GEORGE OSBORNE ADMITS GREECE MIGHT QUIT EURO

GEORGE Osborne risked infuriating Brussels chiefs by openly speculating that Greece could be forced to quit the euro last night.

He suggested that Germany may decide that is the only way to convince its own voters that it is worth pouring more money into the troubled currency.

His frank assessment comes just days before Greeks are due to vote in a general election on Sunday that could decide whether they keep the euro or return to the drachma.

Speaking to business leaders, the Chancellor said: “I ultimately don’t know whether Greece needs to leave the euro in order for the eurozone to do the things necessary to make their currency survive. I just don’t know whether the German government requires Greek exit to explain to their public why they need to do certain things like a banking union, euro bonds and things in common with that.”

His remarks, ahead of his high-profile Mansion House speech to City leaders tomorrow, are likely to anger EU leaders who are battling to ensure the eurozone remains intact. They also conflict with previous Government support for Greece staying in the euro.

Yesterday it emerged that Cyprus is likely to become the fifth eurozone nation to need a bailout of its banks after Greece, Ireland, Portugal and Spain.

NOW EU WANTS TO GRAB CONTROL OF BRITISH BANKS

DAVID Cameron was facing a new showdown with the European Union last night after ambitious plans for Brussels to seize control of Britain’s banks were revealed.

European Commission President Jose Manuel Barroso called for all 27 EU nations to join a Europe-wide “banking union” with powers to ­regulate the financial institutions.

It could see British taxpayers’ cash used to help guarantee bank deposits across the EU, while a swingeing new finance tax could hammer the City of London.

And Mr Barroso called for the EU to take “a very big step” towards ­further integration without holding referendums in member states.

The move to give the Brussels bureaucracy more power outraged Eurosceptics and City chiefs yesterday, while Downing Street officials made clear that the Prime Minister would resist any attempt to include the UK in the new banking bloc.

“Britain will not be involved,” said a Number 10 spokeswoman.

In an interview, Mr Barroso said: “There is now a much clearer awareness among European member states about the need to go further in terms of integration, especially in the euro area. This is one of the ­lessons of the crisis.”

His proposals included an EU-wide deposit guarantee scheme to prevent bank runs. This could see British taxpayers liable for banking crises anywhere in Europe. He also wants a supervisor with powers to wind down banks and impose losses on bondholders without the approval of national authorities, plus a bank rescue pot funded by a levy on financial institutions.

Senior Tory MP Peter Bone said: “The political elite of Europe are completely barking and out of touch with ordinary citizens. The sooner the euro collapses and the European Union breaks up, the better.” At least Mr Barroso was “being honest,” said Mr Bone.

“He wants a European super state. He wants an economic government and a centralised financial system run by Brussels. He is now being open about something many of us have been warning about for years.” Angela Knight, chief executive of the British Bankers’ Association, said the proposal would be “received with some concern” in the City.

THERE WAS A POET CALLED LEAR WHO FILLED TV'S RONNIE BARKER WITH FEAR

A BOOK of poet Edward Lear’s limericks – altered by comedian Ronnie Barker to make them funnier – could fetch at least £1,500 at auction.

The Two Ronnies star was clearly unimpressed by the 100-plus rhymes penned, in the illustrated book, by the famously erratic 19th century British creator of nonsense verse.

Lear’s limericks usually had the same word at the end of the first and last lines. Barker wrote an opening limerick as an ode to the poet:

There was an old fossil named Lear

Who’s verses were boring and drear

His last lines were worse

Just the same as the first!

So I’ve tried to improve on them here

Porridge comedian Barker dated his effort as November 2001 – four years before his death at the age of 76 – and the same pen is used throughout the book, suggesting he tackled them in one go. Edward Lear’s Nonsense Verse, among a job lot of books bought by collector John Watts from Taunton in Somerset, will go under the hammer a week tomorrow.

Chris Albury, from the Dominic Winter saleroom near Cirencester, Glos, which is selling the book, said: “If one had to name Ronnie Barker’s comedy ancestors, the name of Edward Lear would surely feature.

“Both were masters of comic word play. To modern-day readers such as Barker’s generation, the limerick has to end with a funny punch-line in the fifth line. What struck Barker as odd was Lear using the same rhyming word as the first line making the limerick an anti-climax of non-humour.

“Barker has had a fair stab at correcting all these last lines in ink for more than 100 limericks to make it funnier than Lear’s original with what can be best described as mixed success.

MEET MOSES THE DONKEY WHO THINKS HE’S A GOAT...NO KIDDING

HE may look, sound and smell like a donkey, but there’s just no persuading little Moses – because he thinks he’s a goat.

The mixed-up three-month-old foal was raised alongside a herd of goats, following the death of his mother. He has since adopted many of their characteristics, regularly standing on his hind legs and head-butting other animals.

Moses was born in March on a farm in Dunlop, East Ayrshire. After his mother died of tetanus, he was reared by an elderly goat breeder, who fed him on a diet of goat’s milk. But as he grew bigger and more aggressive, she felt less able to care for him.

Three weeks ago she put him up for sale and the Scottish Borders Donkey Sanctuary in Roxburghshire took him in.

Manager John Wilson said: “He thinks he’s a goat. He stands on his back legs and every so often he gives you a little nudge from behind if he thinks you’re ignoring him, which is very unusual for a donkey.

“There are some goats in a field next to him and whenever they come near his enclosure he rushes over to meet them and they just run away from him. As he’s concerned he is one of them.”

PENSION FUNDS FALL £312BN IN RED

The liability rose by 44 per cent from £216.8billion in April, the Pension Protection Fund 7800 Index showed. That compares with a £24.5billion black hole a year ago.

Of Britain’s 6,432 final- salary pension schemes only 929 have a surplus.

The PPF, the lifeboat for bankrupt company funds, found total assets of the defined-benefit schemes are £1030.8billion but total liabilities are £1343billion.

Pensions expert Ros Altmann, director general of Saga, blamed the rise on the Bank of England’s policy of quantitative easing – the printing of money to buy Government bonds, or gilts, which has driven up costs and driven down yields.

She said: “QE is a disaster since the more the Bank prints new money to buy gilts the worse pension deficits become. Many companies have already failed due to the increased burdens of pension deficits which have left pension members with reduced pensions in the PPF.

“Other companies find the increase in pension burdens are preventing them from obtaining new funding to grow their business.

“Many firms now have to put more money into their pension schemes rather than into their business to create jobs. It seems of great concern the Bank has persisted in buying gilts and worsening pension deficits.” Joanne Segars, of the National Association of Pension Funds, said: “Cash-strapped businesses that are already struggling to keep these pensions going will have to find more assets to fill in the deficits.

“QE and international investors seeking a safe harbour from the euro storm have contributed to a sharp drop in gilt yields that has fuelled this record deficit.”

Another expert warned: “The longer it goes on, the more pressure will build on the regulator to demand higher pension contributions from employers.”

FALKLANDERS GIVEN CHOICE TO STAY BRITISH

THE Falkland Islands are to hold a ­referendum on whether to remain ­British in a bid to send a clear “hands off” message to Argentina.

Officials there said yesterday that islanders would vote early next year on the “political status” of the South Atlantic territory.­

The announcement came as they ­prepare to celebrate the 30th anniversary of their liberation from Argentine invaders by a British task force.

The islands’ government hopes the referendum – likely to almost unanimously endorse remaining a UK ­territory – will settle the dispute over sovereignty after renewed claims from Argentina.

It is also expected to fuel demands in Britain for a referendum on the ­country’s membership of the European Union.

Gavin Short, chairman of the islands’ legislative assembly, said: “We are holding this referendum not because we have any doubts about who we are and what future we want, but to show the world just how very certain we are.

“We have thought carefully about how to convey a strong message to the outside world that expresses the views of the Falklands people in a clear, democratic and incontestable way.”

Observers will be invited ensure the process is fair, he said.

It will be the first official referendum on the islands, although an opinion poll in the 1980s found that 94.5 per cent wanted to stay British. David Cameron said last night: “It is up to the Falkland Islanders themselves to choose whether they want to be British.”

Tory MP Andrew Rosindell of the All Party Parliamentary Group on the Falklands said: “It will make it clear once and for all what the islanders want for their own destiny”

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Foreign Office Minister Jeremy Browne, visiting the islands as part of the 30th anniversary celebrations, said: “Only the Falkland Islands’ people can determine how they wish to be ­governed, so I very much support this initiative.” Eurosceptics yesterday asked why the Government backed a referendum in the Falklands while denying UK voters a say on EU membership.

'All the politicians apart from me were too close to Murdoch,' all the politicians tell Leveson

"Sure, some of the other puppets got too close to Mr Murdoch. But I was careful to keep him at string's length"

Something’s been troubling me about the Leveson inquiry. Actually, there are quite a few things that have been bugging me, most recently the remarkable similarity between forensic lead counsel Robert Jay, and Oddjob Junior from the film Carry on Screaming. So much so that when that protester burst in on Tony Blair I was half expecting Jim Dale to leap up and start demanding “What have you done with my Doris!”

But that’s a digression. What’s really been confusing me is this; every politician who has given evidence to Lord Leveson has expressed their deep concern over the destructive sway the press, and in particular the Murdoch press, holds over our political system. There’s now a consensus across the political spectrum; hobnobbing with Rupert and his chums is a very bad thing to do.

“We all did too much cosying up to Rupert Murdoch,” said David Cameron. “Yes,” replied Tony Blair when asked if his own relationship had been too close. The “personal relationships between Mr Blair, Mr Brown and Rupert Murdoch became closer than was wise,” admitted Peter Mandelson. "In retrospect we all should have been more wary about our relationships with them,” conceded Ed Miliband.

Pretty clear cut, then. All our senior statesmen admit they were at it. Well, all of them with the exception of Gordon Brown. He didn’t get too close, he claimed yesterday. Far from it. He kept his distance. Well, he didn’t quite keep his distance. He met with Murdoch about a dozen times. But that was his “duty”, and he didn’t like doing it. Although, come to think of it, he did, because he and Rupert got on well, they had the same Scottish Presbyterian upbringing. But Murdoch had done some terrible things to Brown, and his family. But he hadn’t declared war on him. His response had been to sort out some girlie sleepovers for Rupert’s senior editorial staff instead.

You know what, let’s forgot Gordon Brown’s evidence for the moment. The case stands. All the senior politicians, by their own admission, got too close to Murdoch and his malign sphere of influence.

But here’s the paradox. All of the politicians concede Murdoch’s influence was negative. Yet apparently none of them were actually influenced by him.

"The idea of some grand bargain between me and Rupert Murdoch, that is not true," said David Cameron. "I do not do things or change my policies to suit this proprietor or that proprietor. That is not the way I work, and I will say that under oath.” “There was no deal on issues to do with the media with Rupert Murdoch or indeed with anybody else, either express or implied, and to be fair, he never sought such a thing,” claimed Tony Blair. There was no “Faustian pact”, insisted Peter Mandelson: “In my view and from my experience and knowledge of the time, there was no deal, express or implied, between any proprietor and any leading politician for the Labour Party.” “There is a world of difference between being too close to the Murdochs and the kind of pattern of behaviour that we have seen revealed in the last few days at Leveson,” said Ed Miliband, the butter firmly retaining its consistency while nestling safely in his jaw.

So what precisely is all the fuss about then? Rupert Murdoch’s malign influence wasn’t in fact malign at all. In fact, it was non-existent. He had no influence. None.

According to every single politician who has placed their hand on Lord Justice Leveson’s Bible, not one policy was changed at his request. Not a single favour was traded for his endorsement. In fact, Rupert Murdoch seemingly didn’t even ask for any favours.

According to the Prime Minister, who set up this lengthy and costly inquiry into “the relationship between press and politicians”, there’s nothing wrong with that relationship. Oh there was, back when those lily-livered sycophants Blair and Brown were rolling over and asking Uncle Rupert to tickle their tummies. But not now, not with honest Dave and George on the scene. According to Tony Blair, the media is a “feral beast” indulging in 24-hour, round-the-clock "impact journalism". But it magically had no impact on him. Or at least no inappropriate impact on his policy agenda when he was Prime Minister. As far as Ed Miliband is concerned, the power abuses between the politicians and the press, which the Leveson Inquiry is now exposing as a result of his doughty campaigning, have been going on for no more than 24 months. For the previous 13 years the Government in which he served stood as a bulwark against them. And Gordon Brown fought like a Trojan to safeguard the national interest against Murdoch and his rapacious, though solidly Presbyterian, business practices. We know this, because Gordon Brown told us he did.

It’s embarrassing. Under oath, our country’s most senior statesman are asking us to accept the following. Rupert Murdoch was the world’s most powerful media magnate. His use of his power threatened, indeed continues to threaten, the very fabric of our democracy. Yet when confronted by them personally, and them alone, his power suddenly vanished, like Superman faced with a block of Kryptonite. This man who had bent all other mortals to his will, took one look and thought: “Nah, not today. That Tony/Gordon/Dave/Ed; he’s too much for me to handle. I’ll just wait for the next guy. Then my plans for global domination can get back on track.”

Some people have been on tenterhooks over the last few days, waiting for the parade of the politically great and good. Not me. I’ve had enough of the whole charade. All I want to know now is when’s Jim Dale turning up. And what has Robert Jay done with Doris?

Tags: David Cameron, Ed Miliband, gordon brown, Leveson inquiry, Peter Mandelson, Rupert Murdoch, tony blair

While Obama campaigns, the private sector is not doing fine and the middle class is shrinking

Barack Obama sure works hard. This Tuesday, he’s doing six different fundraisers for his re-election effort. If only he would inject the millions he’s raising into the US Treasury, the country might stave off another few seconds worth of debt.

Quite how aware the Prez is of the scale of America’s economic problems is unclear. On Friday he made a big gaffe when he said, “The private sector is doing fine. Where we're seeing weaknesses in our economy have to do with state and local government.” That’s an astonishing statement, implying that the issue isn’t the health of the market but the miserliness of the GOP. Sensing that he had made a mistake, Obama clarified that while he is convinced the private sector has “momentum,” he understands that the “economy is not doing fine.”

No sir, it is not. It is true that in the last 27 months, 4.3 million jobs have been created in the private sector. But the pace of this recovery has been slow and compares unfavourably with that of other post-recession periods. Since 1970, the average post-recession growth rate has been 8 percent (11 percent after severe shocks). Since 2010, it’s been just 2.8 percent. The growth doesn’t even make up for half the jobs lost since the Credit Crunch, although it does replace what was lost during the first two years of Obama’s administration. Job losses were much smaller within the public sector than the private (407,000 vs 4.6 million) and the figures are massaged by the fact that lots of folks are dropping out of the workforce (labour force participation is back to the level of the 1970s, when women were starting to enter the marketplace). The people hurt the most are those who Obama’s Democrats traditionally represent: blue collar (construction has lost 2 million jobs since 2008), women and small businesses.

On top of all of this, middle-class wealth is evaporating. The Federal Reserve calculates that the median net worth of American families fell by an astonishing 40 percent from 2007 to 2010 – equivalent to the loss of an entire generation’s gained capital. Only half of the middle-class did not lose anything. Credit card borrowing is down (sort of good); education loans are up (worse). Mortgages and house values took the biggest hit (down by about 42 percent). America hasn’t seen this kind of financial cataclysm since the stagflatory 1970s.

And the cost of the recession has been staggering. A study by Deloittesays that the US debt problem is bigger than we thought if you add on interest payments. These are set to top $4.2 trillion in the next decade. If interest rates went up just 3 percent, it would add onto the bill the equivalent cost of both the Afghanistan and Iraq wars combined. That will probably be passed onto the tax payer in the form of tax increases or spending cuts. Even if the private sector was doing as well as Obama hopes, the accrued debts of the public sector would strangle the recovery yet further.

What does all of this mean for Obama? James Carville – a Democratic strategist – says that he has to move the election narrative away fromthe illusion of economic growth and back to protecting what meagre assets people have left. Carville’s interviews with folks from Ohio and Pennsylvania make heart-breaking reading. A quote: “While we hear some optimism, this is framed mostly by the sense that this has to be rock bottom. A non-college-educated man in Columbus professed this kind of pessimistic optimism, saying, ‘I don't think it’s wishful thinking but it has to get better. It really kind of has to … A couple of years ago, it looked like it was turning around just a little bit. And then it really… went downhill … And now, it’s probably about the leanest that I’ve seen in what I do. And you know, it – I can only think that … it’s got to get better sooner or later here.’”

Carville’s recipe for re-election is to offer yet more “hope.” But while the hope of 2008 was based on ambition, the hope of 2012 is a poor man's desperation. “Vote for Barack Obama because we have to hope that things can’t get any worse.” That's not the American dream.

How reassuring that thrillers (and redheads) haven’t changed

I have good reason to know that you must never say yes when someone asks you to judge a literary prize. In 2004 some temporary lack of sanity made me believe that it was possible to read 130 novels (for the Man Booker Prize) while nursing a baby. So I was poised to flee in horror when asked if I might consider assessing 78 manuscripts for the Lucy Cavendish College Fiction Prize, but there were sound reasons for acquiescence.

First, there is Lucy (as its alumnae call it) itself. When I moved to Cambridge and walked past the college gates, I said to my husband it was odd to find a finishing school in the midst of academe. Shamefully, I had muddled the place with Lucie Clayton College, famed for teaching young gels to walk around with books on their heads, not in their hands. Lucy Cavendish, meanwhile, was founded by three female academics in 1965 to widen women’s access to higher education. The college has long encouraged applications from female undergraduates who have somehow missed the university boat – the brilliant author Elizabeth Speller was a nurse and housewife before reading Classics at Lucy. And the college’s ethos filters through to its Fiction Prize, which was established for women writers who haven’t been published.

I was reassured to find that some things hadn’t changed since I last adjudicated a prize: there are still many thrillers involving sinister cults who tattoo their members so they can be handily identified when they turn up murdered. And my golden rule of literature remains true: while in real life only 4 per cent of the population of Europe have red hair, in novels 75 per cent of heroines are flame-tressed, because this is apparently the best way to suggest a female character is spirited and idiosyncratic.

Nevertheless, when I met the finalists it was gratifying to find they all exemplified the college’s egalitarian and quirky spirit. There was a sweet-faced young Glaswegian, a poised Finnish-born translator, a north London poet and mum, an MPhil student and a fifty-something Bristol-based GP and mother of four. The Finn took top honours, but I predict glowing careers for all of them, because that tends to be the case with Lucy women.

Toxic trolls should have no hiding place

The conviction and sentencing of Frank Zimmerman, the 60-year-old man who threatened my children anonymously over the internet last summer, has aroused much comment. Mr Zimmerman, after having variously claimed that he was agoraphobic, too poor to eat (yet able to use a computer) and that his computer was hacked, was arrested when he failed to turn up for sentencing. He was finally given a suspended term with an extensive restraining order, barring him from contacting me and various other people in public life. If he breaches it, he will go to jail.

I thought the sentence fair. As a mother, it was terrifying to me when I received the email threat, referencing the film Sophie’s Choice in which a Jewish mother has to pick which of her children to send to the gas chambers. I have a Jewish surname, being married to a Jew. The threat was detailed, using photographs of the book and the logos of the hacking groups Anonymous and LulzSec. Of course, the nature of the internet is that you don’t know who is behind the screen. Is it Zimmerman, with his filthy house and his record of targeting women online? Or is it some demented teenager with a gun? I arranged security via House of Commons and Northamptonshire police for my family, as at the time it was my ex-husband’s portion of the holidays with our children. But I felt helpless and attacked.

Over the course of the next couple of weeks Zimmerman escalated his campaign. He rang me: I knew it was him right away – the well-spoken, English voice, the menace – and hung up. He sent emails from various fake accounts, pretending to be a duke, a doctor, a student. He researched obscure material about my husband’s former address and even about my novelist sister.

Luckily, by this time I knew who it was. Terence Blacker of the Independent deserves much of the credit for catching Zimmerman, along with the police’s e-crimes unit. He recognised the use of the LulzSec logo and the sexually graphic abuse – abuse that had been heaped on him previously by Zimmerman, who had once been his next-door neighbour. Like me, at first he was concerned for his family, not knowing who was behind the threats.

In this case valuable police resources were wasted on a person who was not a physical threat. However, he was one who thought nothing of threatening sexual violence and death to various women and children, and researching families and relatives. Zimmerman, a typical troll, operated under the belief that if he hid behind an anonymous internet user name, nothing could happen to him.