A slow motion crisis. There’s unlikely to be any early end to the fuss over Craig Thomson and the use of his credit card when federal secretary of the Health Services Union. Fraud cases tend to be difficult and complicated to prosecute and if this one was an easy mark the NSW Police would not have needed prompting by a Liberal Senator to take action. Even with the now promised co-operation of the union we can expect it to take police many months to prepared material to submit to the Director of Public Prosecutions.

Should the decision be to prosecute the member for Dobell for some offence or other he would then be in for a committal hearing – some months after the laying of the charges . Then, if a magistrate agrees there is a prima facie case, a further interval of many months before any criminal trial.

All in all there’s 12 months at least, and probably considerably longer, before any decision that might make Mr Thomson ineligible to hold his seat in the House of Representatives.

Greece a more immediate crisis. The fate of Europe’s common currency, the Euro, should be well and truly determined by then and that outcome will have a far greater influence on Australians than how long this minority Labor Government staggers on for.

The signs of another financial crisis are certainly looking ominous. Remember the assurances given by the EU and the IMF that they had resolved the problems of Greece being unable to pay its international debts? Take a look at what has happened since.

An immediate and sharp decline as markets took the politicians and financial bureaucrats at their word and then this week a complete lack of faith emerges. A 44% interest rate on two year bonds!

So far the European Central Bank has been able to stop the rate rise from spreading to other southern European countries by purchasing vast amounts of Spanish and Italian bonds but there have to be doubts about whether the ECB’s vaults contain enough wherewithal to keep going for long. Already Finland has demanded that Greece provide it with collateral to put in its share of the last bailout funds and the Germans are getting restless which is far more serious.

The German President, Christian Wulff, yesterday accused the European Central Bank of violating its treaty mandate with the mass purchase of southern European bonds. He warned that Germany is reaching bailout exhaustion and cannot allow its own democracy to be undermined by EU mayhem.

I regard the huge buy-up of bonds of individual states by the ECB as legally and politically questionable. Article 123 of the Treaty on the EU’s workings prohibits the ECB from directly purchasing debt instruments, in order to safeguard the central bank’s independence.

This prohibition only makes sense if those responsible do not get around it by making substantial purchases on the secondary market.

These comments echoed sentiments expressed earlier in the week by the German Bundesbank which also warned that the EU’s broader bail-out machinery violates EU treaties and lacks “democratic legitimacy”.

Looming over the very necessary German contributions to any financial rescue of weaker members of the Euro currency group is a court case before the German constitutional court rules on the legality of the various bailout policies. The London Daily Telegraph reports that a verdict is expected on September 7.

More Labor government gimmickry. The appointment of former Queensland Labor Premier Peter Beattie as some super salesman to get mining companies to use Australian companies for their developments beautifully combines spinning with jobs for the boys.

Peter Fray

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