Or to put it another way, the rescue does not promise a bright new dawn for Greece any time soon. Or to put it another way, the only way for the referendum to be won by Mr Papandreou would be for him to demonstrate that the alternatives are far worse.

For the rest of the world, those alternatives look shockingly bad.

They could include, in no particular order of probability or potentially devastating impact on the stability of financial market, default by Greece, exit by Greece from the eurozone or a much more generous rescue deal.

Let’s examine these.

A decision by the Greek government to renege on all its debts would impose huge losses on European banks, the European central banks and European taxpayers.

Such a default would raise the spectre of default by other over-indebted eurozone governments, which in turn would undermine the perceived solvency of some very big banks. We could be back in the territory of paralysis of the European financial system.

Or Greece might decide to quit the eurozone, so that the exchange rate would be able to fall to a level that would allow the Greek private sector to compete.

This could have the spurious attraction that it would mitigate the ostensible fall in Greek wages necessary for recovery.

But its impact on markets could be even worse than a default, it could be a default on steroids: if it became accepted that membership of the eurozone isn’t forever, huge doubts would arise about the true value of hundreds of billions of euros of contracts.

There is an even grimmer alternative Peston doesn’t mention: a military coup in Greece.

Lovely story on BBC News.

Germany has found itself 55bn euros ($78bn; £48bn) richer after discovering an accounting error at Hypo Real Estate (HRE), the troubled bank it nationalised in 2009.

The country now expects its ratio of debt to GDP to be 81.1% for 2011, 2.6 percentage points lower than previously forecast, the finance ministry said.

The miscalculation was at the so-called bad bank of HRE, FMS Wertmanagement.

The discovery was made earlier this month but only announced on Friday.

FMS will contribute about 161bn euros to Germany’s debt this year, compared with 216.5bn in 2010.

From The Register.

War-weary News Corp chief Rupert Murdoch made one concession at the company’s high drama AGM on Friday, stating the MySpace acquisition was a “huge mistake.”

The sorry tale of the social network’s digital demise at the hands of NewsCorp began with the purchase of MySpace for $US580 million in 2005. “We paid $US600 million. We could have sold it for $US6 billion a month later,” Murdoch told shareholders.

“I made a huge mistake. We then proceeded to mismanage it in every possible way,” he said. But Murdoch then threw in the caustic barb, “all of the people concerned with it are no longer with the company.”

This isn’t strictly true as former AOL CEO Jon Miller, who joined News Corp in March 2009 as its great digital savant, is still apparently in Camp Murdoch as CEO of digital media and chief digital officer.

He was brought in to – among other digital super charging duties – turn the ailing fortunes of MySpace around. Despite ousting a lot of bodies and a couple of CEOs, it was pretty clear that this feat wasn’t going to happen. He then helped shift the asset into the hands of Justin Timberlake and Specific Media for $US35 million earlier this year.

The nemesis that perceptive economists like Paul Krugman have been predicting has arrived: stagflation — the grim confluence of inflation and economic stagnation. And what’s really eerie is how nobody in power in Britain can talk about it, let alone admit it. As Will Hutton puts it in today’s Observer.

The way we analyse and discuss our plight is crazily upside down. The Department for Business, which does have some interesting ideas for how to promote innovation, is browbeaten by the wider politics into making it a priority to take the ‘burden’ off business, allegedly to stimulate growth. Yet on most benchmarks, the UK is already the most lightly regulated member of the EU. It is absurd to characterise regulation and red tape as principal sources of the UK’s ills. This is voodoo economics.

Meanwhile, the story is nurtured that the coalition’s judicious austerity plans that were firmly on track are being derailed only by the crisis in the eurozone – the consequence of the madcap project to create a single currency in Europe. The enemies of the piece are thus deluded Europeans, anti-enterprise officials, unresolved global imbalances, excessive regulation and the 50p top rate of income tax, not to mention Gordon Brown’s legacy. There is nothing wrong – or so runs this line – with the gallant coalition’s economic strategy.

It is a story a lot of powerful and influential people – in finance, business, politics and the media – need to believe to cover their support for the coalition’s epic misjudgment when it took office. This was the decision to withdraw demand at a rate of 2% of GDP every year for four years in the wake of the biggest financial crisis in our history, alongside private sector debt levels higher even than in Japan before its lost two decades of growth.

Yep. So what we’re in for is a decade — maybe more — of stagflation. A re-run of Japan’s catastrophe. It’s nuts — and yet it’s happening before our eyes.

Lovely sketch by Simon Hoggart about Liam Fox’s extraordinary moral and linguistic contortions.

And then there is Liam Fox, who spoke to the Commons on Wednesday. What a farrago of self-regarding, self-congratulatory self-exculpation it was! He even contrived to tiptoe round the notion that he had done anything wrong. “The ministerial code has been found to be breached,” he said, as if it were like a hurricane battering a levee, a force of nature for which nobody is to blame.

And why had he come under attack? Because for more than a year, he had bent the rules, constantly and persistently, in the face of warnings from his most senior civil servants? Hardly. His fall was, in part, the result of machinations by unnamed enemies. It was the result of “personal vindictiveness and even hatred. That should worry all of us.”

Time and again he implied he was the victim. But all had not been lost. There had been a tidal wave of support and encouragement from everyone: fellow MPs and cabinet members, constituents, family and friends, and most of all from his wife, who had offered “grace, dignity and unstinting support”.

You would imagine that he had, through no fault of his own, contracted a life-threatening illness, his fear and pain swept aside by the kindness of everyone around him. “I may have done wrong, or possibly not,” he was saying. “That doesn’t matter because everybody loves me.”

The truth about Fox is that he’s a nasty, possibly sinister, neo-Con. And now he’s going to be a nasty, possibly sinister, problem for Cameron.