December 10, 2010

FF's parting gift of corporate welfare will sink the country

Posted in Banks · 154 comments ·
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A farmer told me he had just taken €53,000 out of the local bank and put it under his bed

YESTERDAY was the feast of the Immaculate Conception. In many other Catholic countries, particularly in Belgium and southern Holland, this is also the week that Santa comes and leaves presents in children’s shoes. For many, both the Immaculate Conception and Santa Claus are simply not believable. For me as a child, December 8 was a day off school and that’s all that counted.

What would Christmas be without Santa, or Catholicism without the Immaculate Conception? You can’t have one without the other. Even if you don’t believe, sometimes it is easier to pretend.

The Budget was akin to the Government playing a big game of ‘let’s pretend’. Let’s pretend that the banks are solvent. Let’s pretend that the problem in Ireland is ‘social’ welfare rather than ‘corporate’ welfare (because this is what bailing out the banks amounts to) — welfare fraud by corporations. Let’s pretend that the Budget can make the economy grow. Let’s pretend that some other country has tried austerity without mass debt restructuring and succeeded. None of the above are true.

The problem with ‘let’s pretend’ games is that, when we are young, they allow a child’s imagination to flourish, with reality and fantasy crossing over, but when we become adults, we know it’s only a game. We also know, for example, that the reason no country has ever tried what we are doing — austerity budgets without debt restructuring — is that it doesn’t work. So why go through the charade?

The people know the Budget will not get us out of the hole, and they are voting with their pockets by taking money out of the banking system. The official response to this was, first, to deny it is happening and then to say it is all right because as quickly as our deposits leave, the ECB injects new cash into the banks and the net position stays the same. But this is a recipe for a banking collapse, as it implies that a banking system without deposits is a banking system; it is not.

For example, the other night, following a performance of ‘Outsiders’ at the lovely Backstage Theatre in Longford, a local farmer approached me tentatively. He mumbled for a bit, complained about the weather and abruptly told me that he had just taken €53,000 out of the local bank and put it under his bed (and being a farmer he had a shotgun by the bed). He didn’t solicit any advice as to whether this was a good or a bad thing to do; he just stated baldly his own personal conclusion about the banks, the economy and the financial affairs of the nation in general.

Either we fix the banks or this farmer’s approach will become commonplace and the establishment’s course of action that increasingly looks like national economic suicide or ‘patricide’ will continue.

The only part of the banking system that is currently working is clearing. Most deposits are still in the banks, cheques still clear, the ATMs still work. But that is it. The original guarantee prevented a run back then, but the problem has changed utterly since September 2008. It is now failing. The reason it is failing is that it was the right solution to the wrong problem.

The banks are insolvent. It is interesting that the conversation is now about comparing levels of insolvency. Bank of Ireland is quite insolvent, AIB is more insolvent and Anglo is completely bankrupt. The thing about solvency is that either you are or you are not. You can pay the bills or you can’t. None of our banks can pay their bills.

So, what is the solution? Let’s look at the numbers. In September 2010, when the guarantee expired, the banks had €55bn of bonds that they needed to roll over. The market, knowing that the banks were insolvent, said ‘no thanks’, so the ECB and Irish Central Bank stepped up to the plate and provided the liquidity the banks needed in order to open for business the following day.

To that €55bn we can add the €35bn the ECB had already provided in liquidity, giving us €90bn.

Then we can add the €34bn of special liquidity provided by the Irish Central Bank and we get €124bn. To resolve this mess, we have to look to the biggest holders of Irish bank debt: the ECB and the Irish Central Bank as well as the bondholders.

It should be very easy to convince Mr Trichet that allowing Ireland to go bust — as we surely will with the albatross of bank debt hanging around our neck — would be against the very raison d’etre of the ECB.

What is the biggest cause of runaway inflation in every country from Weimar Germany to Zimbabwe? A currency that people think is weak, and therefore don’t trust. The one thing that will weaken the euro is a sovereign default within its borders. It would turn into an existential crisis for the currency. There is no one willing to trust a currency whose continued existence is in doubt. Result? The euro plunges on the international market.

To stop this happening, the ECB has to sort out the Irish banking system in a way that does not lead to the people of Ireland being saddled with debts we cannot afford.

It should be fairly easy if there is a will to do it.

All deposits in Irish banks are held electronically. Ring fence these and move them to another institution. (This is not as odd as it sounds, it is exactly the plan Patrick Honohan outlined for the depositors in Anglo when he said that institution would be wound up by the end of January.) If a suitable institution does not exist, then we should create one.

The debts of the banking system can also be moved to the new institution, but the ECB would have to allow the money it is providing as liquidity to become capital in the bank. It would own, along with the other bondholders, 100pc of the shares in the new bank. As the property market here finally starts to clear, the bank could be sold to the private sector, fully capitalised and in good health.

Ireland is a systemic risk to the euro. We can deal with our own sovereign debt. We cannot deal with the debts of private institutions that went on a lending splurge to the private Irish banks for quick profits, nor should we.

If the ECB does not allow us to forego the bank debt, then it will reap what it is sowing. We will cause a crisis for the eurozone, and the demise of the very institution that has the power to save both itself and us.

The austerity Budget, without a deal on the banks, will lead to patricide. Corporate welfare, not social welfare, will sink this country. Will that be Fianna Fail’s legacy?


  1. HAC

    Irish Wanking Bankers!

    http://www.youtube.com/user/thepointmelmerby

    One Irishman’s opinion on the demise of the Celtic Tiger.

  2. John Q. Public

    Would it not be simpler to just come to an agreement. Give our banks to the ECB/bondholders in exchange for a clearance of debt. Float them, this might attract fresh investment and increase the overall value of the banks.

    • Mother of Three

      Sounds like a good plan. Bye bye banks and bankers. Why do we need them anyway. Sure there lots of EU banks we can use..

  3. David said (rightly!): Ireland is a systemic risk to the euro.

    Thanks to Kevin O’Rourke for pointing it out, here the activities of the EU government (commission) and Deutsche Bank in context.

    http://www.irisheconomy.ie/index.php/2010/12/10/eichengreen-and-the-european-commission-on-haircuts/

    http://www.independent.ie/business/european/bondholders-safe-even-if-opposition-win-election-2454031.html

  4. SLICKMICK

    http://www.uti.is
    An excellent Icelandic view of what went wrong in Ireland.
    Hope the talentless middle management , most of whom obtained their cushy positions via nepotism, enjoy their bonuses.Where are the IRA when you need them?

  5. ahimsa

    Irish Times:

    Fianna Fáil agrees to hold Dáil vote on EU-IMF deal

    http://www.irishtimes.com/newspaper/breaking/2010/1209/breaking38.html

    This is an opportunity!

    How can we organise to inundate every TD with emails & phone calls?

    How can we explain that the country is insolvent due to the bank guarantee?

    How can we explain that the growth estimates in the 4 year plan are wildly optimistic?

    How can we explain that we are a democracy and we demand our elected officials act in the interest of THE PEOPLE, NOT private banks, NOT european central banks.

    I demand we default.

    We will not be held responsible for the private bank debt.

    Come on, we have another opportunity with this vote!

    Let’s act together!

    • NO HOPE

      Yes Yes Yes Yes Yes Yes Yes Yes Yes YesYes Yes Yes Yes YesYes Yes Yes Yes YesYes Yes Yes Yes YesYes Yes Yes Yes Yesv!!!!!!!!!!!!!!!!!!!

    • I have followed the increased urgency and desperation in Davids articles as he called for radical measures for last 18 months. The majority of thinking people in Ireland know where he stands as he and others have been on RTE Primetime, Drivetime V Brown etc. Of the political elite FF FG Lab only one politician P Doherty SF spoke with passion in favour of default policy. Where does this leave those of us with no particular political allegiance to utilize our vote? A call for new emergency politics is what is required to face the challenges of no economic growth in a post peak oil world.

    • I’m off work at moment and on crutches. Yesterday I watched the debate in the UK Parliament re Student Fees. Full house, intelligent argument and in the end a close result with the coalition winning. No one knew what the result would be as both Conservative and Liberals voted against their own government. No Problem it’s called intelligent debate and it is what healthy democracy is based upon. There were displays of honour, respect and intellect!
      Next Wednesday FF/Greens will win by approx two votes another type of “debate” The “Irish” type where it doesn’t matter what’s argued! Our public reps or parliament have no idea what conscience or democratic process is? The whip system destroyed democracy many years ago! There’s absolutely no point in next Wednesdays charade! Cowen knows he has the numbers so we’ll play the game of democracy? No such thing as a free vote there lads!
      So I’m afraid there’s no hope for now! Only thing we can do is use our ballots. Whatever your party – make sure that you do not vote for an incumbant! That’ll teach them.
      If we have 165 newbies at least they’ll know who’s in charge?
      Me – I’m gonna vote for Sinn Féin!(First time ever)
      Why? – Because in all honesty they seem to be the only ones who actually get it? A bit like the Icelandic PM got it and had a referendum. The Icelandic people share their fate in solidarity.
      - I almost envy them!
      Why is it throughout history that the first guy likely to shaft you will be a fellow Irishman?
      I’d like us all to lie back collectively on a great big sofa and be counselled by a great big analyst and when we get off the national sofa I’d like us to be more like the Jewish People – Self supporting!
      As long as we’re the fragmented nationality that we clearly are we can facilitate anything. Including Facism.

      • BrianC

        I would just like to say that I agree with you and now more that willing to give my vote to Sinn Fein which will be the first time ever. But as you say they seem to get it which is probably to do with the fact they do not have their hand in the cookie jar.

        And the whip system beat the living life out of democracy.

        • Thanks Brian,
          And as for the cookie jar? You see that’s another thing? Our constitution and our parliamentary procedures make no reference to the fact that where there’s a cookie jar there’s inclined to be a human hand delving into it! It’s called human nature – every man , including me, has his or her price! Callely could only get 30 days suspension for stealing from the people. They still only managed to give him 20 because “technically” he was not breaking the rules? Now unfortunately thats another fundamental error in our society? We have a government that at best only “technically” operates within the rules! Is that all we can expect now?
          There is so much fog and grey area nowadays that the system is one specially built for the slimey!
          George Lee’s secret (to which even RTE has sworn him to silence) is just that!
          Honesty is impossible within Dail Eireann.
          The honest man will take the long walk from the plinth!
          Technically the AIB Bonus cannot be taxed this time? Technically Pat Kenny’s salary which is directly disproportionate to his talent cannot be capped! Because technically equality’s just a word heard in Disney movies.
          National bankrupcy approacheth because moral bankrupcy has already occurred!
          And what’s really sad is that I was always the absolute optimist!

      • I agree with everything you said above Paul.
        I envy the Brits as they seem to have far more intelligent politicians and ordinary people with a sense of outrage who will not take this crap lying down.

        There is a change occurring in the Irish consciousness and Mr Docherty has proved that some Irish people are wide awake and ready to fight to get our country out of the clutches of the financial terrorists

        Me and my partner have lived here for 10 years and never voted. I will be registering to vote and I will be voting for Sinn Fein. I feel duty bound to do so.

        My thoughts on the events of this week:
        http://irishlightandcolour.blogspot.com/2010/12/those-days-are-over.html

        Good Luck

        • Well done Paul! I’ve read you blog and I couldn’t have put it better myself!
          The thing that troubles me most is that this site contains lots of intelligent observation as to whats gone wrong but nobody’s talking about solutions?
          Sure there are some that say **** the Bondholders – And I agree with that but that’s still not a solution. You say you have faith in The Irish People and so do I. But only if offerred a distinctive pathway.
          Every journey has a beginning a middle and a destination!
          We have to decide what that means! So what do we want? And what specifically can we do?
          I’d love to see suggestions that could later be taken up as strategies.
          So here’s how I see it – Whatever our faults we’re some of the best sales people on earth. My quick calculation says that we have a market of nearly six billion people awaiting our patter and our products.
          My first suggestion – Reopen The Dell Plant in Limerick. Start with a government contract to equip every child in Irish school system with a laptop.
          Have our salespeople talk to governemnts Europe/World wide to do same and produce the Edu-Laptop for all. (We have the people and the skills)
          Next I would propose a Salepersons Forum (We’ve lots of brilliant Salepeople) to look at other markets and other products (Like moulded electric cars – thats not heavy industry!) with plenty of lateral thinking.(Sorry if you’re a politician reading this – You just wouldn’t get it!)
          Finally enact a law which takes back our natural resources which have been illegally traded by our politicians.
          Build a few Turlough Hill type hydro stations and give first class infrastructural project work to our unemployed construction sector.
          Aim to become totally selfsufficient in energy in five years. I can already hear the Bond Markets lining up for investment!

          And if not – why not?

          • ps200306

            How desperately depressing, Paul. How many times have I come across somebody making total sense about how the banks debts are not ours, and their solution is … create more mountains of debt for something else. God Almighty, when are people going to get it out of their heads that there is some magical pot of money that can solve all our problems.

            To address your points one by one:

            “Reopen The Dell Plant in Limerick” – yes because what private industry decided was not profitable, public spending will fix!

            “Start with a government contract to equip every child in Irish school system with a laptop” – is this some magical government that has a secret wad of cash in its back pocket, or are we talking about tax payer’s funds?

            “Have our salespeople talk to governemnts Europe/World wide to do same and produce the Edu-Laptop for all. (We have the people and the skills)” – more government funds, then.

            “Next I would propose a Salepersons Forum (We’ve lots of brilliant Salepeople) to look at other markets and other products (Like moulded electric cars — thats not heavy industry!) with plenty of lateral thinking.(Sorry if you’re a politician reading this — You just wouldn’t get it!)” — that’d use our world-class car design expertise that we’ve built up over how long, exactly?

            “Finally enact a law which takes back our natural resources which have been illegally traded by our politicians.” – ah yes, the Hugo Chavez school of having your cake and eating it. Ask Hugo how that’s going.

            “Build a few Turlough Hill type hydro stations and give first class infrastructural project work to our unemployed construction sector.” — more magic money from nowhere I suppose.

            “Aim to become totally selfsufficient in energy in five years. I can already hear the Bond Markets lining up for investment!” — sorry to break it to you: that clamour in your head isn’t investors.

          • Negativity will get us nowhere ps200306 and the first thing Irish people need to realise is that sniping at people’s suggestions will get us nowhere. This will only serve to stifle new ideas and keep the population in an infantile state of mind. All suggestions are worth hearing including those that would require lots of something we don’t have namely cash

            For one thing the one laptop per child idea is excellent and if instead of paying insane licenses to Microsoft and Adobe the Irish Government channeled this money into providing cost effective notebook computers running free software Irish children would be indoctrinated into a philosophy of freedom and choice rather than one which limits their choices through being Defective by Design

            We could save a fortune if we become progressive and adopt Linux and free software for all our government departments. Needless to say $MS will have our politicians in their pockets but logic, thrift and common sense tells us that such a situation is absurd and should not be tolerated. I use free software for everything and can testify to how good it is. It also runs on old computers and there are plenty of those lying piled high in college store rooms believe me

            People like me could save many people tons of money with alternative solutions but as Vincent Browne argued last night there many mindsets in this country which are thicker than brick walls. There is no point talking to people who are stupid and for this reason we need to fight to reform our political system and alter it so that it becomes less attractive to gombeens. We need to get smart people into government if we are to make things happen

            I am now going back to my dartboard as I have a photo of that moron Brian Cowen stuck to it

            Ernie Ball, Guitar String Manufacturer tells Microsoft go Screw Yourselves:
            http://news.cnet.com/2008-1082_3-5065859.html

            Why the Software Industry is a complete scam:
            http://www.defectivebydesign.org/

          • ps200306

            “Negativity will get us nowhere ps200306 and the first thing Irish people need to realise is that sniping at people’s suggestions will get us nowhere.”

            That sounds suspiciously like a famous Bertie Ahern quote, the one where he wonders why the people sitting on the sidelines cribbin’ didn’t just kill themselves. The same counterargument still applies — negativity toward a crap idea is entirely justified.

            “For one thing the one laptop per child idea is excellent and if instead of paying insane licenses to Microsoft and Adobe the Irish Government channeled this money into providing cost effective notebook computers running free software Irish children would be indoctrinated into a philosophy of freedom and choice rather than one which limits their choices through being Defective by Design”

            The short (and obvious) answer is that a cheaper version of something you weren’t spending ANYTHING on before is still an expense. I happen to share your views on free software, but that’s irrelevant.

            “We could save a fortune if we become progressive and adopt Linux and free software for all our government departments… People like me could save many people tons of money with alternative solutions …”

            Last year’s McCarthy report noted a total civil service ICT cost of €65m in staff, €200m in external consultancy, additional costs on training, telecomms etc. Software licenses weren’t significant enough to be mentioned. Sure you could save some money. Could you save “a fortune”? In relative terms — especially if we are talking about big economy-saving ideas — no, not a chance.

            I have no doubt of your bona fides in claiming to be able to save government money. On the other hand, I have extensive first hand experience of seeing government customers ripped off by both large and small external consultants. At the end of the day, governments’ ICT troubles are not even remotely connected to whether they are using licensed or free desktop software.

          • Zaphod

            Please don’t give every child laptops, they break so easily.
            I’m an I.T support person, I refurbish P.C’s for schools/non-profit/qualified individuals.
            I also repair P.C’s and laptops.
            Believe me laptops for children isn’t a good idea.
            They get broken lots of times accidently but a lot of times it is malicious.
            It doesn’t happen to P.C’s, perhaps the keyboard or mouse but those are no problem to replace.
            Replacing broken laptop is beyond the means of the schools, so the children/staff get less access to I.T.
            Laptops are designed to be MOBILE devices, they aren’t built to run 24/7, or even 8/5.

          • Zaphod

            @ps200306

            You have a problem with Hugo Chavez?
            Please explain?
            How’s it going Hugo?……Fucking great thanks.

            http://www.guardian.co.uk/film/2009/sep/03/oliver-stone-south-of-the-border-hugo-chavez

      • Pastor of Muppets

        I’m just home from spinal surgery (massive success – pain free for first time in years, kudos to staff at hospital involved) and I’ll put my hand up as a long-time confirmed shinner.

        What really, really strikes me as funny here, from being a long-time reader, is how many people actually want to live as and live within what we Republicans see as a Republican ethos. Yet they see Sinn Fenin as some sort of terrorist looney party. A reputation largely built by that other organisation we all love to hate, the Irish media and RTE in particular.

        I had it (the Republican ethos) explained to me once, by Padraig MacLochlainn. It was rather surprising, put in plain language. It’s about pride in yourself, your community, your country. It builds on pride, self-respect, mutual respect. It’s about acting in an fair, equitable and ethical mannner, about showing compassion for all in our country, regardless of where they came from, the colour of their skin or the deity they worship (or not, as the case may be.)

        If you start with those basic, fundamental principles, surely this has to filter to the top?

        I watched Pearse O’Dochartaigh’s lambasting of the budget from my hospital bed. If I could have stood at the end of it to applaud, I would. As it was, even clapping cost me dearly in the pain stakes but it’s the first time in many months I’ve been proud to be Irish.

        I watched as our Tanaiste threw snide and stupid remarks across the chamber at every opportunity. Anyone with wit would have had a pen and paper and made notes for a rebuttal (not that there was much to rebutt) but no, she talked bollocks while playing with her bracelet.

        I know how I’ll be voting in future, as I have in the past. And as soon as I get on my feet, I’ll be back chapping on doors, pushing pamphlets through letterboxes and otherwise trying to persuade the decent folk of Ireland that we don’t need the nutters we have in power at the moment, that there is another way. And the next person I doorstep who goes “We’ll, I’d consider Sinn Fein, but I’m not sure that they can do a budget….” will get the full Sinn Fein budgetary plan from me, should they care to listen.

        They’ve had one prepared (fully costed, not just vague aspirations) before the last 3 budgets, which is more than the joke of an opposition system we have has. Did Pravda mention that? I think not….

        • adamabyss

          I’m probably going Sinn Fein myself after a few weeks of watching and listening. First time I will ever have voted.

        • Well Pastor there’s no need for any more preachin’ to me cos I is definitely voting SF.
          I too watched Pearse Docherty’s address to an empty Dail. I was impressed by his passion, content and demeanour. (Now when is the last time I’ve been able to say that about any of our mainstream lot?) My point early on in this string was how sad it is that “The Brits” are so good at intelligent debate while our lot are so unaware of what the word debate actually means – i.e. debate has the ability to reasonably change minds. Next Wednesday they’re playing a little game of “mimocracy” because they have the numbers!
          Absolute Cowardice – Such a vital national interest matter should be a free vote! In fact as per Iceland it should be a Referendum!
          Bye the way Padraig MacLochlainn’s summary should be on your pamphlets!
          Oh and I hope you recover to full health soon!

        • I enjoyed your post very much Pastor and wish you a speedy recovery

          Your description of republicanism is eloquent

          I believe that the Irish people now have no option but to demand a real republic based on these basic human principles

        • Deco

          I watched Pearse Doherty. Excellent pantomine. No can the people please vote somebody with a sense of duty instead of a sense of acute opportunism next time around. Doherty does it because it works. It makes people identify with him as their hero. In time he will be found out to be just another opportunist on the make.

          And I must admit I sniggered when Joan Burton stated that he was not into using the incindary language that keeps coming from the mouths of member of Grizzly’s gang concerning bond holders.

          • Hi Deco,
            Still the question goes a begging – Which party is acting out of a sense of duty?
            As for pantomime – Shatter to Gogarty – “Some of us vote with our conscience!”
            Now that’s pantomime! We all know the vote score within two votes on all issues before the vote is taken! Nobody has voted with their conscience for some time – Nor will they!
            I absolutely believe that Docherty meant passionately what he said. And the reason I believe it is that this sort of passion has been absent from our parliament for some time!
            I will vote SF unless somebody gives me a comprehensive reason not to. Now if anybody wants to quote some incidents in the 1980′s or 90′s I’m really not interested. All party’s with the exception of the Greens can be traced back to some sort of paramilitary activity in their past. Also why is it good for these guys to be part of N.I. Governance but bad for us.
            Whatsmore the real experience of such cross community resolution would be of huge benefit to us here in the south.
            I know he was “from the other side” but David Ervine was a personal favourite of mine and the likes of McGuinness, Adams, Docherty et al have far more in common with Ervine than any of our pampered representatives who know nothing about community and everything about funerial vote gathering!

          • Pastor of Muppets

            Deco, not that I’m out to convert anyone to become an ardent Sinn Fein supporter, I’ve noted in the past your opposition to them. I have to wonder if they’d done something to you or yours to incite such opposition? I could tell you a few personal stories, but I’m not putting it on here, but I could tell you and it’d make you wonder why I place my trust in Sinn Fein.

            I think to describe what I consider Pearse’s [impassioned] speech as ‘pantomime’ is grossly unfair, but that’s just my personal opinion. I know it’s easy to become very cynical very quickly about ANY political faction right now.

            I’ve lived north and south for long periods. I have a very clear and accurate view of the history of Northern Ireland and Ireland as a whole. It’s funny, but I’ve come across some otherwise very well educated, literate, articulate people who have a very distorted view of what Republicanism / Sinn Fein / IRA etc actually are, or were, or what they did and didn’t do. Most people don’t understand the difference. Any their view of N/S Irish history seems similarly distorted.

            I’m going to hazard a guess here and say that most people in Ireland have a better idea of what Nelson Mandela did as regards Apartheid in S. Africa than folk in the other three provinces of Ireland have about what good the Republican movement did in Northern Ireland for real people on the streets as regards to access to education, employment, etc. Basically, ending a sectarian-driven apartheid system of our own.

            If you think SF are just a new snout for the trough, you may have missed the bit about PD taking just 29k of his TD’s salary and donating the rest. I think if you did a bit, you’ll find he’s not the only one in that party practicing what they average 5/8th lives.

        • ict

          I’m certainly with you on the “acting in an fair, equitable and ethical mannner etc” bit .
          But why not call it an “equality ethos” or “ a humanitarian ethos”?

          The word “republican” might have some notional link to some egalitarian French revolutionary values, but the term has become hopelessly tarnished by association with all sorts of dubious, if not sinister movements, everything from the American Right to the Democratic Republic of (insert country with despotic regime of your choice). Not to mention the most sinister of all, Fianna Fail, “the republican party”.
          Also, whether you like it or not, Sinn Fein has done it’s bit in denigrating the word, by allowing it to be linked to violent sectarianism.

          This is not just pedantry. If we are serious about getting people to rally around an ideal, they have to be clear about what that ideal actually is.
          I may well vote Sinn Fein myself, but if I do it will not be out “republicanism”. I’m afraid, for me at least, that word has become meaningless.

  6. vincent

    “We cannot solve our problems with the same thinking we used when we created them” Albert Einstein…

  7. NO HOPE

    Love the way Lenihan says we are ALL in this together! If he was in front of me making that statement I would have a hard time restraining myself, honest to God. Love the way Cowan says we ALL have to take the pain. What fucking arrogant pricks! It is actually bizarre that they would have the total audicity, or is it stupidity, to make statements like that. They still have their fat salaries, pensions and perks, (oh shame Lenihan arrives in a Ford not a Merc). What a Clown! As if knocking 1euro/hr off the minimum wage will create jobs. As if taking 8euros a week from a blind 92 yr old woman will rectify the country. Then they have the audacity to state they cannot do anything about the bank bonuses of 40 million. Are they insane?? These people are imbeciles. They should not be allowed to continue to March 2011 It is unacceptable. It is beyond outrageous. Watch the video from HAC. Says it all about the wankers, politicians, and bankers. The labourer, famer and fisherman will pay for the next 2 generations for this.Angry? No not angry. Incandescent with rage at the fact these idiots still run the country….

    • +1

      They are making ordinary law abiding people wish someone would clinically take each of them out with a snipers rifle.

      There is no dialog because we are being basically told to shut the fuck up. Cowen is like a man transformed and I suspect he has seen a hypnotist.

      What we are witnessing is the slow and prolonged demise of FF and by god they are looking like very desperate men with every day that passes

      They have zero class

  8. I like this idea. David has suggested variations of this idea for quite a while now. It seems the only reasonable way to go forward. But the government had steadfastly refused to think about moving the depositors to a “good deposit bank” up until the ANIB wind down was suggested. I think the idea of moving AIB and BoI depositors there also is just too much honesty for the government to cope with.

    I’ve been wondering for a while if the ECB are simply nervous about the idea of winding down an active Irish bank (not ANIB) as they’re concerned that the derivative positions other major European banks have associated with Irish debt could lead to a situation similar to the US when Lehman Bros collapsed. Apart from that, you’d have to think the Irish banks are safe to wind down providing depositors can be dealt with.

    Ultimately, we can create a new bank with a Public Private Partnership. Considering the deposit flight to the UK and Switzerland (looks to be billions) then let’s just let one or more of these banks invest in the good PPP at a discount supported by the ECB, to ease the pain of bond losses. Minimal I’d say as they’ve already been bailed out when the ECB rolled over 55Bn of bonds. (much to their surprise) Existing banks are wound down and confined to history. Ireland would have a new bank that was actually able to lend money, support businesses etc.

    What’s happening right now is daft. The people of Ireland don’t trust the nationalised and semi-nationalised banks as the state guaranteeing them is bust also. So they’re taking money out of these banks en masse and making the situation worse. Those who can are offshoring it. It’s clear there’s still a requirement for banking, just that the insolvent ones we have aren’t fit for purpose. I expect other banks will enter the market. You’ll see the usual suspects like Denis O’Brien, Dermot Desmond etc. investing in new “startup” banks. Who’d blame them, people are crying out for solvent banks. Rabo and NIB must be delighted.

    In the meantime the journos are obssessing with AIB bonus payments. Stuff like 90% taxes on banking bonuses is sideline bullshit that the government is only too happy for people to exercise themselves about.

  9. http://bit.ly/cOwXz6

    Great patricide metaphor FF committing patricide destroying Ireland and its economy.

    I wonder if the metaphor can be leveraged to see us as Oedipus tricked into marrying ECB/IMF, mother, while killing the euro, daddy.

    Disagree with DmcW on ‘pretend issue’. I don’t believe there is any pretence. Pretence involves cognitive awareness of reality.

    The only reality that NTMA and Clown Government have awareness of is the subservient, stooge dependency upon misled belief the economic policy they are following is correct.

    I believe the hysterical urgings of Clown to have confidence in our recovery is truly believed by him.

    Its a line fed to him by those who defend the banks and bondholders from threat.

    This makes Clown a moron. Fianna Fail legacy will not alone be the welcome of ECB/IMF, but the default of and bankruptcy of Ireland and its economy.

    The default train is fast approaching and Fianna Fail are right in its path!

  10. dwalsh

    I heard FFs policy legacy to the next government and the country in general described as a ‘scorched earth policy’…it is tragic and true. Their actions have hamstrung not just the next government but the next generations of Irish people…unless. Unless some extraordinary leadership emerges that is not in thrall to the Doges of international finance and Eurocracy.
    Remember many of the out-going FF politicians will have no political future in Ireland — we must hope; although Cowen’s recent well received bawling populist speeches, and the 7000 first preferences in Donegal are alarming. Their only hope is comfy jobs in Europe and the corporate world, which I am willing to bet are now guaranteed due to their abject subservience to their corporate and European ‘colleagues’ (or is it masters) during the course of this debacle.
    So will the leadership emerge that would have the independence and strength to lead our nation in the direction David indicates?

    • Doges of Venice made Venice boom unlike the kleptocrats of eurocratic cluster FF bombing:)

    • Pastor of Muppets

      dwalsh, (I realise this response is a bit late but it’ll give you an example of why FF still get votes, despite sinking the country) while 7000 first preference votes in DSW’s recent by-election are worrying – here’s one personal example that I can give that might explain it.

      Some time back, I was canvassing for a political party. I knocked on one door and did my usual introduction/explanation and asked if they’d consider giving ‘my’ candidate a vote, first preference if possible.

      The reply I got was basically ‘Sorry, I’ll be voting [local FF councillor] because he got me this house.’

      I asked politely if they’d consider then a second preference, bid them good evening and carried on canvassing.

      Later that evening, I asked one of the higher-ups how the hell a FF councillor could ‘get’ someone a house – being of the vague understanding that social housing was based on a waiting list/need basis. This was the reply.

      “What FF councillors do daily is look through the letters that are getting sent out from the Council offices to people who are awaiting housing, then pick up the phone, call that person and tell them they *got* it for them and they’d get a letter in the mail in a day or two confirming the details. In reality, that recipient was merely next on the list.”

      Now, with ethics like that and plain lies, so are votes bought. And that’s just one stroke FF pull to get votes.

      • capriluvincharlie

        @ Pastor of Muppets – here’s an example of how FF operate – it took place a week before the DSW elections – I was in my local bar on a Wednesday night and after returning from a cigarette break I made a throwaway comment to a friend seated at the bar about Fianna Fail. A man sitting beside my friend questioned me as to why I would complain about the party. I responded that I thought they were corrupt and had destroyed the economy of the country among other things. When I asked why he wanted to know he replied that he was a Fianna Fail County Councillor from Cork who was here to support Brian O Domhnaill in his campaign (nice holiday for him, no doubt paid for by the taxpayer). He quizzed me further as to my lack of support for the party and I replied that the ludicrous amounts of money squandered by the government during the boom years was scandalous and that instead of wasting vast sums on things like the electronic voting machines and the ‘Bertie bowl’ they would have been much better off investing in the country’s health system. I pointed out that cancer patients in Donegal have to travel to Dublin for treatment and how disgraceful that was considering France has mobile cancer units that travel between areas and treat patients in the comfort of their own homes. I mentioned the property boom and how I had nearly bought a house only for the sale to fall through. I told him I was relieved due to the fact that I would have been crippled by the rising interest rates that occurred just after that; considering I had opted for a tracker mortgage. He argued with me and said I was wrong and that I would not have been affected even though tracker mortgage rates rise and fall as decreed by the ECB. He asked me where I lived and I told him I pay 90 euro a week for a cold flat. At this point he asked me if I was on the housing list. I replied that I was but, as I have no children the chances of my being offered a house were between slim and none. He then asked me if I would ‘accept assistance on this matter’. He repeated this offer to me as I looked at him in amazement. I told him I was not interested in bribery of any sort and that there were people who were in greater need of a house than I.
        Our conversation then switched to employment and I told him of my experience working for the civil service on a contract and of how I was appalled by the lack of willingness of people to clear their workload, preferring instead to let the work build up in order to claim overtime. I stated that it was frustrating how people were not even properly trained for these jobs and didn’t care that they were dealing with other people’s lives on a daily basis. I mentioned how Jim Mc Daid was rewarded 230,000 for retiring along with a 90,000 pension per annum and told him it was disgraceful considering I worked 3 jobs during the boom years and barely scraped in 19,000 P/A.
        He then asked me to which party I had aligned myself — I replied that I had little faith in any of the main parties because few make themselves clear and won’t answer the simplest of questions. I expressed my dismay that I considered the majority of them to be corrupt and that the only party I found interesting at the moment was the Socialist Workers Party due to their opposition of Capitalism and their strong stance for the ordinary worker.
        At this point his taxi arrived and his parting shot to me as he walked out the door was “Stalin would be so proud of you”.

        To me this sums up Fianna Fail in a nutshell — if they cannot buy you then they will resort to petty name calling. Why should they get anyones’ vote when yet again they have proved they have nothing but contempt for the ordinary person?

        • Pastor of Muppets

          @capriluvincharlie Bravo! Stalin’s dead, but I’m proud of your ethical stance on the housing issue and your tearing a few strips of the arrogant, lying git – not that had you caved in and offered to sell your vote for an empty promise that it’d have actually got you anywhere. You were smart enough to see through it.

          They’d leave single mothers with families who really need social housing on the street if the could for just one vote. What a laudable attitude – and then they ask for your vote.

          As I said, they have many strokes they pull and the poor, needy and desperate in our society, or at least some of them, added to the gombeen-hangers-on and let’s put it plainly, bloody idiots, fall for it every time.

          Must have been nice enjoying a drink on the high stool from the moral and intellectual high ground while letting this fool make a fool of himself.

          Ethics are just one area of many that FF just don’t get. Their mentality is such that they believe the average man is stupid (or desperate, unfortunately) enough to buy into their rubbish.

          Another favourite line they love to trot out (they must run FF courses in bullshitting because it’s the same nationwide) is “Ah, I’ll see what I can do for you – this year’s budget is gone but [turns to local bum-boy and says] ‘Put that at the top of the *Priority List* for next year’ “.

          It’s always ‘jam tomorrow’ with them. Well, they’ve certainly got us in a jam now, eh?

          • capriluvincharlie

            @ Pastor of Muppets – Well thank you for your very amusing and articulate answer!! You made me laugh! I must point out (I keep forgetting that people assume I’m a man because of my username – comes in handy sometimes though!) that I immensely enjoyed sparring with this idiot as he presumed I was a typical woman who probably followed such nonsense as the X Factor and I made him very uncomfortable indeed. I found out today that the IMF bailout has been voted for by a majority of 81 to 75. This is very disheartening to me as I emailed all of the TDs expressing my concern about the situation and typically I got not one response from any FF politician but I recieved many emails from Sinn Fein, Labour and Fine Gael TDs who all promised faithfully that their parties would vote against it. So my question is – how did it get passed?? I’m keeping their emails and shall forward them to the press if they state tomorrow that they voted against it. The lying feckers. Our country is wrecked thanks to the greed of so few who care nothing about the people who are suffering. It makes me sick.

  11. Broadly speaking we turned a blind eye when the same gang, raped Africa, Southern and Central America and the rest of the developing world. We were a net beneficiary of these pillages and sucked up the media defence of it. We are currently in collusion with the war crimes being committed in the Middle East again sucking up and rehashing the Clinton and Co. defence of these crimes.

    It’s now our turn to get banged. It could all be so different if we were a nation with some backbone and elected people with vision rather than cronies that are just a reflection of the majority of society.

    Most people thing this recession is bad; however, they have seen nothing yet. In the boom the middle class were the losers without even realising it. (The lower and upper classes did well). Now as the bust sets in, the middle and lower classes are and will get screwed real bad. There will be more caviar and champagne at better value for the winners.

    Don’t expect the media to explain how this occurs. We have had thousands of hours of media coverage on the “economic crisis”, yet anybody I speak to has a very poor understand of what’s going down.

    Maybe we are just reaping what we sowed.

  12. ict

    I’d wondered why the budget seemed to target the less well off much more than the well paid. At first I put it down to just ordinary vested interest greed. Then I worried that it was some Fianna Fail electoral shinanegans and they were going easy on the demographic they thought most likely to vote. But now I think there is a much more sinister method to the madness, and it is coming from the ECB.

    Apart from the bits put in to placate enough backbenchers to get the thing through the Dail (old age pension etc), they have skrewed the demographic groups least likely to owe much money and gone easy on those most likely to have a celtic tiger mortgage.

    Those on the minimum wage, or receiving carer’s allowance etc etc are probably less likely to be saddled with a daft mortgage, and even if they are, the amount owed is likely to be relatively smaller than the debts of the better paid. Being well paid was no protection against taking out an unsustainable loan during the boom, as the amount over-borrowed tended to be commensurate with salary. (Or more accurately the degree of grandiose pretentions tended to be commensurate with salary; banks of course lent whatever was requested, regardless of means).

    If they hit the well paid too hard, they may cause them to default on their very big loans and worsen the wider banking crisis.

    My somewhat depressing conclusion is that the priorities of the state (as expressed in the budget) have nothing whatsoever to do with “recovery” (never sure what they mean by that, is it going back to 2006? hardly a “healthy” state of affairs then!), growth, fairness or anything remotely like that. It’s not even about protecting the well off at the expense of the poor. No, the poor can go to hell or emigrate, but the indebted middle classes must at all costs remain and continue to service their debts.

    The priority for the state, indeed it seems the sole function of the state, has become that of a debt collecting agency for the ECB.

    The potential longterm social consequences of this are truely appalling. The sooner something gives the better.

  13. paul

    Absofuckinglutely agree 100% with NO HOPE,as I
    said before,like father like son.Let the people not forget!
    On a different note,I see Fintan O’Toole wants more women in politics,surely the two Marys,Harney and Coughlan, were among the greatest disasters in recent memory?
    Does anyone remember years ago a Japanese company were going to build a metro system for Dublin at no capital cost to Ireland,then they would lease it back to the government over 25 yrs?Guess who shot that one down….Her Hatefulness Mary O Rourke!
    Saw Mary Hanafin interviewed on France 24 about the Irish situation,what a condescending cunt,full of typical fiannafailspeak.

    • The only affirmative action I’d like to see in Irish politics is a new party with some genuine intellectual heft. Only rules for membership, you must not be a member of an existing political party.

  14. As above
    I’m off work at moment and on crutches. Yesterday I watched the debate in the UK Parliament re Student Fees. Full house, intelligent argument and in the end a close result with the coalition winning. No one knew what the result would be as both Conservative and Liberals voted against their own government. No Problem it’s called intelligent debate and it is what healthy democracy is based upon. There were displays of honour, respect and intellect!
    Next Wednesday FF/Greens will win by approx two votes another type of “debate” The “Irish” type where it doesn’t matter what’s argued! Our public reps or parliament have no idea what conscience or democratic process is? The whip system destroyed democracy many years ago! There’s absolutely no point in next Wednesdays charade! Cowen knows he has the numbers so we’ll play the game of democracy? No such thing as a free vote there lads!
    So I’m afraid there’s no hope for now! Only thing we can do is use our ballots. Whatever your party – make sure that you do not vote for an incumbant! That’ll teach them.
    If we have 165 newbies at least they’ll know who’s in charge?
    Me – I’m gonna vote for Sinn Féin!(First time ever)
    Why? – Because in all honesty they seem to be the only ones who actually get it? A bit like the Icelandic PM got it and had a referendum. The Icelandic people share their fate in solidarity.
    - I almost envy them!
    Why is it throughout history that the first guy likely to shaft you will be a fellow Irishman?
    I’d like us all to lie back collectively on a great big sofa and be counselled by a great big analyst and when we get off the national sofa I’d like us to be more like the Jewish People – Self supporting!
    As long as we’re the fragmented nationality that we clearly are we can facilitate anything. Including Facism.

  15. paddyjones

    DMcW is becoming increasingly more desperate, first he advocates default ( Sinn Fein ) then he advocates a good bank idea ( Fine Gael ). Surely this is akin to rearranging the chairs on the Titanic. They tried to do this with Anglo ( good bank – bad bank ) but were still left with the debts no matter what way you do it.
    As for the Euro it is still performing well in my opinion despite peripheral difficulties. Bond prices accross the world are increasing in the last few days and I for one ( being a bond holder ) welcome this as economies are failing to deal with their debts.
    We in Ireland need to come to terms with the debts and learn to live with the consequences of not managing our economy. I wish my mortgage would go away but I have to deal with it knowing that it will be there for the next 10 years but at the end of it I will be debt free and own an asset.
    For the next 10 years maybe more we will have to learn to manage debt first and foremost, we will have to accept austerity.
    One thing that is not being talked about is the actual repayment of debt, this will happen post 2014 and will involve even more austerity. As I make mortgage repayments a portion of it is capital repayment part is interest. We must start thinking about the capital repayment of debts, the IMF/EU/ECB will not accept default this is a non runner and they will force Ireland to repay every last cent even if this takes 20 years, they are running our economy now and will continue to do so until we are debt free.
    DMcW should face reality and stop being a crank.

    • BrianC

      Hi Paddy

      Glad to hear the bond prices are improving and all that.

      Yes you make many valid points and nobody can really argue with the tenet ‘live within your means’.

      The problem that I personally have is being made personally responsible for the debt of others. I also doubt that if all the asinine investments made turned out to be good the investors (bond holders) would be knocking on my door with a cheque.

      I would not expect somebody else to pay my mortgage if it goes bad based on my personal decision making and I doubt you would either. So I am still waiting for someone to explain why I am being made responsible for the banking debts. If you want to answer that one I would be delighted but please spare me the moronic answer that Donal O’Donovan gives.

      If Ireland is finally expected to pay of the bank debt which seems to be the case then they ought to have the intelligence to arrange it in a way that Ireland can afford it.

    • Harper66

      Paddy,

      I agree with and want to second Brians reply to your comments.

      I am quiet happy to pay for my debt.This debt is not my debt.It is an attempt to make private debt sovereign by a crooked compromised government without any mandate.

      Secondly for a man pushing the common sense roll up the charvet shirt and get on with it school of thought you are over looking one simple fact. This debt is unrepayable. This current budget represents only 40% of the planned cuts for the next four years.

      Tell me, at the end of these four years of savage cuts what money will be left to tax in order to repay the debt?

    • Paddy Glad to hear you are in bonds as well as Disneyland http://www.elliottwave.com/freeupdates/archives/2010/12/08/How-a–Dull–Investment-Can-Be-a-Great-Investment.aspx
      Another thing we wont be repaying the capital EVER never mind 20 years. Do the maths working population 1.8million interest on the debt 5 maybe 8 billion Even the ECB/ IMF cut the growth rate what happens with Zero and Neg growth? Welcome to the Titanic you must be on the upper decks

    • Julia

      Sadly, my next door neighbour, who is disabled, is also going to be repaying the debt. He lives on E200 a week and will now be living on less. He has always lived within his means. In fact I worry about him because he won’t light the fire early enough in the day to keep the house warm. He is afraid to use up his fuel too quickly. In this weather! But he never took a loan in his life and doesn’t intend to start. He faces reality every day. He isn’t a crank. He doesn’t know what’s going on or why he’s getting less money but he doesn’t complain. Could you live on E200 a week for a month?

      You need to read the article below in Brollachain’s post.

      • adamabyss

        Sorry to hear about that Julia. At least he has a concerned and pro-active neighbour. May I ask – does he have to pay a mortgage/rent out of that 200 Euros?

        Not being smart but I could easily live on 200 Euros a week if my mortgage/rent wasn’t coming out of that.

        • malone

          adamabyss

          I think that you must be the most thrifty person in Ireland if you say that you could live on 200 euros a week. 200 euros a week is 800 euros a month and most mortages are over 800 euros a month.
          You can feed & clothe yourself , pay all the bills
          not to mention run a car / motorcycle all for less than 200 euros a week ?
          Please tell me how you do it as I would love to know !

          • adamabyss

            Well malone, that’s why I asked if the neighbour’s E800 a month had to cover mortgage / rent as well. If it didn’t have to I could survive on it, if it did have to no-one could survive on it.

        • Julia

          Adam, he does live well enough, day to day. His house was left to him by his mother. And back when I was I was a student I could and did live on less than the equivalent of E200. And I went to parties and travelled etc. as well. Of course I wasn’t planning on making this a life pattern. Everything was an adventure. Still is.

          My friend can’t plan to buy a new sofa. His present one is more suitable for a cat to have kittens in. It’s touching the floor. He depends on the good will of others, which he has. There ‘s a suspicious looking stain appearing in the corner of the ceiling. It’s up to him to get it fixed. Where’s the money to come from? I won’t describe the rest of the house and the work that needs to be done. Any way you know what I mean. Surely I don’t have to explain. The irony is, if he were to get really sick from damp or just give up he could probably get a place in some kind of nursing home at enormous cost to the state.

          My point to Paddyjones was that it is immoral to make people like my neighbour, and everybodies neighbour has a name, pay proportionatly more than the better off.

          • adamabyss

            Yes, point well taken Julia. I was doing the door last night in Whelan’s for Mark Chadwick (Levellers) and a great band from Galway called Queen Elvis (ex-Big Bag of Sticks). The mandolin / sax player from Queen Elvis, Geoff (a Kiwi chap) was telling me that he’s been giving music lessons to travelling kids in Galway for the past couple of years but the funding has been pulled now. These kids only had to pay 10 Euros each for a decent period of tuition. Geoff said some of the young onea were really good at flute, tin whistle, violin etc. but that’s their hope gone out the window now seeing as it’s more important to pay the corrupt politicians.
            It’s a disgraceful state of affairs all around.

          • Julia

            God I’m so past it. Whelans. Thats great. Nowadays I want to go to bed early with a good book. In winter I think I was ment to be a brown bear – hibernating.

          • Julia

            It’s amazing what activities and services become frivolous extras during a recession isn’t.

          • adamabyss

            Oh it’s not my scene either Julia, I was just doing a favour for a mate and got a taxi home about midnight when things started to get messy.

            I did have a couple of nice pints at Kilkenomics but not since.

            Funnily enough I just got a text from my brother who is in the city centre saying ‘Recession me arse. In 2 pubs tonight. Both jammers. Sunday night’.

            I doubt the same could be said in Port-Au-Prince.

            We have no sense of priorites in this country. We are a bunch of spoiled brats.

          • adamabyss

            Yeah, bed early with a book (like now). That’s me too, apart from rare breakouts.

          • adamabyss

            It seems drinking onself senseless hasn’t yet gravitated towards being a frivolous extra.

    • paddyjones, when bondrates go up the value of the bond you are holding goes down. So unless you like losing money THIS IS BAD!!!1

  16. Alan42

    Jesus Christ . You still have the Euro zone by the balls . Do a deal that is favourable to Ireland . Treat Ireland as a business and strike the best deal that you can . The window is closing . The markets and the world are still scared of a new GFC caused by Europes debt .

    • Harper66

      You still have the Euro zone by the balls . Do a deal that is favourable to Ireland . Treat Ireland as a business and strike the best deal that you can

      +1

      FF are acting like lap dogs to Europe.

  17. Brollachain

    About 18 months ago TCD’s Philip Lane linked to this article by a former IMF Chief Economist on irisheconomy.ie

    http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/

    • Contains link to classic

      Brooksley Borne on Derivative Trading

      http://bit.ly/cOwXz6

        • BrianC

          I really enjoyed that.

          I cannot recall the chap but he blew the whistle on derivatives in the UK several years ago in the square mile where banks started taking bets on which companies would make losses. The City shut him up. He explained how it would never have taken place if all financial regulation was left in the confines of the Governor of the Bank of England but Flash Gordon seen the twinkling lights on Wall St and relaxed regulation in the UK and the Bank opened private investment companies poured billions into them and hey presto a pyramid scheme ensued. You know the rest.

    • Julia

      What an excellent article. Ireland is a classic emerging economy. A really good explanation of what is going on. Another author who shows that David is spot on. Thanks.

  18. adamabyss

    subscribe.

  19. I have a suggestion and a song. I like many of you look forward to reading this forum its like buying a lotto ticket you think PS200306 will have all the right numbers answers listed like magic. I read Gurdgiev, Lucey. Kinsella, Kelly and all the international comments I am addicted as I have little else to do.I not only do the Soverign Banking gig I also do peak oil just to keep the pain level up.Try digest the following on top the debt service contract http://aspoireland.org/2010/12/01/peak-energy-climate-change-and-the-collapse-of-global-civilization-the-current-peak-oil-crisis
    Ok here is the suggestion Steady State Economy with world first debt free web based platform finiancial system. http://steadystate.org/discover/policies/
    Finally the song but first an intro http://www.youtube.com/watch?v=G6dGH3iBuS8&feature=player_embedded
    http://www.youtube.com/watch?v=czvxyDgqxmM&feature=player_embedded

    D Grey sings We all saw it coming but we still bought it
    reflect on how we want to contribute to this country our politicians sure as hell seem destined to feed in the trough and we have to offer an alternative that is Survival which is neither left or right.

  20. Please indulge my poetic efforts; All criticism welcome!

    The Village Green
    by Pól Ó Muirceartaigh

    The neon lights blanked out the night upon the village green.
    A voice rang out “Good night, God bless” in foreign tongue it seemed
    My head not long laid down to rest I soon began to dream
    Next thing I know I’m peering out upon the village green.

    I peered down on familiar ground which somehow dimmer seemed
    A gathered crowd about a bus as tears began to stream.
    The brightest of my boyhood friends suitcases in their hands
    Bade sad farewell to grieving clan and left for foreign lands.

    Images seemed drifting by – the trees began decline
    Fashions faded changing as the same old scenes rolled by
    Finest sons and daughters boarded coach then cab and cart
    As innocence they left behind ‘midst sounds of broken heart

    Once again the scene did change as full moon shone it’s light
    Upon the green was conflict as shots rang out in fright
    Brothers fired at brother’s own as frantic sisters screamed
    Wailing mothers dragged lifeless sons from off the village green

    A deathly silence then befell I trembled by the cold
    Not houses now but hovelled shacks lit up by fallen snow
    Silence broke by ghostly waifs, starvation’s desperate scene
    As they carried out, then piled in grief, their shrouds upon the green.

    My sleep invade, a blinding light, perspiring I did wake
    I rushed outside, still fresh my dream, reality to take
    No comfort as I wondered then – was it past or future seen
    And “SOLD” was pasted on the board upon the village green.

  21. fitzney

    So…… do I act as David ‘appears’ to suggest and take the lousy few bob I borrowed for my son’s education out of BOI? Where should I lodge it. Is the post office still ‘good’?

  22. paulmcd

    LENIHAN NEVER INTERVENES ON BEHALF OF PUBLIC INTEREST

    The chairman of the Public Accounts Committee has said it is publishing a letter it received from the chief executive of the National Asset Management Agency refusing to give it the pay scales of people on the agency’s staff.

    I suspect if you study the records, you would find that LENIHAN has intervened only to award gratuitously higher (TAXPAYER) SUMS for NAMA-executive remuneration. On the basis of his justifications, every professional would start at a PREMIUM because starting-out in a new position is the most challenging phase, with greatest workload.

    Check example here: http://www.rte.ie/news/2010/0312/nama.html

    LENIHAN OPPOSES REFERENDUM TO LET TAXPAYERS DECIDE, DESPITE . . .
    ICELANDIC RESISTANCE BRINGING BETTER DEAL: After more than 93% of Icelandic voters rejected the deal to repay the money by 2024 at what was widely considered a high interest rate of 5.5%, the talks stalled . . . .
    . . . The agreement was worked out in talks in London involving the three countries. Under the deal, the Netherlands to receive a total of €1.3 billion with an interest rate of 3%.

    JUDGEMENT ON LENIHAN’S ECONOMIC STEWARDSHIP
    Credit rating agency Fitch has downgraded Ireland’s debt rating by three notches from ‘A+’ to ‘BBB+’. This puts Ireland in the same category as Libya and South Africa.

    LENIHAN’S “STABILISATION”

    The Central Statistics Office said the long-term unemployment rate rose to 6.5% in the third quarter from 3.2% the same time last year. Its quarterly national household survey said the number of long-term unemployed people rose by 69,000 to total 140,400. It added that long-term unemployment accounted for almost 47% of total unemployment compared with 25% a year earlier.

    LENIHAN IS “ECONOMICAL” WITH THE TRUTH
    LENIHAN said legislation brought in on foot of the bank guarantee already prohibits the payment of any performance bonuses to senior bank executives. No bonuses have been paid to bankers for 2009 or for this year, he said.

    THE REALITY: Both Boucher and Doherty – and I suspect many others not in the public eye – received “supplements” in the form of pension top-ups. This was contrary to the recommendations of CIROC.

    Finance Minister Brian Lenihan said we have to start facing economic facts in this country. He said that having the second highest minimum wage in Europe was not sustainable at this time of crisis.

    He forgets to mention: Ireland’s highest political earnings in Europe are no longer sustainable.

    He also said it was not possible to retrospectively put a punitive tax rate on bank bonuses – TYPICAL COWARDLY RESPONSE, favouring the highly paid!

    CLICK HERE

    “However, according to the new Eurostat report when adjustment is made for purchasing power in different countries, the position of Ireland falls to sixth in the league table.

    When purchasing power is taken into account the minimum wage is Ireland is calculated at €1,152 per month. This places Ireland behind Luxembourg, the Netherlands, Belgium, France and the UK. The Eurostat report says that when expressed in purchasing power terms the Irish minimum wage is €2 per month behind the level in the UK of €1,154. For France the figure is €1,189, for Belgium €1,254, for the Netherlands €1,336 and for Luxembourg €1,413.

    The report also says that in terms of minimum wage levels as a percentage of the average gross monthly earnings in industry and services Ireland is also in sixth place in the league table .”

    LENIHAN SUPPORTS PERPETRATION OF NEW FRAUD ON TAXPAYER, FOR THE “COMMON GOOD” I’M SURE

    INCREASE IN CORPORATE WELFARE

    Bank of Ireland has announced a plan to exchange some of its subordinated bonds for new bonds in order to strengthen its financial position.

    The bonds involved had an original face value of around €3.1 billion. Under the proposal, the bank would offer the bondholders a total of up to €1.5 billion in new 13-month Government-guaranteed senior bonds. The move is at boosting Bank of Ireland’s capital strength.

    ANY ARRANGEMENT WHICH AIMS TO BOOST THE “CAPITAL STRENGTH” OF IRISH FINANCIAL INSTITUTIONS IS AN ATTACK ON THE COMMON GOOD.

  23. michaelcoughlan

    Hi David,

    The property market has already started to clear. http://www.businessandfinance.ie/cat_news_detail.jsp?itemID=3250. and as you know as rents rise so will property prices.

    The minister has two choices ONCE WE SOLVE THE PROBLEM IN THE NATIONAL CURRENT ACCOUNT. Option one; He knows we can tell the senior bondholders to fu*k off when our current account spending matches revenue. How do we know this? YOU told us so. Isn’t speculative capital always forward looking as you have told us ad nauseaum? The bond markets will keep lending to us at that stage as we will be living within our means and also enjoy a huge trading surplus with the rest of the world which is option one. The bond markets won’t give a shit if Anglo defaults on its corporate bonds so long as Ireland doesn’t. This is why Irish bond prices are falling in my view.

    Option two is to set up the new bank like you said and again act in three years time when we have solved the problem in the current account and all the deposits and bank debt are in a well capitalised new bank insitu in a Republic with a huge trading surplus and a balanced current account as such a bank would be a very valuable asset. The only way would be up for the equity holders which would be the ECB and they would be very glad to take the bank and sell it to recover their money at that stage. Of course they would.

    Don’t forget all the property assets the title of which will come under the control of NAMA which will be worth a fortune once liquidity is restored to the system after the current account problem is sorted. You bet it will. They guys in Nama will even make Abromivich blush there will be such a massive return to Nama.

    By the way David in my view the biggest reason there is runaway inflation in Zimbabwe is because of a scumbag called Mugabe.

    Ireland is a great country with great people and a great future. It’s time to start looking at the positives and not the negatives.

    Regards,

    Michael.

    • Deco

      Inflation is a monetary phenomenon.
      Deflation is a credit contractionary phenomenon.

      Hyperinflation is a political phenomenon. When the political system, and it’s institutional elements, plus it’s power source, decides that it is the best course of action to keep printing money.

      Hyperinflation occurs when a political system has a pretence to keep up, but has exhausted the economic system upon which it is based, to the point that the political system must make intself responsible for “wealth creation” process itself.

    • Zaphod

      I’m sorry if this is a dumb question, how do you think it’s a good thing for people to be charged more for somewhere to live?

      Unless you are a landlord this is bad news.

      The economy is having 6Bn removed this year, yet somehow charging more for somewhere to live is good?

  24. Pedro Nunez

    Excellent, the absence of Irish civil society mechanisms and channels is evident for all.

    But can we rise above the gombeenism

  25. Deco

    “Let’s pretend”.

    I think the entire ediface of contemporary, be there or be square, sophisticated, up to your neck in debt, “I’mLovinit”, great4alaff, Irish culture is a case of let’s pretend.

    Let’s pretend we can vote alcoholics into power and that “it will be grand”.
    Let’s pretend it was all the bankers fault.
    Let’s pretend that Mr. and Mrs. Gilmore’s site deal in County Galway with the Department of Education (the organization that employ her in a management capacity) is all totally above board (as reported by the Old Schitzo on D’Oliers Street).
    Let’s pretend that the legal profession have the common good at heart.
    Let’s pretend that putting more money into the HSE will see results.
    Let’s pretend that the public sector unions are going to improve productivity.
    Let’s pretend that the predominant Irish concept of management is some sort of world beater.
    Let’s pretend that the Ditherer 1.0 should not be liable for all sorts of charges concerning the funny finances.
    Let’s pretend Ireland is a great country to do business.
    Let’s pretend that Ireland is not suffering seriously as a result of drug addiction problems.
    Let’s pretend you can keep borrowing and leveraging and enjoy the greatest lifestyle ever.
    Let’s pretend that putting on a green jersey is an intellectual qualification or something.
    Let’s pretend that we are actually getting smarter instead of being dumbed down.
    Let’s pretend that the state is effective and efficient.
    Let’s pretend that RTE News is telling you information as soon as it happens.
    Let’s pretend that the media in Ireland does not get bought by “our advertising sponsors”.
    Let’s pretend that we are a highly educated showed of absolute geniuses who can create wealth by farting while everybody else has to toil and sweat.
    Let’s pretend that the US Democratic Party (Tammany Hall) is a holy institution that can never do any wrong and who should rule the world.
    Let’s pretend that you can get rich by increasing your borrowing and buying junk.
    Let’s pretend that we are happy in Liffey Valley Shopping Centre/Dundrum/Jervis Centre etc…

    Irish society is all about “let’s pretend”.

    And this is the kicker that will infuriarate people. But it really needs to be said.

    The “let’s pretend” factor is on course to go completely overboard and takeover. It’s a case of new forms ofr “Let’s pretend” that are even more ludicrous than the old versions”.

    “Let’s pretend” to know it all.

    And the second kicker – a lot of the let’s pretend is being supported in very suave ways by the media.

    Now, stop thinking as you might, instead let us determine your feelings….and don’t forget…to support our advertising sponsors…both current…and more importantly..our future advertising sponsors.

    • Julia

      “Let’s pretend the Public Sector will improve Productivity”

      Ok. I’m a teacher. I hear that in January we will all be working an extra hour in school per week. I’m not sure what we’ll be doing. Maybe cleaning the toilets. Maybe correcting homework inschool that we would be correcting at home. Maybe it means that some of the extracurricular work we do will now be paid. I’m just not sure.

      This productivity thing hasn’t been thought out very well.

    • chrisi313

      Great post as always Deco

  26. The new Cosmopolitan… JUST THE RIGHT AMOUNT OF WRONG!-

    Today, Friday 10 December 2010:

    RTE six-one news, the entire show was dominated by ‘effin’ Eddie and exhausting their time on Gerry Ryan’s coroner report and the inevitable sports news.

    Geeze, will you give the man a brake? If you take advantage of this ground shaking news that Ryan was a morphinist to deliberately distract from the real important issues, I suggest you pay his family another months of his salary for having the privilege to report on the fact that he was a multi drug addict that went too early due to his lifestyle and pressure he was under.

    Note to RTE: Next week Tuesday an election in the Dail will ask our elected, but since long not wanted anymore, representatives to agree or disagree on the EU/IMF bailout package, but RTE has more pressuring things to report on I guess. I know the whole thing is a farce, otherwise Mr. Cowen would not have agreed to it, but at least you could have the decency to pretend this to be of some importance.

    X X X X

    Josef Ackerman was born in 1947 and is amongst the most powerful bankers on the planet.

    Since 2003 he is the chairman of the board of the IIF, the Institute of International Finance Inc., this illustrious club that was established in 1983, right after the Latin American debt crisis which started in the 70s and ultimately peaked in a situation where Brazil, Mexico and Argentina became insolvent.

    The IIF announced yesterday a new breakthrough research function on their website that allows for location specific data. We learn that:

    I am pleased to announce the launch of a new format to the Economic Research pages at the IIF’s website…..This website change caps a year of evolution for IIF Economic Research – Phil Suttle -Chief Economist and Deputy Managing Director

    The most important change that you will notice is the introduction of regional and country-specific pages. For example, if you are interested in our research on Brazil, you just need to click on the Latin America link in the column on the left hand side of the main Economic Research page, and then click on Brazil. You will then find all our relevant Brazil research (including our database), together with (on the right side of the page) links to other useful websites and resources on that country.

    Oh goodie, I am impressed, you can now click on a country and get the country specific data sets they see fit for publishing online. We did that in the mid 80s using index linked searches of database structures when clipper was a modern compiler operated mainly under DOS.

    So let’s give that’s shot and have a look what they have to say on in the Irish situation, but wait…. …on the left hand side of the main Economic Research page….
    Well, I guess their European database might find an update one of these days eventually, reflecting the reality of Europe’s social, political and economical situation, including countries such as Ireland, and hey, last time I had a shower, Turkey was Asia not Europe.

    Yeeeeah yeah, all right, Eurasia, I hear you. If you think so, fine!

    By clicking on Regional Publications, next to Country Publications we find a note from May 12, 2010

    RECOVERY GETS UNDERWAY, Related Countries: Europe, Type: Research Note:

    The outlook has improved, with a recovery under way, inflation and current account deficits largely under control and capital inflows on the rise. The main policy challenge will be to begin to reverse last year’s fiscal deterioration and address the root causes of the growing structural deficits.

    http://www.iif.com/emr/eu/

    The IIF is not WikiLeaks, this is a members club only!

    Ackerman is not only the CEO of the IIF but CEO of Deutsche Bank where he is to stay until 2013 . Further he enjoys positions as a visiting Professor of Finance at LSE, London School of Economics, the world’s leader in providing a “elitist-blind-spot-education”, chaired byPeter Sutherland until 2008, Non Exceutive Director at SHELL and personal barbecue friend of Angela Merkel, to name but a few.

    In five days, on December 15th, a not so small opening party will be launched and I have a feeling Mr. Ackerman will join the list of only by invitation guests who will come together to celebrate they opening of an impressive but given the reality of our times, somewhat anachronistic building, comprising Vegas’s largest chandelier with two million crystals to lighten the mood of the distinguished guests.

    The Cosmopolitan, a 1500 slot machines, 80 Roulette, Poker and Black Jack tables and 3000 rooms counting casino.

    Owner: Deutsche Bank, their total investment USD 3,9 bln.

    The hook line for The Cosmopolitan USA TV advertisement:

    JUST THE RIGHT AMOUNT OF WRONG!

    Even the Wallstreet Journal could not resist to make remarks that it is good to know Deutsche Bank not only has casino balance accounts, but a balance account in a casino.

    Smack in the middle of the boom cycle Deutsche Bank granted property tycoon Bruce Eichner a credit for USD 60 mln to buy the land for the Cosmopolitan, but we know how these estimates of developers work, hence he had to extend his credit line from 2004 to 2008 and Deutsche Bank agreed. Total in 2008: 768 million US-Dollar.

    Early 2008 Eichner became insolvent and Deutsche Bank the owner, and decided to finish construction work.
    As a matter of course, Deutsche Bank makes no comments on the adventure, other than the spin that the investments will provide the best possible output for their shareholders.

    Yeah, right!

    First financial results are to be published Q1/2011. Wanna make a bet?

    I suggest we help our German friends out of this misery that constitutes their very own banks by defaulting like Greece did according to Brian Cowen on Prime Time this week.

    Not?

    Well, all right then, a Freudian slip?

    ….may be!

    http://dl.dropbox.com/u/4914840/jabber.mov

    Best
    Georg

    • Deco

      When a high profile “celebrity” dies of drug usage, then thi should be a signal to the rest of society that these substance do real harm.

      We seen the same thing with regard to Katy French.

      Basically, celebrities do not get treated in a less than hyper-respectful manner.

      The level of cocaine abuse in Ireland is a very serious concern. But for strange reason it is a subject that is taboo with regard to “celebritie”. There is no Irish equivalent of National Inquirer to wallow in these type of stories and undermine media credibility.

      Let’s pretend that we can believe the media, and become smarter and well informed as a result.

    • P.S.

      If anyone thinks that Cosmopolitan makes a profit in the next decade, I know, Hell, it is a casino…. think twice!

      They won’t!

  27. Deco

    Taking money out of the banking system is driven by fear.

    The deposits are backed by the ECB. Therefore deposits in Irish banks are safe. They are very safe.

    But there is one thing that is no longer safe. Houses are no longer as “safe as houses” as an investment.

    Let’s pretend that property is a sound investment.

    • michaelcoughlan

      Hi Deco,

      Any one who bought a house in the last few years in a half decent area would have a lot more money to get back if they sold it than if they put the same money into bank shares, Iris stock market a pension fund etc etc.

      If you know what you are doing there has never been a better time to consider an investment in property.

      • Deco

        Yes, this might actually be a good time to buy property.

        But deposits never go down except by means of inflation, and taxes. In an inflationary environment like what we seen in the last ten years, we see inflation causing people to “believe” in the housing market.

        The entry of borrowed money into the economy, the lower ECB lending rates, state spending (mostly after Bertie became a Socialist), and local market distortioning factors all caused inflationary pressures.

        And inflationary pressures fed the housing boom.
        With deposit money losing value, it required great discipline to do nothing.

        And discipline of any form was the height of bad taste, backwardness, lack of sophistication, and poor fashion. Or simply put “savers” were “just not with it”. Saving is no back with a vengeance. Even Dermot Ahern is liable to launch an assault of saving.

    • Taking money out of the banking system is driven by fear.

      The deposits are backed by the ECB. Therefore deposits in Irish banks are safe. They are very safe.

      But there is one thing that is no longer safe.

      ….the ECB!

  28. Malcolm McClure

    Tubridy interviewing Flash Gordon this evening discovered that he actually has emotional intelligence. Big beaming smiles all round. Gordon explained his party’s defeat at the polls by saying that they hadn’t explained their policies well enough. Tubridy said that looking forward a year he could picture Cowen sitting there saying the same thing.
    At least Gordon kept the UK out of the Euro. What well-merited decision will Cowen be able to point to?

  29. Incident

    If you have an interest in the psychology of how our planet got to the mess it is now in, spend some time on this.

    http://www.edge.org/3rd_culture/kahneman_taleb_DLD09/kahneman_taleb_DLD09_index.html

    • I have a suggestion I like many of you look forward to reading this forum its like buying a lotto ticket you think PS200306 will have all the right numbers answers listed like magic. I read Gurdgiev, Lucey. Kinsella, Kelly and all the international comments I am addicted as I have little else to do.I not only do the Soverign/ Banking gig I also do peak oil just to keep the pain level up.Try digest the following on top the debt service contract being forced on us http://aspoireland.org/2010/12/01/peak-energy-climate-change-and-the-collapse-of-global-civilization-the-current-peak-oil-crisis
      Ok here is the radical suggestion worlds first Steady State Economy with worlds first debt free web based platform finiancial system. (Software Available) http://steadystate.org/discover/policies/
      Any takers to try and sell this ?

      Go to U tube for D Grey and A Lennox Full steam
      We all saw it coming but we still bought it
      reflect on how we want to contribute to this country our politicians sure as hell seem destined to feed in the trough and we have to offer an alternative that is Survival which is neither left or right.

      • Does anyone else ever have to ask themselves the following;
        Am I a fool for caring? or
        Am I a fool for not caring? and then the old classic;
        Am I just a fool?

        Having digested the above one wonders about starting with a job-sharing strategy? Afterall if one pays the top rate of tax does it not make sense to work three days one week and four days the next in a seven day cycle? Ones net earnings would not drop that substantially and the other guy who currently has no options would suddenly have prospects?

        On top of that I would will say that when we run out of oil we’ll find something else! Why would I say that? Because we’d have to! It’ll most likely be a solar solution which will never be liable to peak! The reason why we haven’t done it up to now is because it’s difficult to harvest the sun “Exclusively and Commercially” in the same way that you can buy an oil field.
        But why wait until then.The technology actually exists to make every Irish household close to self sufficient on sustainable clean energy.

        The following is a very interesting docu. on commercialism;
        See http://www.youtube.com/watch?v=59hAG-QG6dE and watch the documentary parts on youtube.
        We’re living somebody elses commercial/political agenda at the moment! Our public reps tell us its the only way. Same as they tell us that borrowing 85bn at 5.8% is the only way. Fact is it’s their only way!
        Can we not try to step out of it?
        Or is that just the rantings of a fool?

        • BrianC

          Some say they also killed Stan Meyer the chap who claimed to have developed the car that runs on water.

          • Honest signage at the new Terminal Two;

            STRAIGHT AHEAD FOR FLIGHTS DOMESTIC AND INTERNATIONAL
            ROUND THE BACK FOR RENDITION.

            BOARDING AREA FIRST FLOOR
            WATER-BOARDING AREA DOWNSTAIRS

            I’m not your classic conspiracy theorist but if you want to meet a sudden accident – just register the cure for cancer.
            And of course I was disappointed to hear that the leading light of an honesty website – Wikileaks was nothing but a low down rapist? I mean who’da thunk?

        • Paul
          Classic response we will find something else yes just the rantings of a fool. .Solar trucks tractors to work the land deliver the food…….
          “The technology actually exists to make every Irish household close to self sufficient on sustainable clean energy.”
          I am in the game and we missed the boat Eddie never got funding for the big capital wind farms from FF and in case you missed what we were discussing – the money is gone. Now the weather has got cold prolonged sub zero twice in one year our 90 % dependence on heating our homes with fossil fuels with the price and availabity about to change? Have a look at the world US in Iraq, China signing bilateral trade deals everywhere Russian pipelines no dollars etc etc.

          • Thanks Transitionman,
            Fool, as I’ve obviously just discovered, is not a term that sits too uncomfortable with me. (Shakespeare fan)
            You’re obviously far more au fait with the current global picture than myself and my tone should not be interpreted as disrespectful. It sounds to me like you are convinced that the dye is cast – The lights will go out and there’s nothing we can do about it? Did I interpret your meaning correctly?
            If Eddie didn’t get the money – Specifically how much did he need?
            You’re in the game? So what should have been done.
            What can yet be done? I’m genuinely interested and if you feel uncomfortable posting publicly you can leave a reply here. http://www.ogra.biz/?page_id=113
            Thanks
            Paul

        • However, the saddest aspect of life right now seems to be that science
          gathers knowledge faster than society gathers wisdom to use the knowledge.

          subscribe!

        • Thanks Georg, I’ve read summary and a few sub summaries and I see where this is going.
          (And sadly, I will read it all)
          I’d rather put NPRF to work here than throw it down the black hole!
          The worse that can happen is we lose both ways but at least there’s a possible positive outcome in energy investment?
          Pastor I was just wondering if SF have ever looked at this in a serious way?
          Of course the other great hurdle for any party that’s ever attempted to crack this nut is – how do you get it across to the electorate?
          Should we just wait til the lights go out?

          • Should we just wait til the lights go out?

            I intend to think, the content of the dissertation is one major reason for the partially by ideology motivated global financial heist. – They have an agenda! –

            I substituted an open fire place in our house, a considerably big sucker, this year with a high efficiency woodburner made in Norway. Now round about 80% of the energy is utilized. The open fire place did blow 80% out of the chimney before.

            My own dream house, for which I fought @(*@&^^%! 3.5 years with Irish planning authorities, is based on geothermal, the pump supported by solar and wind, rain water collection as well as high efficiency wood burners and now is back in my drawers due to the economic situation. Ah well… [shrugs]

          • After generations of Irish Planners I’m left asking – what was the plan?
            Did we even come close?

            Irish Planners like Irish Politicians have an aversity to saying;
            “I made a mis….”
            “I made a mist…”
            “I ma..”
            “I made a m….”
            No sorry have to stop there!

          • You know, this: It is thus impossible to extract more fossil fuels than geologically available. In other words, there are limits to growth imposed by nature. is often missing in the economical discussions. Denial perhaps?

        • BrianC

          Did a little work on insulated concrete form (ICF) house construction.

          They are really good and virtually no heatloss once you get the insulation that uses graphite and the house structure is monolithic with 25N strenght and you can have 60N if you like and use steel fibers the house is virtually indestructable and if you want to make the concrete completely water tight you can use a Canadian product available from a chap in Ardagh.

          As for planners and planning offices pure holiday camps.

          • Actually Brian I’m looking for (if there’s such a thing) a lightweight material which has the properties of concrete and can be easily mouldable for a project a friend and I are exploring? Is that your field?

        • Georg Read the consequences of thesis http://aspoireland.org/2010/12/01/peak-energy-climate-change-and-the-collapse-of-global-civilization-the-current-peak-oil-crisis
          If you need more try FEASTA Tipping Pointhttp://www.feasta.org/documents/risk_resilience/Tipping_Point.pdf -

  30. SLICKMICK

    Dumbest comment I ever heard.A woman in Tipp said that she would vote for Mattie Mc Grath, because like herself, “he came from a family of 10 kids”.You could’t make it up !

    • Local Pillar and dyed in the wool FF supporter has agreed to go canvassing for FF.
      I actually heard him say the following to another guy in our local on Thursday;

      “Well what happenned is lots of private individuals borrowed money and now they owe it to the state instead of the banks!”

      So there you go, simples! It’s all been a bit of a misunderstanding?
      The trouble is that the guy he said it to nodded in an “I get it” fashion and seemed content.
      With canvassers and canvassee’s like this FF could actually win next election.

      Eh? Do they still do those cheap one way passages to Australia???

    • Pastor of Muppets

      Darn. By her reasoning, there may well be another 9 idiots in/from Tipp. Those with a little reasoning power might also ponder if the other 9 McGrath siblings are similarly gifted in the logic dept. etc….

      Fortunately, the last time I studied genetics, IQ wasn’t an inherited trait that got divided by number of children per family.

      Honestly, there are days when you hear comments like that that has you wondering if it would be safer here if people had the right to bear arms, instead of the right to bear children….

    • One o’clock news and the Gombeens are at it again. It was said as a joke that Cowan might be holding on so as he can present the bowl of shamrock to Obama in March.
      What troubles me the most is that FF, FG and Labour are so detached from our reality that this wet dream scenario actually has the “leaders” salivating.

      Is it just me or is there something terribly disturbing about the “in joke” amongst our TDs

      And if I were working for Fitch or Standard and Poors I’d be inventing a new basement rating called “Treble F”
      - Fucked, Fucked and Fucked again!

      Please give me someone who’ll say;
      “Obama pick your own fucking shamrock!”

      • Pastor of Muppets

        Paul,

        How about if Moody’s S&P and Fitch got together and created a rating called ‘Irish’. Be pretty embarrassing to have your country’s rating label as that….

        I wish I was joking….

    • unfortunately, a lot of such tribal psychology still applies in Ireland of the 21st century, something FF/FG gombeens know too well and thrive on.

    • Deco

      Oh no….there might be 9 more Mattie McGraths out there….

  31. Pastor of Muppets

    I’m sat here, wondering how we actually went so badly wrong in this country. Admittedly, I’m doing it bloody slowly, as I’m on rather a lot of prescription sweeties that tend to slow the though process to even less than my usual glacial pace.

    I remember at school being taught about politics, how PR and other electoral systems worked, the social responsibility of voting, filling in census forms, how society and various political systems ‘works’ and all that. Some of it even sunk in. And that was a lot of years back, mind you.

    Just out of curiosity, do we have any teachers on here that can tell me is that sort of stuff even taught anymore, if so, at what age level, to what degree and so on?

    The way the majority of people vote, if they bother their hole to get out and do so, makes me wonder if the understand the consequences of who they vote for and if they don’t vote, what the consequences of that are?

    Given that it’ll take a generation to dig ourselves out of the hole we’ve been dug, if this sort of stuff isn’t being taught at school now, it might be high time to do so.

    And if it’s not on the curriculum, why isn’t it? When was it removed? Would that be part of the bread and circuses dumbing down of the media and distraction of the general populace that’s let FF rule the roost for so long?

  32. Headlines I’d love to see;

    IRELAND TO U-TURN ON DEFAULT!
    - “It never made sense?” Admits Official

    SITE OF CHILDRENS HOSPITAL CHANGED!
    - “It never made sense?” Admits Official

    SENATE ABOLISHED!
    - “It never made sense?” Admits Official

    FF/FG TO MERGE!
    - “It never made sense?” Admits Official

    NUMBER OF TD’S HALVED!
    - “It never made sense?” Admits Official

    TD’S TO STAY OVERNIGHT IN STATE OWNED HOTEL!
    - “It never made sense?” Admits Official

    TD’S TO GET FREE TRAVEL CARDS!
    - “It never made sense?” Admits Official

    TD’S TO GET MIMIMUM WAGE!
    - “It never made sense?” Admits Official

    PAT KENNY TO GET NEW MINIMUM WAGE!
    - “It never made sense?” Admits Official

    IRELAND TO DITCH EURO!
    - “It never made sense?” Admits Official

    COWAN AND LENIHAN HAVE IT!
    - “It never made sense?” Admits Official

  33. It’s amazing to be living in times that demonstrate why the French revolution started. I’m at a complete loss to understand,let alone comment about, the crass ignorance if not abject arrogance of those we have deemed to be suitably and sufficiently able to run our affairs.
    What in Gods name is taught in our leading Universities or elsewhere that this class codology has risen to the top of the stew?
    Incomprehensible tripe masquerading as policy rules the land. Scarcely believable econo-prop sits as a last bastion of the Mise an Gombeen Brigade.
    I narrowly dodged the incident involving HRH Prince Charles and Camilla the other night and it wasn’t pleasant.
    Whither Ireland now?
    Not far from an incendiary incident methinks.
    F

  34. Tull McAdoo

    I listened to the budget speech and when I reflected back on what it contained, I could not shake the notion that given all that had happened ,here was a Finance Minister implementing all the policies advocated by none other than Seanie Fitz. Now there’s f…… ironey for ya… you could’nt make it up as our host is usually heard to say.

  35. Tull McAdoo

    It may be a socialising of the debts of the the insider /elite but I can assure ye, it is definitely Thatcherism for the rest.I am just wondering if there is some hawkish gobshites in the DOF and elsewhere who feel that this might be the last chance saloon for one last attempt to implement Thatchers/Regan’s failed ideology. This might seem like a strange comment but dont forget it was the mentors of the present brigade that thought protectionism and an insular self-sufficient route was the way to go.
    I have to say the level of ignorance and incompetence coming from these old bastions of the status quo is quite astounding.
    Jim o leary was on the board of AIB and now he is acting as some sort of advisor to the DOF. Is there no end to this stuff.????

    • Deco

      That is the problem with this little country of ours. Such a shortage of talent. (lament). We have to appoint the same people to multiple directorships. But because they are busy, we have to make the NEDs – rather than fulltime directors.

      And because we have such a shortage of golf clubs, the talent recruitment only goes as far as the K-Club and Portmarnock.

      And because they are overworked with multiple directorships they are under massive stress. If it’s the second Monday of the month we must be doing banking, and if it is the third thursday of the month then wee must be covering air travel.

      I wonder how the multinationals manage to suceed in this country, when all the talent is circled and headhunted to run the state, semi-state, and price fixing areas of the domestic economy.

      • BrianC

        Was there any talent left in Ireland after the coffin ships sailed bringing our spirit to the New Worlds. I was beginning to believe this was the case then Pearce Doherty lights a candle in the Dail. Will the flame be strong enough to rekindle our true spirit or are we truly lost in the abyss of status quo politics me too me feinism to become willing servile servants of the ECB and IMF? Are we destined to become a Nation of great pretenders. If Pearce Doherty can do it then why can others enter the arena and clear out this nonsense status quo self interest and deliver the true will of the Irish people. When the Great debate takes place in the Dail at least Doherty will hold the a candle for Ireland.

        David you have the talent step into the arena and help deliver the will of the people. If you are strong enough you will win for now is the time and others will follow.

      • That is the problem with this little country of ours. Such a shortage of talent.

        Deco,

        Seriously, after nearly 15 years in Ireland, I never experienced any shortage of talent whatsoever, on the contrary, but a oppressed generation instead, lacking confidence and self esteem, without any good reason

        No there is no shortage at all!

  36. uchrisn

    “That was the situation that I found in the Philippines, a vastly rich and wealthy elite, about 200 powerful families owned the land, the food, the factories and all industry. The millions of Filipino people, were mired in poverty, hunger, sickness and were begging for the scraps that fell form the tables of rich who lived in palaces and made billions of money from corruption. They even owned the government. The congress was stacked by the relatives and friends of the rich and government served them and not the poor.” Fr Shay Cullen, Preda 2010.

    There are situations like this in so many developing countries in the world and have been throughout history. What David and bloggers here are helping people to become more aware of is that wheter they like it or not this situation exists in Ireland.

    If more than 25% of young Irish people could not emigrate every year, we would be in a far worse position.

    Luckily Iirsh people are not as poor as in the Philipines and do not have as bad social problems.
    However there are 450,000 unemployed people and many young people who cannot afford a home.

    I encourage people to really look at and find a good candiate in their area for the next election. They should not only vote for them but also donate some small amount to their campaign and organise events supporting them.

    Also people could start organisations as Fr. Cullen did in the Phillipines. I suggest someone on this site starts an organisation with the aim of educating the general population and lobbying politicans about corruption.

    • adamabyss

      Problem is, calling a spade a spade, most of the general population is as thick as two short planks. You can educate them till the cows come home and it won’t make a blind bit of difference. I’m all in favour of education as well, to lift people out of poverty and create equality across society but if you are expecting 99% of people to have original thought then you are on a hiding to nothing. I include myself in that, I’m only scratching the surface of self-awareness and social consciousness as it is. People have stronger vocabularies these days due to ‘better’ education (as opposed to none), but confusing a more fluid stream of large words with intelligence, as opposed to the afore-mentioned ‘original thought’ is a serious mistake.

  37. furrylugs : I am reminded of the french Engagement in Algeria where the ‘insiders ‘ the planters were given favours while the indiginous outsiders moslems were ostrascised . We all know what eventually happened afterwards for the failure to listen to the cries of the outsiders ….the French were kicked out with the insiders. Vive the outsiders .

  38. Geeze I am coming home today from the glorious sunshine.

  39. John Q. Public

    Anybody think it would be better if this IMF money didn’t come through? And we told the bondholders to go and shite! http://www.irishtimes.com/newspaper/frontpage/2010/1211/1224285303441.html

    • Yes. The current deal is a nonsense and the only reason the government are sticking to it is belief that the EU will be merciful with us, relaxing the deficit reduction plan, if we show things are working and the economy can control its spending while returning to growth. Some of the reasons things aren’t working are that we’ve had tough budgets since 2008, people’s personal debt is too high and our banking system is insolvent. None of these things will be fixed by this bailout. Indeed, austerity budgets ensure people have less money and can’t pay back their debts as quickly as they would otherwise have. High debt levels in countries with tough bankruptcy laws retard entrepreneurship and growth. It seems that, not for the first time, our growth strategy revolves around low corp. tax and foreign direct investment.

      This is wing+prayer stuff. The most likely trajectory is downhill with further contraction, business closures, unemployment etc. People are leaving the country in large numbers. While some were hailing the recent reduction in the live register it’s worthwhile noting that the CSO’s recent emigration figures show that the largest demographic emigrating during the 1st 6 months of 2010 were youngish Irish people (>40%). Even more than foreign immigrants which is an interesting anomaly. Again, an important part of Ireland’s economic strategy is the ability to force young people to emigrate to avoid having to pay them social welfare.

      It’s despicable. Every misguided plan the government puts in place contains words like “emergency” and “national interest”, neatly excusing the proposers and voters of these bills from any moral dilemma. We had to do this.. No alternatives…We were following orders…

      I’m a dispute mediator. I’m seeing so much pain every day. People are desperate and the government repeats a mantra of “we are living beyond our means”. That’s because no adjustment is possible. Many are enduring both a personal and sovereign default situation. They can’t afford to pay their own debts and they’re being asked to take further state debts onto their backs. The government have no idea and those that do seem to lack the intellect and worldiness to appreciate there are other options.

      Compare with Iceland where they negotiated a low fixed rate of interest and a flexible 30 year repayment schedule for the IceSave debt. Their economy is recovering already. Our government negotiated slavery. They have betrayed the people they claim to serve.

  40. John Q. Public

    southofdub, a good point in this video is that we(the people) could have the banks and the bondholders by the gonads if we clubbed together. At the moment it is like herding cats, sure people vent their anger but without a collective will we might as well say nothing. We should have a petition and lobby the Dail one way or another before next Thursday.

  41. Harper66

    http://www.youtube.com/watch?v=lyYVfuedy0g

    Pearse Doherty First 10 minutes of his post budget speech.

    I have been watching the massive swell in support for SF over the past few weeks with interest.

    Equally I have been surprised by some close friends of mine who have recently told me they are going to vote SF in the upcomming election.Prior to this they would not have considered voting SF.

    One friend of mine pointed to Pearse Dohertys post budget speech as the deciding factor in giving SF his vote (the speech combined with the fact the last three community meetings he attended in his locality the only political representitive that attended was SF. One of these meetings was about the future of a local school and another was cleaning up a local beauty spot. In fact the SF councilor went one further in the clean up and donned over alls and mucked in the rest of the volunteers)

    I must say I listened to Dohertys speech and found it like a breath of fresh air. I could not fault him on any of the points he made and I greatly appreciated hearing Lowry and Healy Rae being called what they are – gombeen men.Likewise his plain speaking on Calamity Coughlan and the disconnect of our senior politicians collecting huge pay checks, pensions and then being driven home.

    I also detect in interviews many of the other politicans dismiss Doherty as almost not being a legitimate politican ( I presume due to his membership of SF). I believe they are foolish to dismiss Doherty.

    David McW has stated many times that the recent past has seen the largest transfer of wealth from the young to the old. I honestly believe we are arriving at a breaking point. The young are angry and they appear to be turning to SF.

    I can only conclude SF are going to continue gathering support.

  42. Incident

    The Sovereign Debt Problem – Speech by George Soros
    October 05, 2010

    World Leaders Forum at Columbia University

    As you know I have written several books which serve to explain the crash of 2008. Two years have elapsed since then — it is time to bring the story up to date. That is what I propose to do today.

    The theory I shall use is the same as in my previous books, so I shall not repeat it here. The main points to remember are, first, that rational human beings do not base their decisions on reality but on their understanding of reality and the two are never the same — although the extent of the divergence does vary from person to person and from time to time — and it is the variance that matters. This is the principle of fallibility. Second, the participants’ misconceptions, as expressed in market prices, affect the so-called fundamentals which market prices are supposed to reflect. This is the principle of reflexivity. The two of them together assure that both market participants and regulators have to make their decisions in conditions of uncertainty. This is the human uncertainty principle. It implies that outcomes are unlikely to correspond to expectations and markets are unable to assure the optimum allocation of resources. These implications are in direct contradiction to the theory of rational expectations and the efficient market hypothesis.

    The extent and degree of uncertainty is itself uncertain and variable. Conditions may range from near-equilibrium to far from equilibrium. Again, it is the variance that matters. In practice markets have a tendency to move towards one of these extremes rather than to hover near a historical or theoretical midpoint between them. In evolutionary systems theory these extremes are called “strange attractors”. My contention is that financial markets tend towards these strange attractors, not to equilibrium. So much for theory. Now for the actual course of events.

    ***

    In the crash of 2008 the uncertainties reached such an extreme that the markets actually collapsed. But that was a short lived phenomenon. The authorities intervened and managed to keep the markets functioning by putting them on artificial life support. In retrospect, the momentary collapse may seem like a bad dream, but it was real enough and two years later we still suffer from its consequences.

    Let me explain why.

    When a car is skidding you have to turn the wheel in the direction of the skid to prevent the car from crashing. Only when you have regained control can you correct the direction of the car. That is how the financial authorities had to deal with the crash. The underlying cause of the crash was the excessive use of credit and leverage. To prevent a catastrophe they had to avoid a sharp contraction of credit. The only way to do it was to replace the private credit that lost credibility with the credit of the state which still commanded respect. Only after financial markets resumed functioning could they hope to reverse course and reduce the outstanding credit and leverage. This meant that they had to do in the short term the exact opposite of what would be needed in the long term.

    The first phase of this delicate maneuver has now been successfully completed. Financial markets are functioning more or less normally with toxic credit instruments replaced or guaranteed by sovereign credit. But the second phase is running into difficulties. Before the economy has recovered and unemployment has fallen, the credibility of sovereign credit has come into question. If governments are now forced to pursue fiscal discipline and tighten monetary and fiscal policy too soon there is a danger that the recovery will stall. That is because the imbalances that have accumulated over a quarter of a century have not yet been corrected. The US still consumes too much and China is still running an unsustainable export surplus vis-à-vis the US. A similar imbalance prevails within the eurozone, with Germany in the surplus position. In addition, the housing and commercial real estate bubbles in the US have not yet been fully deflated and in the eurozone the banks have not yet been properly recapitalized. The deleveraging of the private sector is underway, but it is far from complete. In the US it applies to banks, corporations and households alike. In Europe it is heavily concentrated in the banking sector.

    Because the global imbalances which were at the root of the financial crisis still remain to be corrected, the question arises: How much government debt is too much? That is one of the central questions confronting policymakers today.

    The discussion is eerily reminiscent of the 1930s. Then the fiscal conservatives led by Andrew Mellon and Irving Fisher were confronted by rebels led by John Maynard Keynes. Now, the division of opinion is more along national lines. The center of fiscal conservatism is Germany, while those who have rediscovered Keynes are located mainly in the United States.

    The clash of views has led to a drama which is unfolding differently in different parts of the world. The remarkable unanimity that prevailed in the first phase of the crisis and culminated in the one trillion dollar rescue package that was put together for the London meeting of the G20 in April 2009 has dissipated and political and ideological differences have arisen. Misconceptions are rampant. They complicate matters enormously because it would require global cooperation to correct the global imbalances.

    I shall briefly review how the credibility of sovereign credit came to be questioned in various parts of the world and then I shall address the question — how much debt is too much?

    ***

    Doubts concerning sovereign credit first reached a crisis point in Europe and they revolved around the euro. But what appeared to be a currency crisis was in reality more a banking crisis and a clash of economic philosophies.

    The euro was an incomplete currency to start with. The Maastricht Treaty established a monetary union without a political union. The euro boasted a common central bank but it lacked a common treasury.

    So even though member countries share a common currency, when it comes to sovereign credit they are on their own. Unfortunately, this fact was obscured until recently by the willingness of the European Central Bank to accept the sovereign debt of all member countries on equal terms at its discount window. This allowed the member countries to borrow at practically the same interest rate as Germany and the banks were happy to earn a few extra pennies on supposedly risk-free assets by loading up their balance sheets with the government debt of the weaker countries. For instance, European banks hold more than a trillion euros of Spanish debt of which more than half is held by German and French banks. The large positions came to endanger the creditworthiness of the European banking system, depriving them of the capacity to add to their positions.

    Although it was the inability of the banks to continue accumulating the government debt of the heavily indebted countries that precipitated the crisis, but it was the introduction of the euro and ECB’s willingness to refinance sovereign debt that got the banks weighed down with these large positions in the first place. It led to a radical narrowing of interest rate differentials and that, in turn, generated real estate bubbles in countries like Spain, Greece and Ireland. Instead of the convergence prescribed by the Maastricht Treaty, these countries grew faster and developed trade deficits within the eurozone, while Germany reigned in its labor costs, became more competitive and developed a chronic trade surplus. The discount facility of the ECB allowed the deficit countries to continue borrowing at practically the same rates as Germany, relieving them of any pressure to correct their excesses. So the introduction of the euro was indirectly responsible for the development of internal imbalances within the eurozone.

    The first clear reminder that the euro lacked a common treasury came after the bankruptcy of Lehman Brothers. The finance ministers of the European Union promised that no other financial institution whose failure could endanger the system would be allowed to default. But Angela Merkel opposed a joint Europe-wide guarantee; each country had to take care of its own banks.

    At first, the financial markets were so impressed by the guarantee that they hardly noticed the difference. Capital fled from the countries which were not in a position to offer similar guarantees pushing the countries of Eastern Europe, notably Hungary and the Baltic States into difficulties. But interest rate differentials within the eurozone remained minimal.

    It was only this year that financial markets started to worry about the accumulation of sovereign debt within the eurozone. Greece started the process when the newly elected government revealed that the previous government had lied and the deficit for 2009 was much larger than indicated.

    Markets panicked and interest rate differentials widened dramatically. But the European authorities were slow to react because member countries held radically different views. Germany, which had been traumatized by two episodes of runaway inflation, was adamantly opposed to any bailout. France was more willing to show its solidarity. Since Germany was heading for elections, it was unwilling to act, and nothing could be done without Germany. So the Greek crisis festered and spread. When the authorities finally got their act together they had to offer a much larger rescue package than would have been necessary if they had acted earlier.

    In the meantime, doubts about the creditworthiness of sovereign debt spread to the other deficit countries and, in order to reassure the markets, the authorities had to put together a €750 billion European Financial Stabilization Fund, €500 billion from the member states and €250 billion from the IMF. The turning point came when China re-entered the market and bought Spanish bonds and the euro.

    So, under duress, the euro has begun to remedy its main shortcoming, the lack of a common treasury. The Stabilization Fund is very far from a unified fiscal policy, but it is a step in that direction. Member countries are now a little bit pregnant and they will be obliged to take additional steps if necessary. So the crisis has passed its high water mark and the euro is here to stay. But it is far too early to celebrate because the emerging common fiscal policy is dictated by Germany and Germany is wedded to a false doctrine of macro-economic stability which recognizes only the threat of inflation and ignores the possibility of deflation.

    This misconception is incorporated in the constitution of the euro. When Germany agreed to substitute the euro for Deutschmark it insisted on strong safeguards to maintain the value of the currency. As a result, the ECB was given an asymmetric directive. Moreover, the Maastricht Treaty contains a clause that expressly prohibits bailouts and the ban has been reaffirmed by the German Constitutional Court. It is this clause that has made the crisis so difficult to deal with.

    This brings me to the gravest defect in the euro’s design; it does not allow for error. It expects member states to abide by the Maastricht criteria without establishing an adequate enforcement mechanism. And now, when practically all member countries are in violation of the Maastricht criteria, there is neither an adjustment mechanism nor an exit mechanism.

    Now these countries are expected to return to the Maastricht criteria in short order. What is worse, Germany is not only insisting on strict fiscal discipline for the weaker countries but is also reducing its own fiscal deficit. When both creditor and debtor countries are reducing deficits at a time of high unemployment they set in motion a deflationary spiral in debtor countries. Reductions in employment, tax receipts, and consumption reinforce each other and are not offset by exports, raising the prospect that deficit reduction targets will not be met and further reductions will be required. And even if budgetary targets were met, it is difficult to see how the weaker countries could regain their competitiveness vis-à-vis Germany and start growing again because, in the absence of exchange rate depreciation, they need to cut wages and prices, creating deflation. And deflation renders the burden of accumulated debt even heavier.

    Deficit reduction by a creditor country such as Germany is in direct contradiction of the lessons learnt from the Great Depression of the 1930s. It is liable to push Europe into a period of prolonged stagnation or worse. That may, in turn, produce social unrest and, since the unpopular policies are imposed from the outside, turn public opinion against the European Union. So the euro, with its asymmetric directive, may endanger the social and political cohesion of Europe.

    Unfortunately, Germany is unlikely to realize that it is following the wrong macroeconomic policy because that policy is actually working to its advantage. Germany is the shining star in the economic firmament. It dealt with the burden of reunification by reducing its labor costs becoming more competitive and developing a chronic trade surplus. And the euro-crisis brought about a decline in the value of the euro. This favored Germany against its main competitor, Japan. In the second quarter of 2010 the GDP jumped by 9% annualized.

    Germany believes it is doing the right thing. It has no desire to impose its will on Europe; all it wants to do is to maintain its competitiveness and avoid becoming the deep pocket to the rest of Europe. But as the strongest and most creditworthy country it is in the driver’s seat. As a result Germany objectively determines the financial and macroeconomic policies of the Eurozone without being subjectively aware of it. And the policies it is imposing on the eurozone are liable to send the eurozone into a deflationary spiral. But people in Germany are unlikely to recognize this because they are doing much better than the others and the difficulties of the others can be blamed on structural rigidities.

    The German commitment to fiscal rectitude is also gaining the upper hand in the rest of the world. Angela Merkel went into the recent G20 meeting in the minority and — with the help of the host country, Canada, and the newly elected Conservative British Prime Minister, David Cameron — came out as the winner. Prior to the meeting President Obama publicly appealed to Chancellor Angela Merkel to change her ways, but at the meeting the US yielded to the majority and agreed that budget deficits should be cut in half by 2013. This may be the right policy but it comes at the wrong time.

    The policies of the Obama administration are dictated not by financial necessity but by political considerations. The US is not under the same pressure from the bond markets as the heavily indebted states of Europe. European debtor countries have to pay hefty premiums over the price at which Germany can borrow. By contrast, interest rates on US government bonds have been falling and are near record lows. This means that financial markets anticipate deflation not inflation.

    The pressure is entirely political. The public is deeply troubled by the accumulation of public debt. The Republican opposition has succeeded in blaming the Crash of 2008 and the subsequent recession and persistent high unemployment on the ineptitude of government and in claiming that the stimulus package was largely wasted.

    There is an element of truth in this narrative but it is far too one sided. The Crash of 2008 was primarily a market failure and the fault of the regulators was that they failed to regulate. Without a bailout the financial system would have stayed paralyzed and the subsequent recession would have been much deeper and longer. It is true that the stimulus was largely wasted but that was because most of it went to sustain consumption and did not correct the underlying imbalances. As I explained earlier, the government was obliged to do in the short run the exact opposite of what is needed in the long run. Now consumption still needs to fall as a percentage of the GDP and fiscal and monetary stimulus are still needed to keep the GDP from falling and to prevent a deflationary spiral.

    Where the Obama administration did go wrong, in my opinion, was in the way it bailed out the banking system: it helped the banks earn their way out of a hole by supplying them with cheap money and relieving them of some of their bad assets. But this was an entirely political decision; on a strictly economic calculation it would have been more effective to inject new equity into the balance sheets of the banks. But the Obama administration considered that politically unacceptable because it would amounted to nationalizing the banks and it would have been called socialism.

    That political decision backfired and caused a serious political backlash. The public saw the banks earning bumper profits and paying large bonuses while they were badly squeezed by their credit card charges jumping from 8% to nearly 30%. That was the source of the resentment that the Tea Party exploited so successfully. In addition, the administration had deployed the so—called “confidence multiplier” to restore confidence and that turned to disappointment when unemployment failed to fall.

    The Administration is now on the defensive. The Republicans are campaigning against any further stimulus and they seem to be winning the argument. The administration feels that it has to pay lip service to fiscal rectitude even if it recognizes that the timing may be premature.

    I disagree. I believe there is a strong case for further stimulus. Admittedly, consumption cannot be sustained indefinitely by running up the national debt. The imbalance between consumption and investment needs to be corrected. But to cut back on government spending at a time of large-scale unemployment would ignore all the lessons learned from the Great Depression.

    The obvious solution is to draw a distinction in the budget between investments and current consumption and increase the former while reducing the latter. But that seems unattainable in the current political environment. A large majority of the population is convinced that the government is incapable of efficiently managing an investment program aimed at improving the physical and human infrastructure. Again, this belief is not without justification: a quarter of a century of agitation calling the government bad has resulted in bad government. But the argument that stimulus spending is inevitably wasted is patently false: the New Deal produced the Tennessee Valley Authority and the Triborough Bridge.

    It is the Obama administration that has failed to make a convincing case. There are times like the present when we cannot count on the private sector to employ the available resources. The Obama administration has in fact been very friendly to business. Corporations operate very profitably, but instead of investing their profits, they are building up their liquidity. Perhaps a Republican victory will give them more confidence; but in its absence investment and employment needs to be stimulated by the government. I do not believe that monetary policy can be successfully substituted for fiscal policy. Quantitative easing is more likely to stimulate corporations to devour each other than to create employment. We shall soon find out.

    This brings us to the question I raised earlier. How much room does the government have for fiscal stimulus? How much public debt is too much? This is not the only unresolved question but it is at the center of political debate and the debate is riddled with misconceptions.

    That is because the question does not have a hard and fast answer. In saying this I am not being evasive; on the contrary, I am making an important assertion. The tolerance for public debt is highly dependent on the participants’ perceptions and misconceptions. In other words it is reflexive.

    There are a number of variables involved. To start with, the debt burden is not an absolute amount but a ratio between the debt and the GDP. The higher the GDP the smaller the burden represented by a given amount of debt. The other important variable is the interest rate: the higher the interest rate the heavier the debt burden. In this context the risk premium attached to the interest rate is particularly important: once it starts rising, the prevailing rate of deficit financing becomes unsustainable and needs to be reigned in. Exactly where the tipping point is located remains uncertain because it is dependent on prevailing attitudes.

    Take the case of Japan: its debt ratio is approaching 200%, one of the highest in the world. Yet ten year bonds yield little more than 1%. Admittedly, Japan used to have a high savings rate but it has an ageing and shrinking population and its current savings rate is about the same as the US. The big difference is that Japan has a trade surplus and the US a deficit. But that is not such a big difference as long as China does not allow its currency to appreciate because that policy obliges China to finance the deficit one way or another.

    The real reason why Japanese interest rates are so low is that the private sector — individuals, banks and corporations — have little appetite for investing abroad and prefer ten year government bonds at a 1% to cash at zero percent. With the price level falling and the population aging, the real return on such instruments is considered attractive by the Japanese. As long as US banks can borrow at near zero and buy government bonds without having to commit equity and the dollar is not allowed to depreciate against the renminbi, interest rates on US government bonds may well be heading in the same direction.

    That is not to say that it would be sound policy for the US to maintain interest rates at zero and preserve the current imbalances by issuing government debt indefinitely. Once the economy starts growing again interest rates will rise and if the accumulated debt is too big it may rise precipitously, choking off the recovery. But premature fiscal tightening may choke off the recovery prematurely.

    The right policy is to reduce the imbalances as fast as possible while keeping the increase in the debt burden to a minimum. This can be done in a number of ways but cutting the budget deficit in half by 2013 while the economy operating far below capacity is not one of them. Investing in infrastructure and education makes more sense. So does engineering a moderate rate of inflation by depreciating the dollar against the renminbi. What stands in the way are misconceptions about budget deficits exploited for partisan and ideological purposes. There is a real danger that the premature pursuit of fiscal rectitude may wreck the recovery.

  43. John Q. Public

    I’m going to like this guy if he keeps going down this track! He really is growing balls!
    http://www.irishtimes.com/newspaper/breaking/2010/1214/breaking26.html
    Just imagine what could happen with a little bit of unified coercion from us. The collective will, if organised and directed properly could catapult us through this mess.

  44. jheffernan

    It will pass peolpe…eventually!!!!
    Only a man harrowing clods
    In a slow silent walk
    With an old horse that stumbles and nods
    Half asleep as they stalk.
    Only a thin smoke without flame
    From the heaps of couch-grass;
    Yet this will go onward the same
    Though Dynasties pass.
    Yonder a maid and her wight
    Come whispering by:
    War’s annals will cloud into night
    Ere their story die.

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