May 12, 2010

Forget bailouts, it's time for a two-speed Europe

Posted in Euro · 259 comments ·
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WE are living in truly historic times and witnessing historic events. Uncomfortably, the massive rally that followed the euro bailout appears to have petered out. The main leading indicator of sentiment is the euro/dollar exchange rate. Having rallied on Monday, the value of the euro has fallen back. One implication of this is that the financial markets are not convinced that the huge EU/IMF/ECB bailout will be enough. Maybe the markets think that the extraordinary web of borrowing between the European countries is just too big to manage, even with such guarantees in place.

People are asking the meaning of signing such a huge cheque. Are there strings attached? In order to make such guarantees valid, does there not have to be much closer integration in Europe (John Bruton had a thoughtful article on this yesterday)? But will this fly?

While the EU elite might want this, the people of Europe don’t. France, Holland and Ireland have all rejected more integration when asked (okay, we voted again). But the signal from the street is that the French want to remain French and sovereign, the Dutch do too and doubtless the Germans, Danes and Greeks feel the same way.

So the people are pulling one way, but the political and banking elite are pulling the other. As a result of this unstable system of IOUs that ties countries’ financial infrastructure together, we are seeing an obvious cleavage between the interests of the citizen and the interests of the power elite. This disconnect between the state and the citizen leads to the spectacle whereby a department of finance, which is supposed to make decisions in the average citizen’s interests, in fact makes decisions that validate existing banking contracts and that have nothing to do with the average citizen — but it is the citizenry who must foot the bill.

Because we are talking about Europe, history and commitments, let’s look back a bit. When examined from a historical angle, the whole financial structure of Europe is now eerily reminiscent of the system of alliances that existed before World War One. How did it happen that when a Serb nationalist in Bosnia murdered the heir to the Austrian throne, what should have been a local quarrel between the Kingdom of Serbia and the Austrian Empire, ended with young men from Castlebar and Dingle dying in Belgian trenches?

Similarly, how did it happen that when the Greek government failed to control its spending, a loan application last week in Waterford was withdrawn? What connects Crete to Cork?

Remember the alliances in 1914 were constructed to prevent war and avoid conflict. But in the end they delivered the opposite outcome.

Now think of credit around the eurozone. The loans from German banks to Irish banks were supposed to facilitate credit, but now the very existence of these huge interbank loans is making credit dry up.

Look at today’s financial alliances. The existence of the euro means that all euro countries are tied together — and not just politically. The underlying adhesive that binds these alliances together are the huge loans between eurozone banks. For example, our banks owe German banks alone €129bn — that’s close to the size of our GNP. When Greece wobbles, a fault line emerges and the German banks begin to worry if the Greeks will ever pay back the loans.

With this in doubt, the Irish loans also look in doubt simply because the bankers are getting nervous. Now with worries about existing loans no one else will lend further to Irish banks; they have to pull in their horns and a business loan application that was due to be scheduled in Waterford gets cancelled.

Unemployment goes up incrementally in Waterford but it also goes up all over the country, which undermines our economy a little bit further and off we go again on the next leg down.

So the contagion that we hear so much about links everyone to everything all of the time. It is the financial equivalent of Germany coming into the war to defend Austria, while Russia comes in to support the Serbs. But the Russian involvement then committed Germany against Russia based on a treaty between Germany and Austria, and then in turn France and Britain came in to support Russia.

Suddenly, instead of a Greek and peripheral European crisis, we get a continent-wide panic which prompts a dramatic response. When World War One broke out, everyone was giddy with patriotism but most truly expected a few skirmishes and then reason would prevail with the whole thing over by Christmas. That didn’t prove to be the case. The war created its own dynamic and all the reasonable logic of the summer 1914 was gone by December.

Now think of the huge bailout. Initially, markets were euphoric. But now, only 24 hours later, people are not so sure. If the markets shrugged off a €120bn bailout for Greece last week, I suppose it’s not too surprising that they shrugged off a €750bn bailout for the whole of Europe this week.

But the “ever increasing bailout” dilemma leaves us in a huge bind because if this bailout is not perceived to be enough, what’s next? Each bailout has to be immeasurably bigger than the last one and all this undermines the credibility of the bailouts because so many countries have run out of money, which is the nub of the problem in the first place.

Most of us see through this bluff. It was summed up succinctly by that great economic thinker Jason Byrne on the Late Late the other night when he laughed and the audience laughed too at the ludicrous notion of a country that is bust, like us, pledging money we don’t have to come to the aid of another country that is bust, Greece.

When a smart comedian sees through the bluff and is throwing out the gag for a laugh and when the people in the audience of the Late Late nod in agreement, no amount of financial spin can obscure the obvious.

AS in World War One, the initial euphoria wanes and the population realised that they were in for a long difficult slog. Do we have the appetite for similar austerity to save a system of bank alliances? I’m not too sure the average Greek, Spaniard or indeed Irishman has the stomach for what lies ahead.

The obvious alternative to borrowing to solve a problem that was caused by too much borrowing in the first place is to orchestrate an organised default, realise that we can’t compete with Germany in the single currency, create a two-speed Europe and start again.

But something so obvious could never fly, could it?


  1. Great thoughtful essay by D once again.

    Lenihan excused Ireland’s contribution when asked of this by Miriam Frontline earlier this week, that we were borrowing Greek bailout money at a rate below what we would be charging Greeks for it, so we would be making money on the deal! ITS like an invitation by the ECB for other participating countries to participate in lucrative lending. Only thing is proper lending should only be based on due diligence. Who would want to bail out ‘missa’ Greece, bailout money flying everywhere in bribes and scams. Similarly, look at the state of financials of the PIIGS, who in their right mind would load more borrowings onto them. I believe the bailout conjuring trick is only a bluff trick. Not going to work.

    We need a 2 speed Europe perhaps and a good plan B.

  2. G

    Casino Capitalism!!!

    The rise and fall of the Dow Jones, while humanity’s fortunes go into permanent decline.

    Fascist system!

    • dwalsh

      @G Well said…
      We can only hope that eventually people and politicians will wake up to the insanity and immorality of the current international finance system and realise we cannot build a rational, integrated and humane global civilisation on the basis of Casino Capitalism.

  3. Well we’ve had structured this and structured that but nothing has worked so far to sate the international appetitie for cheap credit so why not have a structured default?

    If the People, the Governments and now the Eurozone as a whole have to share the pain, I have no problem in also sharing it wholeheartedly with George Soros and Peter Sutherland et al. Fate makes strange bedfellows but I could swallow my pride for the sake of our kids future.
    That a structured default would provide huge savings in Quantitative/ Qualitative easing (Which is it?) and thus free up funds to restructure a more mature Europe can only be good for democracy. At the moment, we have feudalism, with robber barons in the form of international bankers bleeding the Euro estate dry.
    Yet another excellent thought provoking article from our host.

    “When Greece wobbles, a fault line emerges”
    Love that line.
    Positively JohnALLENesque.
    Must go fill fridge.

    • Tim – get that url to connect to ‘I am mad as hell’ …it is coming closer .Some practice is required and auditioning is essential to do it properly.

      • It is time I must have two hen houses to fool the fox .

        • The Code of Before Time and After Time

          To understand the concept of a two speed Europe we need to feel the presence of the Corrupt Government in power in the Irish House of Commons today and the Mullahs of Irish Banking who continue to stash away their ill gotten gains ; we have NOTHING .
          The day that we free ourselves from the maw of their corruption will be the beginning of TIME that they have already taken away from us .When the Land League was formed it was about the denial of Land then to everybody to make a living as it was then in essense a factor of production ‘a wealth creator’.Today land is no longer a factor to the general populace, however, TIME is .We NOW need to form a TIME LEAGUE .
          We want to reclaim Our Time back to its rightful owner namely ourselves , you and I.We seek the Virtue to initiate the faculty of human awareness between ourselves that has been robbed .We want to create our own Greater Circle .
          At present this circle is broken .We must Adapt and change our compass and instead of going from west to east we must move from east to west just like the rest of Europe.
          We must learn to Experience a journey ( Imram ) in Life and not the speed of distruction we find ourselves in.
          Cuairt a Mhean Lae

    • furrylugs – why do you chose to be in frozen time and not the real time ?

      • Too damn busy filling the fridge John.
        And I erected a standing stone, or Gallaun, and stone circle in my garden today just to remind me of who we could be without this Anglo-Greco-Roman-Yankee profit at all costs tomfoolery.

        Time to reclaim our heritage, history and native culture.
        Time to have time. This life of ours doesn’t do pause\repeat.

  4. Just as we had to get to the extreme before the bubble burst we will have to go to the bottom of the barrel before there is any real change. At most, all we will do is change one bunch of gobshits for another, just as they have in the UK. They have alternatives that have plans for REAL change i.e. http://www.ukip.org but they went for the safe option.

    On the comedy point, we have this in Ireland for years, (scrap Saturday, Bull Island, Gift Grub ha ha ha) having a big laugh at politicians but I’m afraid the laugh is on us.
    We know the solutions but just as with any lifestyle issue most won’t change until it is too late. http://irishsovereignty.wordpress.com

    • Black Cat

      I think part of the problem is so many ordinary people don’t understand the basics so they don’t recognise the enemy

  5. SM

    A true bail out of each other’s states would be to exchange each other’s produce.

    Spuds for goods!

  6. ps200306 says
    You’re asking Fintan O’Toole for a clear message? Did you see the Aftershock program the other night in which he and Justine McCarthy were looking for a new constitution?

    Morning,

    CHANGING IRELAND CONSTITUTION 1

    Thank you for the link ps200306!

    I come to think that we need to look at the very core of our social political structures to bring real change. Yes, I would not exclude the constitution from this check up to be put under the looking glass, on the contrary!

    See, everything around us is interconnected in some ways, even more so in the times we live in, and our actions impact on the whole. From this point of view I would drive possible reforms to be brought forward to the people.

    The moderator in this film you linked to states We have to have a plan, not for a few, buy for everyone. I would challenge this thought to think in bigger terms than Ireland alone.

    To change the constitution is a fundamental step to rebuild a framework for Ireland from scratch and from here strongly acknowledge it’s role and responsibility as one of the many cultures / nations on this planet we share.

    i would agree that our system has underperformed consistently and has been abused the way it is worked for decades.

    They have no plan, they work on potholes to be fixes whereby they knew too well that the tarmac used was of a deliberately low standard by the contractor they gave the tender to. As a result the tarmac will melt even at moderate summer temperatures, and the contractor is likely to be called again and gets another contract. – Side note, I wonder why they choose Hans Zimmer’s Filmmusic, ‘The Dark Knight’ for this film Aftershock. Grins, very clever! -

    The Lisbon Treaties, the European Constitution, that Donegal (yes, some sense of pride here) voted against in the second referendum has been phrased in a gibberish that even highly educated legal eagles could not understand without a massive effort.

    Our own constitution would need to take into account what we have learned in the past few years from the ways the ruling elite is working the system.

    As a result of the system wide abuses, the participation in elections is on the decline, this was observed in the North Rhine Westfalia elections as well, the numbers of people who cast a vote declines, which is a clear indicator of lack of trust in the core of the system, which in essence is reflected in the constitution.

    The german constitution, Grundgesetz, in essence was a excellent document, but had been diluted and stretched over the maximum to be able to ratify Nice and Lisbon treaties, the same counts for Ireland.

    Our dream needs to have global proportions, anything else is inadequate.

    Fintan is right when he says that the system is designed to avoid accountability.

    The constitution is too complicated and needs to be thinned out and brought back to a useful level that everyone can identify with and has a part in.

    It is there that trued change can find a start, a start into a world that acknowledges that we were wrong in our ways and need to change.

    To re establish trust and confidence, we need to consider this way as the fundamental step forward and out of this swamp of nepotism and cronyism that is gripping Europe and the World.

    There are strong forces at play that will oppose such changes at all cost, forces that worked the system since generations, but they do not stand a chance against the true will of the people if ti comes out and is expressed.

    The alternative is what happened after the Asian crisis, they just started all over again a new cycle of ripping the masses.

    To make a analogy, our countries are in ashes, luckily no shots were fired, but we look at the ruins of a war waged upon us by a few.

    Discussing QE and other stuff, I asked a friend who was high up and established in Irish politics, whether she thinks that we send our best brains to Europe or the biggest nuts. I think looking at what people Ireland sends to the EU the answer is pretty clear. This is not an Irish phenomenon alone, and this needs to change radically.

    Our influence on european policy making needs to be of a different kind, and we need to look at core changes in Europe that are necessary and possible.

    I would like to point your attention again to this condensed interview, which I think is providing us with ideas we might find valuable enough to consider for changes that need to be implemented.

    http://www.zdf.de/ZDFmediathek/hauptnavigation/startseite#/beitrag/video/1039446/Jeremy-Rifkin-im-Interview-(engl)

    • P.S.

      Someone just asked me what message I would have expected him to state on Vincent’s show.

      Well, it is simple.

      The demonstrations will continue each week on xys at xyz, and if you agree with our demand, that the current government has to step down, please join!

    • Deco

      Great idea – bring in new laws….so that the well connected can ignore the new laws….just like they have been ignoring the current laws.

      What is the position of such expensive notables as McUseless and the “defender of the constitution” (Senator Cassidy) on Article 45 ????
      They either don’t know it exists, or deliberatly ignore it.

      By the way, where does the 7 Billion Euro Greek loan fit in with Article 45 ????

  7. BlueLines59

    Must agree with Furrylugs when said :
    If the People, the Governments and now the Eurozone as a whole have to share the pain, I have no problem in also sharing it wholeheartedly with George Soros and Peter Sutherland et al. Fate makes strange bedfellows but I could swallow my pride for the sake of our kids future.

  8. Spare Change

    Our banks are bankrupt, they are worthless. AIB & BOI are integral to the Economy. These cannot fail. Anglo Irish and Irish Nationwide are not. Yet we are pumping €27 Billion into both of these banks at the expense of Healthcare, Education & Job Creation. We are paying €27 Billion for 2 banks that are not even worth €1….

    Our Government is borrowing money to prop up these failed banks at the taxpayers expense, simply because their wealthy friends in Ireland and the EU are the bondholders in these banks, who will lose out if these banks fail. Why should we pay for their mistakes? Why should we cover the losses of bondholders who lent money to bankrupt banks with bad lending practices? It is our future, our kids future and our grandkids future we are sacrificing here. This money could be put to better use, creating jobs, improving our healthcare & hospitals, and improving our schools. It could be put to better use by investing in our economy, in renewable energy, and new ways to create a wealthy Ireland.

    The people of Ireland need to stand up to this corruption, if you don’t, then don’t complain in a few years time when we are paying 50% tax, have systematic long term unemployment, a stagnant economy, poor healthcare, understaffed schools, and large scale emmigration, with no future for our children.

    Our government have adopted the approach that somehow our economy will return to the way it was 5 years ago with a booming property market. They have based their whole strategy on the return of a booming property market. This is essential for NAMA to work. What they dont realise is, this will never happen again. They are repeating past mistakes over and over again. They have learned nothing. We need a new economy based on new principles. Take 30 minutes from your day visit http://www.davidmcwilliams.ie and http://www.spiritofireland.org see the views expressed on these sites, make your own opinion. Do not believe the propaganda being spouted from Leinster house.

    If you come to the conclusion that propping up Anglo Irish & Irish Nationwide is wrong then voice your opinion by joining the demonstration next tuesday 18th May outside Leinster House. Its time to stand up for what is right, its time to save Ireland from decades of stagnation. If you care about this country and the future of your kids, now is the time to do something about it….before its too late.

    • Deco

      officially the Irish Nepotists Building Society was of systemic importance, when it was in danger of going bankrupt….
      This baffles me because when it was a “success” it was very much irrelevant…..

    • dwalsh

      @Spare Change
      Excellent comment and appeal.
      The problem facing our politicians at this time is they are obliged to fall in with what is euphemistically called ‘best international practice’.
      I remember watching Cowen as minister of finance defend his refusal to tax the super-rich because it is ‘best international practice’. What he was really saying was – we cannot go against these people – we cannot tax them.
      Why?
      Globally the political elites are in thrall to the Doges of international finance – the high priests of the Golden Calf of The Markets. They dare not break ranks with the international system of the all powerful Markets. Their own careers would be quickly forfeit if they attempted such a move; and any nation that did succeed in breaking away would be subject to severe measures to bring it back into line; up to and including military force.
      Our national economic problems cannot be dealt with independently or sensibly and for the good of our citizens for this reason.
      Essentially we are no longer sovereign other than notionally. We are part of a global system that is rogue and out of control. A system that can only be confronted by a fundamental shift in mindset on a global scale. People en masse have to wake up and see the abyss into which we are being driven by global financial capitalism.

      • Spare Change

        I totally agree. This has been going on for a long time, see federal reserve act 1913, bildebergs etc. All part of a global strategy to make us economic slaves.

        Our politicians are merly puppets having their strings pulled. The goal being one world bank one world goverment.

        The problem with their system is its a house of cards based on a worthless paper currency. All these bailouts are just signs of the cracks in the system, throwing more worthless paper money at them will not solve the problem just temporarily prop it up – see queen elizabeth 1st 1588 when she had to remint all the coins her father had watered down.

        Currencies that are not backed with any intrinsic value such as gold back silver backed etc will always fail. History has proven this. Problem is your average joe punter fails to see the bigger picture, and this is the lie that has been covered up for the past 100 years by the bankers.

        I really thought 2008 was the start of the collapse of this house of cards. They have managed to prop it all up, by sacrificing the economic future of generations to come.

        • Spare Change

          But we have to take action first at a national level. Hopefully then other nations will pick up on what is happening in Greece and here in Ireland, and eventually in Britain, now that they have thrown out that useless labour govt, and actually have to wake up to the realisation that they need to borrow more money than greece and ireland combines.

          Take to the streets, protest, get your point across. Its the only form of action.

      • Black Cat

        dwalsh – I struggle to understand some of the posts here but reading your posts from this and previous article your analogies are extremely effective in conveying the gravitiy of the situation to a non-initiate – perhaps you should speak publicly.

        • Hi Black Cat,

          Just to let you know my email to Pravda/RTE enquiring address to enquire re Ghost Land documentary gone without reply so far, also googled it, found naught there, mystery deepens!

          • paulmcd

            MAD Expansion of GHOST-HOUSING scheme in North Louth

            http://www.dundalkdemocrat.ie/dundalknews/Empty-estate-in-Dundalk-set.6287660.jp

            Some relevant factors which the above article does not mention:

            The estate referred to is 2 miles from the nearest shopping centre and about 2.5 miles from the centre of Dundalk. This is a very long way for such a small town. Its situation is not convenient to singletons who would want to avoid the drink/drive temptation. They would be better off buying an old Edwardian 2-up, 2-down townhouse or renting an in-town apartment.

            The list price of the houses on sale at present, 450000, would be roughly 6.5 times the joint salaries of a couple on an average income. It would represent 9 times my public-service salary at its peak, but now considerably reduced.

            The city commuter has left the market where County Louth is concerned. Gunnes Auctioneers closed their Drogheda office over a year ago for this reason.

            Jobs are to be lost in the nearby Halifax-BOS service centre.

            Alas, Louth County Council has been approving so many mad-hat schemes that I am sure the developer will get approval.

          • paulmcd

            Oops! I should have said 5 times my salary at its peak – way too much, bearing in mind that double-digit interest rates are very much on the horizon in the coming decade(s)

      • Damn fine synopsis there, dwalsh.

  9. +1

    See, I started this petition on April 5th, by now I do not care for it anymore because they will not even consider what the people think or what their concerns are..

    http://www.thepetitionsite.com/1/close-anglo-irish-bank-now–no-bank-guarantee-extension

    I fully agree, as a first step, this government has to step down. NOW!

    Thank you for informing us about 18th of May 2010 and demonstrations taking place at Leinster House!

    Allow me one more sentence, I call on everyone joining to influence to your best abilities on people to not execute violence.

    Otherwise you put our Garda in a impossible position, and let us not forget that it was the Garda that expressed their views on this government loud and clear!

    Best
    Georg

  10. SLICKMICK

    Last week, I predicted that 3,000 would turn up for last night’s protest, 1,400 turned up.Saturday 12 o’clock is the best time in order to maximise attendance.The Prem and rugby seasons are over.Suds will be choking on his caviar and cornflakes reading this.Doctor in the house?.Judging by prime time last night, Iceland hasn’t diappeard into the Atlantic/Frankfurt swamp just yet!.

  11. Spare Change

    +1
    Non violent peaceful protest, many of the Gardai are on our side. Lets not alienate anyone, or give our govt an excuse for dismissing our views by labelling us as violent thugs.

    Lets get our opinions accross, tell everyone you know to turn up, post it on your facebook page/ twitter, email all your contacts.

    We have to show the government that we will not stand back and allow them to gamble with our future.

    • Can I just say, from experience, often when demonstrations become a regular event, and I am not saying this is the case, but wish to put up a BIG RED FLAG, what can happen is that agents provocateur are send to start violence and bring the demonstrators into discredit and more.

      My suggestion, observe the next event, if again violence should break out, consider this:

      For the following demonstrations communicate the message that people who start any violence will be arrested by citizens on the spot and handed over to Garda.

      Everyone is entitled and encouraged to help with this arrest and enforce peaceful continuation.

      Do not tolerate any form of violence, and with this message you have a fighting chance to avoid it.

      • Everyone, bring a few large enough cable ties to constrain potential violence. Seriously!

        • G

          Why shouldn’t the people be entitled to go into the Dail? It is the people’s house.

          • What I am saying is to constrain any person that starts violence in any form, throwing bottles or attacking Garda etc.

            Citizen arrest, and hand over to Garda, if that is common sense, you can stop it from happening at the very start.

          • G

            Think ‘conflict’ with the State, which we would like to see avoided as Guards as just public servants doing their best to maintain law and order, is inevitable. Government has to go.

          • liam

            I totally agree G, your exactly right. Anyone is allowed in , anytime, BUT its at the discretion of whomever is on the gate at the time. Did those characters look like they were going in to have a nice cup of tea and chat?

      • liam

        I dunno about agents provocateur. There are certain groups, waving a certain coloured flag, claiming a certain political allegiance who are quite obviously just a bunch of angry shouty fucktards.

        Idiocy trumps conspiracy every time.

  12. SM

    I was on the march last night and will be on the next one too. We need more middle ground there to boost the numbers and balance the social mix. This is about everyone in this country from all social groups.

    No violence.

  13. STEP ONE!

    Are you unemployed?
    Join the demonstration!

    Do you believe human rights are important?
    Join the demos!

    Are you a father and mother?
    Join the demos!

    Do you believe elderly deserve more respect?
    Join the demos!

    Are you angry?
    Join the demos!

    Do you think we can do better?
    Join the demos!

    Are you fed up with 1%-5% owning 95% of wealth?
    Join the demos!

    Do you believe it is right to care for each other?
    Join the demos!

    Are you fed up with war and profiteers of death?
    Join the demos!

    Do you believe we need to live in global peace?
    Join the demos!

    Are you pissed as Hell to see Idiots sent to EU?
    Join the demos!

    Do you think we can change our destiny?
    Join the demos!

  14. SM

    Are you working the private sector but not part of a union? Get involved.

    Join the demos!

  15. mediator

    @David

    You mentioned John Brutons “thoughtful” article. It was straight out of the shock doctrine
    He attended the recent Trilateral Meeting in Dublin and is part of the power elite to which you refer. This crisis has been engineered so that the French, Germans etc will all have to surrender their national sovereignty to a supranational organisation. ie the EU and then who knows.

    Bruton, Sutherland, etc… are are lined up to ensure that when double dip and Euro failure happen the answer (heres one I made earlier)will be self evident to the sheeple.

    ie Full Federal Europe or some deriviate thereof the governance of which will be at arms length from the people

    @ Irish Sovereignty is right. The people are genuinely afraid of real change and instinctively change tweedledum for tweedledee as happening in the UK election. Genuine alternatives are ridiculed on mainstream media and it is the mainstream view that most irish people agree with (sad but true)

  16. Deco

    Britain has a new government. Clegg took any Labour votes he could, and threw Labour out…..And the prize for muppet of the month goes to Will Hutton (observer/Guardian) for advising Labour supporters to switch to Lib Dem to prevent Cameron becomming Prime Minister. Lesson number 1 concerning politicians – they never mean anything that they say !!! (Will Hutton knows that now). Or maybe I am wrong. Maybe Labour wanted to go into opposition.

    As David pointed out a few weeks back, Britain is in a position that even worse than Greece, and has some how or other got away with it. There will now be swinging cuts across the board. And Northern Ireland will get a real shock. It is possible that Cameron might allow the north to reduce it’s tax rates. If that happens it could be a problem for us here in respect to retaining multinational investment.

    Cowen stood up in the Dail and talked about how much he would miss Brown. (Cowen always shows an affinity for tragic types, he was a great pal of the Greek PM also). Kenny and his mates were wearing blue ties and praising Cameron (eh, hold on there Enda – he has done nothing yet !!). And Gilmore stopped comparing himself to Clegg (in case we might think that he too was full of pretence), and was praising Brown. The first thing the new Brit PM will have to do is deal with a serious fiscal imbalance. To give credit the new regime seems to hit the ground running. And most of the new ministers are young and energetic compared to such old stallwarts as Alan Johnson. However I am extremely sceptical – the scale of the disaster left behind by Brown and pals is enormous. Britain will be struggling for over a decade to come. Which probably explains the wisdom of the Labour Party moving away from power before people get to join the dots. There is a “wealth of inexperience” in the new administration. There will be serious errors made in the first year. It remains to be seen how George Osbore and Vince Cable work in the UK Treasury.

    With 25% of NAMA denominated in Sterling, as well as large chunks of AIB/BoI we have a vested interest in Britain getting it’s economic and financial house in order. All the hard work here is wasted if sterling continues to be undermined by money printing, or if Britain is in a continual incomes crisis squeeze – as has occurred over the last two years.

    Now, this connects in my mind to something that Richard Curran mentioned on the Aftershock program on Monday night – concerning the so called smart economy. That we were basically missing the point with all the concerning jobs, manufacturing and cost. If the British decide to make their manufacturing even more competitive, then our manufacturing base will face even tougher cost pressures. Any tax regime changes for the North will be particularly relevant.

    The continuing difficulties in the sterling area will mean continual downward pressure on large parts of the economy here. Something which will affect a lot of people (though we can be confident that the most expensive politicians in Europe will not allow their pay packets or expense regimes to be weight down by such considerations).

    In other words, we have still be dithering about our cost base, and this dithering is costing us a lot of money. The only growth occurring now is from semi-state organizations that are investing millions in projects that are of dubious economic value, on the basis of oligopolisitic or monopolistic market control. And they are beig directed to make big announcements from government departments. We have been here before. This went on a bit in the 1980s under both Haughey and Fitzgerald. This is not real job creation. In fact, in net terms it might even be job destruction. Hardly the most intelligent way to handle an economy in the context of the fact that our next-door neighbour is trying to improve it’s competiveness. The jobs are going to go one direction. And the Dumbasses in Kildare Street will keep talking terms ‘smart economy’ and other buzzwords that are supposed to leave us convinced that they actually have a strategy.

    • Well said Deco, yet again.

      However, you have forgotten that Belmullet Tractor production has exceeded all targets and is up for 28 months running. This patriotic achievement by the glorious citizens of Bangor Erris and Elly Bay will ensure jobs for life and free teeth for all.
      Conversely, the traitorous Doom & Gloom rantings of a few malcontent wavy haired economists, bordering on blasphemy, threaten the security of the State.

      In other news, Maura Slattery-O’Cinneide has been awarded the Presidents medal of Supreme Achievement on becoming the first Dingle woman to bear heptoquintuplets, a heroic feat. Previous recipients include Millicent Frogtrotter III, an Irish Naval Service nurse who tended to the wounded in Chad after missing her Ryanair flight due to the evil American Volcano Dust attack.

      Roses are red? Tarmac is Black? Who am I?

      Welcome to the world of 1984.

    • @Deco,

      Watched Will Hutton’s speech to ICTU last night, thanks Wills for the link. We need an election now plus the number of TD’s halved but that’s OT. He did make rather a good point backed up with charts/forecasts and plenty of empirical evidence. Europe, UK and USA is heading into a big economic contraction over the next ten years due to a global debt crisis that will also impact China and the rest of the world and Eastern Europe in particular.

      This country if we don’t get our act together soon is under a severe existential threat.

      We need to get into survival mode fast. We’re still living in FF LA LA Land.

      We need an election fast.

      Could Cowen, for the sake of the country, plus the Greens, resign from government now, before its too late and its time to hand the keys to Europe.

      Seems the FF poodles have already handed over those keys!

  17. SM

    Joe Duffy is starting his campaign of misinformation on RTE now.

  18. Folks,

    I would like to throw something in here for consideration. I am somewhat skeptical on a two speed system, not totally opposed at all, but have some reservations.

    What I wonder about, I guess it is basically Keynesian David, is the idea of a global currency instead.

    Also here, I have to go into more depth before I can conclude a reasonably informed opinion, but the thought just crossed my mind this morning.

    http://www.singleglobalcurrency.org/documents/EcopyNo15forFreeUnlimitedDistribution.pdf

  19. Deco

    ” create a two-speed Europe ”

    Last year, Lisbon 2.0 was voted through with a promise that “there will be no two speed Europe”. sarcastically, I think it was Anthony Coughlan who commented that it would not possible to legislate Europe to one speed.

    But now the two speed Europe will be required. Maybe even a multispeed Europe. So does this mean that there lead to be another EU Treaty ?

    This is all getting absurd. It proves that all the laws in the world will not prevent people lying, deceiving, bullshitting, wasting, pretending etc….

    • MK1

      Hi Deco,

      Multi-speed Europe was already in place long before Nice I never mind Lisbon 2. The EEC/EC/EU as originally designed has been more loosely organised as it has been expanding, with opt-outs here and there, derogations, here and there etc. Its simple, if we cant agree to even have a single plug for Europe then how can 27 countries be managed as one. Its impossible without having joint unified control. Its those cracks, etc, which undermine systems such as the euro. The yanks head-scratch when they hear that there are Irish euro bonds, Green euro bonds, and German euro bonds rather than EU euro bonds!

      I agree also about laws not preventing people’s weaker attributes. We cant prevent but with sufficient deterrents, just like with 4 year olds, we can dissuade most apart from the foolhardy, and for some that need a personal lesson rather than hearing that the detterent will be applied.

      MK1

  20. Peter Atkinson

    Typical Irish greedy scum.United States of Europe when we are getting cheap money and free handouts (structural funds,social funds) but as soon as we are asked to rally around, the discussion of our soverignity is No1 on the agenda.From uneducated “Bob the Builder” with limited education and just about having the ability to mix concrete, similar to his brain, talking about his latest Bulgarian or Turkish development to the sleeveen slick Micks,or Marys selling mortgages for rip off fees and over valued real estate equally with limited education where are they now.The cute hoors in cahoots with the banking fraternity took the profits before the shit hit the fan.Imagine asking them to donate to a bailout fund.I suppose they did in a way.Their own bailout when they legged it to the cosy hot spots around the world.The real gobshites are still here picking up the tab for their indulgences and I would gladly rally around any citizens of any country willing to vent their anger.We have a minor skirmish at the Laughter Lounge (Dail Eireann) and hours of media coverage is handed over to it.I now really know how the 1916 patriots must have felt when they rose up for change and the initial reaction they got from the citizens of Ireland.I went on more marches throughout the 70s,80s,90s and the 00s and the one march that most sticks in everyone’s mind is the most violent of them all, the march on the British Embassy.The politically correct way isn’t always the most effective.

  21. To march, or not to march?

    In a shop today, big headline re yesterdays march, ‘Shiners, Republicans, Socialists’ hijack march.

    Fair bit of rabble rousing on this list including advice to bring along big enough tie restraints in case they’re needed to restrain violent opportunists on the march…..errr no thanks!!

    The spectre of a battle between the pacifists? and the angry mob, who could be anything from loons annoyed their head shop is closed, to dope heads out for some psycho fun.

    So what does this achieve? That those against the ‘civilised’ way of the Government’s approach to our debt crisis, are mere morons with tendencies towards violence, barbarian hordes we must guard civilisation against at all costs. Our FF goons would love that!

    You betcha I won’t be on the march! Its only a trap so that gobshite Tubridy on his radio show today can look down his nose and denigrate the rabble rousers.

    We’ll get similar reaction all across the newspapers and Pravda/RTE, ensconced in ivory towers, inflated salaries scorning the mob which threatens their cosy lifestyles.

    No doubt some will say this is what we want! Ain’t what I want.

    There is another way. Raising of public consciousness through peaceful dialogue.

    “Washington, D.C. — Thousands of Americans will gather in more than 20 cities for a National Town Meeting on June 26th on the nation’s fiscal future. The goal of the nonpartisan discussion is to find common ground about the choices necessary to address the nation’s growing deficit and national debt. Local forums will be linked together by satellite and the Internet for a truly national discussion. Recommendations will be shared with national leaders, including members of Congress and the White House’s National Commission on Fiscal Responsibility and Reform.

    This unique national discussion will be organized by AmericaSpeaks, a nonpartisan, nonprofit organization, and is supported by three leading foundations with a shared commitment to informing the American public and policymakers of the fiscal realities facing the country. The Peter G. Peterson Foundation, John D. and Catherine T. MacArthur Foundation and W.K. Kellogg Foundation are providing $4.2 million to spur this critical national conversation.

    As national leaders and policy experts work to jumpstart our economy, enormous challenges loom and threaten the long-term vitality of the United States — chief among them, a growing total federal debt that is projected to reach 95% of our GDP by 2020. As national leaders convened in Washington, D.C. this week to discuss fiscal challenges, the three foundations committed to ensuring that the public would have a voice in shaping the terms of the policy debate.”

    Raising of public consciousness through rabble rousing is often counter productive.

    It may achieve some questionable short term gain as in letting off steam, long term its a mockery of real dissent based on rationality, raising of consciousness, informed debate, greater awareness of the facts of the situation facing ourselves and our children’s children..

    • SM

      “The spectre of a battle between the pacifists? and the angry mob, who could be anything from loons annoyed their head shop is closed, to dope heads out for some psycho fun.”

      The marchers were families and young professionals, intelligent informed people who obey the law. A few wasters had a go at the gates of the Dail and it was over in minutes. That’s the actual truth of it. And next week there’ll be more ordinary law abiding people on the march. Nothing will change if people sit at their desks and type angrily on their keyboards.

    • liam

      Marches, protest, demos, all have the potential to be hijacked by certain well know unsavory types. I’d ask the question, its this the only mode of opposition/expression/activisim that we can possibly come up with?

      For single issues, like the pensioners medical cards, a march/protest can be effective, since there is one simple message. This is a far more wide ranging and complicated collection of problems that we have here.

      So is there another mode of operation, and a different type of language that can be employed here? As our host says, these are extraordinary times and require extraordinary responses. We need to be much smarter about how we do this.

  22. G

    Labour/Socialist party still haven’t tapped into the anger, no major events, just meetings of a few hundred people, find it all rather astonishing.

  23. I was just thinking, NAMA should be renamed NLMA, national liabilities mismanagement agency

  24. Art1980

    I was unaware of the protest last night until I read this morning. Will there be another next Tuesday? Agreed violence will do no good for the cause. A sit down protest on Kildare Street and Upper Merrion Street blocking both gates as so to trap the polictical elite in the Dail – they ‘ll soon get Hungry to listen to the people.

    To increase numbers attending these protests if someone could organise a megaphone and make announcements at all the dole queues or hand out flyers to notify the masses.

  25. Philip

    If I was a bond holder, I would be sweating if any state were to default. Indeed the whole system would be blown apart because of the contagion effect. This is not the same as Argentina etc where they were more isolated.

    All it needs is one country to blow…Greece, Ireland or anyone.

    2 Speed Europe makes no sense. The whole system is flawed. Needs to be redrawn from scratch.

  26. Art1980

    Anyone know who the hero was who parked a “cleaning crane vehicle” outside Anglo building on the green with a large poster that listed the traitors and wasters of this country along with the sums for bailouts. I have a picture of it but cannot attach here.

  27. ps200306

    Long but informative article from Der Spiegel on the IMF in Greece and the prospects for the rest of the world. Discusses the options of austerity, inflation, and default. Probably bears out a lot of what David has been saying here for some time. Anyway, now that bank debt has become sovereign debt it is Last Chance Saloon for the global economy.

    http://www.spiegel.de/international/europe/0,1518,693317,00.html

  28. When Merkel suggested sanctions on countries that don’t manage their budgets (withholding of agricultural grants for example), that to me indicated a pending more radical shift of power to Europe.

    When Lenihan seconded that suggestion the other day it seems the Irish government are of the same mindset. (Albeit he looked like the new member of a gang hoping to impress the gang leaders).

    Assuming the Euro remains intact I think we can expect some heavy changes. EU legislation to further centralise power. Changes of structure so that 5 year term national governments aren’t left to manage or prevent boom / bust cycles (every 15-20 years?).

    Micheal Martin gave a telling comment on TV the other evening – “How do you prick a bubble, it sounds easier than it is”. Even if FF could have ‘pricked the bubble’ why would they. A happy electorate means a better chance of re-election. (Ok, it hasn’t worked out that way this time but…)

    Reality is that you can’t trust/leave it to national governments to protect the Euro.

    In conclusion, if Europe gets past this crisis it will prove to be the perfect vehicle for progressing the EU agenda.

    • tony_murphy

      All aboard the Special Purpose Vehicle now. Don’t get left behind.

      Special purpose vehicles driven by drunks and brainless fools given directions by eurocrats, passed lisbon, stuttering and now heading over a Cliff

      I for one am well sick of SPVs

    • Interesting food for thought. I’m hearing all this thought on the euro being finished and not lasting 2 decades at the very most. Its something I disagree with, its merely growing pains. The Euro when run right will be a great alternative to the current world reserve currency, the USD.

    • coldblow

      Re pricking bubbles, Galbraith in his book about the 1929 Wall St Crash makes the point forcibly that while some would have seen it coming nobody for sure wanted to be the one to bring the party to an end. Whoever did that would be left with the blame while everyone else could argue about what might have been, soft landings etc etc.

  29. wills

    Posters:

    Will Hutton streaming LIVE in Dublin NOW at link below.
    http://www.ictu.ie/

  30. wills

    David.

    There already is a two tier system in Europe and Ireland and UK.

    The economic system is hatched to deliver through political system the economics which works to the benefit of the guilded, well connected, well heeled, crony connected, landowners, corporate owners and old wealth families.

    They run the operating systems of the economy for the serfs on the plantation habitat and they run the operating software for the economy for the insiders habitat which always remains intact above the fray and the chaos and the pain and suffering the non rich live in.

    The euro is a fractional reserve banking fiat paper money project meated down for the plantation serf habitat, implemented and rushed through the political channels to get to work making for the insider economy billions and billions and this is what we are witnessing.

    The euro was literally a money making project on industrial scale to make the insider class wealth beyond the insiders dreams.

    • wills

      Thus said, if the euro fails the insider class do not care ‘cos it has yielded what its creation intended, billions and billions of wealth funneled into the insider class economy, an economy which rests beyond the serf / outsider class economy.

  31. Malcolm McClure

    71 comments today and no coherent analysis so far.
    A lot has happened in the past few days. Let’s all quieten down and think about what it means?
    Since there has been no response to my comment at end of the previous article it might be worth repeating”
    Said on RTE news that Ireland may have to submit its budget to the other EC members for approval.
    Alice in Wonderland? Time was when the budget was the most sensitive secret until it had been delivered.
    What will the others think of our attractive corporation tax rates? if one of them disagrees, who settles the arbitration? German bankers?

    • wills

      You are entitled to your viewpoint and in respect I say back to you that your characterization of comments incoherent is patently not true.

    • wills

      Malcolm.

      What exactly are you asking feedback on there in your comment it is quite vague?

      • Black Cat

        On six one tonight they said the IMF will be visiting us in a months time, is this just routine or something more sinister.

      • Malcolm McClure

        Sorry wills: If it is too vague, I withdraw the comment and accept that I must remain a puzzled pilgrim, treading the lonely wilderness of the benighted, and unable to ignore the howls of distant wolves.

  32. wills

    Black Cat.

    I think focus on IMF can be over done. The IMF is an agency funded by the money printing presses.

    Who funnels the money printed off the presses into the IMF draws more attention.

  33. stiofanc02

    Malcom is too smucking fart for us lowers, but , I have a response for him….. The Tanaiste says “No way Jose” No one is going to see our Top Secret Budgets, like the last few that were not leaked to the media and had many surprises. Hows that my friend? Give me a break.

  34. Alf

    Hi David,

    Political elite? hmmm. Where’s the track record? First they set up a currency framework that creates huge bubbles and has no ability to handle subsequent recessions. Their solution for too much Greek debt is to lend more while simultaneously putting the each of the nations at more risk. Instead of letting free markets punish the banks for reckless lending they encourage the ECB to lend to schemes such as NAMA; which ultimately makes the taxpayers pay. Finally their solution for this incompetence is to hand over more power? Arrogant but not very surprising.

    But really does this sound like an institution that has earned more power? I don’t think its very surprising that the peoples of Europe don’t want further integration. Any remaining confidence in the financial competence of the eurocrats must have been wiped away with the Greek fiasco.

    • wills

      ALF.

      Surely the financial engineers produced a humdinger of a money making vehicle that is the euro and showed supreme ‘competency’ in how they pulled it off!!

  35. Black Cat

    I had thought being part of Europe was going to lift us out of Gombeen politics and corruption, naive maybe

  36. IMF… CORRUPTION… SHIFT OF POWER

    Euro Commissioner Olli Rehn has made a coup, what was unthinkable just a short time ago, never would have been agreed by Germany and France, now became reality, Europe demands Power.

    At the global level, we deal with a globalization that is mainly influenced by powerful Washington Lobbyists, the IMF and Worldbank.

    Lobbies play the major role in policy making in Brussels. The Lobbyists have Brussels under Siege since long. Consumer protection in matters of Food for example, has a relation of 1 Brussels Representative to 100 Lobbyists. These are the Pepsico, Kraft, Nestle etc, who pay enormous sums to manipulate legislation to their advantage. Hence a simple ‘Traffic Light’ marking of food in terms of good, neutral, bad has been successfully blocked and a Industry preference of somewhat cryptic descriptions is in place.

    There are many those examples to show that Brussels operates in certain ways. The latest stunt is mind blowing, a commission steps over all established processes Europa Rat, Parliament and other democratic consent instruments and implements new rules.

    IMF is in the boat and we all are just presented with the fact as if it is natures law. It is not!

    We have not called the IMF to act on our behalf, neither did the people of Greece to which we should show solidarity.

    The IMF and World Bank are the backbone of this globalization. Their history of ruining countries and leaving them back in poverty by implementing structural policies is long and well documented.

    Keep in mind that the IMF gives their civil servants are instruments of tyranny and can do as they see fit, they impose with dictatorial powers their will on recipient countries.

    In post Lisbon Treaty Europe, by now we can see the truth behind the gibberish that they call a European Constitution. The Controllettis are back!

    The IMF country manager has higher powers than the leader of the country they go in, it is as simple as that. They just use this power to dictate non negotiable conditions, and should the Leaders of the country disagree, they will not make recommendations to the board of the IMF. Period. Aid, debt relief etc is brought to halt right away.

    This is Tyranny and the instrument of high finance to enslave nations and dictate a new world order.

    Joseph Stiglitz wrote ““reforms often bring advantages to some groups while disadvantaging others,” and one of the problems with policies agreed in secret is that a governing elite may accept an imposed policy which does not harm the elite but harms others. An example is the elimination of food subsidies.

    Ok Folks, I am sorry, I realize I need to deal with Internet attention span, but this can not be written about in 2 sentences, really not.

    Essentially, the IMF undermines every democratic principle. Why? Because they make elected representatives accountable to Washington based Institutions and further increase already existing corruption!

    I try to make it short, so what does this mean for Ireland and Europe?

    Put it this way, I think it is fair to say that we all learned a great deal during that past three years and that we are governed by incompetent puppets who serve the Bank CEO’s and Lobby Groups, and NOT the people of their respective Nations.

    Now these Puppets are being sent to Brussels to come up with a strategy to ‘help Greece’ , well, we learned that is pronounced bailing out major German and French Banks who gambled our money away and not meant to help Greece at all.

    Next they talk about saving the Euro, whereby the same applies, it is nothing but another fraud, another capital shift from the masses of working class and poor people to the Banks. Period!

    So, we learned that Lenihan and Cowen are not to be trusted, on the contrary, they deceived us and were complicit in this Heist together with their cronies. Or, would you really doubt that a public investigation in these matters would bring out different results than we saw in Iceland?

    I dont think so, and the digs are braking it on the street since long, even without the all facts at hand, we know this. We even have to face their undemocratic arrogance to deny us such public investigation.

    Now, this is not only in Ireland the case as I showed in an earlier article where I tried to explain the truth about the Greek bailout, titled ENOUGH IS ENOUGH. Germany is not governed by Merkel, the truth is that Ackermann and others are calling the shots, and this since a long time, and this is replicated throughout Europe.

    So these people meet in Brussels and before you know it, the IMF becomes a normality in our media landscape, the presence as normal as Tubridy on a Friday.

    We are facing a totalitarian bureaucracy that is executing this Heist.

    The sudden presence of the IMF in Europe has been dictated by the same inept and corrupt politician puppets who were complicit in this Heist!

    As for Ireland, a new government can not be trusted to the very people alone who are in the system since decades, this is not good enough.

  37. mishco

    OK we’re all linked in the euro, but the euro can be seen as a sideshow to the dollar if you agree with this article (which makes sense to me):
    http://www.bfi-capital.com/mountainvision/newsletter.php?view=093f65e080
    When all’s said in done, buy gold.
    And/or vegetable seeds.

  38. Yogi Economics – this is defined as the suspension of body mass activity until we can afford to pay our debts again.This means we stop eating and morph ourselves into a state of hibernation away from sovereign debt and suspend sex.
    Recently an 83 year old man in India abstained from eating for seven decades and has been observed by a team of medical doctors from USA to study his technique for use by men in war , space travel etc .It has been noticed that his body was able to recirculate his body fluids again without needing to discharge them.
    Do we have something to learn from this and were we to attempt it would it distroy our national economics permenently? Just a thought on defining another Time capsule !

  39. Irish Politics in The Toilets :
    Have you ever sat back and look at the government on film when watching the TV? Have you ever compared them to their equivalent in the House of Commons in London , Paris ,Bonn , Capital Hill etc ?
    I find this an interesting study .Just watching these deputies ( cowboys) actually sitting there and their body language tells us more about them than they will ever mutter during their lifetime in the dawl.Next time when you watch them look at their faces , then their eyes, then their arms and hands , then their shoulders .I often wonder what they are sitting on because their experience is only a personal one in a public place .
    There is no evidence of there been really present representing you and I .No attention shown that would register that they want to connect with the opposition or anyone for that matter .Stare is probably the focus of their virility and where they stare it can only be inside their heads to a void of emptyness .They are an amazing specimen of species that calls us to think of Jungle science .Can you imagine what happens when the toilet door on the train opens while you are sitting down or the door of a public toilet on the street. Can you imagine?
    Nothing fazes their pleasures as they sometimes squirm on their seats .
    Speakers have their own unique tribal custom that is evolving in an ape like fashion.Watch how when they speak as they always clutch at least one hand on the bench in front of them and allowing the other arm to drop hanging from a stroke attack.I have seen many monkeys doing that at least they can swing when they want to .Our deputies would need feathers to do that .Have you notices how the speakers stare at the floor when speaking .Have they hygene problems in the building they want us to know about ?Have you ever seen their full blown facial dissatisfaction when they are asked a question and then they might lean heavier on that arm clutching the bench in front of them or do a musical between the two arms clutching and de clutching the bench at the same time.
    I am reminded of the ancient art in our lands in a time of long ago known as ‘fith fath’.It is the art of apearing and disapearing using body colours against the sunlight of the day .Sometimes the members in government do that to confuse the people that elected them and cause a blurr that displaces our collective sense of beaing a nation.

    • Yes John!

      I compared this often, and can I just add to your excellent observation this ridiculous act of reading (jabber, stutter) out pre fabricated statements all day long. This in itself is a political culture which needs to be challenged to the bone.

      The way this dail operates is ridiculous! It reflects the state our democratic structure is in.

      A year ago I saw this the first time on oireachtas live and I can only tell you that my jaw dropped on the desk when I observed what is going on there. What may seem normal to most of you guys, looking at it from a distance is utterly ridiculous.

      Makes one laugh at first, but this is substituted quickly by a certain sadness and deep concern. Another thing which was most obvious for me as an outsider coming to Ireland was the level of corruption here. What really struck me was the fact that they do not even try to hide it, so blunt they are. In other countries where I lived, they try hard to hide corruption behind all kind of smoke screens, not so in Ireland.

    • You mispell the word, ‘Dail’.
      Your spelling is ‘dawl’.
      The correct spelling is
      ‘The Dole’……………………………

      :)

  40. johninmunich

    The Germans have greatly benefitted from the Euro in the last couple of years. Normally the Spanish and Italians would have devalued ages ago, meaning German products would have become too expensive. This would have resulted in lots of job losses in Germay. But in the last couple of years they’ve lost about the same amount of jobs as Ireland. So they will continue to try and keep everyone in there.

    I disagree that your average Greek is not ready to stomach change. About 80% of them are screaming for change. For the last 60 years or so, different generations have left for America, Germay and Australia. They want to see reform in their country. It’s cheaper to send something from Germany to Athens than from Athens to Thessaloniki for gods sake.

    Economic growth in Europe will start in central Europe if at all, provided the Euro stays weak. Lambasting the Germans for not spending as I often see here is a pretty poor argument in my opinion. First of all why join in and buy mindless tack that nobody needs. Secondly, if the Germans suddenly started spending tomorrow, what Greek or Irish products would they buy? I was at BAUMA, one of the worlds largest machinery trade fairs a couple of weeks ago. There were thousands of German companies there, quite a few from Spain and Italy also. I saw 3 from Northern Ireland, none from the Republic, 3 from Greece. It’s not the Germans fault, or the speculators fault that the Irish or Greeks have no real history of producing anything.

    Blaming speculators for this that and the other is also folly in my opinion. They are just taking advantage. The same as the developers in Ireland took advantage. And will surely take advantage again if allowed to.

    • Original-Ed

      johninmunich
      I agree with you , there’s no point in blaming the Germans for our excesses. They’ve done well from the Euro and expect all countries within the zone to pull their weight. They don’t buy our products, because we don’t have any decent ones to sell and I know that they would buy if we got off our arses and produced some.
      I exhibit there, at a huge international fair in our sector and only three other Irish companies are ever there and none of them are tech. apart from ours.
      They’re the best customers in the world – they know their quality and are prepared to pay for it.

    • wills

      johninmunich.

      The comment sum’s up nicely the problem here in Ireland. The reason for lack of indigenous production and so on is precisely because the infrastructure in Ireland servicing home grown business in Ireland is rigged and access to credit open to those who play the crony board game.

      Anyone who proceeds according to the rules and ethics to be expected that govern principled business practice are iced out and driven to a despair undermining ones enthusiasm to continue swimming upwards against the corrupt gatekeepers keeping guard on who gets a chance at running a business and who does not.

      • Original-Ed

        Wills,

        You’ve got a good point there, but there are ways around it – the pay before play mentality in our political culture is a major drag on our development. The brazen displays at the Galway races said it all.

  41. GoMorning,

    FF Euro poodles out in force today haranguing FG for ‘reprehensible’ remarks on proposed involvement from the European Commission on Ireland’s budget. Richard Bruton cautioned FF on their denigration of democratic debate and Martin’s poodling didn’t help clear up clear concerns. Earlier on Morning Ireland we had the view spoken by a euro academic that while the commission could propose budgetary changes, Ireland would have the power of veto at the council level if it so chose. This was denied by Bruton. The story is there will be a task force set up to deliberate on what the budgetary involvement will me. Speculation is it could be anything from the macro to the micro, macro agreeing broad parameters, micro meaning anything from corporation tax to Pat Kenny’s taxable income, or the level of pensions I guess. Typical FF poodle effort to stifle debate. Sovereign freedoms are at stake here, right to set our own corporation tax, to stimulate our own markets through native taxation policy. The fact that a task force is to be set in motion around this, plus the need to get broad agreement for it, plus the level of probity such a project may entail for Euro members, does not bode well for a successful outcome. Satisfaction of world markets therefore on this score would neither appear to be easy nor have any great hopes of a successful outcome! D’s prescient essay title would therefore gain more evidence for its aptness the more time goes bye.

  42. johninmunich – all the greek employees in the EIB in luxembourg would disagree with you .They produce the best Olive Oil and they sell it to the Italians who sell it on under another flag.Greek marketing is not as developed but their raw products are.

  43. She does it again, Martina Devlin calls a spade a spade.

    http://www.independent.ie/opinion/analysis/martina-devlin-tds-have-cut-themselves-adrift-from-the-electorate-2177898.html

    This is exactly why I thought Fintan missed an opportunity, or better, missed the point on Vincent Brown!

    It is encouraging to see that people like Martina are still around in Ireland, but for how long?

    I came across her column just a few weeks ago, and in deed, she is truly a precious gem in the Irish media Landscape.

    • “This boil needs to be lanced right now”

      MK1 is Martina Devlins doppleganger?
      Shurely not???

      • One of these days, you need to explain to me what that means, I have no idea, the boil needs to be lanced…. LOL…

      • MK1

        No, I am not Martina Devlin (she’s MD1 shurely!), but I do agree with her that an election here would give a new government a mandate. We also need to think if 5 years is too long for a government, perhaps 4. But when the sands were about to shift the Irish electorate voted in this government so have no-one else to blame but themselves. All we can do is wait.

        Laughingbear, Lance The Boil is a call to repair things that are broken using sharp but effective means, eg: Bank Reform, needs to be enacted, and radical with new thinking. Banking is a utility, just like water, electricity, roads, etc. We need to think that way. And political reform is also needed.

        What would you Lance?

        MK1

    • coldblow

      I recall her some months ago on the radio discussing the case of the young girl who sent a neighbour to jail by lying. She had, as an adult, the courage to confess what she’d done and the man was released. Unless my ears deceived me, Devlin said that she was worried that the case would make it less likely for women or girls to report such crimes in the future. I also used to look at her OPs (Indo) but gave up as it was just the usual ideology.

  44. Central Bank, Honohan on ANGLO:
    ….UNCONSCIONABLE….

    Bravo! I commend Mr. Honohan on the deliberate use of this word in his description on the events around Anglo Irish Bank.

    Unusually harsh and shocking to the conscience; that which is so grossly unfair that a court will proscribe it…..In contract law an unconscionable contract is one that is unjust or extremely one-sided in favor of the person who has the superior bargaining power.

    At the same time Alan Dukes wrote an article in the independent that is not even worth my comment anymore.

    This current government rejects the people of Ireland and their clear call for a public inquiry into banking matters, not only Anglo and Irish nationwide but all Banks.

    This government has to go, and the protestors need to get their act together and come up with a list of demands to be presented as not negotiable, and the public inquiry is just one of those points.

    • Unconscionable….

      Unconscionable conduct is also found in acts of Fraud and deceit, where the deliberate Misrepresentation of fact deprives someone of a valuable possession.

      You can bloody say THAT!

      It deprives the Irish people of 25 billion euro.

  45. AndrewGMooney

    David, thanks for another enjoyable article.
    There has always been a 2 speed Europe! Those low interest rates when the hangover of German unification and a neurotic saving/hoarding culture demanded it. At the same time the periphery was allowed to slam the accelerator down and head to the cliff edge in various Franco-German precision engineered ‘special credit vehicles’. Vehicles fuelled by virtuous savings exchanged as cash-for-trash by German banks and pension funds in the casinos of Wall St and The City. Puritan politicans to their home Bild target demographic, whilst consorting with hedge fund whores and harlots in Babylon-don. Hilarious stuff. Now ‘further European integration’ translates as EU/ ECB vetting of sovereign budgets even though EU Court of Auditors has declined to sign off its accounts for a whole decade. You couldn’t make this up! So the end game comes into focus despite the ‘shock and awe’ campaign that lasted all of 24 hours:
    ‘Why The Euro Must Die’
    http://www.taipanpublishinggroup.com/taipan-daily-050710.html
    It used to be ‘double or quits’: Further Eurozone integration or disintegration. The former looks increasingly implausible, unless decades of deflation suddenly becomes a fashion accessory for the chattering classes of Dublin, Rome, Lisbon and Madrid.
    A sensible way forward, perhaps, is for the delinquent hoarders of Core Euro to launch a new ‘Uber-Euro’. Leaving the PIIGS with the existing ‘Unter-Euro’ which can then re-splinter into culturally appropriate forms? If Fianna Fail. Inc (formerly known as ‘Ireland’) succeed with the Catholic guilt hairshirt flagellation and deflation, then this vassal protectorate/former sovereign state can seek forgiveness, absolution and readmittance to ‘The Temple of Balanced Budgets’ at a later stage. So long as they succeed in escaping the trading snares of Perfidious Albion!
    Speaking of the French, I fancy a comic interlude, so let’s look at Sarkozy’s latest hissy fit. Quelle surprise! Looks like they’re gearing up for a war on the Brits cause Alastair Darling said “Fc-uk off, stick your SPV up your morally hazardous arse”:

    http://www.telegraph.co.uk/news/worldnews/europe/eu/7711356/Europe-tells-Britain-not-to-ask-for-help-in-a-crisis.html

    “There is not a two speed Europe but a three speed Europe. You have Europe of the euro, Europe of the countries that understand the euro … and you have the English,”

    I’m sure the British nation is quaking in their boots at the prospect of retribution from the Eurozone. *rollseyes* Of course, a singular genius Brit prophesied all of this denouement long ago and far away. And a sensible solution. But the Yanks decided to replace the Brits as Empire instead. Forget the Euro, time to roll out The Bancor:

    http://www.guardian.co.uk/commentisfree/2008/nov/18/lord-keynes-international-monetary-fund

    • From your link:

      http://bit.ly/deTAPF

      “An 18-Year Flashback

      There is also a bit of déjà vu here as far as the United Kingdom is concerned. That’s because Britain went through a phase some 18 years ago with similarity to what the eurozone faces now.

      In 1992, Britain was part of something called the ERM, or European Exchange Rate Mechanism. The ERM was a kind of fiscal strait jacket. As a member of the ERM, Britain had to keep its currency, the Pound sterling, within a certain agreed-upon range.

      The trouble was that the prescribed range for the ERM meant Britain’s currency was too strong. An overly strong pound was killing the weak British economy. (Sound familiar yet?)

      Back then, British politicians were just as pig headed as the talking heads in the broader eurozone today. They swore up and down that Britain would not drop out of ERM… that the British pound would not be devalued… that the pound would hold its value, no matter what.

      Well, those politicians didn’t know what they were talking about. They didn’t understand that fiscal strength requires preventative maintenance — that you keep a strong currency by avoiding debt build-up in the first place, not irrationally denying it after the fact.

      And so — we are still talking about 1992 now — along came a speculator named George Soros, looking for trades to make in his legendary Quantum fund.

      In a nutshell, Soros saw that the British politicians were being stupid. He saw that the British pound would have to be devalued, for the sake of the weak British economy… and that stubborn British politicians wouldn’t be able to maintain membership in the rigid ERM band just because they wanted to.

      And so Soros shorted the daylights out of the pound… and made a billion dollars in a single day doing so, earning the nickname “The Man Who Broke the Bank of England.” The tabloids hated Soros after that — they accused him of taking 12 pounds sterling from every man, woman and child in Britain — but really all he did was do the country a favor.

      (Some British economists admitted that, had they stuck to the artificially strong ERM trading band even longer, much greater damage to the British economy would have been done.)”

      euro dipped again $1.25

      1.00 EUR = 1.25852 USD

      Question I pose here is would parity with the dollar sort out problems for the eurozone?

      • I was watching some lectures/interviews of Soros. The man is brilliant.

        Also, I heard on King World News the likes of Goldman Sachs can short the Euro and crash it overnight if they wish thanks to the IMF’s SDRs (special drawing rights) an the fact the Euro is a fiat currency.

        Philharmonics have been sold out in the past few days and gold and silver has been shooting up to record highs.

        It won’t be long now until gold reaches €1,000 an ounce.

    • tony_murphy

      Thank you AndrewGMooney, not only an entertaining post as ever, but very informative.

      The link to the IMF was very much needed. I must have being looking out the window at school during the history lesson on Bretton Woods. I wasn’t given the opportunity to take business studies, maybe it was covered there. Business studies was for girls only apparently in the school I went to in the 80′s

  46. SLICKMICK

    http://www.Independent.ie says that there are presently 1 million students in Ireland.Where will all of these people find work?.We will pay, have paid and are presently paying a horrendous price for high birth rates and crazy levels of immigration over the past decade.Another cock up from the political class.

  47. MK1

    Hi David,

    DavidMcW> the financial markets are not convinced that the huge EU/IMF/ECB bailout will be enough.

    Is it a bailout or is it a proposed fund that will be built-up over time and lent out? Bailout is a term that is being bandied about far too often. Note that euro values are not dependent on whether proposed financial ‘safety mechanisms’ work or not, because even working solutions could make the euro weaker, eg: via QE. A weaker euro is not a sign of an unfunctioning euro system. And a weaker euro is better for exporting europe. A strong euro is not necessarily a good thing.

    DavidMcW> So the people are pulling one way, but the political and banking elite are pulling the other.

    In terms of better integration and better systems, I dont think that is the case at all. Banks and Governments ‘failed’ with the current looser system so if anything people want a better system, as they dont want to pay for the “bailing out” of failed bank ‘betting’ and credit bubbles.

    DavidMcW> but it is the citizenry who must foot the bill.

    The only way that citizens can change this is to establish a more democratic and direct system. It is in the people’s power whether they realise it or not.

    Btw, I dont think the WW-I analogy works.

    DavidMcW>The loans from German banks to Irish banks were supposed to facilitate credit, but now the very existence of these huge interbank loans is making credit dry up.

    Just because a system fails due to the mis-usage of the system, ie: credit in this case, doesnt mean that the system itself should not be used. Credit IS fine, as long as its amount is controlled very carefully and thats its based on real assets.

    DavidMcW>they have to pull in their horns and a business loan application that was due to be scheduled in Waterford gets cancelled.

    But the business loan getting refused in Waterford is beacuse there were too many loans already given out in Waterford, Dublin, Cork, London, etc, in the past, the credit bubble. This happened irrespective of the Government debt problems and the systemic cracks in the euro system.

    DavidMcW>So the contagion that we hear so much about links everyone to everything all of the time.

    I agree that contagion is the wrong word, links is better. Contagion is a media fantasy buzzword.

    DavidMcW> all this undermines the credibility of the bailouts because so many countries have run out of money, which is the nub of the problem in the first place.

    Exactly, too much credit. And the only reason that the US is not worse than Europe is because the USD is a global reserve currency, the relatively new euro is much less so.

    DavidMcW> orchestrate an organised default, realise that we can’t compete with Germany in the single currency, create a two-speed Europe and start again.

    In that scenario, Germany could leave the euro and the other countries would remain in it, the euro 2.0 would devalue, the DEM 2.0 would appreciate etc. Yes, that would be workable BUT another way would be to tighten the euro system, to re-examine the rules, strengthen them, and make sure they are followed by EVERYONE, Germany included.

    MK1

  48. wills

    laughingbear.

    The ‘insider’ class / occupiers and operators of the levers of the free market economies are not incompetent.

    In fact the problem is they are far too clever for their and the outsider’s class own good.

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