April 28, 2010

Lunacy of NAMA bailout will tip us over the edge

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Will Britain be the first country to go bust or at least have a run on its currency before, not after, the Olympics?

Traditionally, countries and cities host the Olympics with great fanfare, expecting great things from tourism and then, when the marathon finishes and the clean-up begins, they are left with a nasty bill. However, such is the ‘feel-good’ factor associated with the prestige of the games that the bill is rarely presented before the opening ceremony.

But this time it might be different. Britain is in a precarious financial position, but at least it is exceedingly lucky in that it can print its own currency. However, while devaluation saves parts of the economy, it almost guarantees a run on the currency, particularly now that Britain faces a hung parliament.

Its deficits are huge and there is real angst across the water as to what Britain can do. What industries does it have that can, in the years ahead, save it from being a chronic deficit country?

Not that you would feel this angst in London. In fact, the place seems giddy. Anyone who has sat on the Tube in recent days and read the ‘Evening Standard’ over the shoulder of their neighbour will know that London is in the grip of Cleggmania. There is not much else being talked about and as the election approaches Nick Clegg is the man to beat.

If you doubt this, just read the Tory press, which is spewing out as much bilious gunk as it can find in an effort to smear this guy simply because he does a better imitation of Tony Blair than David Cameron.

But the Tories are stuck, as are Labour, because the people are responding as they have responded politically in the past two years — they want change. They want the outsider. They are sick of the two-party system; and the more the press and political opponents throw at Clegg, the stronger he gets.

I have been spending a few days in London and the place is buzzing with politics. So much so that no one is discussing the underlying economic challenge facing whoever wins the election, which will be massive cuts in spending.

For example, last night I found myself in an old London institution, Bloom’s Restaurant in Golders Green. The place is one of the few authentic kosher restaurants in London and well worth a visit — if not for the food, just for the people watching.

Last night the place was hopping. As the only man without a yarmulke, I stood out a mile. The tables were full of old Jewish ladies, nattering about their daughters-in-law, elderly couples sharing desserts with two spoons, bearded men on mobiles and my own raucous table deep in heated debate.

My hosts were worried. We tucked into some Yiddish specialties all washed down with Maccabi beer. The conversation moved quickly with no one agreeing with anyone else. You could have been in an east European shtetl before the war — all exaggerated hand gestures and dramatic sweeping statements with warnings of the impending disaster that awaits Britain if the Liberals and Labour do a deal. This Armageddon was only marginally more treacherous than the one that faces us if the Liberals and the Conservatives do a deal.

We spoke of the euro too, which they all agreed was going through the mill. Some of these guys had years of financial experience and they were in no doubt that Greece would blow, followed by Portugal and then on to Ireland. They explained to me something I had forgotten which was how profits, not ECB press statements, embolden market players.

So today the Greek bond yields are out at 16pc. This means that the markets who bet when Greek bond yields were at 5pc that there would be a crisis can now make a tidy profit. This money that they make in Greece will now be banked and deployed against the next country.

I left the restaurant more confused than when I had arrived and hopped on the 328 bus to Notting Hill. As the bus left the predominantly Jewish Golders Green so too did the Jews who were on the bus. They were replaced by Indians and Chinese.

The bus moved towards Kilburn. At Kilburn High Road, the bus filled up with older Irish people, immigrants from the 1950s and 1960s. Out the window the corner shops sold the ‘Limerick Leader’, the ‘Sligo Champion’, the ‘Leitrim Observer’ and, of course, ‘The Irish Post’.

By the time the bus pulled into Westborne Park Station, most of the Irish had got off, replaced by younger Middle Eastern and Asian migrants.

The bus captured the essence of London; transient, mixed, still territorial. I had started in pre-war Poland and ended up in 21st century Bangladesh via 1950s Mohill.

This is the country that Nick Clegg is connecting with. This is the place that is fed up with the two old parties. For Ireland, the next few weeks in Britain will be crucial. The UK is still our biggest trading partner and it is where we are most likely to go to as our recession drags on.

It is also the place that we have to be competitive with. As the Greek crisis reaches its endgame with either Greece leaving the euro or defaulting, Ireland will come under severe pressure. Markets will look for reasons to validate selling Irish bonds. Most obviously the enormous NAMA debts to bail out the banks will tip us over, but so too will our competitive position with Britain.

Think about the following: Clegg and the Lib Dems do very well. He holds the balance of power and has a big spending agenda, plus the added spice of wanting a PR system. It will mean that the new coalition will be unstable and unable to rein in the public deficit. The markets will do what they always do — sell sterling. Sterling falls even against a weak euro, which is being hammered against the dollar because of bond crises in Greece, Portugal, Spain and Ireland.

Sterling’s fall means that in Dundalk, Cavan, Letterkenny and all across the country north of Athlone, the retail trade seizes up. People go north for bargains, but also retailers here who expanded in the boom see their credit cut off by the banks, who are suffering because our bond market is in freefall.

Then the true lunacy of our Government’s policy becomes apparent. We are trying to slash prices and wages in the euro at a time when we are papering over the cracks with massive borrowing to save the banks. In the process, we strangle domestic indigenous exporters — who are supposed to be the saviours.

It won’t be just Britain who has its day of reckoning before the Olympics.


  1. The Institute of Fiscal Studies (IFS) yesterday published research which showed that none of the three UK parties had shown in their manifestos the true extent of the savings, cuts and tax increases needed to plug the UK deficit. Great though that the UK has such a respected institution to keep all the politicians straight. And interestingly the UK will probably have no choice but to increase VAT to 20%+ which might lessen the attraction of cross-border trading.
    What is our equivalent of the IFS? The ESRI? Many say that has become politicised in recent times – “the bank bailout is manageable at a cost of €25bn”. Where is the national house price index that was suspended in February 2010 and which was supposed to be replaced with a quarterly index published in April?

    • G

      Mandelson indicated cuts of £78 billion after the election, he said it would be impossible to forecast now given the ‘uncertainty’, but he did say the cuts will be unlike anything (since the postwar period possibly), they will get themselves re-elected and then you will see a blood bath in terms of public service provision etc

    • Deco

      The ESRI would be more likely to address such an important topic with a projection like

      “Growth will return to the economy in the second half of ….” “We must make the decisions now which will position us correctly to take advantage of the recovery” “The property market has now hit the bottom…..represents….good value….for the first time buyer…..” “smart economy”…..”digital hub”…..growth hubs…..regeneration….expansion…..fiscal measures…..productivity.

      You know something, this is same sort of PR drivel produced in the US under Greenspan and Bush !!!!

      • Stephen197

        David,

        I am just reading your book, follow the money. It is so spot on its frightening. I dont know how you get it so right. I have lived in Bondi for 3yrs and came back hoping to make a go of it. I am on my way back to Bondi for good. I luckily was granted a resident visa but your synopsis of how the Irish are now coming into Oz and the way the ‘new’ emigrants operate is 1000% correct. It is affecting the way us old irish are viewed. I think these new emigrants get a shock when they arrive. They are expected to do an honest days work for an honest days pay which for most is alien…

  2. I keep saying this since more than 10 years, it is a war against the Euro for Dollar supremacy. – Hussein threatened to sell his Oil in Euro not dollar anymore! Bye bye Iraq. -

    The Wall Street fascists deliberately targeted Greece, next in line is Portugal and Spain, in mission to destroy the Euro.

    http://www.stoxx.com/indices/index_information.html?symbol=SX5E

  3. G

    Mandelson said at a conference that Britain was not Greece, nor Portugal………contagion set to spread, Ireland…………………………..interesting that leading US financial institutions have played a major role in ‘unraveling the European project’…………..

    • Deco

      Here we go again…
      “When you hear the official denial, then you know with added certainty that the rumours of the problem are true”.

      Everything that Mandelson has been put in charge of has been a disaster. Mandelson is to Britain what Martin Cullen is to Ireland. Except Cullen never got sacked. Mandelson got sacked three times, and the urge to sack him is worth a few hundred thousand votes to both the Conservatives and the Lib Dems.

      If the Labour Party get a hammering, journalists here will talk of the similarities with FF.

      I have always held that FF are the Irish version of the Labour Party, that FG are the Irish version of the Conservative Party, and that the ILP are the Irish version of the Lib Dems. The comments made by Eamon Gilmore recently merely confirm this theory.

      The similarities between “our three” and “their three” are striking and remarkable.

      • G

        “Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains.” ~ Thomas Jefferson

        I was actually quite shocked and annoyed that Labour hired a former PD, TD, Mae Sexton from Mayo!!Have Labour any principles? You just can’t take them seriously when they do sh*t like this!

        What did good Mae say –
        “the situation had changed very dramatically since she was elected as a PD TD in 2002, and claimed different circumstances and different problems required a different set of responses.”

        http://www.irishtimes.com/newspaper/breaking/2010/0427/breaking21.html

        • G

          Correction – “Ms Sexton, an Independent councillor in Longford, is expected to contest the next general election in the Longford-Westmeath constituency alongside sitting Labour deputy Willie Penrose.”

          I wonder how Willie feels about that. What was Rabbitte’s line: ‘my job is to looked pleased when I am not” – great, worthy of Gordon Brown but then that was the same guy praising Michael O’Leary (Ryanair) on Vincent Browne’s show after Lisbon II – Orwellian!

        • Deco

          G
          I noticed the same thing. Suddenly a member of the PDs, the IBEC political wing, goes and joins the ILP, and becomes a socialist.

          Of course the only thing that she has remained in an opportunist. That was the common thread through her political career.

          She was a career neo-Liberal, and now she has become a career socialist !!!

  4. All we need now is an Earthquake in San Francisco and the whole lot comes tumbling down.
    What do we do then? Delete all the debts and start a new financial system from scratch?

    • G

      Apparently certain US States like Colorado have preparations in place for just such an eventuality and the human tide that will follow eastwards………..but they won’t be waiting with bottled water and blankets………..typical US solution if you know what I mean…….

  5. [...] Lunacy of NAMA bailout will tip us over the edge [...]

  6. I’m positive about an Irish exit from the Euro, should make us positive against our neighbour, get some of the diaspora spending money here at last

    Salutes to the great GRA and their standing ovation from the Irish Gardaí for their President’s, Michael Boyce,

    speech attacking the Clowen Gang of economy wreckers. Miriam O Callaghan of PrimeTime from Pravda RTE was almost apologetic to Ahearne for Boyce’s ‘tell it like it is’ ‘reality’ speech. Ahearne practiced in jack boot tactics used on any opposition was allowed to denigrate Boyce at will.

    It was a great whistle blower speech from Boyce.

    On the one hand, business news this morning gave upbeat remarks about our economy turning the corner from Davy mining the news over BOI; then news in another item, the real news, mounting Irish debt costs soaring differentially due to increasing pressure because of the Greek situation.

    The real world is beginning to prick the propaganda bubble we live under.

    http://bit.ly/9F1d1N

    “Dermot Ahern, the justice minister with responsibility for drafting legislation on casinos, lobbied fellow ministers to support a friend’s proposal to build a Las Vegas-style winter sports and casino development in Dundalk.”

    The Clowen gang might be given jobs in Ahearn’s Casino Amadán as bouncers.

    OT there’s an emergency meeting of the EU leaders next May 10th to discuss the Greek situation. I revise
    early post prediction of Greece out of the Euro within 4 weeks of yesterday, refining it a little.

    New forecast,

    Greece to get the thumbs down on that day. No bad deal for Greece/Ireland, say 20% devaluation in time for the tourist season (Bord Failte take note, time to target value holidays at the USA/Europe) We need to clean up the NAMA FF mess.

    P108, Sorkin, ‘Too Big To Fail’,

    “For the last several weeks Lehman has been complaining. Academic research and our experience indicate that when management teams do that, it is a sign that management is attempting to distract investors from serious problems”…..”Lehman was in for some serious pain when the market opened the following day; the
    shares would fall as much as 5%”

    Greece is Europe’s Lehmans, Groundhog Day here we come.

    Take a bow D and others on the list who’ve called this Greek event inside the Irish bubble of FF RTE Pravda propaganda.

    Posters, keep on posting and telling it like it really is on NAMALAND BanaRama Scamarama.

    • G

      Very strong comments from Head of the GRA, to the Minister for Justice (who refused to attend)

      On the government -

      “…..self-serving, overpaid, underworked, dishonest people with over generous pensions…………..a government corrupted by
      years in power, lost touch with reality, whose only agenda was to protect economic traitors, gombeen businessmen who have sacrificed our chilrdren, and children’s children
      to those who bankrolled the FF party, that the government of which Dermot Ahern was a long serving member has mismanaged the wealth of this country for more than a decade, by allowing the States assets to be robbed and plundered by bankers and speculators”

      (From Pravda/RTE news)

    • Papandroeu since March doing his best to protect Greece against the speculators, rising interest rates/cost of borrowings for Ireland, Ireland already under similar attack….the shorts!

      http://bit.ly/95dded

      • Good wishes to UK…………..

        Henry V Speech

        Feast of Crispen’s Day

        Why should they mock poor fellows thus….Our hearts are in the trim….Come thou no more for ransom, gentle Herald

        http://bit.ly/M5mH

        Above vaguely linked to usury and economic theory :)

  7. Malcolm McClure

    David: Brilliant piece evocative of London and with sound financial insight. The Jew’s ploy of buying Greek bonds when intrest rates were low and selling when they rise makes sense as an investment in Irish bonds only if Ireland comes closer to the brink of default. Paradoxically, if enough Jews buy Irish bonds in large quantities expecting a default, their action makes default less likely to happen.
    By pointing this out you have done the country a great service. Thanks for that.

    • Does buying bond when rate are low and selling when they rise make sense to you Malcolm? Thats a quick way to lose money. As rates rise the value of the bond DROPS. These guys are trading CDS contracts, a sort of insurace product or method of shorting, in this case Greek bonds.

      • Malcolm McClure

        Irish Sovereignty: I’m obviously no bond guru but I believe the situation with bonds can be more complicated than you suggest, and often can become counter-intuitive. To establish worth, we need to distinguish between the bank rate and the coupon rate. Typical bond coupons pay a semiannual rate until maturity, say in 2020. I buy a @10K bond and get my capital back in full on maturity regardless of bank rate but devalued by inflation of the “big, solid” Euro. The value of the bond depends on whether the coupon rate floats with inflation or, as in the Greek case, is enhanced to tempt gamblers. Zero-coupon bonds make up another gambler’s rat-bag.

        The yield on a Greek 10-year bond shot above nine percent, while a two-year bond rose above 11 percent, both record highs since Greece joined the eurozone. Weirdly, short-term debt financing is now more expensive than long-term funding. This situation is referred to as an “inverted yield curve,” and it is generally considered a harbinger of financial doom. This means that investors think that Athens is more likely to experience problems sooner rather than later but by 2020 it will all be sorted and the IMF will cough up the principal.

  8. ref. The Minister for Justice has withdrawn from his scheduled appearance at the Garda Representative Association annual conference.

    This political peacock can go back to the other economic terrorists and tell them they can expect to get the same treatment everywhere else the show up
    The ordinary people of this country have had enough
    Mr.Ahern and his associates have brought this country to its knees and we the people will not stand for any more nonsense
    Fair play to the GRA for telling the truth and saying openly what every member of the Force hears on a daily bases from their real bosses (The people)
    Well done to the GRA

  9. With all the western countries now carrying huge debts
    I have to question who exactly is behind the buying all this debt?
    I mean where do they get all this money?
    I know that the US is printing so many Dollars that the real value of the dollar is now probably only worth less than a cent!
    And the Euro, well just read the newspapers!
    Total EU External Debt 18,302,319.trillion $

    Total US External Debt 13,703,567.trillion $
    These mountains of debt cannot be repaid and the markets will have to wake up to this fact soon or later!
    There isn’t enough gold in the ground to cover these vast amounts of debt
    The only thing that is keeping the financial markets stable is the use of obscure derivatives tools, but these are just promissory notes with nothing behind them, something
    Like the emperor with no clothes syndrome.
    Which brings us to another question and that is why is gold so cheap!
    It should be somewhere around $6,000 an ounce at least.
    Somewhere, sometime the market will face up to this reality and we will see the mother of all crashes then.
    make no mistake the ball is already rolling!

    • MK1

      Macholz, I have been saying something similar for a long time.

      You see, the financial system of the globe is based on trust, and the debts are to paid off in the future, so future work is the only thing that can pay it off. In fact, Earth Inc is in net debt right now to itself.

      The system is based on trust, and perhaps one day, that trust will be lost and the system will come down like a house of cards.

      MK1

    • mcsean2163

      Th Chineese are buying the US debt. Pensions funds too are big investors in government debt

      • Ruairí

        The Chinese WERE buying it. They’re quietly building heir gold reserves and they’ve also become net sellers of US bonds as of last month.

  10. Malcolm,

    Interesting points but just to get the record straight, my friends the other night were not involved in the present currency/bond travails. So its not a case of “Jews” selling bonds. That’s a bit too much like the “elders of zion” stuff that went around years ago. However, they are people who have seen how the world works and their opinion is, for me, worth 1000 press releases from the ECB/Department of Finance.

    Best David

    • Malcolm McClure

      David: Agreed. I have Jewish friends too and abhor stereotypification.
      As you described so eloquently, it is the variety of racial types in London that makes living there so interesting.

  11. I don’t quite follow this article among others. David states:

    “Britain is in a precarious financial position, but at least it is exceedingly lucky in that it can print its own currency.”

    How is inflation a good thing? It would be hard if they couldn’t print their currency but its going to be much harder for them if they do. Either way pain has to be taken and printing only prolongs and deepens the situation.

    David goes onto say:
    “Sterling’s fall means that in Dundalk, Cavan, Letterkenny and all across the country north of Athlone, the retail trade seizes up. People go north for bargains…”

    An inflated currency effectively forces retailers to go on a permanent sale. If an inflated currency is good for trade, then why don’t they just inflate all the time? Surely this would perpetually increase exports and everyone would be happy? Inflation and higher exports is an illusion. Its not like the UK treasury is getting any richer just because they collect more ‘notes’ if the value of those notes isn’t worth the paper its written on.

    Persuasive copy with little economic sense.

    • tony_murphy

      devaluation = the nation takes a pay cut en masse

      everyone takes the medicine

      pound is worth less, inflation goes up yes.. imports go down, exports go up, people don’t holiday aboard, money stays in the country.

      the 3 holidays a year burning on the med while tanking up on booze on the back of public purse is a thing of the past

    • roc

      He said ‘able to print their own currency’.

      If you put this extra money into the pockets of people and business, they are able to pay down debt, strengthen cash positions and go shopping for things they may need.

      When people go shopping for goods and services, their demand requires other people to work to meet their demand, so JOBS are created.

      Inflation only becomes a problem when means of payment increases more rapidly than the total output of goods and services.

      We are a long way from that – we would need to be getting nearer to full employment for inflation to become a factor – means of payment is still rapidly shrinking.

      Alternatively, inflation comes about when people lose confidence in the currency – this can be very dangerous inflation – however in the case of sterling, this is a long way away, notwithstanding the hubbub internet and goldbug nerds make about the possibility.

      Anyway, a bit of inflation is what is most needed in a recession – the trouble is stoking it in a controllable manner – that said, the efforts that have already been made in this regard has left quite a legacy of incipient inflationary forces bubbling just under the surface.

      • Absolute Keynesian dribble.

        • roc

          Quite different – The Keynesian view advocates running big deficits and government spending. What is being advocated above is controlled printing of currency and putting it straight into the pockets of people and business. As I said, quite different to a Keynesian philosophy.

          • So incur more debt to get out of debt right? Putting devalued printed money in the hands of people to presumably buy stuff – why? Your premise is a Keynesian one but not as severe.

            De-inflation is what we want, not inflation because it makes things more affordable for business and it encourages saving for production and investment just at the time that capital is required.

  12. [...] 28, 2010 tags: david mcwilliams, deficit, euro, Greece, Portugal, sterling by John P. Muldoon David McWilliams is always worth a read, and today he warns that Britain’s huge deficit – remember their stimulus during the credit [...]

  13. Worth noting:

    2/3 of the greek population do NOT want to take money from the EU and have the IMF Mafia step in.

    Any action taken from the greek government to allow the IMF and possible EU money to go forward would be against the clear majority will of greeks population.

  14. David, printing money isn’t the answer. Its downright criminal theft. If it was the answer, Argentina would be the wealthiest nation on Earth. Yes, I know we did it in the mid 90s, but Ireland was small and in the right position to attract multi-nationals. Today that is no longer the case.

    The UK is screwed and I can see Scotland eventually splitting from the Union due to financial reasons. Scotland has the wind and wave farms. England’s economy is dependent on the now being exposed corrupt, heavily manipulated financial market. Silver for example is leveraged 100/1. Don’t believe me, then google Andrew McGuire and GATA.

    Yes this decade will be a lost decade for Ireland, but we will rise from the ashes. FF will get the boot and we will become a net exporter of energy. This alone will not only save our economy, but lead to another boom time.

    As for Nick Clegg, his policies are by far the best. On immigration for example, he says it is far too high and a points system like that of Australia should be in place. I’ve been calling for that in Ireland for years now.

    In Ireland, people are always running to the government to look after them. How bout we get up off our asses and look after ourselves and stop moaning. Yes things are bad, but we are still a wealthy nation with advantages other nations could only dream of. We have gotten fat and lazy, its time to shape up.

    • Yes Sean it is time that we grew up and began to look after ourselves. The Germanns realised this after WWII and quickly grew to be a world power. Meanwhile in our “Republic” we were looking to the church and state for leadership while exporting our talent. http://irishsovereignty.wordpress.com/

      • G

        How true and depressing! Don’t forget the role old money played along with the professions who sought a tight game – no wonder Gates and Buffet never emerged out of Cork!

        J. J. Lee does a pretty good job highlighting this in his exhausting work: Ireland – 1912-1985.

  15. SM

    Just in response to that note regarding Aherne and the casino in Dundalk.

    I’ve long suspected that FF and their cronies would try to legalise large scale gambling casino resorts. It’s an excellent way to launder dirty money and it’s a huge revenue generator and a perfect change of use for Nama hotels.

    We don’t even need to rely on a domestic market because serious gambler-tourists will fly around the world to spend a week gambling and playing golf.

    I can see it now, Citywest Casino and PGA Golf course. All the bling and tack you can handle in one five star resort within 30 mins of Dublin Airport.

    I can also see the thousands of low earners and desperate gamblers from the hinterland destroying themselves and their families.

  16. Schaeuble, DSK and IMF held a conference call this morning, hold on to your butts…..

  17. Question is….Will the debt Junkies continue to share their needles or go cold turkey?

    Have a lucky guess!

    The debt spiral is in full motion, so is the contagion!

  18. MK1

    Hi David,

    An interesting people watch bus ride on the Kilburn High Road.

    DavidMcW> For Ireland, the next few weeks in Britain will be crucial. The UK is still our biggest trading partner.

    The problem that the voters have in the UK is that they do not know what they are voting for economically. They have no idea what shape a Lib-Lab or Con-Lib government would have and the economic policies it would follow. I think that whatever government emerges wont last that long as all parties will be eager to get to the public again and they have no track record of being in a coalition.

    I agree that what happens in the UK is important to us, not only trading, but also as an emigration ‘valve’. That 1950′s Mohill you mentioned was also the 1980′s Dublin, Cork and Limerick.

    UK’s debt is huge, as is the US’s as is Japan’s as is the EU’s. And the governments debt has only been added to in recent years as private banking debt has been moved to government public debt. And QE tricks by one and all doesnt work.

    Many problems need to be fixed … UK debt and Greek debt are just a couple of them, yet solutions are few on the ground. No-one wants to give up the easy money they make in this global financial system, least of all Goldmine Sucks (ie: Goldman Sachs).

    MK1

  19. AndrewGMooney

    Hey Malcolm: See. I’m still here! Reading, learning, enquiring. It’s all good. Developing my tran-generational social equity post-Keynesianism of the ‘learn, earn, save, spend, donate’ variety.

    Having ‘brainstormed’ another pre-visit ‘blue-sky thinking’ for the supposed visit of pope Benedict/Gregory XV1, I was in Regents Park yesterday afternoon. Watching the caravanserai of humanity moving from one shoppathon to another. Beautiful sunshine. Ice-cream. My favourite place in my favourite city. Playing some songs on the aul’ I-Pod:

    “I’ve been dreaming of a time when the English/Irish are sick to death of Labour/Tory/Fainna Fail/Fine Gael….etc.” Morrissey/Mooney mash-up remix.

    And now, it may finally be happening. This side of the Celtic sea, at least. ‘None of the above’: I want a ‘hung’ parliament. Actually, I want them hung, drawn and quartered. I want them all pushed into a pressure cooker/torture chamber where they have to actually ‘right-size’ this Disunited Kingdom politically, economically, socially, militarily. On every level, in every way: Enough is truly enough. “We are all in this together” says Cameron as he threatens to turn off the spigot of taypayer funding to Northern Ireland. That will create happy outcomes I’m sure. David, you could always just hand the place back to Ireland. I’m sure they’ll be happy to fund it. *rollseyes*. No, David, we are not ‘all in this together’. It’s not that you went to Eton. So did Orwell. It’s your membership of The Bullingdon Club. Ditto Boy George Osborne. There are competing narratives and agendas which are irreconcilable without compromise and co-operation. The same cauldron will come to the boil by 2012 in Ireland if the FF/FG sham can manage to maintain a ‘consensus reality’ until then. Which I very much doubt.

    If the Tories where honest about spending cuts, the Olympics would be first on their list. They’d pay China to re-host the extravagant drug-fuelled charade in that abandoned Birds Nest stadium, and invest the money in another tube line. The tube reached Hackney / Dalston yesterday. Won’t solve the boroughs drug and knife crime problems but so much better for everyone living in a right-on mansion around Victoria Park. They’re finally ‘on the map’: ‘Electioneering row as Boris Johnson opens East London Line at ceremony’

    http://www.timesonline.co.uk/tol/news/uk/article7109423.ece

    The whole Greek ‘eurodrachma drama’ will be rival the world cup for retinas this summer. It’s good to see David mapping out the interconnectedness of various nation state fates. Germany. Greece. UK. Ireland. I get weary of ‘nationalist’ competition to see who can deflate themselves into oblivion fastest.

    http://www.independent.ie/opinion/analysis/why-we-have-one-up-on-the-formerly-mighty-blighty-2151609.html
    One day, ‘Chermany’ will realise there is no Mars to export to and that a global reordering of hoarders and spendthrifts is inevitable to avoid another war. But not until they realise they are precipitating a deflationary catastrophe in their PTSD about Weimar.

    I liked David’s article on Michael Hudsons’ biblical economics but a debt jubilee implies a reset button whereby the whole nonsense can start again. In effect, the Biblical Jubilee institutionalised debt peonage rather than solved it. Geometric debt curves will never match the s-bend of human political economy. And that s-bend currently resembles flushing a toilet. So, why is Hard-Core Euro ‘helping’ the flaky periphery by giving them even more debt to drown in? Write it down and/or write some of it off. This nonsense can’t carry on. As an aside, If David had taken another bus, he might have ended up in Camden. Arlington House. Where the child soldiers of the Industrial Schools sought sanctuary in an oblivion of alcohol. So much for the ‘third sector’ of faith-based charities replacing the bureaucratic state. Yeah, that really worked in previous decades in Ireland, Mr Cameron….

    London isn’t ‘England’. London isn’t the U.K. London is The Metropolis. And, as Michele Obama realised in a blinding flash at that school : London is a post-colonial vision of the future. If there is a future, and it’s gonna work. It’s gonna start in London. Dublin and Ireland appear to be hell-bent on self-destruction. Catholic guilt after sinful pleasure, etc. The ‘decadent Keynesianism’ of the British will, I sense, prevail over the alien Chile-Chicago Thatcherite aberrations. As well as a ferocious cultural pride and optimism when not talking about the weather: People here usually vote for Santa not Scrooge, no matter that Santa is paying for the sleigh with credit cards and may have his credit lines abruptly cut! Whatever, ‘the Brits’ will come through. Thatcher had North Sea Oil and Gas to fund her class-war. ‘The Brits’ need a bigger, brighter vision and inspiration in the post-resource rich decades ahead. High speed rail to Birmingham. A post-modern Green Industrial Revolution is up for grabs. James Dyson has moved his hoover production back from Malyasia, etc. The benefits of a ‘free floating currency’ will probably emerge and UK holidays will be in Turkey and Egypt rather than Greece and Spain. Life will go on in amended, straightened circumstances. But it will still be the U.K. Which is a cultural vision as well as a federation of nation states. Cameron sees the benefit of unity amongst UK nations but recoils from similar in EU. Cognitive dissonance. Kenneth Clarke will blow the Tories to bits over Europe. And Clegg wants the Euro! Cameron’s ‘Big Society’ is just a concept. It hasn’t been fleshed out. It’s essentially an appeal to common British decency. But that won’t pay for CCTV and high tech medicine. The N.H.S is a sacred cow. Cameron lauds the Swedish private school model, but no ideas how to fund it. Ignores the French leading-edge health model which is insurance based rather than run by an internal Soviety monlith similar to the Red Army. Sir Gerrard Jude “Gerry” Robinson from Donegal tried to raise the alarm, but no use. ‘Can Gerry Robinson Fix The N.H.S?’ BBC 2007, etc.

    Ireland is also in a bit of a pickle. Triangulating, reaching out towards a 3 leaf clover of US/UK/Eurozone may have made sense in ’99 when the millennial euphoria stopped any sensible discussion of the flaw underpinning the Euro Project, but now it’s decision time. I can see why some argue that Ireland needs to abandon trading with the bizarre QE funded shenanigans of its’ incorrigible neighbour, but getting into bed with Angela and Nicholas seems to have ended up with Ireland being spit-roasted. As Malcom Tucker might have said “Angela is about as much use as a marzipan dildo’. When I see that FF are introducing emergency legislation to mandate German and French for all kindergartens and Bundesliga games replace the Champions League: I’ll believe that Ireland has ‘joined Europe’. Until then, I think David is right about leaving the Euro. But not as a panic lone bolt for the exit, but as part of a planned strategy if and when the containment of this crisis fails. I’m sure the Brians are on the case. The UK must ‘walk a tightrope’ between reigning in debt/deficit and stimulating economic activity. Here are the articles which led me to that view. Key point from Martin Wolf. Key point:

    ‘None of the parties has a convincing plan.’

    http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2010/04/19/uk-economy-must-perform-a-rebalancing-act.aspx

    So, I hope there will be a ‘hung’ parliament which forces all 3 main UK parties into a pressure cooker / Govt of National Unity type scenario where they have to stop the boo! ya! posturing and actually, finally, put this country on a road to ideology-free prosperity. And I dearly hope that something similar emerges in Ireland as and when the ‘implosion’ takes place. Alastair Darling is on the telly. The future Prime Minister once the clusterfcuk circle jerk of this election and ‘hung’ Parliament plays out. Another Scot! Maybe Ireland needs a few Scottish Taoiseachs. [*raised eyebrow*] Where am I going with this? Lol! Ireland and the U.K have a commonality of purpose in stopping the dysfunctional German juggernaut. As high-tech and beautifully engineered as it is: It won’t work. The whole world can’t be a balanced budget fanatic. Cue Keynes. IMF to introduce ‘The Bancor’ and so on.

    regards
    AndrewGMooney
    ‘An Irish Childhood In Birmingham’ 20:12, 20/12, 2012.
    The Irish Centre. Connaught Square. Birmingham. Eng-Eire-Land

    ps: Gordon Brown has just blown his brains out by calling a wonderful woman voter ‘a bigot’! We really are in ‘The Thick Of It’ today.

    • Deco

      Brown is the Labour Party’s biggest problem. (a remarkable acheivement given that John Prescott, Steven Byers, and Lord Mandelson are in the same organization).

      Clegg knows this and shoots at Brown at every opportunity.

      • tony_murphy

        I actually think that Gordon Brown isn’t all that bad – I think he realizes all the mistakes he has made.

        I would certainly trust him more than Cameroon and Clegg.

        The really scary thing about Labour are the millibands. They are blarites/parasites. Labour will get rid of Brown regardless so Phony Tony types can take control of the party again

        • Deco

          Not a fan of Phony Tony either. Was delighted to see him go. Not impressed with the way his crony Mandelson got back into office. They are preparing to put Milliband in as PM. It will be a Libour Gov. Milliband did his best to create a massive crisis between the EU and Russia over the Georgia affair 18 months ago. Milliband is really dangerous. He has Blair’s tendency to jump too quickly, and when you putting on his honesty act, then you know that he is lying through he teeth.

          • G

            Here, here Deco, I monitored the Georgian situation very carefully and Miliband made very dangerous comments, really inflammed things, he was looking to Washington, part of the acceptable coup against Brown?

            As the Oracle says in the Matrix, what do men of power want? More power!

            He is an amateur par excellence!

    • Malcolm McClure

      AndrewGMooney: Always a pleasure to read your carefully crafted insights, all relevant to understanding.
      I’d fault your comments on Hackney though, as I know it well. Five or ten years ago it might have been regarded as an up and coming ‘new Islington’, but even that is passé as it has developed its own richly distinctive character.
      The new rail line is overland (not tube) and parallels the Kingsland Road. Unfortunately for the ‘right-on’ types (and unlike Islington) it provides no convenient connections to the West End. (Dalston Station is still a good 20 mins walk from Vic Park).
      Victoria Park (not ‘mansions’ but mid-Vic terraces – perhaps you were thinking of de Beauvoir?) is a gem but London Fields and Broadway Market are key ‘East Enders’ material as are Hoxton and Shoreditch. The new Bridge School beside the Regents Canal is an architectural gem and it is a delight to see its kids walking home proudly in their neat school uniforms. Clissold Park and London Fields have excellent pools. Homerton hospital works well and the Olympic stadium is within walking distance.
      The entire borough is a miracle of international integration, and I’d hazard that drugs and knife crime are no worse than most other inner city boroughs.
      Holidays in Hackney anyone?

      • AndrewGMooney

        Malcolm, appreciate the feedback. Enjoy your contributions too. I also love Hackney. I was just being a sarcastic smartarse. For a change….Holidays in Hackney? Well, there’s the Lovebox Festival in Victoria Park which would make for an entirely pleasant urban city break if you’re into bangin beats and 80s retro nouveau:

        http://www.lovebox.net/events/event/uk/23/

        I class £1,250,000 as an ‘urban mansion’. This example on Brookfield Road needs work, but has a useful layout with separate accomodation for staff / home office, etc. UK house prices up 10+% y/o/y due to devlish QE. It was either halve the price of houses or debauch the currency. ‘An English(wo)mans’ home is their castle’, so it was an easy call to make, for good or ill:

        http://www.foxtons.co.uk/search?location_ids=93&property_id=724214&search_form=map&search_type=SS&submit_type=search

        It won’t be sold to any local bus driver. If you can afford it, you can afford a taxi to the new train line, avoiding that 20 min walk and all those ‘difficult’ street scenes which initially thrilled with their ‘edgy vibrance’. I, too, was thinking of the whole ‘Spitalfields / Janet Street-Porter gentrification thang, whereby the focus of London has shifted to the East. I support the Olympics. I support the Stratford hub infrastructure. It’s certainly a different place from when I squatted on The Morningside Estate in the early 80s, whilst Tony & Cherie were getting ‘on the ladder’ nearby:

        http://property.timesonline.co.uk/tol/life_and_style/property/investment/article1741849.ece

        To wrap this up: Tony now has a gaffe in Connaught Square. Madonna has been secretly buying up half of Marylebone during the downturn. I was in Marylebone on Tuesday. It would have been funny if I bumped into DMcW as I, too, prefer the symphony of the streets and bus travel. My Dad was Paddy ‘On The Buses’ for 35 years. I will take to the stage in Connaught Square in Birmingham, become absurdly rich and famous, buy a house in Connaught Square next to Tony and Madonna, invite them to dinner parties and live happily ever after. Perhaps!

        I think DMcW could branch out and become a major media figure here in the U.K. I’d like him to begin with a series on ‘The Irish In Britain’. I’ve done the ‘lift pitch’ at the Beeb, but it hasn’t been green-lighted due to the budget challenges. Fingers crossed. I see David as a potential ‘Wogan’ type provocateur in UK society. It took donkeys years for the cognescenti to realise how subversive Terry was. Now he’s sadly retired. Still, we have Graham Norton *rollseyes*. Oh, for the days of Dave Allen on primetime UK t.v. He really pushed the envelope. I remember that Pope in Drag striptease sketch which made my Dad pull the plug off the set. Hilarious. I must reprise it for the ‘welcome’ I’m organising for Benedict in Sept:

        ‘The Pope Performs A Striptease – Dave Allen At Large Series 4 1975′

        http://www.youtube.com/watch?v=pANRjBLsDDk

        Anyway. Must stop rambling as per instruction from ‘stiofanc02′ @22. Need to stick to praising DMcWs unconditionally so he carrys on with the writing lark. He’s a tender wallflower, needs constant approval from ‘fans’ to bolster his self esteem. ‘stiofanc02′: Locate the button on your keyboard called ‘Pg Dn’. Get Ronan to limit replies/comments to 250 characters, etc.

        • Malcolm McClure

          AndrewGMooney: By coincidence I too drove through Connaught Square a couple of weeks ago. Not impressed. If I wanted to live that close to the West End, I would choose not Marylebone but the other side of the TC Rd in Bloomsbury, where I think you’d be completely at home.
          I like the idea of a celebration of the Irish contribution to London. Not just in Kilburn but Holloway and Seven Sisters Road. Think Arsenal, Spurs, not Chelsea or Fulham.
          For me the natural replacement for the irreplacable Wogan would be Tom Dunne of Newstalk radio.

  20. Deco

    The British General Election, and the impact on Ireland, deserve at least one article. Simply on the basis of the potential for whatever happens in England to impact Ireland. Britain is still our main export market, and especially it is relevant to the middle Ireland that depends on lowpaid industrial employment for sustainance.

    The problem for Ireland is that our boom was sync’d with the British boom. We are now in sync with Britain’s bust. This means that when we need export derived growth, we are finding it hardest to attain. And forget about our builders being able to fill gaps in British construction when the British banking system is on life support after a massive heart attack brought on from a decade of high fat living.

    The Lib Dems are not going to fix Britain. And the Labour Party (the real one that is, not the ILP), are unlikely to turnaround and fix Britain. The Conservatives did turn around Britain twie before under Thatcher and Major. But the Thatcher method was painful. What people forget is the state of Britain before Thatcher. There were periods in the 1970s when the electricity was cut off every second day. Try competing with the Japanese Industrial competence when you have no power in Dagenham. This not saying that Cameron will be a big plus to Ireland. But Ireland’s economic interest is more likely to be well served by a Tory administration than one of the alternatives, purely based on previous performance. Simply put, the Tories try to do the one thing that our politicians seem incapable of doing for Ireland – when the Tories take over, Britain really means business.

    Funny enough, I am not as concerned as David concerning retail. Not everybody will go North for the shopping. And bear in mind that Northern retailers are liable at some point to push their prices up from greed. We have heard a lot of discussion about people going up North to fill the trolleys. But we do not hear about the people who simply downscale their lifestyle, to more humble and modest proportions. There is deflation occurring in Ireland, and we need it to occur to enable the economy to generate jobs. This is the complete opposite to the normal perception of economics, because generally the political establishment, the business sector and the trade union bosses prefer inflation. We are having simplification of the distribution process in the part of Ireland that is North of the Royal Canal, Athlone-Galway Road.

    A far more insidious and galling problem is our industrial competitiveness. Our wage rates are too high. Our indirect costs are too severe. Our regulations are too rigidly enforced. And there are layers of government that owe their existence to need to police the rest of the population, and provide justification that the rest of the population need policing.

    And where does this lead us to ? Back to the way we all used to behave when the British were in charge. And that ethic became the organizational ethic of the Catholic Church, and many other organizations that were in charge. Not saying that we are part of an Empire or anything like that….But there seems to be an element of this in the current British Election. Clegg is promising too much to each side of this authority conundrum. In other words Clegg is a fake. The British do sometimes far for these types, but usually it cartoon characters like Mr.Blobby, or soccer players like Rooney. It never happens in politics or religion because the British have always taken these areas to be very serious topics.

    The British might have Clegg-mania, but is quite possible that when they enter the ballot box that they leave this completely behind.

    I don’t trust Nick. Something just doesn’t quite add up….

    • SM

      Yeah, because you’re a Tory, that’s why.

    • AndrewGMooney

      Deco, usually love your contributions. But!
      I don’t understand…. Wayne Rooney is a fake? You could get yourself fk-ukin killed for saying that in certain Dublin hostelries I now studiously avoid. And what’s your problem with Mr Blobby? Next you’ll be dissing Mr Bean and then you’ll be in real trouble.
      best
      AndrewGMooney/Clooney/Rooney.

      • Deco

        Actually maybe Wayne Rooney is not fake. But I was having a go at the whole celebrity culture nonsense. It is a sign that the media have too much power in a society. And that applies to Ireland as much as England.

        I am alsoreading a book called “Affluenza” about the whole mani engripping the English speaking world.

        It will end in debt, social chaos, and possibly a war with some part of the world that has natural resources, like the Russia Federation or the Spanish speaking part of Latin America. Perhaps the US might even take over Canada. Basically these countries need real wealth to back up dodgy paper money. It is not a great prospect. But hard work seems to have gone out of fashion when the media took over Western culture.

  21. paddyjones

    The problem with Greek debt being junk status is that pension funds and banks cannot hold them any longer. There is 300 billion of Greek bonds out there somewhere that is now going to come on the market.
    The EU are playing a dangerous game , it is a front that there will be no default but the 45 billion on the table will not be enough. The greeks need 100 billion for 2010. The Germans are now saying that any bailout will not be repaid , so the 450 million Ireland will pay will go directly on our deficit.
    It is gone time to liquidate investments and hold euros. In Ireland deflation will deepen and there will have to be another budget in the next few months.
    Lenihan cannot sit this one out he must act quickly. Ireland will owe 140 billion by end 2010 that is way worse than Greece and Portugal.
    Be prepared for the worst.

  22. stiofanc02

    Am I the only guy who skips over the looooonnnnggg posts? These fall into the category of “dont try this at home”, in my opinion. Daivds articles and some of our amature opinions are what this forum is for, I think. A sort of sounding board.Not the lengthy missive going on and on and on,link after link and more and more………………………….need air.

  23. WOBBLE – the last one as Apr 5 th and we saw what did do to mountains and airlines .Maybe the next one will throw ash over the Euro as we burn more in a Greek Tragedy .After the EU Euro summit in early May will smoke signals rise once more and towards the end of June will we see the begining of the next Moon Wobble that will peak on 3rd July .Its time to dig a bunker and hide .

  24. Bus 328 is one of many Time Machines to observe in the metropolis of London .step on a bus near you and see does it set you back of bring you forward .

  25. wills

    Macholz @9.

    Maybe the debt and the debt buying is not what we are told that it is.

    Maybe the debt is a con.

    Maybe the debt is merely a reality get seperate from the cash money printed through the printing presses.

    People are sold the idea that the loan at the bank comes from money in the banks safe.

    It does not.

    A customer loan from the bank comes from the bank opening up a debt for the customer for the bank to accrue into the account a set sum of numbers.

    The actual cash is not there in the account it is merely figures on the statement.

    The cash itself is all together a whole different reality run through the printing presses and nothing to do with debt opened up on accounts.

  26. Josey

    Spain just downgraded by S&P gangsters….ireland next?

    • G

      Portugal next, then Ireland, watch Eastern Europe, Hungary etc as well as Baltic Republics, bowling pins……………………France and Germany will find themselves surrounded (for once)………failure on all sides.

      • Deco

        I think David mentioned the Domino Theory, which was the thinking that prevailed under LBJ when the US started to escalate it’s involvement in Vietnam. VietNAMA. And Ireland being the domino that the ECB were trying to contain.

  27. Dilly

    So, is it true. Have the EU stepped in and told our feudal landlords Fianna Fail to close Anglo. or maybe it is just a wicked rumour.

  28. noonep

    “The ESRI? Many say that has become politicised in recent times — “the bank bailout is manageable at a cost of €25bn”.

    Everything is managed purely on expedient gombeen political terms in ROI. They’ve taken on the church but Irish ‘citizens’ appear happy to be treated as gormless peasents by the establishment.

    ‘Is leatsa e’ me a-se, yes its yours €140 billion of debt incurred by gombeen politicians, bankers and developers coked out in a delusion high roll with this country’s future, who have copperfastened ‘contractual pension cushions’ and feather bed emoluments to shield themselves from the forces of destruction they’ve unleashed on the ordinary Joes of Ireland and their families.

    ‘is leatsa e’, what patronising crap!

    • Deco

      IS LEATSA E = “It is yours”.

      Anglo Irish Banks…..”IS LEATSA E”
      Bank of Ireland………”IS LEATSA E”
      Allied Irish Banks…..”IS LEATSA E”
      Irish Nepotists BSoc……”IS LEATSA E”
      Educational BSoc…..”IS LEATSA E”
      (as if we did not get a sufficient education from the other financial institutions).
      The report that found that Anglo got a loan from Permo that inflated what the Department thought Anglo were worth……..”IS LEATSA E”
      NAMA…..”IS LEATSA E”
      Ghost Estates in NAMA…..”IS LEATSA E”
      Dublin Docklands Dev Authority…..”IS LEATSA E”
      The HSE with layers of wasters……”IS LEATSA E”
      Bankrupt local authorities…..”IS LEATSA E”
      hundreds of hotels that are unviable…..”IS LEATSA E”
      Hundreds of commercial retail units that are idle…..”IS LEATSA E”
      A big long fat dole queue…..”IS LEATSA E”
      The most expensive electricity in western Europe and pointless ads from Eirgrid that are supposed to patronize you to bits……”IS LEATSA E”
      The partnership process which makes democracy a sham, and means that the dominant entity governing Ireland is IBEC……”IS LEATSA E”
      Union bosses who cosy up to politicians and get multiple earners in all sorts of semi-state organizations for doing nothing……”IS LEATSA E”
      Cronies of Bertie Ahern like Bullshit Cullen running semi-state organizations……”IS LEATSA E”
      400 000 000 Euro thrown at the FAI to build a second stadium that was smaller than one that already existed by Johnny Cash on the eve of sweeping cutbacks………”IS LEATSA E”
      Hundreds of pointless quangoes………”IS LEATSA E”
      The media that whipped up the euphoria that praised people for financial recklessness and took the advertising revenue, and which now wants to get back on your good side again……..”IS LEATSA E”
      Useless politicians, inept civil servive departments, lossmaking semi-states, bungling local authorities, and quangoes full of political appointees……..”IS LEATSA E”
      Tribunal reports which have not put the crooks in jail…..”IS LEATSA E”
      Stupid laws, excessive regulation, and stealth taxes…..”IS LEATSA E”
      Towns and cities that are covered in litter, where alcoholics damage each other and nervous pedestrians at the weekend, where drug dealers divide up into sales territories, where planning policy is a result of brown envelopes…..”IS LEATSA E”

      Yes, all yours.

  29. Is it a biscuit or is it a bar ?
    I am thinking of Bismark and I am also thinking of Charlemaign .Do we have twins? Its late this evening and I am also thinking of Kaffee mit System as in Volksprung mit System.I am thinking of a farmer with lots of animals .
    Now I am trying to fit them all together either as insiders or outsiders .Weather does not dictate what decision I make .It bloody does not matter .
    Now I think of myself and wonder if I am a lobster with red hair.

  30. Alan42

    Actually NAMA makes perfect sense . I was watching Prime Time from a week or so ago with David and Eamon Ryan the Minister for Green something or other debating the growth forcast for next year .
    I know little about economics but i actually thought Ryan was joking . His evidence of things picking up was that he had talked to his relations who are in tourism and they had told him that things were picking up .
    This is not some guy talking to his mate on the bus . This is an Irish Government Minister .

    So if the Irish government has a ‘ ring your Auntie and ask how business is at the B+B ‘ type attitude well NAMA has to work and its off balance sheet . What can go wrong ? Its all Greeces fault .

    • PMC

      LOL, +1, I had the very same thoughts myself. I was stunned by the comments on the family business, and how it somehow demonstrated a general turnaround in consumer trends.
      From now on, lets use Eamon Ryans family business as the consumer spending barometer.. Gombeenism in its truest format. There’s no hope for us if that’s the standard of public representation.

  31. wills

    David.

    The crux of the article for me is the domino effect from international money handlers denying Greece purchase of their government issued bonds, including the ECB saying NO.

    Now, the ECB will buy the greece government bonds and the ECB will buy the NAMA bonds.

    The european insiders will ensure the ECB will do what is necessary to preserve the EU project and if this means print running free money to funnel into Ireland and Greece this will happen.

    I do not see this chain reaction happening along the lines the article proposes.

    Now I do see the Greek bond meltdown happening for other reasons other than what the media nad mainstream commentators are saying and here it is below I think which is the actual contagion putting the financial banking system and its debt creation scam system in peril.

    ‘ But the $1.5 trillion in subprime mortgages were dwarfed by the $15 trillion US residential real estate market, to say nothing of the $1.5 thousand trillion world derivatives bubble. But, starting with Bush-Goldman Sachs Treasury Secretary Henry Paulson, the talk has been of a “housing correction,” not a derivatives panic. It must be pointed out that derivatives are nothing but wagers, bets placed from a distance on securities which themselves are often not mortgages, but rather other derivatives. The bettor buying a synthetic CDO or CDO² does not own the underlying mortgages or mortgage-backed securities, any more than someone who bets on a racehorse owns part of the horse. Blankfein and others tried to portray derivatives as a service to hedgers and end-users, but it’s clear that the vast majority of derivatives involve neither hedgers nor users, but only bettors on both side of the transaction. It is in any case this mass of kited derivatives which blew up in 2008, bringing on the present world economic depression.’ webster tarpley

  32. silverbullet

    What financial institution said :

    We don’t make a drachma out of a crisis ?

  33. paddythepig

    Have we the fattest police force in the world? These guys are meant to be lean, mean and fit. The GRA benches had the finest set of beer bellies I’ve ever seen. Crowd of chancers. Sack the wasters.

    I heard David on Matt Cooper this evening. Bizarrely, he said the Greeks could never be more competitive than the Germans. Why not? They could be if they wanted to be.

    Paddy.

    • Colin_in_exile

      Paddy,

      Perhaps if the Greeks switched from Eastern Orthodox to Lutheran, quit smoking cigarettes & cigars, moved en masse to a location with a cooler climate, ate 3 square meals promptly each day, became interested learning foreign languages, and got over their phobia of working in private enterprise, then there’s a chance they could be more competitive than the Germans. But somehow, I think they’d rather stay the way they are.

      The Greeks want to have their cake and eat it. The German’s are realising they’ll have to pick up the bill for the cake.

    • AndrewGMooney

      The Greeks can’t compete with The Germans because the Germans are ‘different’. As they lecture everyone to grind down costs to compete and pay back money German/Austrian/Swiss banks should never have loaned in the first place: They are also planning another round of grinding ‘efficiencies’ in their own consumer-free economy, neurotically hoarding themselves into an economic pariah basket case. Once Angela’s re-elected, she’ll hopefully get real. Or I can see the hard-core Euro nations having a complete hissy fit and leaving the Euro. Or maybe they’ll be expelled by their peripheal vassal state debtors. Now, that would be interesting……Greek culture is also very, very ‘different’. Germany has to take responsibility for allowing Greece into the Euro in the first place. The Greeks know this. They hold all the cards and they’ll play them in true hubris/katharsis/tragedy style. We covered all this last year. What’s next?

      • G

        @ Colin_in_exile – have you lost your senses -

        Let’s not forget the Germans wrecked Greece during WWII, stole the gold from their central bank, killed a few hundred thousand GreeKs, in the post-war period a civil war broke out, hundreds of thousands more killed, Britain and US heavily involved to prevent left wing government emerging, followed by a brutal military dictatorship with customary crony elite!

        Indeed, the Germans got the mother of all bailouts in 1946/47, so the irony is not wasted on me!

        Come on man!

        • Colin_in_exile

          G,

          If I was Greek, I’d refuse to change my ways too. I wasn’t having a go at the Greeks, I see the Greek lifestyle as superior to the German one. However, the Germans have a superior economy.

          It was in America’s self interest to re-build post war Germany. It was a case of USA shovelling money to West Germany and telling them to take it. The risk was that if America had not done that, then the Red menace would have been a much larger problem for America, my point being West Germany did not demand a bailout as far as I know.

      • paddythepig

        Strip us all down to our jocks, take away our soothers, and we’re all pretty much the same regardless of where we come from. Culture takes a back seat then.

        The Greeks could compete with the Germans if they wanted to, or if they were forced to. It’s a matter of will.

        They may calculate they have the upper hand in the game of roulette, but if they push the boat too far they’re screwed, and deservedly so.

        Paddy

  34. Philip

    I feel we are looking at that picture of the unfortunate falling man in the 9/11 atrocity. Week after week blog after blog we are merely reporting that the poor guy is going faster and has reached an ever lower floor befor his inevitable demise.

    Many of you are yammering on about the scams and you seem to have eloquently nailed it. But enough! It is well proven

    I am getting weary, The financial mismanagement is for me a symptom of a deeper malaise which goes beyond a few idiots gambling with “cash” to acquire more “wealth”. Ignorant gits whose blingified company would drive me to distraction – people who are utterly unappreciateive of the fact vthat they live at all. idiots. I say leave them be. They are diseased.

    As for the machinations of govrenments of the UK etc. Fcek em. Yet a symptom of the same malaise. I love the ordinary folk of the UK
    jews, blacks, brumies, cocknies you name them…I have friends of them all. They are sound. I also love the froggies and the krauts and the chinks…sound people to be found everywhere. We are rich for company – get a fceken grip!!!

    All I need is a beer, a good book or 2 , a few laughs and plain grub and some place dry and reasonably warm and health. The rest will follow, but I shall not hunger for it.

    Greeks are marvellous and proud people. I wish them luck in the midst of this nonsense. The Acropolis will be there long after we are all pushing up daisies.

    Two fingers to all the charlatans.

  35. —- BRIAN LENIHAN —-

    Ok, here is your chance to redeem yourself, all the Lies and BS from the past shall be forgiven and you can resign without being disgraced. How?

    Use our VETO power to support the greek people, that with 2/3 majority overwhelmingly refuse EU money and Worldbank/IMF Mafia to come in.

    The Irish contribution of 0,5 bn has just doubled, money we don’t have and would borrow to give to greece, only to extend this Heist shifting debts and allowing banks to make huge profits.

    Deutche Bank reported 2.8 bn profit MAINLY from Investment banking sector, at the same time, they were raided by german revenue agents, a 180 million carbon tax scam surfaced.

    Invest into the future of the Irish people, infrastructure and strategic industries and projects, close Anglo and Irish nationwide and tell the bond holders, sorry, but you lost, we all lost!

    THE MARKETS WILL NOT PUNISH THIS, ON THE CONTRARY!

  36. Wonderful well made comment and counter comment. No more I can say that hasn’t been said but for two important things.

    1. Philip @35 has a good point in that we’ve predicted and witnessed this accelerating farce over two years. We should have put our money where our mouths were and made a fortune. Not too late yet.

    2. I can confirm that John ALLEN is not a red haired lobster. Au Contraire Mein Freund.

      • Georg,
        We should launch an economics summer school up there in Donegal a lá Willy Clancy week in Clare. A kind of economics cult with DMcW as The Heavenly One.

        You provide the teutonic insight into banking, Deco Malcolm & MK1 the sober analysis, I’ll counter that with ribald public house critique and John ALLEN would be cultural attaché.

        When they come to take us away, we do a Waco, burn the place and jump into a flotilla of waiting currachs bound for Iceland.

        But empty your bank accounts before the bank holiday weekend first. Those markets are going to come back Tuesday very depressed.

        • 5 years ago may be, now, it is too late. The Euro Lie will not survive, not a sausage!

          It is a double dip, and stage one has started on 23rd April.

          In July Spain has to refinance 25 bn, with a massive housing bubble bursted and virtually no growth sector….

          Euro? What Euro?

          The Mafia with DSK/Zoellnick and Trichet had Merkel in submission in no time. Clear majority in Germany does NOT want to pay greece, Hell the greeks themselves want to stay clear of that debt shift.

          The Euro Lie is going to burst inevitably, only question is, how much more profit the banks will make from here on and leave countries behind in poverty.

          • So what if all the PIIGS defaulted together and told the banks/ bonds/hedgers/betters to go to Hell in a bucket?
            Then annex all the auslander holiday homes, golf courses and yachts?

            Or threaten to?
            These Pirates are roving the world looking for a carcass to ransack. Put it up to them. From what I’ve learnt here, they don’t like surprises, so issue a mini-union statement of solidarity. If the union is going to fail, so be it but bring these bastards down with us.
            They are people after all, those who lurk in the shadows plotting. Find them. And ruin them.
            This dithering makes us soft and weak. Find these people who profit from the ruination of our jobs and way of life and deal with them.

    • BTW. For anyone that doesn’t know London at closing time.
      It’s not wise to get on a bus, even through Kilburn.

  37. [...] Lunacy of NAMA bailout will tip us over the edge | David McWilliams [...]

  38. http://www.marketwatch.com/story/what-greece-means-for-the-stock-market-2010-04-28

    Good, balanced article here from the other side of the pond and broadly in agreement with David McW that sovereign defaults are somewhat manageable.
    Nasty, but manageable.

  39. Full post here from the Huff Posts Richard Eskow. Well worth a read.

    “”What we’ve been witnessing in Washington isn’t just political positioning by one party looking to deny the other a victory, although it’s certainly that. We’re also seeing the death struggle of a dying ideology. This ideology provided intellectual cover to business and political elites for decades, but events have proved conclusively that it doesn’t work. What’s more, people are beginning to see that it’s inconsistent with the country’s traditional values of competition and free enterprise.

    The ideology was cooked up in think tanks and boardrooms, then packaged and sold under a variety of conservative and libertarian guises. While the theories and rationalizations varied wildly, the conclusions were always the same: Deregulation was always the right approach, even (especially) for the most concentrated and rapacious businesses. Consumer regulations should be avoided because they hurt everybody, especially (somehow) consumers. And cutting taxes for the rich magically made things better for everybody else.

    The arguments changed but the results were consistent: greater upward distribution of wealth, and more concentration of power, delivered by those the special interests funded and placed into positions of influence.

    While the ideology was traditionally a Republican one, it had willing enablers in the Democratic Party who pushed for the same goals: Less regulation. More “unfettered” innovation in financial products, with “unfettered” a code word for “untested.” Less transparency. More centralization of financial products through growth and acquisition, as if the world had never seen oligopolies before.

    Now the ideology lies in ruins. The world has seen its fruits in a worldwide economic collapse, massive structural unemployment, and revelations of dirty dealings by our largest and most respected financial institutions. The two most prominent architects of the New Economic Order, Alan Greenspan and Robert Rubin, are publicly discredited by the collapse of the edifice they built. And, as we’ve discussed before, Greenspan’s philosophy was particularly colored by his extreme ideological leanings and Ayn Rand worship (the money quote for Greenspan: “Parasites who persistently avoid either purpose or reason perish as they should.”)

    And yet privilege rewards its own. The same elites are being drafted into service, this time to recommend slashing benefits for older Americans in service of the wealthy. The Economic Night of the Living Dead that is Pete Peterson’s “deficit summit” is the perfect example of this. (See Dean Baker’s reaction here.)

    But old warhorses like Greenspan and Rubin don’t have the mojo they used to. Public anger at banks and financial institutions is staggeringly high, and nobody but the die-hard ideologues believes that deregulation has been a good idea. Not that this has been an upsurge in socialism, mind you — as much as some might hope and others might fear. If anything, it’s a return to what might be called “traditional American economic beliefs.” Here are a few of them:

    Free markets should be free. Ideologues can no longer use the phrase “free markets” to describe a system where wealth and political influence are amassed by a few. The public recognizes that this encourages cheating, politician-buying, and the stifling of competition. And competition is the engine of a free market. What they call a “free market” is one where opportunity and growth have been crushed by the power of a few.

    Transparency is vital. The Greenspans and Rubins of the world have long resisted rules that would require public disclosure of financial transactions. Yet disclosing deals, whether through exchanges or other mechanisms, is completely in line with the concept of “perfect competition.” That’s a market model that requires, first and foremost, “perfect information.” Transparency’s not just vital – it’s fair. And what’s a more American concept than fair competition?

    Everybody gets to play. How effective is a marketplace where some people get to buy at one price, others have to buy at another price, and still others never get to buy at all? Whether it’s through so-called clearing houses or other mechanisms, reform can ensure a more effective market with more participants on a level playing field. It’s hard for those who label themselves free-marketers to oppose reform of this kind.

    People should be rewarded for doing things, building things, inventing things … not moving money. America’s financial heroes have always been inventors, leaders, creators. Instead these ideologues have built an economy where an ever-increasing percentage of the nation’s profits are captured by the people who move money around. That leaves less for the people who create wealth and more for the people who drain wealth from the system.

    With ideas like this emerging, and the old theoretical double-speak disproved by events, what’s an ideologue to do? Judging by recent events, the answer is to flail around a lot. First Republicans (and one Democrat) began filibustering to prevent debate on financial reform. But they’re politicians, and keenly aware that their ideology’s been discredited, so they had to articulate the very principles they were opposing. Yesterday they released an alternative proposal that oscillates between vagueness and repetition of ideas in the bipartisan-negotiated Dodd bill. (If they’re really this close on the shape of reform, it undercuts their position even more: Surely they’re close enough to be able to debate the bill’s contents.)

    Now Sen. Shelby has apparently reiterated the two parties’ inability to strike a deal, while at the same time seemingly releasing Republican Senators to vote in favor of bringing the bill to the floor. If that’s really what has happened, debate may begin shortly. But the zig-zag arguments of the past several days underscore the deeper narrative: The ideology that served Wall Street special interests for the last 40 years has broken down, and there is nothing to replace it.

    You can’t argue for free markets and still fight for the giant companies. Those positions are mutually exclusive. You can’t paint the picture of an agrarian past and then serve the giant corporations. The fact is, the American dream can’t survive without regulation. Without it, the powerful will always crush a free market where the little guy has a chance to make it. It’s like the old Western movies and dime store novels, but this time with an unhappy ending: The giant ranchers will always drive out the independent cowboys. The combines will always throttle Main Street business. The frontier will always be fenced. The railroad will always destroy the town.

    And those who speak up for giant, faceless, unethical forces will always be what they’ve been in Western movies and dime store novels from time immemorial:

    The bad guys.”"

    This should be put up on every streetlamp in Ireland.

    • @Furrylugs,

      Fair points you have there. But the picture is a little incomplete. There is another component that is a product of our technological age and globalisation of markets included. This component is the growing sophistication of financial markets that have allowed the development of financial products such as CDO’S, Derivatives, the slicing and dicing of equities into complex financial products sometimes 10 times removed from the underlying assets.
      Yes, deregulation was built on a naive trust that Greenspan deregulation assisted by rating agencies such as Moody’s or Standards & Poor sheriffs could maintain order and trust. But Greenspan himself observed he who had a large staff of PHD’s under his wing, couldn’t make out the mathematical formulas of logic upon which these were based. Combine this with lax rules on leverage vs equity held by banks and technological innovations such as the internet and lo and behold we have a HOUSE BUILT OF STRAW, any spark can set fire to. So now we got a huge system of IED’s Improvised Explosive Devices e.g the SEC is trying to defuse in Goldman’s at the moment. New regulatory rules have to be system wide agreed to bring the system into better order and purpose.

      Bit like Toyota pushing the profit line at the expense of safety. Lots of faulty cars returning means the whole system of production needs to be changed.

      As I’m an amateur in these matters I expect the above to be seen as an oversimplification, but some points might serve some use. There is of course the whole underlying crazy ethos of our Fractional Reserve Banking system explained and understood much better by Zeitgeist experts e.g Wills who has a brilliant grasp of this. In summary, I don’t think you’ll find a bunch of puppeteers pulling the strings as the origin of our financial woes, you got to go back further and see that the system itself generates puppeteers and all the inequality goes along with that….

    • Deco

      Interesting article.
      But the comment
      { The ideology was cooked up in think tanks and boardrooms, then packaged and sold under a variety of conservative and libertarian guises.} is not not entirely correct. Because the entire spectrum both left and right bought into it.

      Greenspan and Rubin were in charge under Clinton. Clinton deregulated the mortgage market in the US in his first term of office, which eventually blew up in the Subprime Crisis. Clinton and Greenspan also got China (not a regime that is big into human rights etc) into the WTO. They also took advantage of Chinese trade policy to juice up the private sector.

      What I am saying is that article is blaming everything on the Wall Street part of the Republican Party. But the Wall Street element of the Democratic Party is also responsible. And to deny this is in my mind bias on behalf of the Huff Post.And why should be worried. Because letting one party that causes the problem continue to pretend that they are fixing it, is ensuring that it will never get fixed. In other words it is allowing the media to perpetuate the same policies.

      • A good point Deco.
        But that’s the past dealt with.
        I wonder what the next 20 years will bring? The risk of one of the main players being hauled up was probably identified 20 years ago when this scam was born, hence GSucks CEO not looking too bothered yesterday. The responses are all in place and even if someone of note goes down, they do 3 months, are diagnosed with an incurable disease and are then released on humanitarian grounds. Fanciful??

        Remember Ernest Saunders.

  40. This here is Greeks debts exposure, source: Bank for International Setllements

    http://av.r.ftdata.co.uk/files/2010/04/Greek-exposure.jpg

  41. Incident

    Time to change the government?
    Time to open a foreign bank account?
    Time to move your € to $ ?
    Time to revolt?
    Time to decide if god really exists?
    Time to think?
    Time is not on our side?

    Any comments?

    • Incident :
      You are thinking and thats a good thing to do .

      Reflect on ‘ Da Wu Yu Code’ where Wu = before Heaven and Yu = Heaven and Earth

      Now think of Atlantis and the remaining semi circle of Dun Aengus perched high above the cliffs beside the Ocean.

      Now ask yourself where is the full circle.

  42. Acropolis & Dun Aengus

    Ozymandias
    by Percy Bysshe Shelley
    I met a traveler from an antique land
    Who said: Two vast and trunkless legs of stone
    Stand in the desert. Near them, on the sand,
    Half sunk, a shattered visage lies, whose frown,
    And wrinkled lip, and sneer of cold command,
    Tell that its sculptor well those passions read
    Which yet survive, stamped on these lifeless things,
    The hand that mocked them, and the heart that fed;
    And on the pedestal these words appear:
    “My name is Ozymandias, king of kings:
    Look upon my works, ye Mighty, and despair!”
    Nothing beside remains. Round the decay
    Of that colossal wreck, boundless and bare
    The lone and level sands stretch far away.

  43. Who we are .

    ‘When the sun shines on the Ring Fort daily , it never shows its object twice .Only the blindness of habit and new time of modern life convince us that we continue to live in the same place and that we see the same beauty on the landscape.The changing elements of nature collude and conspire to tease the sentient man into submission and darken the senses into a false sense of security.’

  44. LENIHAN’S ANGLO PLAN MIGHT GET THE EU BOOT

    Hold on to your butts, there are significant rumors that the EU does not approve of Lenihans Anglo restructuring plans.

    Drum roll………….

    • @Laughingbear 44,

      ECB have been badly caught out both by NAMA and Lenin’s plan for Anglo. If they pour billions into Greece on top of this, this will only serve to weaken the euro bigtime. Better to allow Ireland/Greece go for safer sanctuary outside the euro and return to the fleet after repairs are made. Otherwise, they just be pouring ballast onto sinking ships!
      Ireland INC ^^ sunk by The Clowen Gang!

  45. A Eureka moment. This is the craic behind the ratings agencies.

    From the FT
    CDO fees flow to ratings agencies

    By Aline van Duyn in New York

    Credit rating agencies are still being paid millions of dollars a year to report on the performance of collateralised debt obligations that have lost most of their value despite having been issued in many cases with triple A stamps of approval.

    The fees, known as “ratings surveillance” payments, are paid to the agencies ahead of any payments to investors under the terms of the CDO contracts — and without regard to how accurate the original ratings were.

    More FT video

    US regulators including the Federal Deposit Insurance Corporation have proposed new rules to link such fees to the performance of the underlying deals. This was not a common practice in the run-up to the financial crisis.
    EDITOR’S CHOICE
    John Gapper: Rein in the ratings agencies – Apr-28
    Video: Credit rating agencies – Apr-29
    Letter: Let regulators select rating agencies – Apr-29
    In depth: Ratings agencies – Nov-30
    Call for ‘responsible’ credit ratings – Apr-28
    Senate inquiry faults rating agencies – Apr-23

    The terms of the CDO contracts highlight how lucrative these instruments were for the agencies, with annual pay-outs of up to $50,000 made to track deals. Such payments come on top of the fees received to rate the initial transactions. The fees paid to the rating agencies have become controversial following the collapse of so many securities that were issued with the highest ratings.

    A congressional investigation found last week that Moody’s Investors Service and Standard & Poor’s, the biggest rating agencies, were unduly influenced in assigning ratings on CDOs by the banks that paid these fees.

    Ratings surveillance fees are still being paid on CDOs that have suffered “an event of default”, meaning payments to some investors have ceased. Such CDOs often escape liquidation because of the complexity of the underlying contracts.

    Ramius, which handles CDO liquidations, estimated that 290 mortgage-related CDOs that have had an “event of default” have not been liquidated yet.

    As long as these CDOs are not liquidated, they typically allow for payments to service providers, including ratings agencies.

    These payments are at the top of the “waterfall”, the term used to describe the way money is passed through CDOs, which pool debts or securities and distribute the cash to investors. Even the most distressed CDOs often still generate some cash.

    From 2004 to 2007, Moody’s and S&P produced a record number of ratings and record revenues, primarily because they expanded their business rating mortgage-backed securities and CDOs.

    The liquidation of CDOs has created friction between investors in different tranches. In some cases the rights of various investors are not clear in the contracts underpinning the deals. These legal battles mean even toxic CDOs can continue to exist for many years.

    Moody’s and S&P declined to comment.

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