May 31, 2010

Europe back in the wars

Posted in International Economy · 111 comments ·

‘The lamps are going out all over Europe. We shall not see them lit again in our time’

These famous – and now seemingly prophetic – words were uttered by Sir Edward Grey, the British foreign secretary, as dusk fell over London on August 3,1914.Grey had just sent an ultimatum to Germany, following the latter’s invasion of Belgium, but he knew it would have no impact and that the next day his country, along with all the European powers, would be at war.

Seeing the lamplighters turning up the gas lamps on Whitehall and King Charles Street on that late summer evening, he linked the humdrum daily routine to the epoch-making events then getting under way. The same was happening here. People went about their business in the most leisurely way. Dun Laoghaire Pier was full, as was the centre of Dublin; there was no real sense of what was to come.

Technically, of course, Grey was wrong.

The lights went on again across Europe, albeit over four terrible years later, and life resumed some kind of normality.

However, substantively, his assessment was entirely accurate. August 1914marked a true turning point in European and world history, the end of an era which stretched back at least to 1870 and, in many ways, to the post-Napoleonic settlement almost a century before.

Most of the European ‘great powers’ that entered the war did not survive it – the Austro-Hungarian, Ottoman, Russian and German empires were all shattered and destroyed between 1914 and 1918.Even those that seemingly emerged intact – and even victorious – namely Britain, France and Italy, were irreparably scarred and weakened.

For example, by 1921, following our independence, Britain, the victorious World War I power, had lost more of its pre-1914 landmass than Germany, the defeated power.

The crisis gripping and steadily strangling Europe today is equally devastating, although fortunately almost bloodless. By ‘today’, I mean since 2008, when Europe first awoke to the fact that the supposedly ‘limited’ ‘regional’ subprime crisis in the US involved the Old Continent too – up to its neck.

The meltdown of Iceland and the abrupt collapse of the Irish property binge were the harbingers of a much more widespread disaster, as were the bank runs in Britain and the bailouts in Germany.

But, like London in 1914,most people were determined to pretend that it was irrelevant to them and continued to live in la-la land.

It is a historical fact – amazing, but steadily less so in light of current developments – that for several weeks following the declaration of war, the 1914 English cricket season continued under the banner of ‘business as usual’.

Only after WG Grace, the Grand Old Man of English cricket, wrote a letter to the Times in late August did the MCC come to its senses. ‘‘I think the time has arrived when the county cricket season should be closed, for it is not fitting at a time like this that able-bodied men should be playing cricket by day and pleasure seekers look on,” he harrumphed.

‘‘I should like to see all first-class cricketers of suitable age set a good example and come to the help of their country without delay in its hour of need.”

We are seeing the same today, as the EU tries to patch things up and focus on ‘important’ events such as the Eurovision Song Context. However, the recent mega bailout, which no one really believes will do anything but buy time, has evocative undertones not just for the pre-war delusion, but the post-war economic solution.

Think about the idea of burdening the taxpayer with the sins of the European banks as reparations. JM Keynes argued that if the Allies lumbered Germany with huge reparations, the German economy would have to become hyper-competitive to find the extra hard currency to pay the reparations and it would destroy jobs in Britain and France as a result.

He argued that the debt relief for Germany would ultimately make Britain and France safer and that imposing reparations would make them less, not more, secure.

He also threw in the idea that an unstable Germany might be a dangerous Germany and spiced his polemics up with the forecast that the major currency arrangement of the time, the gold standard, was the problem, not the solution. All this was heresy to the people who had failed to see the war coming but felt entitled to be listened to after the devastation.

Yet Keynes was right and Churchill, when asked in later life about the biggest mistakes of his life, stated that one of them was not listening to Keynes in 1927 when he told him as chancellor to take Britain off the gold standard.

The euro is the gold standard of today. Under the gold standard, companies and countries lent and borrowed huge sums across borders. Banks, believing the gold standard was immutable, financed all sorts of cross-border commerce. Thus America became Britain’s banker. Britain became Germany’s banker and France too lent huge sums to Germany.

Germany needed all these loans to grow more quickly than the rest of the world so it could payoff the reparations to France and Britain. The Americans always wanted to offer debt forgiveness to Germany, but the old allies disagreed. So Germany borrowed money and got into more debt to deal with a dilemma that was caused by too much debt/reparations in the first place.

We are building up the same reparation system in Europe now. Here, all of the banks’ debt is guaranteed indefinitely, courtesy of the EU bailout plan for countries in trouble. So too is Greece’s, Portugal’s and Spain’s.

The only beneficiaries of such lunacy are the banks who lent the money in the first place. As the EU has now stepped in to act as a backstop to anyone in trouble, there is surely no reason why our own bank guarantee should be extended beyond its end date of September 30.

The real problem is that it is quite clear that none of these countries will be able to grow within the straitjacket of fiscal tightening and the strong currency that is the euro.

One of the iron rules of monetary economics is that weak countries with strong currencies get weaker, not stronger.

This will happen to us – and all the others. Ultimately, like the gold standard, the countries will see that the euro is not a facilitator of recovery but an impediment.

It will be stitched together again and again until the European Central Bank not only becomes the lender of last resort, it becomes the lender of any resort.

Europe has a choice between sorting out its currency and banks or its economy and unemployment. Seems pretty clear, doesn’t it?

  1. Legin

    Hi David,
    I think what you are saying we should do sounds correct,but i really can’t see this Government leaving the single currencie,can you?

    However when the real crash comes due these massive bailouts and guarntee’s put in place, i am shure they will be trying to hoodwink us again saying no-one was telling them to leave the single currencie.

  2. @Tim 23 previous article

    Re Morgan Kelly’s calculations posted in the IT. Note his overall position following these calculations is that we cannot afford the cost of the bank bailouts on top of our sovereign debt obligations.

    Also re the IMF landing in Dublin this week to make similar assessments of our ability to carry the debt load plus the cost of NAMA including its forward debt/return calcs, is this a preemptive prep to prepare for eventual default.

    I’m not an expert but as far as I can see, there are a number of calculations/parameters that relate our economic survival under present economic conditions that will make survival less/more likely.

    1. NTMA cost of issuing Irish bonds to pay our balance of payments deficit. If markets decide we’re a bad risk, cost could rise to Greek 18% levels making this an impossible task and therefore default option looms higher or further eurozone support.

    2. Increasing bank rescue costs. With EBS inability to raise capital from the markets last week plus further bad news on the shares front, no good news there

    3. Increasing costs of NAMA due to further failure of the property market. Likelihood of this scenario is increasing. Plus the effects of the release of the property/commercial/residential overhang on the Irish market has yet to be gauged.

    4. Economic contraction/deflation. In spite of the marginal projections by the OECD for a return to growth of 1.5-3% for 2011 this growth is less likely than it seems coming on top of associated costs due to rising unemployment and decreasing tax take…

    5. We could get lumped together with another 19 economies globally facing bankruptcy so we get to be part of some global wind down managed by the IMF and the world banking system, a possibility but not very likely.

    6. A global recession/contraction puts further pressure on the PIIGS making their ability to trade out of recession impossible and default more likely.

    7. A Government smart enough to see the writing on the wall and make the right response moves. We have the opposite, a state of denial!

    8. A strong euro supported by the markets. Nope, its weakening strongly as we speak!

    The clock is ticking!

  3. Great article from David, cheers and thanks!

  4. MK1

    Hi David,

    Its always interesting to look back into the past and to try and draw lessons. There are lessons in history as people/humans as a collective make mistakes, and repeatedly so! The mistakes are the symptoms though, as the cause can be standard human psyche, with traits such as greed taking us down again and again!

    DavidMcW> The euro is the gold standard of today.

    No, its not. The gold standard was a fixing of currency rates with gold as a reserve and the ability to convert paper money into gold. Paper was a handy way of representing gold, thats all, in the gold standard.

    The euro on the other hand is a floating fiat currency system across a region of disparate countries and cultures. But likewise, Sterling (UKP) is a currency across a region of disparate “countries/areas” and cultures. The same with USD, JPY, etc.

    Now, any currency can be “difficult to manage” for any areas within those regions. At any point in time, the USD may not suit the people of Norh Dakota anymore than the euro may suit the people of Ireland or anymore than Sterling suits the people of Aberdeen.

    Yet, it is very possible to work economically within that currency as other variables can be moved/levered.

    DavidMcW> The only beneficiaries of such (bank guarantee) lunacy are the banks

    I think you will find me on record as saying it was lunacy when the idea was first raised! I agree, the guarantee should be dropped, but reduce it in installments, first to deposits of 1m, then 500k, then 250k, then leave it at 100k (or whatever the EU/euro agreed standard should be – there should be a standard!)

    DavidMcW> none of these countries will be able to grow within the straitjacket of fiscal tightening and the strong currency that is the euro.

    They should. The euro will get weaker if the euro areas growth is weaker, thus helping it improve its economy. A weak euro will be a good thing. The countries need to balance public sector budgets and make adjustments by reducing the ‘social safety net’ in each country. In other words, people need to work a little bit harder to pay for the prolifigacy of the recent past. This is the pain for those that made the easy gain in the credit bubble. A clawback tax on excessive wealth made during that credit bubble period would go some ways to balancing the books and making the pain fair.

    DavidMcW> Europe has a choice between sorting out its currency and banks or its economy and unemployment.

    I agree that changes in the euro are needed. Rules need to be better established and followed. That doesnt mean ditching the euro but perhaps fully endorsing it across the EU. Maybe it should be an EU membership criteria, either join it or get out of the EU. And countries need to sing with the same hymn-sheet when talking about it and other matters. The Greece debacle is an example of how not to do things with as many people as opinions and approaches.

    The euro is young, it can survive though if supported by its members. And it can be a force for jobs.


    • re “That doesnt mean ditching the euro but perhaps fully endorsing it across the EU”

      I’m afraid its a bit late for that.

      PIIGS have already spent the money given to them by cheap bond loans. We’ve blown ours on a useless property bubble. We’ve a number of Anglos across Europe some e.g Greece/Ireland just been bailed out. Others eg Spain cajasur plus the other cajas getting ready for more bailout. With deteriorating recession imminent facing the US and UK and through them China, there’s no great tidal growth going to float their boats. Likewise here in Ireland default is becoming more and more of a likely option. The only question re Ireland is whether this fault is a local one, unlikely because of present policy, or enforced as part of a PIIGS default and some form of restructuring of the euro currency due to inability of Euro to mount further bailouts.

      Its simple really, the lack of ECB regulation has poured Commission money down the toilet. Markets will suss The Pied Piper of Hamlin or hidden hand must be paid and with recession the money can’t be repaid. Increasing debt burdens combined with tax downturns due to austerity measures and lack of economic growth in GDP/GNP is a recipe for disaster.

      Markets bet on growth and short on insolvency. The euro is becoming more and more insolvent as conditions for PIIGS deteriorate and the ability to mount rescues becomes more questionable.

      Its only a question of time before markets use the mounting evidence of our inability to pay back and grow our way out of this and begin to speculate against us.

      Arguably, the cancelling of May bond auction for a time by the NTMA was first signal of what’s in store down the road that leads to certain default.

      • Deco

        Two interesting points.
        1) The Spanish Cajas are in trouble. But the superbanks are in even more trouble, as they were even more agressive.
        2) Bond auctions are now increasingly being timed to coincide with the aftermath with positive announcements on the ECB (which are engineered to “calm the markets”). This suggests to me that confidence in Irish soveriegn debt is a precarious commodity. Gone one week, back the next. A bit like confidence in the residentail property market in the intermediate aftermath of the peak. In this case, you could be corect. what we seen recently could be a foretast of what is going to come in increasing months.

        The more the government borrows, the sooner default will come, and the more it is likely to occur. Our government, wth it’s long list of ever increasing commitments is increasing it’s borrowing. In addition it is incapable of rolling back the expenditure increases of the Ahern years – the patronage system is firmly in place, just like in the 70s and early 80s.

        • Re 1) my information on this is opposite to yours so if you’ve info I missed, let me know.

          I’m led to believe the commercial Spanish banks, which is what you mean by the superbanks?, not as exposed as the cajas. Unwinding the cajas will be a question of whether the cajas can be closed safely or merged into the Spanish commercial banks, a bit like Bank of Spain and cajasur story here:

          There are upwards of 16 cajas that have to be dealt with. It remains to be seen over the coming months whether they succeed/survive/merge or disappear altogether. At least its not like AIG and Bank of America merger, which would be similar to Bank of Spain having to be saved by a couple of cajas!

          2) +1

    • We speak about the Euro in a collective word meaning an all embracing unit of currency printed by one bank .This is not the case so this complicates everything what is being said especially when making comparissons with other great currencies.The Euro has no cohesiveness enjoyed elsewhere and I doubt if it has enough political trust to hold proper stewardship by any organ of the EU .
      Our thoughts are all in a ‘basket’ and can be handed around like a mass collection .There is no control and no transparency that is sufficient to empower a central issuance authority to control within its power what it intends to do.There are no legal structures that are needed now and the whole Euro plan is a fake from inception.So it has to fail.
      We should be talking about how it will fail and how will it impact on us ‘little ireland’.
      Personally I believe France and Germany will do a runner and the rest will sink.This makes sense for them as they are too big to fail and they must adhere to damage limitation exercise first.

  5. Europe has a choice between sorting out its currency and banks or its economy and unemployment. Seems pretty clear, doesn’t it? WHY NOT BOTH?


    fwiw, I fail to see that it would be impossible to sort out both at the same time. This notion of one or the other, but not both, I would disagree on that point.

    My reasoning is that this article is focussed mainly on Europe, leaving out ROW where in deed ROW has to be part of the solution.

    A few observations

    Somehow I do get the impression that the presence and role of the IMF is a accepted standard amongst economists that write in public these days, except a few, most of them do not question their activities but rather refer to them.

    Another observation I made is the rather self referential aspect economists seem to cultivate. This is something I find somewhat ridiculous but I understand it in context of their role and their history, so it does not bother me too much, but people should be aware about it.

    History is a valid point to refer to when we try to find solutions for the future, at the same time we need to accept that we have a unique situation at hand that has no historical reference points. We can not analyze charts and draw conclusions from that alone without considering social political realities. If we do that, we are misguided into a reality that institutions such as the IMF live in.

    A NewGlobal Reserve Currency

    The history of the IMF and their activities is well documented and what I observe is a total failure when it comes to their influence.

    This is due to their refusal to undergo major reforms, mainly because they are operated with a USD ideology in focus.

    The IMF is no development financial institution, but tries since decades to sell itself as such, where the reality is that IMF is in deed counter productive by forcing conditions and austerity measures.

    The only logical role for a future IMF would be to enable access to short term liquidity on purpose to build a new global reserve currency and help to stabilize international exchange rates, enable fair commodity prices, and act preventative.

    The failure to continue to use the IMF quota formula now will be again visible in Greece. There is no adjustment so that the burden is made somewhat equal between richer and poorer countries. Why should Ireland pay anything at all to Greece? It does not make any sense.

    If we want to re establish an economy build on sustainability and social justice, we can not allow the old structures of IMF and in deed central banks to be the driving force for a renewed social contract and more intelligent global economy.

    A new international currency Union is what we should strive for.

    The future IMF should not be allowed to continue conditional longterm lending to vulnerable countries under the camouflage of development. This is wrong and needs to be addressed with priority. Of course, this requires fundamental governance reforms of this institution.

    You referred to J.M. Keyenes in your article and in deed it was him who proposed a international currency union.

    We live in new times and as I said above, we need to adjust such still valid proposals to our new social political and geo political reality, but it is possible, only it requires political will.

    We need to leave the dollar, hence the current role of the IMF and Worldbank as well, quickly behind us and focus on a new reality that is no longer a post WWII scenario but a reality where prevention of crisis and swift interaction when crisis strikes are the key elements of a global economic agreement.

    In that context I would like to recommend this Chatham House paper from March 2010:


    This does not need a lot of reflecting. The reality is that the quality of politicians in Europe has declined rapidly. What is left is a bunch of senior servants administrators, hopelessly overwhelmed by bankers who state demands on them.

    Political will is required to enable change for the common good, but what we observe is the very contrary. Desperately clinging to old structures, the current administrations are failing to rebuild a new economy based on a a new set of agreements.

    The recent G20 meetings are evidence about this lack of leadership and true statesmanship, People like Merkel or Sarkozy or Cowen are no statesman, they play statesman but are a shadow of people who once lead the countries out of crisis.

    Ultimately, political will has to come from the people, if they fail to demand these changes, it will not happen and they have to live with the consequences.

    Never before was political intervention by the people of our nations so important. Our crisis management has failed, and it will continue to fail if we do not demand the required reforms, chase out the old ‘bloodhounds’ who can not smell blood anymore if you dip their nose into it, and reform not only economical structures but reestablish a true democracy at the same time.

    One without the other is a receipt for failure and will lead into further and more severe crisis situation with much more devastating consequences for all of us.


    • Sorry, I did not mean to type in bold after

      David, fwiw

    • MK1

      Hi Laughinbear/Georg,

      > we need to accept that we have a unique situation at hand that has no historical reference points.

      Fully agree. Economics and financial systems in place are evolving on a continuous basis and at any point in time are unique consisting of millions if not billions of inputs and variable factors. We can draw lessons from history as David often does, but we are in a unique position now, as we were yesterday and yet another tomorrow! Okay,maybe not as quick as that but the economic sands continually move ala the sahara.


    • Georg – You understand the German economic mindset when I mention ‘ kaffee mit system’ – in my words it means the best quality .I believe the German people will not allow its sovereign currency to allow itself become eroded by foreign benign viruses in the same camp.
      They will do it alone with their own intact system thus remapping the whole currency map again.What is your opinion?

    • Interesting to see the globalists posting here.

      Do you really think we need further consolidation of currency?

      Its this doublethink that has got us where we are. The common European Currency is failing;
      solution a global currency?

      Of course this is already in motion with the global reserve ‘currency’ – the IMFs special drawing rights SDRs.

      The euro is proving that fiscal centralisation and control does NOT work.

  6. This is what David said :

    ‘One of the iron rules of monetary economics is that weak countries with strong currencies get weaker, not stronger.’
    - This speaks louder than the words seem to say .If you want to survive in EU and have a job live in Germany or France that is where real growth will be in the long term.

    • good article thx, he sets out the problems but is a little circumspect on the solutions other than his 4% inflation rate prognosis, which because of the distinct lack of economic integration throughout the eurozone is wish fulfilment rather than pragmatism!

    • Deco

      Actually I have been sceptical of Hutton. His analysis of the problem is never entirely accurate. And his solution always amounts to trusting the politicians to fix everything. And his writings are full of hope and eloquence – but never of any practical use.

      { Spain, with Ireland, Portugal and Greece, could run through all that money within 24 months. The EU also agreed that as a last resort the European Central Bank could print euros and buy eurozone government debts — what Latin-American countries habitually do.}

      First, the only country (despite all the bad press tht Merkel got from the Irish media) that agreed formally to stump up the money is Germany. The Netherlands will not be seen doing anything to help. This will affect the Belgians, the Finns. And the previous British Labour Government gave nothing to this fund because Britain is probably bankrupt as well. The French working class is efffectively bailing out the French moneyed class (given historical precendetn this is not a good idea). And that leaves the PIGIS. Like us, the PIGIS are all expected to borrow money and loan it to other PIGIS so as to bring down each other’s borrowing costs. This is the type of something for nothing policy that

      There is only one thing Hutton left out. Europe is financially stable compared to the US. California has more debt than Spain. New Jersey is worse than Ireland. And Illinois is worse than Greece. Michigan is more broke than Portugal. Incidentally they have been dominated for decades by the Tamany Hall political establishment. The real problem is derived from political movements that misappropriate tax revenues, or which fail to collect tax revenues, purely for the purposes of protecting their electoral base.

      Polititians promising “something for nothing” is the source of the problem. Which begs the questions “how on all earth will politicians printing money for nothing sovle the problem ?”.

      We are all living in the afteraffets of a crack up boom. All crack up booms tend to ‘crack up’. We had a simultaneous asset class boom which was driven by cheap monetary policies from the US Fed, the ECB, the BoE, BOJ, etc…Continuing it with inflationary money printing will push up the cost of living, and will leave everybody poorer at the end of the day.

      • You can’t compare individual US States like for like with EU countries. Unlike eurozone countries US states are each part of a homogeneous single currency whose overall debt to GDP ratio is nothing like the state of debt to GDP ratios of individual PIIGS. This lack of homogeneous integration makes euro less agile, weaker and more exposed than the dollar. Plus the richer eurozone countries are now exposed because of their poor investment in the PIIGS. Only question is whether losses will be big enough to bring down the euro or not?

  7. Deco

    I don’t know if civilization is going out like it did in 1914. What happened in 1914 destroyed the rest of the century in a cycle of war, bloodletting, etc… I heard it said once that, except a border war between Paraguay and Bolivia in the 1930s stemmed from some element of the 1914-1918 war. Civilization went out. In some regards it never fully recovered.

    Europe is trouble. There is the internal element. (the debt levels in the PIGIS). And there is the external issue, concerning the rising competitiveness of Asian manufacturing hubs like China, India and Vietnam, which are going to exert a downward pressure on incomes, and an upward pressure on the price of raw commodities. This means that the entire spectrum of Western society is in trouble. Europe is losing competitive position.

    And Ireland has prepared for this income squeeze by mounting up massive debts, and building commitments that are unsustainable, even in the medium term. The behaviour of the entire society over the last ten years has been irresponsible, reckless, and pointless. At the root of the problem we have an easy money policy from the ECB which created bubbles all over the plae. The key objective of the Irish government policy seems to be to continue the borrowing and to prevent any assymetric shock that would force the cost base to be reduced. The Irish political establishment are all living in a bubble. In fact the state has become a massive web of patronage, waste and bad decision making.

    I would say that there may be a need for debt default. This means the banks take the hit. However, Sarkozy in particular, seems determined to circumvent money from taxpayers to the Greeks, and back to the French banking system. The memory of the Depfa debacle, coming from the Dublin Financial Community with it’s culture of nod’n'wink, and sweep it under the carpet, is blocking Merkel. (that product of Irish Institutional corruption, sNeary has influence well beyond his worth).

    I don’t think cheap money will solve the problem. Cheap money caused the problem.

    The PIGIS need to reduce our cost base. And some markdown of the debt, between the banks and the sovereign governments will be necessary.

    Sending money from taxpayers to banks is failing everywhere. It only creates a bigger sovereign debt problem. Only the German taxpayers seem determined not to put up with it. We should learn from their example. And we could start by binning ANIB, INBS, EBS. Let the property market take the hit. The whole thing was a massive misallocation of resources.

    I think that the protection of Irish pride is killing us. It is preventing us from making logical and practical decisions. We are not questioning the establishment half enough.

    • Irish Pride – I thought that was a sliced pan we eat ! Your confusing me deco.

    • Deco,
      At the risk of sounding facitious, and I certainly don’t mean to be, the world has outgrown Capitalism. One can only milk so much out of so many people for so long, as long as they have something to milk.

      To quote someone or other, the Internet is an elite cadre where most of the worlds population hasn’t yet made a phone call . Demographic studies indicate that 2 more Chinas will populate the planet by 2050 or thereabouts, give or take 20 years. Homo Sapiens, the arrogant ones, are becoming a parasitic self important vacuum cleaner intent on raping all natural resource in a quest for survival.
      That quest becoming focussed in a Darwinian retro curve where norms are violated and centuries of accumulated knowledge are discarded by the new Cro-Magnon.

      The world lives in fear of the unknown and the misunderstood. David McWilliams has made a valiant effort, as has Stiglitz, Gurdgiev, Roubini et al, to shine a light of understanding on the mechanisms of international finance, where Sutherland and his co-conspirators, as an example, share circa 10 million for their trickery and duplicity.
      Where life as we value it becomes valueless, where honest effort as we value it reduced to a charade and where principal is subjugated by facetious oratory.

      We live amongst the charlatans who, to our naivety, we have allowed rise and dictate our future.

      “The fault, dear Brutus, is not in our stars,
      But in ourselves, that we are underlings.”

      Dun Talkin. Time to put a bush in the gap.

      • Deco

        Furry – I think you raise some interesting points. Our democracy has been subjugated by the best connected of the rich. We are presented by a media show that is illsionary, and that holds together our ignorance with an avalanche of trivia and irrelevant minutae.

        The really baffling thing is that it is high successful. Lack of proper intellectual argument has ensured that it is successsful.

      • liam

        “…a quest for survival”

        Well, there you have it I guess. Look on long enough timescales and human population statistics look exactly like the housing bubble, only instead of cheap credit, we’re booming on cheap energy/labour etc. I reckon all the west has done to raise living standards is simply to outsource its Dickensian working conditions and poverty to the third world (many would argue against this as we still in fact have profound poverty, fair enough but it is not widespread, for the moment anyway). Plus we can only dig sun-light out of the ground for so long.

        So like any boom its about due for a correction. Your para 2 resounds with the percussive inflection of hammer hitting nail-head.

  8. Looking forward to results of preliminary enquiries into the banks this week.

    Shane Ross, Ireland’s most experienced NED watcher had a humorous take on current Anglo director Maurice Keane(ex BOI) shuffling deck chairs on the titanic croneyism Sunday Indo Business yesterday. Also he made a good catch on noting one of the three NEDS appointed to Anglo last week was ‘Aidan Eames of Eames Solicitors, Dublin.

    It wasn’t released publicly that Eames very close to FF as an ex senator appointed by FF, also appointed by Dermot Ahearn to Bord Gais as a director and he’s an old friend of Clowen who appointed him chair of APSO.’

    Given that a handful of developers were handed up to €16bn by these banks, were the NEDS nodding messages of support for this policy from the banks spurred on by Ahearne/Clowen or who?

    Will we find out or get a piece of crap blaming it on Wall St?

    • Deco

      Unbeleiveable. Same names seem to be cropping up again and again.

      I think in Irish writing in the 1800s, as Gaelige, NED was a favourite nickname for “an asal” (the ass). However in such writing those donkeys were actually of critical importance, and did a lot of useful work. It was not a derogatory term at all.

      Mind you, in this context, should we call these directors a herd of asses or a herd of NEDs ??

  9. Malcolm McClure

    Excellent article David, placing the present situation in an historical context. Points made by MK1 are also helpful as usual. I’d agree with him that the Euro is not the gold standard of today. The closest approach to a gold standard are US treasury Bonds, UK Gilts and other countries’ Sovereign Government Bonds, backed by rating agencies’ AAA or otherwise reflecting perceived risk for each country (assuming perfect transparency).

    We tend to assume that Irish government bonds are backed by the taxpayer and that any consequent default will extend to perpetuity. But it ain’t necessarily so.
    The Irish state is custodian of a vast array of assets, ranging from National Trust properties to the Government Mercs., as per the examples listed below. These assets belong not to the government but to the people.
    A few years ago, the banks used to own swank buildings graced with Corinthian columns in every town in the land. As soon as the Celtic Tiger had been shot and skinned they engaged in a sell and leaseback strategy for those properties, realizing that if they were nationalized, the management could be turfed out, replaced with any eejit who could count to ten and installed in the properties seized in default. That wasn’t so easily done if the properties belonged to third parties.

    My point is that the government could place all its properties as collateral against sovereign default and shift the load from the taxpayer. If push came to shove those properties could be sold off to the highest bidder and leased back at normal commercial rates.

    Government assets include all government and council owned buildings and fittings; all hospitals and schools; all government land holdings including military reserves, Coillte forests, motorways, etc.; all government and council owned plant and machinery; all existing mineral and petroleum licenses and the tax streams devolving from them; all offshore and onshore fishing rights; mineral and petroleum exploration licenses; the ordnance survey and geological survey; and of course all nationalized banks, insurance companies, pension funds etc.

    That lot should add up to a couple of trillion; let’s sell and leaseback the lot, or in the mix, have the taxpayer pay only for the assets they actually use and reduce taxes accordingly.

    • Hi Malcolm

      Reminds me of the excellent movie, ‘District 9′. So the banks now own the land and lease back a portion of it to us Irish, ‘ the prawns ‘. Moving us into smaller and smaller reservations to make way for more and more international casinos and LaLaLand condos run by the Ahearn brothers. I get it:)

  10. Here’s my 2p on what needs to be done.

    We need a debt renegotiation based on default and exit from the euro plus IMF (wouldn’t like this either) support option.

    Our new currency should seek alignment with the dollar and we need to do the necessary fiscal adjustments to show the markets we have fixed the problems.

    This will free the euro and free ourselves. Sometime in the future better conditions/regulations for closer economic alliance will take place.

    This will be a change not without its pain but its a recipe for growth not stagnation/deterioration and death through debt

  11. Where was America in WW1 – late arriver and main benificiary of the Allied victory.

    America still, in my opinion, holds the key to Ireland’s (and to a lesser extent Europe) recovery.

    A friend is currently visiting from LA (longer than she anticipated as she is back to renew her passport – some chance of that…). Where 12 months ago businesses were closing – they are now opening. There has been a pick up in the property market; and in general there is a mood of optimism that the worst is over.

    Confidence is the key to recovery – including this country. That extends to the property market as well – that is vital as without a recovery here we cannot cure our debt hangover.

    PS – those of you interested in my vegetable garden: Slight disaster. Sprayed my potatoes with Dithane for blight – unfortunately had not cleaned out my sprayer well enough from a previous mix of Round Up: Spuds dead….. Could there be an analagy here with the Irish Banks!

    • paulmcd

      PhilRuss, Could you call to the next Anglo board meeting and use the same spray on the blighters there?

    • Phil,
      I have read many of your posts with interest due to their alternative and possibly positive take on the whole situation domestically. Similarly, I disagreed with some of the more personal attacks on your character purely because this forum has survived and attracted quality comment during the course of the downturn. Healthy robust disagreement is the cornerstone of debate.
      Confidence is indeed the road to recovery and those of us who take the time to appraise ourselves of the realitys involved have a duty to try to put a positive outlook on the future for those who seek an informed opinion.

      However, those people do not exist on this forum. Hardened, exposed, analylitical and informed, we as a group have documented this catastrophe since 2006, if not before.

      By all means express an opinion, this being a democratic forum, but , with respect, be aware that polit=speak is best kept for the letters column of the Daily Star.

      Míle Buíochas


      • F (urylugs).

        Thank you for recognising the right to express a view.

        I am not sure about your points re informed views: My take on the current world economic and social position is that we have entered uncharted waters and therefore are not in a position to give informed views until we see where we are going (or have gone).


        • We have either entered uncharted waters or cyclically, as in a maelstrom, have just completed another circuit which leaves us collectively even closer to the abyss?

          • Abyss? – World War 3 and annihilation of the human race as we know it? Not impossible.

            Or realisation that Globalisation may actually turn out to be a disaster; and that the Western World will put up tarriffs and embargoes against Asia – and start manufacturing and producing in its own back yard again? That could be a good thing?

            Or a realisation that the internet may be a driving factor in pushing up unemployment.

            Or in Ireland that we created too many jobs people in the boom years and we are now counterbalancing that in the recession – with a hope that we find an equilibrium sooner than later (and something similar applies to the Irish property market).

            Or perhaps the realisation that we are such small players in the Global scale of things – that what happens to Ireland just really doesnt matter.

            I dont think we are in a circuit – I think we are in changing times. I hope that the return of confidence is a way forward – but I wouldnt be too sure.


    • liam

      “Confidence is the key to recovery “

      Hello Phil. That is rather a sweeping and non-specific statement, therefore hard to argue with, since it essentially has no meaning. I have to (once more) profoundly disagree that locking in massively over-valued property (land) prices in any way a sane strategy. Like many Irish in the past few years, you are confusing the consequences of wealth creation, with actual wealth creation.

      You want to compare with LA, ok so heres another comparison for ya:

      Japan’s land area that is usable to continued human habitation (about 55k sqkm) is less than the total land mass of Ireland (around 70k sqkm), Ireland has around 4m people, Japan around 120m, yet we payed comparable costs for land at the peak in 2006. WTF?

      I seriously don’t see how a return to Japanese levels of land prices helps anyone (except those that own lots of land of course).

      Surely this is a massive competitive advantage we should be trying to exploit instead of throwing away?

  12. “cleaned out my sprayer well enough from a previous mix of Round Up: Spuds dead….. Could there be an analagy here with the Irish Banks!”

    Absolutely, The NEDS plus croneyism(‘Round Up’ of the banks for the property bubble)

    NEDS plus croneyism(previous ‘Round Up’ plus NAMA Dithane) for bank rescue/ lol

  13. Philip

    LA, Silicon Valley, California etc…According to the Silicon Valley Index (2010) 1.3Millon employed – lost 90000 jobs during the dip between 2008 and 9. Venture capital shrunk from 8 to over 5 bn in the same period etc etc. Average wage is 75K USD and innovation / patents registered dropped only 1%. So the interesting takeaway is Innovation cost fell and loads of money does not mean loads of invention.

    India & China with South America and Europe has made the likes of Silicon valley a 7 x 24 hr innovation shop.

    The reason things are in bits right now (and I always have maintained that it has had nothing to do with the financial cockups – which merely reflected a symptom) is that the world became lazy in thinking and easy credit made businesses soft.

    Also, the US and indeed much of the world will find that there will be a bigger fight to get the best brains. The real competition will be in leadership and innovation…not cheap Euros and being hypercompetitive work til you drop. Economic strength will only come if you are prepared to believe in your local communities to deliver beyond the usual bricks and mortar.

    Irish companies are thriving here. make no mistake. Look at the gaming industries and biotech. We simply do not have the critical mass of these genre of companies to fix the rest of the mess yet.

    Nice analogy with WW1, but it’s not just about money.

    • Phil to Philip:

      The reason things are in bits right now (and I always have maintained that it has had nothing to do with the financial cockups — which merely reflected a symptom) is that the world became lazy in thinking and easy credit made businesses soft.

      Is probably nearer to the truth than most of the stuff I have read on this blog.

    • Deco

      Phillip – yes, Silicon Valley/San Jose will respond to a crisis by working harder etc…

      But the City of LA is bankrupt. So is California.

      Here in Ireland there is a fight to silnce the best brains, and get people to damage their brains so that there will be less people joining the dots and figuring out what the gombeen element in society are doing….

  14. Philip- I agree but your comparrison is selective and not all embracing of the greater productive social order and Ireland is bigger than silicon Valley .

  15. Josey

    The only thing that got Britain and the USA out of depression was WWII. We are going back to the gold standard…!!!

  16. Josey – WAR = Kim Jong

  17. wills


    We all live in a bi-partite system.

    The rich / insiders / crony networks control and operate the credit / money out of thin air ‘control switch’ in accordance with how much and how far they can get away with the cod without inducing a peasent revolution.

    Every now and then when the opportunity presents itself the operators , behind the levers of power, will game the system, inflate bubbles and make a killing and stash the winnings and play dumb when the coast is clear to do so. Why wouldn’t they, they are above the law and own the legal system, all that holds them back is jeopardizing their hold on the levers of power been taking from them by some sort of social movement.

    And so it is, the big wheel of the international central banking operating system turning the cogs and wheels of the free market economy in their favour, in perpetuity.

    So, why would the insiders NOT rig the debts from the banks up onto the countries bond issuance account and roll the printing presses to print the money they require to preserve the same high living standards the rich and avarice in control are used to, until the next bubble making enterprise comes along and off they go to the races for the millionth time, milking the next paper chase cash cow secure behind the lines of their real hard asset wealth of property, gold, influence, and ownership of the means of production.

    The economic system itself been a fractional reserve banking scam, printing money out of thin air scamaramadoo ding dong, keeping the sheeple in the dark system, is it any surprise for god sakes that the economy is rigged and primed for one Ponzi bubble scam after the next ad infinitum by the selected bunch who happened to be next in line next to the levers of power with all that material wealth to pillage been provided by the slaves in the factories.

    You give the license to print money to private companies and they only hire their own kind and nobody tells the truth and they stick together keeping with the same hymn sheet spoofing that money does not come from debt, spoofing that money comes from hard work, and you throw in greed and technology and unwillingness to roll sleeves up and do an honest days work, and what do we get, we get karoke economics held together by holding a section of the community in the dark through fear driving them out to work for a system where the richest 1 % own all the wealth and have closed down any opportunity they alone do not wield control over.

    The prisoners in the system held in check by owning very little and needing contacts to get anywhere in the rigged jailor system the media and school and mainstream culture call a democratic open common market system, what a load of old cobblers that one is as the ‘tins of fruit’ march up to the microphones and project an air of professional ese in charge of the counterfeit money making machines in the back garden sheds of each country rolling of the presses the dosh to be irrigated through the system according to whatever contingency of the day holds to keep the central banking tyranny system in place and safe from been found out >>>>>

    “The central banking system emperor HAS NO CLOTHES” ………………. exclaims wills………

    Lets see if it works.

  18. Tull McAdoo

    Now Dr. Paddy Gurdgiev has thrown the cat amongst the pigeons ( or three jolly pigeons if you fancy a pint in Oliver Goldsmith Country outside Athlone ;-).)with an interesting observation on his blog on Sunday (linked below). Constantin the Contortionist has pointed out that with Irelands Private sector share of GNP falling below 47% then Ireland no longer qualifies as a Market Economy. HA HA HA HA HA . Oh man I’m busting by cajhonas at that one.
    Cowen and Harney the great free marketers, all the Austrian School Economists on this blog and elsewhere, and all the other misguided Greenspan Geeks were trying to solve what they though were problems interfering with free market Economics, when the truth is WE DON’T HAVE A FREE FCUKING MARKET.
    Wrong medicine for wrong disease. Go back and re-read what our host has been saying from Day1 and maybe then the pingin will drop.
    Oh man that Rooskey cracks me up. Jasus you just gotta love that guy. The thing is he has figures to back up what he’s saying……. BACKED UP FROM HERE TO THE FRONT DOOR OF THRE ESRI, if your reading this Fitzcaraldo de younger. Published John and be-damned as Wilde would say….

    • Deco

      We never qualified for a market economy, even wehn we were a market economy. Because so many markets were rigged by oligopolists.

      In the same respect, we were not a democracy either. IBEC are the power in the land. And the ICTU are the opposition party. The circus on Kildare Street is just for entertainment. A kind of an expensive punch and judy show, with them all throwing abuse at each other, but really they are just puppets. And when it is all over they meet up and get drinks for each other in the Dail bar. But it acheives nothing.

      The question is – how do you as an individual survive in an economy where price setting, market rigging, institutional corruption, and state patronage are rife. And where the media exists to generate a euphoria so as to keep you spending the fruits of your labour, well ahead of the schedule of your efforts.

      By believing none of it and withdrawing from as much of it as possible. Some people have even taken this as far as going to the point of leaving the country for good. This is effectively capitulation in the war against the establishment.

    • liam

      Thats kind of dependent on your definition of “market economy”, and remember that the good Doctor regularly refers to himself as an “arch capitalist”. More interesting is that the countries in the same ball-park as Ireland (Sweden, Denmark, France) are getting value for their spending (proper universal healthcare, integrated transport infrastructure, properly funded education system etc).

  19. I disagree we need anything like a €23bn reduction in gross annual primary spending by the state.

    Gurdgiev says:

    “The cuts must include at the very least a €9.3bn reduction in the wages and pensions bill in the public sector (5.9% of GNP or almost 44% cut in the total PS wages bill, achievable through both reductions in numbers employed and wages paid and pensions benefits entitlements).”

    In my opinion there is no scope for reduction in numbers employed. There could be some scope for a reduction in wages but
    only on the basis of an increase in numbers employed. This would have the effect of reducing expenditure on the live register and be an effective use of taxpayer money to generate employment and a better quality of life for those taken off the live register and society in general.

    Likewise, he says
    “Instead of raising tax revenue, Irish Government should engage in a dramatic reduction of tax burden on the economy. Generally, total tax take in the Irish economy exceeds the average Boston-Berlin position by 6.5% of GNP, requiring a reduction in overall tax burden of €10.3bn on 2008 numbers”.

    Unfortunately, the Boston-Berlin analogy is flawed because the US tax system is flawed. It is such arguments as these that are used to allow the tax burden to be lifted from those who can most well afford to pay tax.

    Tax take should be increased on the higher paid and general quality of life indices of fair distribution of tax should be replaced by other indices such as
    Berlin-Stockholm or Ottawa where, for example, a more equitable universal health care system would ensure good primary health care for all and a fairer taxation burden on all.

    He doesn’t advocate any change in Social benefits. Agreed, fair enough.

    Perhaps most alarming though about figures such as those provided by Gurdgiev is the implicit assumption that taxpayers should pay for bailing out the banks through the austerity measures he advocates.

    • above to Tull link to gurdgiev @ 19

      • Tull McAdoo

        Yes Colm , but you have to understand the good Doctor, is mostly concerned with the maths, as the political implementation of his conclusions are of little concern to him. I disagree with his conclusions as I do not see any merit in crashing an Economy which is in a downward deflationary spiral into a brick wall. Unless the good Doctor just wants to take us out of our misery for once and for all. LOL. p.s. it is also next to impossible for Ireland to hit a massive reset button in isolation when we are so buried in Euro’s. Its one thing crashing the Economy like Iceland but jasus man who would calm our volcano??.

        • I’ve followed our resident Dr Roosky, which is near where three counties meet, on twitter for some time now, to the extent that I’ll have to disconnect him. He doesn’t appear to sleep.

          I’m convinced that he’s the fore=runner to a Soviet invasion.
          Which, given our state of penury, might be a good thing.

        • Economics needs good mathematical models not bad/faulty ones that are unrealistic !

  20. paulmcd

    I note that today, Lenny, the Minister for Economic Armageddon, has committed another 2 billion euros in funding to the Anglo black-hole cum millstone around around our (ie, outsiders’) collective neck:

    I note that Lenny’s stated aim is to minimise the cost to the “taxpayer” (FFspeak for “insiders).

    • paulmcd

      As citizens of the magical state of Éire we should do more to promote the existence of The Supernatural Anglo BLACK-HOLE, the only such vehicle which sucks infinite sums into its vortex and, in the process, MINIMISES costs to citizenry.

      I suspect that the vortex leads directly from the land of leprechauns to rainbow’s end.

      Alan “The Wizard” Dukes has already proposed that competing holes like Quinn of Cavan, be absorbed into the great infrastructure of the Anglo Abyss.

      If Lenny and Dukes work together they should come up with more bright ideas like offering Anglo to service BP’s hole in the Gulf.

      We can suck it all up; just divert ALL THAT BLACK STUFF our way via the Gulf Stream.

  21. biskalero

    1. Demoralization
    2. Destabilization
    3. Crisis
    4. Normalization

    These steps have been followed by another Union. I believe we are at stage 3 in this process of destroying nations and sovereignty.
    People open your eyes to whats going on it has been done before…

    • biskalero

      Ireland and other countries were given TRIPLE AAA credit ratings, where did this come from ? That gave International banks the green light to pump credit into each economy therefore creating the debt that can’t be paid back , that’s how they take control. Where is all the bailout money going ? into the hands of International Bankers.


        Through NAMA money is also going to local cronies, legal firms, estate agencies, financial service companies, and directly into the coffers of banks,developers and their shareholders.

        From link above “Historian Richard Aldous considers that the Celtic Tiger has now gone the way of the dodo. In early 2008 many commentators thought a soft landing was likely. By January 2009, it seemed possible the country could experience a depression.[7] In February 2010, a report by Davy Research concluded that Ireland had “largely wasted” its years of high income during the boom, with private enterprise investing its wealth “in the wrong places”, comparing Ireland’s growth to other small Euro zone countries such as Finland and Belgium – noting that the physical wealth of those countries exceeds that of Ireland, because of their “vastly superior” transport infrastructure, telecommunications network and public services.[8]”

        Welcome to LaLa Land
        was Celtic Tiger Land
        now zombie land
        DoDo Land, do nothin land

        Watch out, Cassandra, don’t go to faraway castles
        Don’t poo poo our politicos
        We’ve got no politboro quangos
        We need brain dead martyrs

        Here it comes! Hurry!
        It not lobotomy!
        Its our smart economy!


        We’ve a tax
        On evry f_rt. So
        Before you depart
        Feel free to f_rt


  22. €2bn more paid into Anglo ……what a shame …….its amazing how we allow all this to happen without causing a resistance .
    My prediction is that soon all home meat produced will be exported and none allowed for the home market because we wont be able to afford it unless kim kown keeps some for his elite and henchmen.
    Did we not experience that in the famine?

    • Tull McAdoo

      How many developers are holding “bearer bonds ” in Anglo ,do you think Seaneen. Are they a good way of hiding the few bob, jasus johnny they were creaming it everyway, high coupons on the Bond’s, what 6% / 7% with interest rates at 3% and inflation no where to be seen. Ireland Mother Ireland. You would wonder why the hoors bothered building atall atall as Miley would say.

      • Malcolm McClure

        Tull McAdoo: Your comment reminds me of the days when all you needed to know to become a bank manager was the 363 rule:
        Pay 3% on deposits, charge 6% for loans and be on the golf course by 3pm.

  23. David_Back_From_US

    I’m really confused.

    We spend €50bn/year, we take in €30bn in taxes. We’ve got a debt of €75bn, with €10s of bn more being pumped into banks. MNCs are doing better but there is zero growth in the domestic economy, so tax intake isn’t going to jump any time soon.

    1) Why are we just reducing the budget deficit by €3bn? And where does the next €3bn come from in Dec 2011?
    2) What makes Lenny so confident that we (+ our children) can pay all this money back?

    I really do wonder about the emperor’s choice of clothes… but would really like to hear why a €3bn spending cut gets us out of €100+bn of debt.

    • Tull McAdoo

      In simple terms David, Lenny only intends paying the interest portion of the national debt. The capital owed or bonds to be more accurate will be rolled up or re-issued every time they come up to maturity. The NTMA have been doing this since it was formed some years ago. People talked about the national debt being reduced, but this was only as a percentage of GDP and this was only true because GDP increased every year, as the debt itself was still at the same amount after years of NTMA involvement. It was just a sort of spin we hear all the time around Ireland.
      FF reckon the same in this case with regard to national debt.
      1. inflation when we get it will reduce the real debt over time.
      2. GDP will hopefully grow when growth returns to the economy.
      3. Some money will be recovered from these lame duck Banks.
      I suppose FF/AMISH have just signed us all up to a massive mortgage with NO clear term for when it will be paid off. It will rise to at least 100 billion and I’m sure in years to come long after I have departed to the happy hunting ground (fingers crossed) some Gobshite decendant of Cowen /Linehan/Haughey/Ahearn or whoever will be trying to convince some poor old Tull McAdoo like myself that’s theirs is the only show in town/ we are where we are/………………………

      • gquinn

        “1. inflation when we get it will reduce the real debt over time.
        ” :- Not going to happen as prices now as they stand are still way to high compared to the rest of Europe. Expect deflation to last at least another 5 years so the debt will become more expensive.

        “2. GDP will hopefully grow when growth returns to the economy.
        ” :- Not going to happen any time soon as the World economy is still dropping. I don’t xepect the World economy to start to pick up for another 3 years at least.

        “3. Some money will be recovered from these lame duck Banks.” :- This is up to the ECB to do this. Since Ireland pissed off Germany and France with the 12% Corporation tax its now pay back time and Germany will leave the money in the Irish financial system just to drive home the pain.

        All in All there are still years of pain left for Ireland to experience there is not going to be a quick recovery and people should learn from all this that all Delusions and Crowd Euphoria will always go bad in the end.

        I anticipate the next bull market to happen in Ireland to start in 2022.

      • Yeah but they’ll be ok Tull. This notion of paying back stuff is alien. Good God, only the small people do that.
        Just look at the property pages on the Sunday Rags.
        “plus ça change, plus c’est la même chose”

      • Deco

        The forever debt. A bit like occurs in other banana republics.

    • gquinn

      We cannot pay back the money and its so fucking obvious remember we all still have to stand up to the King and call him an idiot because he does not se the reality (He is wearing no fucking clothes) of the situation as he is still living in his fucking castle and does not understand what the ordinary person is going through.

      We all need to tell Clown and Lenin that they are idiots and to come back to planet reality.

      They still want to switch the machines back on but they have been switched off now for a good 2 years and this needs to be explained to the government or else every person in the country including your childrens children will be ruined.

      • Tull McAdoo

        What you have here in a sense is Linehan producing what I would call ” consolidated financial statements” from the holding company i.e. Fianna Fail. The subsidiaries are Anglo, Hse, etc.etc.and uncle tom cobbley and all. There is NO Ireland mentioned in these dispatches, except to inform Europe where in fact Fianna Fail the holding company is based, for correspondence purposes only and the odd subsidy wink wink.

    • Deco

      The MNC sector is a distorting effect on GDP. This is because of ‘transfer pricing’.

      In fact I reckon that there is much less cash being generated which is available for expenditure in the economy, than anybody in authority really admits. In a situation like this you can get a hell of a hammering in a sector where incomes are the driving factor behind activity. For example in the property sector. All that is required is a momentary pause in the credit flow mechaism that is propping up the entire ponzi scheme.

      As Wills pointed out many times, this is a Ponzi-economy. All you have to do is look at the level of borrowing and speculation.

  24. So the IMF are in Dublin under radar searching the files and scrutinising the facts .Blood on the hands for those near them .I have no doubt that the mandarins are getting a good talking to and told where to go by these gestappo agents .
    Poker is the game that our mandarins will lose this time and their bluff and bluster will be transparent in all their sly moves.Cowards to all in the Dept of Finance.Freedom of Information should extend to the findings of these investigators so that the little people know what is fcuking wrong with this fcuking country.

  25. Today there is no such thing as Gold Standard only GOLD .
    By the term Gold Standard we mean today a state of mind and what David means is that we measure that in Euros.So in fact our currency is really a ‘bareme’ or benchmark against which we make comparisons against other mediums of exchange.
    In the present chaos clairvoyant mediums would be more appropriate.

    • Tull McAdoo

      Its all a game of cat and mouse John. Take Germany for example, one section i.e. the banks want their money back in good valued Euros, while German exporters want a weakened Euro to keep them afloat, while German savers want good Euro’s without the threat of inflation. Hard to keep all them balls or “liathroids as gaeilge” if you will in the air at the same time. It will all end in tears as my Mother God rest her use to say.

  26. wills – are the bondholders bearers? Invisible ,ghostly and ghoulish creatures?

    • wills

      Lets see, bondholders it seems to me John are other banks lending money back on forth to each other in a spiral upward, built on nothing more, than a piece of paper in receipt of a future penny.

      And there seems to be a picture revealing itself that the banks use the bond issuance to secure paper money in implicit understanding between banks that the debts opened up would be in the future erased and forgotten about and reset button pressed, no questions asked.

  27. @ John ALLEN 28

    During the years 2000-10 the goms and their followers had become more powerful having gained access to billions of euro shovelled unchecked into their accounts by EU bondholders, puppet cash cow banks were
    now grown monstrous with what was stored in their pig’s bladders.

    It was the time of Kim Kown and the age of the Amish. Their ilk had spun out a home grown property bubble that yielded instant profits faraway beyond their dreams.

    The market was fed by active dragons fire breath by politico soothsayers promising great wealth to all.

    Goms under camIOUflage with hardly a chicken in gold
    were handed vast sums in the billions and no law was made stand in their way. Perhaps some salted away their loans in offshore hedge funds or elsewhere in hidden crannies, who knows. Does CAP even want to know?

    Villager taxpayers for whom infrastructure, broadband, telecommunications, social services, education and health were a priority, were eaten as mortgage feed by the predators.

    Goms, so-called developers, they’d set up a new company for every project in every village and dreamt of soothsayer profits promised by the Arch soothsayer, the Pied Piper, Kown.

    With themselves as director in
    each, so when one went bellyup, their other companies of the night were left intact and untouchable for losses made by the dead ones.

    Then during the reign of Kim Kown and the Amish conditions for a perfect economic storm arose and in every village their projects went belly up.

    The soothsayer Kim Kown and the Amish halved their liabilities using the little known Grendel NAMA serpent spell.

    CAPs were taken off and thrown into the air as soothsayer Kown brewed his gom rescue
    potion for them.

    Villagers, suppliers and tradespeople screamed in anger and pain as the goms declared their companies in every village insolvent and bankrupt with no payments obliged for trade/service received.

    No financial laws could put a lean on the developers to pay up their bills to electricians, tradesmen and suppliers even though financial LAWS existed in other faraways to curb their excess, the UK, 7/30 payment rules to be
    judged by the moon, the US, bonds helt against payment default.

    Kown and the Amish and the Paddies and the bankers puppets and the goms had fooled them all. Caps were again thrown in the air but one CAP appeared to see naught, they were too busy with the drug lords

    Occasionally a feckless Cassandra would weave their words of despair, but Kown and the Amish and the goms had once again disappeared down the rabbit hole.

    Neighbours wondered why the populace was not up in arms even though some were up the wall in Silver Birches in Co Longford.

    But Kown pleaded we couldn’t afford not to save the goms and the bankers. With tears in their eyes those in Silver Birches said we couldn’t afford to save them!

    Someone had seen a Pied Piper of Hamlin who’d made reports told to the populace the land had now been cleansed and was now filled with Alices.

    Occasionally, some doomsayer would disagree and demand we go down the rabbit hole and rescue the Alices and bring them back to reality.

    Kown and the Amish said this was all absurdity even if meant figuratively:)

    Have a good day, folks!

  28. Deco

    This defies explanation.

    Terminal 2 has cost almost a billion. And now there will be nobody working in it, because the 32 K compensation is insufficient.

  29. My mantra up to now has been all along is that Logic is dead now I have come to a realisation that Economics is dead .The only thing waking up is WAR.

    And plenty of it.

    • liam

      Logic, reason etc were never part of the game in the first place John. Perhaps it time they were re-introduced.

  30. Colin_in_exile

    Can we afford to keep making our farmers millionaires to facilitate the rest of the population with neccesary infrastructure?

    Forget your bankers and developers, this is the group who have raped the state the most and wreaked havoc on the rest of society by being the primary root cause of expensive property, never mind ripping consumers off at farmers markets and side of the road enterprises (Note: bring your own weighing scales in the boot of your car to save yourself €s as bags of spuds are sold below the weight displayed on the side of the road). The Irish farmer is a sacred cow in this country, for some reason I don’t understand, and the irony is he’s been milking the rest of us since 1973.

    • Colin – do not confuse the fine line between the two words ‘farmers’ and ‘land developers’ .Land Developers are a breed of their own apart from the ‘Farmers’. For city dwellers it appears confusing .The farmers farm only and thats what most of them do big or small.Farming is always hard work and for many it only offers a way of life to occupy the time with the odd benefit of self subsistance ie milk , eggs , meat and vegitables and space to park .

      • Farmers Grants – for the record from my perusal of grants paid out I have noticed that the single one area in the whole country that has the largest grants paid in value to farmers is around Enniscorthy Co.Wexford.The values paid out are astonishing .Does Ivan Yates know ?

        • Malcolm McClure

          John ALLEN: The news from Northern Ireland this evening is that the EU is reclaiming £60 million acreage grants paid to farmers there since 2007. This is because the farmers claimed for scrubland and heath of no agricultural value because it was covered in gorse and rushes. They also found that some farmers were claiming for the same fields.
          Of course the farmers are not to be asked to repay the money because their claims were approved in error by the NI Ministry of Agriculture, so the tax payer will have to stump up.
          One wonders whether a similar situation has developed here.

          • Malcolm McClure – my recollection of the names for high value grants on the register seem to indicate ‘names of very old landed gentry’ that would turn Strongbow in his grave.Who is Ivan Yates?

          • Malcolm McClure

            Ivan Yates was TD for 21 years ; he now broadcasts early morning show on Newstalk radio. Seems sound on most subjects.

      • Black Cat

        And some of them murder foxes without looking into the scientific evidence

    • Garry

      +1 colin.

      I don’t agree 100% with what you’ve said but cuts need to happen across the board…

      EU CAP payments should be capped at 10k per farm; right now there are people ‘earning’ 100k per year scratching their holes on big farms.

  31. wills


    Good info here on ANGLOS bondholders.

    • Deco

      In the context of what it permissable to state, within the confines of the Irish legal code, regarding matters like the Right to good name and character (regardless of behaviour and bad deeds) this is a heck of a collection of data.

      In fact it is a series of quotations. Because you could get into trouble providing analysis of them.

      It is also abundantly clear that the Anglo Bailout (er “Takeover”) is a Marxist intervention to preserve the position of the rich. A fitting accomplishment of the 1960s revolution, which was led by the children of the rich toying with Marxist ideas.

    • Interesting it raises the canard again ” We sold 37% of the bonds to Germany/Austria, 32% to UK/Ireland with the bulk of the deal to banks.” mentioned as part of a 2007 offering. We remember the credit unions arguing with Lenny that they were less exposed than he was maintaining.

      Hope the bank inquiry will focus on the billion+ euro developer loans that were handed out by anglo to its developer cronies. I hope account is made of every pingin spent on developments to make sure none got redirected/salted to private funds hidden away somewhere. Any developer in default of their loans should already have been interviewed by the CAB, not to mention that they should be before the courts re asset guarantees!

  32. Deco

    Hey Greeks, You know your economy is bunched when you are told to take advice from the clowns running ours….

    I did not we are in recovering. Did you ?

    The only company that can be cited as evidence that things are improving is based away from the cliques in Straffan. Proof that the problem IS the predominant Irish concept of Management.

  33. wills


    The banks debts that the banks owe their lenders are been paid down by the taxpayer.

    The loans the banks owe to international bondholders, the taxpayer is paying this debt on behalf of the bank s so the banks which are private companies can stay in business.

    If this is not corporate fascism what is.

  34. Think Outside of The Box :

    In these moments now three important events are happening that are significant :

    1 Iceland has formed a new political party named : The Best Party . We should do the same; and

    2 Sarkozy and Merkel are doing a swap namely surrender Trichet and appoint Webber .This may sway Germany to make love with France and do the Tango and leave us all on the ditch; and

    3 Spain is beginning to DEFAULT .Do I need to say more .When that happens we will have many Lehmann Bros to cope with.

    The best advice now is take a deep breath and blow and sing the chorus song :

    We’ve a tax
    On evry f_rt. So
    Before you depart
    Feel free to f_rt




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