THE BLOG
19/08/2011 10:32 BST | Updated 18/10/2011 06:12 BST

Your Economic Questions Answered

At the time of writing this, there was a panic in the international finance community. At the time of reading this, there may not BE an international finance community left. This is because they will be queuing to find a suitable place from which to throw themselves from their window ledges.

Markets thrive on confidence and the market is now confident that everything is totally fouled up. That is not the sort of confidence that inspires confidence.

Greece recently fell over like a one legged drunk at a spinning contest. Its fall was broken by the European Community who decisively decided to avoid making a decision and just propped it up for the time being, like they had leaned it on a lamppost. In America, the birthday boy, President Obama had the icing licked off his cake by some people at a tea party who seemed determined to break America, just so that they could blame the ensuing mess on a man whose middle name is Hussein. Sense prevailed and they have now raised the debt ceiling so that they can continue spending money they don't have on things they can't afford. This might not make much sense to you but that is because you are a sane and rational human being. Do not try to understand what is going on here as that happy state of mental equilibrium may not last.

Allow me to summarise where we are. Spain is screwed, that much we know. All that Spain produces is houses for ex-pats from Britain that need to be torn down because they breached an obscure planning rule that no-one understood, or even knew existed, because it is written in Spanish. It may sound harsh, but that is not helpful. Failing to write things in English shows a lack of effort on their part. The Spanish also make colourful clothes and hats that tourists buy when they are drunk and which never see the light of day once installed in their wardrobes. Multicolour sombreros are not a good look when it is raining in Sunderland.

Italy is also screwed, because its leader thinks that "financial support" is a bra made of money. Italy has debts of one and a half times what it makes all year. If you racked up debts of that order you would be called an incontinent splurger who should be tied up for your own good. If you threatened to tie up Silvio Berlusconi, he'd invite you to one of his parties.

These countries need help, and so do Portugal and the other countries of Europe whose names I will look up later on a map. How can they get this help I hear you ask. They can get the help they need by asking themselves for money. This is perfectly normal and quite unlike talking to yourself, which is not. All the countries of Europe owe each other money. When a nation that is in trouble because they have, for instance, bought every lap dancer in Rome a meal and a fur coat, they go to other countries in the EU to ask for money. These countries gladly hand over the sort of amounts that would cause even a hedge fund trader to raise his eyebrows. They can do this because they still have the money that the country that is asking for the money gave to them. They are, in effect, lending money to themselves. What will they do with this money? They will buy the goods and services that relate to a modern democratic nation. They will pay their staff and award themselves bonuses to celebrate a job well done. So, they are borrowing money from themselves, to pay themselves. Head hurting yet?

France lends money to Spain so that Spain can pay back France for lending it money. Germany bungs Greece a bazillion Euros so that Greece can continue to buy the goods that Germany squirts out of its factories, which are closing down because of the austerity measures necessary due to the lack of money in the German economy because of all that lending they are engaged in. If any of this makes sense to you, then where were you when we were trying to crack the Enigma code?

The only good side to the dire economic news is that no-one can afford petrol any more, so the price is coming down. Shortly, you be able to fill your tank and leave the house you no longer live at since the bank repossessed it and drive to the job you don't have any more as the company fired you because no-one is buying their goods any more because we leant all our money to countries that can't afford to pay us back. And to think people say economics is boring!