Talk to the shovel

The levy on savers in Cyprus banks is a worrying new development in the Eurozone crisis. Supposedly to teach savers not to save with dodgy banks, instead it is punishing ordinary people by relieving them of at least 6.75% of their savings in return for shares in those dodgy banks. The natural result is that they are all rushing to withdraw their money, with the help of a JCB in one case. If the ECB thinks that savers in other Eurozone countries will not be following suit and stuffing money under their mattresses, they are extremely naive. And if the Germans think that their insistence on this measure will not fan already smoldering resentment against them into roaring flames, they are mad. They have picked on Cyprus, rather than the PIGS, because it is small, weak and has reportedly been a sink for laundered money. Now the plug has been well and truly pulled, the dirty money will go elsewhere and honest savers will be the poorer. The Germans seem to think that is a price worth paying in order to send a tough message to feckless economies - their Finance Minister Wolfgang Schaeuble called the levy part of the "fair" distribution of the bailout's burden. Try telling that to the JCB driver.

Frau Merkel wants to have her kuchen and eat it

Calton makes no apology for once again commenting on events beyond the borders of Scotland because, with our First Minister's avowed desire to see Scotland at the top table in Europe, we ignore what is happening there at our peril. Today the European Central Bank gave out 489bn Euros-worth of 3-year loans to European banks at 1% interest and with lower collateral requirements which is the equivalent of your bank lending you £2000 at 1% for a clapped out old car. The hope is that the banks will use the money to buy up the debt of the likes of Spain and Italy, thus making the ECB a lender to sovereign nations at one remove. In other words, we are only one step away from seeing the ECB become a national bank for the nation of Eurozone, ie fiscal union. And fiscal union means political union. As Angela Merkel said to the Bundestag early this month - "We have started a new phase in European integration ... we aren't just talking about a fiscal union, rather, we have begun creating one." However in the same speech, she also said "A joint liability for others' debts is not acceptable", reiterating the German opposition to the introduction of Eurobonds. This is because, while the Germans want fiscal union, they don't want to be responsible for the debts of other nations like Greece and Spain. A case of the Germans wanting to have their cake and eat it then.

(See also Stephanie Flanders on the BBC News website.)