December 13, 2010

Time to play the Brady hunch

Posted in International Economy · 197 comments ·

Last week, we had the tale of two countries.

One country, Iceland, apparently did ‘everything wrong’ by defaulting on its bank debt and increasing government spending as the people of Iceland saved. Iceland told the International Monetary Fund (IMF) to back off until it was ready to do a deal. It also put the bank deal to a referendum.

The other country, Ireland, allegedly did ‘everything right’ by promising to pay everyone every red cent and imposing huge austerity measures on its people.

We handed over the keys to the IMF without even taking a vote on the details of the plan.

When the vote is taken this week, we have already been told we can’t renegotiate any of it, so the next election – from a macroeconomic point of view – is academic.

What is the result of these different paths? Last week, Iceland cut its interest rates to 4 per cent. Its crisis is over.

The deal with the creditors is ready and it will be done in Iceland’s favour. Money is flowing back into Iceland. Unemployment peaked at 8 per cent and is falling. National income is rising robustly again.

Ireland, on the other hand, is getting deeper and deeper into a hole. Last Friday, the Central Bank confirmed what many have suspected for some time now.

There is an ongoing, relentless run on the Irish banks. It hasn’t manifested itself in queues at the ATMs yet, but that’s the way it is going.

In November, the Central Bank said it Injected more than €10 billion into the Irish banking system. This is to replace the money going the other way: leaving the country.

This brings total Central Bank Support of the Irish banks to €44.76 billion.

But that’s not all because, when added to the support of the European Central Bank (ECB),a total of €181 billion is being lent to the Irish banks by the ECB and its vassal on Dame Street.

In medical terms, the Irish banking system – and by extension, the Irish economy – is an anaemic patient losing blood and being kept alive by huge transfusions.

Unless we stop the haemorrhaging, the situation will never stabilise.

The only way that Ireland can stop haemorrhaging is to separate our banks’ debts from our country’s debt.

The reason money is leaving the banks is that the population doesn’t trust the banks; it also doesn’t trust the ability of the government to deal with the crisis.

We realise that Ireland has a debt problem and we also know that the way to deal with too much debt is by having less debt, not more debt.

So the more debt the government takes on, the less credible it becomes and the more we rush to protect our savings by taking them out of the banking system that has proved to be the single greatest destroyer of wealth in this country since Cromwell.

So how do we get to a position of less debt? First, we reiterate that the bank debt is not Irish sovereign debt and it never was; it must be treated as commercial debt.

A commercial default is quite commonplace.

The implication of the ECB’s funding hole in the banks is that they are bust, so they must default or force debt-for-equity swaps, whereby the bondholders and other creditors become shareholders and we move on.

We can only do that with those banks that might survive in the future. As for Anglo, we simply default on it. The debt wasn’t ours to pay in the first place and, secondly, it will simply be a waste of billions of euro, which have to be earned.

Throwing real money into a financial cesspit never made you credible, it made you look stupid.

What’s more, it scared proper investors because they knew, the more money you wasted in Anglo, the less you understood about the value of money and how difficult it was to make the stuff you are so readily squandering.

So what happens when we restructure our debts? Normally after a deal is done, investors flood back into the country.

This has happened in every country where the default was accompanied by a change in the way the country does business.

The most conspicuous examples of this are the US in the 1930s, Brazil in the 2000s, all the Asian tigers in the late 1990s and Mexico in the late 1980s – not to mention all the countries of eastern Europe which defaulted on their debts.

The reason these countries recovered and grew was that they had a mechanism to regain access to markets quickly. It was called the Brady Bond.

I worked in this market for a number of years in the late 1990s and it was the way in which countries that defaulted made their peace with creditors and both the countries and the creditors stayed in the game.

When the emerging-market countries defaulted en masse in the 1980s, the banks – particularly American banks – took huge hits because most of their loans had to be written off.

The market froze until Nicholas Brady, Ronald Reagan’s finance adviser, came up with an ingenious rescue plan.

Brady is an Irish-American. His great grandfather, Anthony Brady, left Ireland, became a friend of Thomas Edison and subsequently made a fortune in the US.

Nicholas Brady had worked in banking for two decades before Reagan appointed him. Brady understood that the American banks needed away to get back into the countries to do business and get some of their money back.

He also understood that the countries needed away out, otherwise they would do business with non American banks and the Americans would have lost everything.

So he came up with a pragmatic deal.

All the old loans were re-examined. Much of the banks’ original principal would be written off and the remainder would be paid by the issue of new 30-year bonds called Brady Bonds.

The new lower principal was guaranteed by the US Treasury.

The countries would have a five year grace period to get back on their feet, but would be allowed to borrow again. Initially, because of the risk associated with former defaulters, the interest on the bonds was high.

However, as the country adopted proper economic policies, the risk fell and consequently so did the interest rate. The price of the bonds would rise accordingly.

Investors bought these new bonds.

This solved the banks’ dilemma because, despite losing huge amounts on their initial loans, at least the books were now clean and the developing world’s debts became someone else’s problem.

The Investors were happy as long as the countries behaved themselves and changed their ways, and the countries were happy because they now had access to new finance.

The Brady Bond solution shows the triumph of common sense over dogma. It is clear that the present strategy of four more years of austerity without any debt forgiveness will not work.

Do you think there is a reason that this policy has never been tried in any other country, anywhere ever?

It’s time to snap out of it and do a deal. Maybe Nicholas Brady – the great grandson of an Irish emigrant – has offered us a workable blueprint.

The Icelanders are certainly better off after following their own path, so why don’t we?

As we are likely to default anyway, why not have a plan up our sleeve for that eventuality?

  1. Economists and their role

    Much of the public attention these days is given to economists by the media landscape. Some of them are well established, others on their way up.

    In Ireland, some of them are publishing papers that are nothing but a reflection of governments policy and/or generally accepted knowledge, adding nothing or very little new, and never missing to dish out at those who are critical of government policies and proposing alternative views and options.

    They can be seen to use Internet fora, Irish Times etc. for a frequent publishing bombardment, creating a Halo of faked expertise. May be they are hoping on a Job from the next Gombeen government if they only continue to parrot governments most likely stance and dish out at the critics.

    Sometimes, if required by the editor’s agenda, you can see them on Television as well and it always amuses me to observe how they can’t even hide the childish pride and excitement in their faces and smiles to be on the show. Sucker-Uppers I believe they would be called in a cliche office environment, well, Sucker-Uppers are easily identified, and I just ignore them but I feel sorry for students who enrolled in their classes often not knowing what teachings they will provide them with.

    Then we have a variety of economists that I would rather have respect for, they are from different schools.

    I know, it is nothing new, and has been established since long, but I have to say it once, because it has to be understood by the non academic public. Economy is not a science per se, it never was and never will be. It deals with deterministic chaos, hence by it’s very nature is as unpredictable as the weather is. Economy is an academic discipline.

    Some say that economy as a discipline started with this publication in the year 1776 here:

    It should be pointed out to the populists of a right wing agenda that it was Adam Smith who wrote in the Wealth of Nations that:

    Division of labor will destroy human beings and turn people into creatures as stupid and ignorant as it is possible for a human being to be.

    It was the same year where on Monday 8th in July the Liberty Bell was rung to summon citizens of Philadelphia, PA, for the reading for the Declaration of Independence, which was formally signed later in August.

    It was the year of the first submarine attack, THE TURTLE, that deployed a bomb to the flagship THE EAGLE of British Admiral Richard Howe that had landed in New York.

    In Ingolstadt Germany, Adam Weishaupt founded the Illuminati, Captain Cook began his third voyage. Henry Brook Parnell the second son of the Chancellor of the Irish Exchequer was born in 1776.

    The 18th century was fascinating in many respects, Benjamin Franklin flies his kite, the one and only, the great Joh. Sebastian dies.

    Common US history books left out the century of genocide on native Americans and it would take more than 250 years for the world to acknowledge this. The Paris treaty of 1763 ended the French-native American wars. ‘Cornstalk’s’ Shawnee warriors were defeated by the Virginians at Point Pleasant, Lord Dunmore’s War.

    Britain took almost every acre of French land in Canada and to the South, all of French properties east of the Mississippi, except New Orleans. The British also got Florida from Spain. The Spanish joined the French in 1762. The French kept a few islands, south of Newfoundland and in the Caribbean, Martinique and Guadeloupe.

    Napoleon Bonaparte was born in 1769.

    The Russian empire emerged as a political power during the 18th century. Czar Peter the Great defeated the Swedes and gained an outlet to the Baltic sea. St. Petersburg was established.

    1789 the year of the French revolution, and some survivors of the Mutiny on the H.M.S. Bounty establish the Pitcairn Island colony.

    Mozart started writing his requiem, he did not finish it and died in 1791. Two years later the first public art museum opens in Europe, The Louvre. Another two years later, Louis XVI and Marie Antoinette were beheaded.

    Note to the Irish: In 1794 a rebellion started against excise duties in Western Pennsylvania, THE WHISKEY REBELLION. – Grins –

    In 1785 the Commissioners Plenipotentiary of the United States, in Congress assembled,… give peace to all the Cherokees, and receive them into the favor and protection of the United States of America. - How generous of them! –

    Early in the 18th century, 1705, the Scotsman John Law, a gambler and Controller General of Louis XV wrote a proposal to supply the Nation with Money.

    Pay close attention now, It was John Law who created the ‘Mississippi Bubble’, that peaked with the collapse of Banque Générale Privée. He centralized trading companies in Louisiana into a single entity, The Mississippi Company, that later expanded as The Company of the Indies’ and it’s shares were destroyed by artificially inflated speculation. Banque Générale Privée was developed to use paper money as a privately held bank. 75% of it’s capital was in government bills and government accepted notes. Banque Générale Privée was established 1716.

    In 1718 it became Banque Royale, hence the notes were guaranteed by Louis XV of France. They began issuing more notes than they could represent in coinage, which lead to economic inflation, and this lead to a Bank run when the new paper money lost 50% of it’s value.

    Again, it’s shares were destroyed by artificially inflated speculation.

    Sounds very familiar doesn’t it?

    Contrary to Ireland and Europe in the 21st century, John Law was fired from his ‘CEO’ position in the Bank, and he had to flee the country, disguised as a woman. I am certain modern make up artists could do a brilliant job on Trichet’s features as well and I wonder how David Drumm made it into the US.

    In todays economy history literature you will find work that praises John Law, notably Antoin E. Murphy’s Economic Theorist and Policy-maker. [Shrugs]

    The 18th century was the age of Reason and Change, the steam engine, and spinning frame was invented. The diving bell, the flush toilet and the electric telegraph.

    John Law is the father of modern paper money.

    Oh, I forgot an important one, the Guillotine was invented in the age of enlightenment as well. [Grins]

    X X X X

    Economy and Ideology are often intertwined, even inseparable. This lead to many deliberate misrepresentations of the Wealth of Nations by certain ideologists in the economy departments. In my humble view on the matter, Smith proposed free markets, and I mean really, really free markets!

    We do not have free markets. The notion of the past years of liberalizing the markets is the biggest smoke screen of all, because the state regulatory was exchanged for private control, and with markets in private or state control, a true democracy can’t exist.

    The ultimate goal of production should be to get rid of slavery, to enable free people, producing commodities is the means, not the goal. What we face today however, is precisely the opposite. Institutions such as the EU government and the IMF extort wealth from the people of our Nations, and the FED continues to ruthlessly reflate the US by printing around the clock, and there is no end to them doing so.

    It can’t be discussed in such a short and personal article here on David’s forum, but I would like to support Noam Chomsky’s view on this matter that Smith’s idea of free markets would inevitably cause equality.

    The importance placed on views of economists in our rapidly changing society is somewhat marked by desperation. Politicians don’t know what to do, either they are not even politicians but rather career civil servants, or they are just plain dumb struck, or highly educated in elitist institutions that provided them with that stereotype blind-spot they will suffer from for the rest of their lives.

    The state of affairs is desperate, and what was wrongly perceived as security and progress, has been uncovered as utter chaos, driven by post imperial extortionists.

    Social cohesion is slowly dissolving, and Western governments are also updating their internal policing might, often under the cover of pretentious threat assessments as we saw recently in Germany. Security in Europe at large is of concern, and reports of think tanks advise governments on pre cautionary measures. The EU opened the doors to new methods when it comes to policing, as could be observed on the recent demonstrations against the transport of nuclear waste material, the castor transports in Germany, when demonstrators who were digging out stones from under railways to delay the transport. They were beaten up by riot police in full close combat gear, only, they were not German riot police, they were deliberately imported from France, as they would not have any local and family links that might become a conflict for them. European states can send Beat’ Em Up servants from France to Germany, vice versa. Civil liberties are increasingly under threat, watch that space, it will get worse.

    Economists are looked at to solve the problem, but we have to admit that they were part of the problem as well.

    Myron Scholes and Robert Merton shared the Nobel prize in economics in 1997. Their mathematics, although deeply flawed, was hailed as a breakthrough securing them the Nobel prize.

    One year later, Long-Term Capital management L.P, where both Scholes and Myron were on the board of directors, wrote losses of 4,6 bln USD, in 1999 the FED bailed them out, the fund was closed in 2000.

    Of course, LTCM was incorporated in Delaware, where else, those of you with some practical background in American business will probably smile, but was based in Connecticut and traded via LTC LP, surprise surprise, from the Cayman Island, conducted trough Bear Sterns and client relations management by Merrill Lynch.

    They did business with everyone who had a name on Wall Street, hence their cataclysmic losses was a considerable earthquake for the street. The vultures already were circling in the skies, Goldman Sachs, AIF and Warren Buffet put on the pressure and offered them peanuts, the deal never came through. Then the FED stepped in and injected 3,5 billion by their creditor banks and in return the banks got a 90% share in the fund. The position were liquidated and a tiny profit went to the creditors. May be this opened the door to the religious bailout fatalism we are confronted with today?

    This hedge fund story alone should bring up red flags left, right, and center.

    Economists are mathematicians who are in the game of predicting future revenue streams, risk and more, based on somewhat complicated models.

    The entire post WWII economics was based on the paradigm of growth and of course, that growth was based on a massive appetite on resources, here is where Oil comes into the game.

    Mikael Höök, is secretary of ASPO International, a physics PhD student in Uppsala, Sweden.

    While doing some reading, I stumbled across his dissertation from September 2010. His doctoral thesis deals with peak resources, and overpopulation. Coal and oil: The Dark Monarchs of Global energy. Understanding Supply and Extraction Patterns and their Importance for Future Production.

    It is very encouraging and a small reason for hope to see students make this the subject of their dissertations. He is not alone. I forwarded it to Prof. ‘Al’ Bartlett in Colorado, I am certain he is pleased to his name four times in the references of this dissertation.

    In the final notes of this paper, Mikael writes: However, the saddest aspect of life right now seems to be that science gathers knowledge faster than society gathers wisdom to use the knowledge.

    That nails it for me!

    In the equations of the EU and others, the forecast for future medium and longterm growth don’t take resource scarcity into consideration, they use figures that are truly ridiculous and are designed, engineered by economists to support a certain agenda. In that respect FF forecasts and EU forecasts are little different, each follow their own political and ideological agenda and use Sucker-Upper-Economists to support it. This is really no secret, and it should not come as a surprise that the various excel-spread-sheet-artists are highly trained to engineer and support a certain view and let it appear as the inevitable truth.

    Luckily, not all of them are Sucker-Uppers [I think I like this term-Grins], and some shine with a brilliant analytic ruthlessness. I consider Dr. Constantin Gurdgiev to be one of them. Of course, one needs to be warned here, they also have their own ideological views which will influence their output, but only if they allow this to happen. Analytics should stay clear of all ideological views, some form of purist economic discipline if you will.

    A society that has created such a monstrosity of civil servants, inevitably has turned into a Sucker-Upper society. This is not only the case in Ireland of course, although it has reached extreme proportions here beyond doubts. In one of the recent publications, the article explained that a University warned their students on the consumption of WikiLeaks to be of possible consequences for them if wish to send their CV for a job in government at a later stage. Yes, this is the world we live in now.

    They showed a picture of a student who adhered to this advise of his University in the USA, I am not showing the picture here, but believe me, if there is a certain type of Sucker-Upper, well, all I can say is that the photographer made a very good choice for his subject. I really had to laugh out loud when I looked at him, poor chap!

    It would be a slapstick, if it would not be so serious. Fear is again used as a weapon in the toolbox of indoctrination, and it works well on certain people. A befriend Professor in Italy is very worried about Berlusconi’s proposed changes to Universities. It could constitute the end of Universities as we know them. In England last week, thousands of students marched in protest against the substantial fee increases.

    The privatization of knowledge is a trend that can be observed in many societies, and it is plain wrong and devastating, but again, follows an ideological motivated agenda. The incident of censoring by fear that I described above is something that educators need to be aware about and fight against at the first signs.

    Economists do not hold the key to the solutions of our problems, that much is certain. They can however contribute a great deal to the possible ways forward, because one thing is for certain, without a global paradigm shift that is embraced by all of us, we march straight and with open eyes into tragedies of immense proportions, some of them I am afraid no longer can be avoided.

    The financial system is flawed from the ground up, and it is not fixable. Continuation, to keep it on life support, only extends the pain for many, the outrageous profits for a few and ultimately would contribute to a possible extinction event, of which we created a great many triggers in the past few decades.

    Economy apologists will continue to hammer home the message that this can be fixed, was a temporary glitch, human error in an otherwise well worked out system. It is not!

    Basel III, higher Tier1 capital requirements etc. such are the smoke screens they put up to avoid a discussions on the fundamental flaws and the changed realities that make this system unfixable.

    All this is not only about Banks, regulatory systems, markets and market makers, it goes much deeper. Our resources are finite and the very term ‘sustainable growth’ is an oxymoron, especially in the light of our massive overpopulation problem.

    I guess it is progress if the “holy see’ [giggles] now allows the use of condoms in the year 2010. Oh wait, of course there is more to it, this is not to approve the quote egoistical decisions made by spouses not to have children!. These guys are so dangerously removed from reality, it is an insult to any human being with brains worth a cup of tea to have them hold so much power and wealth.

    I use the mute button on the remote control when the inevitable church bells blast through my speakers for two minutes before six-one news in Ireland starts, showing their piss poor submissiveness propaganda clips with that faked altruistic touch of multi- culti. I have nothing against bells, Pink Floyd’s Division Bell is a piece of art, but I can’t take this hypocrisy that is broadcasted on the Irish Pravda, or these prayers in the Dail, I find it sickening, and it strikes me as utterly insincere and stage managed, the historical relicts of past ages that serve no purpose anymore.

    Your milage may vary, I mean no offense, but I really think the church should stay the Hell out of this slot before the news show.

    X X X X

    This video clip here, was calling for Julian Assange’s assassination on Fox News.

    The very fact that an idea of ‘Anti-Americanism’ can even exist, is a clear indicator of a stringent underlying totalitarian system at work. The same totalitarian systematic is applied to Europe and its Nations.

    Is it worth pointing out to these red neck mainstream populists that Assange is Australian? Probably not!

    I was walking my dog on our local stomping ground, listening to Gustav Mahler’s 5th, fourth movement, Adagietto- Very slow when this scene here, a dream in blue, unfolded in front of my eyes. It is nothing spectacular, but if you know this piece of music, you might relate. I listened to Mahler’s body of work first when I was at the tender age of 12.

    Now, at the tender age of nearly 50, I still hold this particular movement of the 5th for one of the finest late romantic pieces that were ever written. I you need a little bit of peace, listen to it, and you might agree when I say, we all should slow down, especially in economic terms.

    The role of economists inevitably has changed due to the fact that our all circumstances changed. Those in the ‘meteorologist business’, well, they will continue developing bad eye sight over their spread sheets and display a rather undereducated state of mind, focussed of course, very focussed.

    The more well rounded members of the economics departments are under obligation to ask tough questions, very tough questions, and from there come to new models, new ideas, new solutions. When the fires burned in Russia this summer, and export came to a halt, wheat prices went up, and not only that, as it is all interconnected, milk, meat and other commodity prices went up as well.

    I dare to say, we are one Nation and as such we need to start thinking, and it has started already, in schools, in families, in companies, everywhere. Just, is it happening fast enough to change direction before it is too late?

    Honestly, I don’t know this. I know however that we created an extinction potential that is very serious. We have not even begun to understand our own planet, and we just had a glimpse of what is out there when the Hubble space telescope was launched and started to transmit. The greatest adventure of human beings that can ever be experienced is learning and exploring, the greatest responsibility is teaching. The moral lessons that we taught our children in the past decades are useless, they are a post imperialistic relict of exploitation and abuse, they no longer serve any purpose, in deed they never did, other than to maintain status quo.

    The 18th century was the age of enlightenment. How will the 21st century go into the history books? Unfortunately, I won’t be around that long, but I guess, as we are at a cross roads, it could go in as the age of ‘Peak Oil Wars’, or the age of the 2nd Enlightenment.

    As human beings, we are choosers, and ultimately, the choice is ours.


    • BrianC

      Hi Georg

      Once again really enjoyed reading your post.

      I think we will never find our answer in pure economicss. Adam Smith believed true equality will only be created in a truly free market. The real flaw in our world is human nature which values greed above all else. And we put self interest before others which fuels greed. We perceive our world through what we have against what we are and can do. There are no free markets so we are enslaved to the will of those who control the finances of the world.

      I have posted this before but it is worth repeating.

      In 1955 Cyril W Davson published a book to honour Karl Schappeller an Austrian who pioneered a certain thesis in Physics and the book was called ‘The Physics of the Primary State of Matter An Application through the Primary Technique’. Davson wanted to try and ensure that this knowledge would not be lost. At the start of the book he wrote

      “Anyone who sees in his own occupation merely a means of earning money degrades it; but he that sees in it a service to mankind ennobles both his labour and himself”

      I think more and more people are becoming aware that human kind needs to break away from the enslavement of finance and the few masters who control it. This is not a backlash against capitalism but the desire to achieve true economic freedom. But for this change to manifest itself it will be necessary to have a huge change in heart.

      From what I can see our political system it is totally out of touch with the will and needs of the people. When Pearce Doherty was making his first speech most TDs had left the Dail chamber most likely to adjourn to the Dail bar. Mary Coughlan made it known that Pearce Doherty should show proper respect and address her in accordance with the protocol of the Dail. Yet ‘Minister’ Coughlan and all of her colleagues in the Dail fail time and time again to pay due respect to the Irish Citizen and favour the select few at the top of the pyramid to where the wealth of the Nation is being transferred.

      I doubt that the Dail will endorse ‘Time to play the Brady Hunch’ as not alone is it outside their intellectual grasp the change of heart required would be far too great. There is absolutely no way they will desocialize this debt and put it back where it belongs on the balance sheets of private sector banks and let the ECB deal with the problem which they will have to eventually. The opposition could win the opposing vote but they have no will to do it as they are putting self interest first. The only dissenting voice is that of Sinn Fein and that is so ironic a party that was once denied the right of free speech is now trumpeting the true will of the people.

      Regards Universities and education institutions from personal experience those who pass through those intellectual incubating centres are quite well educated but applying their knowledge to the real world is a bit of a challenge as they lack real ingenuity applying their knowledge to deliver true problem solving very much as evidenced in how the government is administering itself to solve the present financial challenges. The world needs a new kind of education system that goes well beyond a Certificat Diploma or Degree which at the end of the day are mere pieces of paper that confirm you were educated enough to pass an exam and the examination of life is a far more comprehensive test which Irish politician fail miserably but are rewarded well in excess of their performance and worth and I would refer them to

      where Sal Khan can explain banking finance and economics to them on a one to one basis.

      By the way I loved the picture.

      • @Brian C
        “I think more and more people are becoming aware that human kind needs to break away from the enslavement of finance and the few masters who control it. This is not a backlash against capitalism but the desire to achieve true economic freedom. But for this change to manifest itself it will be necessary to have a huge change in heart.”
        If yourself and Georg have a few minutes to spare this is awesome
        NEW BLOG POST UP: Dec 13 2010, The Debt-Dollar Discipline: Part III – Future Reorganization

      • TheFullRed

        Lets go beyond the zone of academic theorising Gentlemen; it seems to me that the path chosen by our erstwhile Government has been actively pursued, one might even say plotted, and what needs to be clarified is why and who benefits? I see this path as perverse, as it is both political suicide for FF, and immensely wounding to the Nation. Notwithstanding that the overall global picture needs to shift in terms of paradigm, to be honest, Im that that into altruism to really care, but what I do want to know is why these twits from Mount Street are so intent on making a catastrophe into an utter disaster…
        Cui Bono?

      • Brian,

        I think the keywords missing are 1. Respect and 2. Empathy, and both are in the toolbox of humanity, but they are not utilized to the required levels.

        Greed is what? That in which one trusts, Mammon!

        It is not really rocket science to analyze what brought us to the point we are at when one looks back into historical events to date.

        The sleeping Dragon is awake, and now a Chinese state bank competes with others to buy the entire German WestLB, most fascinating. The strategic move of the Chinese towards resources, raw materials, and project finance was highly predictable.

        I agree, the education system is a complete mess, what we would need is a cross-disciplinary scholarship instead of teaching knowledge to be a personal asset, the latter creates only zombiefied-drones and sucker-uppers with tunnel vision.

        The top-down centralized market system is a complete failure and impotent to address current and essential survival challenges we are confronted with as one Nation, sharing one biosphere. The same counts for dysfunctional political systems that are top-down centralized.

        Capitalism per se is not the problem, the way it was executed is, and IMHO the way forward lies in a different from, the distributed capitalism.


    • edp

      Very good comment to another excellent blog from DMcW (though hardly a response to the original).
      At any rate, one small point thta I disagree with:
      You say “Economy is not a science per se, it never was and never will be. It deals with deterministic chaos, hence by it’s very nature is as unpredictable as the weather is.”
      I would suggest that science is not ‘a science’ either, in the terms that you appear to mean it i.e. a reductionist ‘objective’ value free exercise. Moreover, much of science and all or economics deals with complexity; which is not in fact deterministic (or rational) at all but is rather non-linear, whereby macro (society level) efects cannot ever be predicted on the basis of a very large number of micro (e.g. individual level) actions; this is the concept of emergence. Thus its not entirely correct to say that one bank can bring down an entire global economic system (and not just a country) as it possibly will end up doing once the markets eventually get jittery with the massive US deficit after they’re finished with Europe, but rather the whole (economic) system is so complex that when it is in a highly non-equilibrium state, an apparently small effect can create a very large perturbation which results in a tipping poiunt to a whole new (and unpredictable) state. Understanding complexity can help us understand the economic, social and enviromental consequences of the current unsustaianble global trajectory. McWilliams, understands (at one level at least) as he’s demonstrated through a number of media including his excellent documentary ‘Adicted to Money’.
      Secondly, I don’t think that your statement
      ‘Analytics should stay clear of all ideological views’ is a valid one, as it presupposes the modern object oriented rational Catesian-Newtonian-Adam Smith world view that has so firmly take a grip (with much success) over the past few centuries. We cannot divorce ourselves from values – a complexity paradigm revelas that its just not possible.

      • Science they way I think about it, as in observing and empirically studying natural phenomenons. Of course, we could agree that scientific methodology is used to describe and predict economical events and developments, and there is this classification model whereby we would distinguish between natural and social sciences, the latter being the suitable place for studies of a dynamic system driven mainly by human behavior, however, this would contradict certain aspects of it’s mathematical predictability as well, and the latter is a great deal of economists activities when I referred to them as being in the meteorologist business.

        Economists were not comfortable taking into account people and what they are thinking when they make economic decisions, Friedmann for example argued that one should never do so, fortunately, some disagreed and started to find applications to include human behavior.

        However, chaotic processes, while unpredictable, can be synchronized and in an applied sense controlled as well. This does not even require mathematical modeling of the dynamic process involved, it can be observed in chemistry [my own background besides music] all the time.

        If you look at the the geological earth timescale, before human beings and after human beings there ain’t such thing as economy to be observed, physics and chemistry however still would, which places economy in a rather very limited timeframe.

        Of course we can not divorce ourselves from values but we need to maintain a clear view as best as we can to gain a better understanding, any pre influence on the outcome is decremental to the gain.

        Our understanding of the Universe is slowly coming to a point where we would be best advised to re consider certain aspects of our interactions as a species, of course, it is still in it’s infancy, a lot to be discovered, and time is against us.

        What I tried to bring across is that officials all over the world apply a 18th century mindset on 21st century problems, and this is doomed to fail.


        • P.S.

          Of course, there will be those insisting the Universe is driven by economical principles of production, exchange and distribution as well. [grins] I beg to differ!

        • edp

          Thanks Georg, I think we agree on far more than we disagreee on – your article is largely on the ball. However, to me economics is part of a complex system, and thus inherently has unintented and unpredictable connsequences, no matter how much is known about the system in advance. So is society and much of what we call science. Chaotic systems are a subset of complex systems -these behave by simple non-linear rules whereby the future can vary enormously depending on starting point, but can be deterministic. Effectively we need to be humble and realsie that there will always be ‘unknown unknowns’ -that we simple cannot and will not ever be able to fully understand (and certainly cannot ever ‘control’ complex systems in any kind of mechanistic/determinsitic fashion). However, (incresed) complexity is a natural emergent property resulting from the second law of thermodynamics and realising this can help us better understand the inherent limitations of thinking we can ever control an ever more complex society; thus ideas like the precautionary principle are useful. This merely strenghtens the arguments you make above regarding reseource use, etc. Its also useful to step back and take a broader look at society, the economy and the broader environemnt in which both these reside and thus ‘listen’ to and observe how these work; McWilliams is very good at doing this, particularly in the economic sphere. He sees teh bigger picture, as do you.

          • Yes, I sign this part of the need to be a but more humble, by slowing down eventually might help to sharpen senses again for the real things that matter.

            Just thinking, it often takes a tragic event, the loss of a loved one, which makes us slow down and appreciate the things that matter, all other worries we overvalue so often then seem to shrink. It would appear that all that we ever invented was invented to accelerate processes, I guess, it has to do with our finite life span, to pack as much as we can into it, and in the attempt we seem to loose the focus on what really matters.

            Really appreciate your thoughts!


    • A Stunning piece of writing Georg which I enjoyed immensely

      A few months ago I read The Ragged Trousered Philanthropists for the second time and there was one passage that stuck in my mind because it could have been written especially for Mr Lenihan and the Irish people as a whole. It was written over 100 years ago and the book has been a right of passage for many British labour politicians including Prime Ministers and it has been read by many world leaders in the time since it was published

      Rrobert Tressel, the man who wrote it, was born in Dublin in 1870


      Whether it can be altered or not, whether it’s right or wrong, landlordism is one of the causes of poverty,’ Owen repeated. ‘Poverty is not caused by men and women getting married; it’s not caused by machinery; it’s not caused by “over-production”; it’s not caused by drink or laziness; and it’s not caused by “over-population”. It’s caused by Private Monopoly. That is the present system. They have monopolized everything that is is possible to monopolize; they have got the whole earth, the minerals in the earth and the streams that water the earth

      The only reason they have not monopolized the daylight and the air is that it is not possible to do it. If it were possible to construct huge gasometers and to draw and compress within them the whole of the atmosphere, it would have been done long ago, and we should be compelled to work for them in order to get money to buy air to breathe. And if that seemingly impossible thing were accomplished tomorrow, you would see thousands of people dying for want of air – or of the money to buy it – even as now thousands are dying for want of the other necessaries of life

      You would see people going about gasping for breath, and telling each other that the likes of them could not expect to have air to breathe unless they had the money to pay for it. Most of you here, for instance, would think so and say so. Even as you think at present that it’s right for a few people to own the Earth, the Minerals and the Water, which are all just as necessary as is the air

      In exactly the same spirit are you say: ‘It’s Their Land,” “It’s Their Water,” “It’s Their Coal,” “It’s Their Iron,” so you would say “It’s Their Air,” “These are Their Gasometers, and what right have the likes of us to expect them to allow us to breathe for nothing?” [And even while he is doing this the air monopolist will be preaching sermons on the Brotherhood of Man; he will be dispensing advice on 'Christian Duty' in the Sunday] magazines; he will give utterance to numerous more or less moral maxims for the guidance of the young

      And meantime, all around, people will be dying for want of some of the air that he will have bottled up in his gasometers. And when you are all dragging out a miserable existence, gasping for breath or dying from want of air, if one of your number suggests smashing a hole in the side of one of the gasometers you will all fall upon him in the name of law and order, and after doing your best to tear him limb from limb, you’ll drag him, covered in blood, in triumph to the nearest Police Station and deliver him up to ‘justice’ in the hope of being given a few half-pounds of air for your trouble


      • Paul,
        I have never read this before – It is truly stunning! It probably explains why Solar Technology is not as advanced or available as it might or should be? Because you can’t charge for sunlight! There seems no incentive to give it to the little people power?
        I read your comments on Radio Caroline and can clearly see that you get it! If the above is typical of the kind of thing that you can contribute then it’s guaranteed to be a success!
        Those few paragraphs read against a suitably stirring track would be a valuable advert for what we could be about!- Eye opening perspectives!
        We might wait a few days to see who else is interested then possibly meet up over the holidays?
        Thanks again – Top class stuff!
        P.S. Unfortunately Ireland was sold to the lowest bidder today!

      • Thanks Paul,


        From what I saw, it may be worth pointing out that it allegedly took until 1955 to get a uncensored version published, until then they were cut short of the ending and the somewhat socialist remarks as well.

        • @Paul – yes it would maybe make a good slide show for the web. Such material makes people think.

          @Georg – yes the book was censored. From the inside cover of the Penguin Edition:

          Robert Noonan (Robert Tressell was a pseudonym) was born in Dublin in 1870, but as a young man moved to South Africa, where he worked as a decorator. He came to England at the turn of the century and lived in Hastings, where he worked as a sign-writer and interior decorator. Tressell decided to emigrate to Canada in 1910, but died of pneumonia en route to Liverpool in February 1911 and was buried there are a pauper.

          Tressell was unable to get The Ragged Trousered Philanthropists, his only novel, published during his lifetime. It was eventually published in an abridged form in 1914, largely through the persistence of Tressell’s daughter, Kathleen Noonan. The unexpurgated version was not published until 1955.


          Robert Tressell did not have any formal academic qualifications. His father was an absentee landlord and he could not wait to get away from him therefore Robert left school early and pursued a craft. He clearly believed in craft because the book’s main character Frank Owen is always seen as being more mindful of doing a decorating job properly rather than slopping it on in a rush. There is none of the ‘it will do mentality’ as can be seen from looking at the crumbling ghost estates of the modern era

          The same ethic can be found in the quote Brian C has put on here several times, which incidentally appeared on the inside of a Physics book published in 1955:

          “Anyone who sees in his own occupation merely a means of earning money degrades it; but he that sees in it a service to mankind ennobles both his labout and himself”

          • Robert Tressell did not have any formal academic qualifications. Which does not matter a sausage, his University was South Africa and the british workhouse, and raising a daughter on his own in a poverty stricken environment, the only tool required for him was honesty and to speak/write his mind, which he did so well.

  2. irishminx

    David, THE most important question you ask is this,

    “Do you think there is a reason that this policy has never been tried in any other country, anywhere ever?”

    Why then are the Irish Government implementing this policy?

    My guess, they’ve sold us out a long time ago and can not now renegue on what ever deal they did!

    I think with regard to Anglo and a few other banks, there are scandals in these banks that they need to hide!

    The Irish Government are scared sugarless that the truth will out!

    The fact is, the Brady Bunch, would have more common sense in dealing with and sorting out the Irish economic situation, than the two Brian’s do!

    My heart is heavy with sadness for what our Government
    are doing to Ireland and to her people.

    And no amount of common sense seems to enter their thought process!


  3. We tried it their way.

    The banking policy followed has proved to be a potentially fatal mistake.

    Dukes has now announced even the €35 bn for Anglo might be small change and will probably not cover the potential tsunami of mortgage debt ready to roll in on our zombie economy.

    I’ve had enough rubbish from Tricky Trichet:

    “Asked if he feared a domino effect in light of the debt crisis, he said that this would not happen, adding that Ireland and Greece were both solvent and therefore debt restructuring was not an issue.”

    He’s trying to use Ireland as a pawn to mount a frontal cavalry attack on the markets.

    A bit like the ‘Charge of the Light Brigade’ at Balaklave against the Russian guns.

    Who’s he got to do his running for him?

    Our NTMA and Dof mandarins whose favorite pastime is breaking the Irish economy with stupid decisions personified – Aided of course by our four horsemen of the catastrophe, Lenihan, Cowen, Varadkar, Kenny.

    The latter 2 believe we can renegotiate a better deal, rabbits have a better chance of negotiating a better deal with foxes.

    This is simple. There is a known and proven way to deal with our situation. Sweden and Iceland and the other Asian, Latin American examples lead the way.

    Do what you should have done in the first place. Stop going down the cul de sac driving on the wrong side of the road against oncoming traffic!

    Nationalise and close the banks that require this.

    Burn Senior bondholders.

    Do a Brady bond if you want to be meek about it, walk away and do not negotiate if you really want to show mettle.

    Other countries will help us if we do. Let’s approach China for aid, that should liven up the
    banxter trickters.

    Be prepared to leave the euro.

    Tricky Trichet, Lord Cardigan, fed Ireland a rotten deal that will doom our economy. Time to back out of Trichet’s hangman’s noose.

    We’re led by an aristocratic elite from a bygone age just as the Light Brigade were led.

    Is there any life left in the comatose Ireland patient drained of its blood to get it to stand up for itself and throw down the gauntlet and say, ‘no More!

    Banks will not be allowed to bring down sovereign Ireland. Its time to burn banks and bondholders and to stop burning the citizens of Ireland. Let them carry their own losses.

    Irish citizens will live freely with the consequence, not as vassal slaves indentured to the IMF/ECB in order to maintain and pay the debts of a vassal elite product of a bygone age!

    • Mother of Three

      Good plan. Could we become the Singapore of the West. They have a similar population. But who will lead us?

      • TheFullRed

        I propose the likes of Gurdjiev, David Mc and Michael Ryanair. Democracy is a sham in this land, as the charlatans in FF Fg at al have convinced all and sundry that the answer lies in their broken paradigm. We need an executive unencumbered by electoral desire. A NATIONAL EMERGENCY GOVERNMENT indeed. McAleese should be called upon to make a statement on all of this. She is the president after all, and shee can yap on about the Queen coming to visit but she cant comment in a time of National Calamity??? Time for her to stand up or step down.

      • Colin

        Well, that would involve a huge change in law and order, for example you get the death penalty for possession of drugs. In other words, its a police state. Don’t get me wrong, there’s a lot to be said for a police state, women can walk the streets freely anytime of day without fear of being attacked etc…., but not a lot of people in Ireland would welcome such tough laws and enforcement.

    • TheFullRed

      Hear hear!

  4. NO HOPE

    Spot on David as usual. We have to realise one simple thing. There is not a teaspoonful of common sense in government. Any rational plan is overlooked because the imbeciles that got us here, and run Ireland, simply don`t know how to do the job. Vincent Browne said it very comprehensively-there are 15 state of the art dunderheads making ministerial decisions. Even with new “government” what hope is there? They are already backtracking saying they cannot reverse decisions. They are all a bunch of weak, useless, plonkers. Difficult to see a bit of backbone amongst them. Any real leader would stand up and say exactly what you are advocating. They should employ top economists from the UK,US,Ireland,France Germany and put them all in a room together and say lets use the common denominator and get the country out of the hole with a structured default. They should firstly sack the entire dpt of finance and start again with new blood and new ideas. What do we have? The same tired old faces waiting for their pensions while they put more holes in the boat and go on extended summer holidays. What an outrageously stupid bunch of wankers. The problem is that there really is no desire for change. FG want to cap salaries at 200k?? A “real” opposition party would cap all state salaries at 100k at the top, get rid of the presidential ceremonial office which costs 9 million+ per year to run, dissolve the Senate, cut TD salaries to 70k max, and show some real leadership at the top. Not in Ireland. We will continue with the representation of all that is useless with the same systems in place, while we bleed to pay for those outrageous salaries, cars and holidays, and reward those who would not last 2 months in the private sector let alone 12 years. We are sunk. No doubt about it. Only when the margin calls come in will it become evident we cannot pay and all those billions would have gone into bondholders pockets and banks. Our children will be in Australia, Canada and wherever some possibility of a real life exists. We will be stuck here in 10yrs time with a bankrupt country on its knees still. All because of private bank debt. It is insane…..

  5. Kerry

    Hi David

    Great article. Have the government or opposition ever commented on your ideas regarding how to deal with the situation?


    Kerry O’Sullivan

    • NO HOPE

      They are unable to understand simple economics. Davids point is entirely missed….

      • Very interesting aspect of this is the degree of concealment, lack of transparency wedded to plain lack of knowledge on behalf of the citizens of Ireland.

        We are on the receiving end of financial fascism that isn’t subject to democratic laws.

        This is a kleptocracy that seeks to destroy democracy in Ireland by disenfranchising citizens, an undemocratic ‘behind the scenes’ financial oligarchy that is putting manacles on every one of us.

        Its taking away our citizens rights and turning us all into vassal slaves.

        In order to pay the debts of a handful of Irish banxters who should be in jail!

        You wouldn’t believe it if you read it in a work of fiction!

    • dwalsh

      Our politicians cannot think rationally and hear what David is saying. Not because they are stupid or cant understand; but because they are creatures of a crony system, who are only permitted to think within the terms of the system. Each of them is in the position they are now because they played the parish-pump crony system successfully. That’s why George Lee never got and never would get a look in with FG – he is not part of the crony system.
      At government level our politicians are clients of the Eurocrat system, which is another, larger, crony system.
      The only hope we have of doing anything like Iceland did would be for a completely new group of leaders to emerge who are not beholding to the party-political crony system for their Dail seats. I dont see much chance of such leaders emerging, or the Irish population being able to see what is necessary – given the garbled nonsense that passes for economic reporting and comment in the mainstream media – which is also ultimately part of the crony system.

      • Pedro Nunez

        Ya judging by the young brutal being ‘bored/inadequate’ in Oxford on Sam Smyth Sunday am and Rabbitte caufgt in the headlights on George Hooke tonight, we’re still truly on peasant class Irish solutions to non Irish but truly European fiscal, banking and currency systemic problems.

        No sniff of perspective, leadership or heaven forbid, statemanship, from the establishment gombeens of all hues at mo.

        ‘People without a vision perish’,

        FF never had one (apart from ‘Me Fein party’) and the others prefer bitching than leadership or the energy of a new coherent political ideology.

        The people are ahead of these fat cat politicians who gorge on the last dregs of ‘celtic tigre’ cream.

  6. SoccerBoy

    All the 2008 bank guarantee (which was designed to save Ireland from a systemic failure) has achieved is a banking system failure in slow motion. In effect the collapse has already happened but we just haven’t recognised it yet.

    There is a craziness in the Irish financial system that is symtomised by the following huge anomaly:

    1) The interest rate on an AIB 20 year mortgage, fixed for five years, is 3.85% APR.
    2) Five year Irish Government bond yields are in excess of 7%.

    Any rational AIB loan officer would / should not issue any mortgages at 3.85% when he/she can invest in Government guaranteed paper at more than 7%.

  7. Extract from
    “This system, unlike its strictly industrial predecessor, is endogenously prone to over-extension in the short-term. The large economic rents extracted by speculative financiers lead to severe debt deflations, which then leave significant segments of the underlying population in economic despair, including the industrial capitalists. The rapid growth enabled by financial discipline sparks a crisis of legitimacy, in which previously self-disciplined financial consumers begin to question the wisdom of their shackles. For the most part, this questioning is simply a result of there being no other option, as financial expectations and promises have evaporated as quickly as they were formed.

    Before the global financial crisis of 2008, debt-dollar discipline was maintained by re-directing credit growth whenever a debt-induced recession occurred. Essentially, financial consumers would be disciplined (by the system and themselves) to leverage their stagnant real wealth into various different assets for temporary returns. There are currently no asset classes or greater fools left to pick up credit growth where it left off, save for government leaders around the world, who will stop at no lengths to preserve the debt-dollar discipline keeping them in power.

    However, these governments are currently or will soon face sovereign debt crises, as a function of their own enslavement to the financial disciplinary system. They, too, must borrow money from private banks and pay interest on that debt, which becomes increasingly difficult as economic growth stagnates and tax revenues plummet. The “delinquent class” has now become too massive and visible for the existing power structures to effectively control, but that does not prevent the disciplinarians from trying.

    Many of their attempts to reinstate debt-dollar discipline are failing because of the financial system’s rigid structures themselves. As a function of conservation, these structures have become extremely inflexible and a liability for those seeking to maintain the status quo. The U.S. Federal Reserve has created trillions of debt-dollars through discounted loans and quantitative easing, in the alleged hopes that this “liquidity” will find its way to financial consumers and inflate the prices of assets and goods.

    Their attempts are futile because economic actors worldwide had previously been disciplined to take on dollar-denominated debt, and as those massive liabilities come due, the demand for dollars will spike along with their value. It may seem counter-intuitive that a collapse in debt-dollar discipline will cause dollars to increase in value, but the disciplinary system has actually relied on a suppressed dollar to carry out its purpose. Without inflated asset prices relative to the dollar, debts cannot be repaid and financiers go broke.

    Other attempts involve governments incurring fiscal deficits to provide subsidies, backstops and general support for the financiers. The U.S. policies of TARP, ARRA and Fannie/Freddie housing intervention are great examples of such attempts. It is hoped that financial discipline can be restored by propping up the institutions most responsible for implementing and reinforcing it. Once again, the reason this plan will not succeed is due to the financial system’s original disciplinary purpose.

    It had evolved to establish a global class of financial consumers who will continuously take on debt and repay most of those debts, in the form of debt-dollars or hard assets. The system has now limited its own ability to extract future wealth, as financial consumers have very limited capacity to repay existing debts, let alone incur new obligations. Much of the collateral secured by existing debts, or that could potentially be secured by future debt, has lost significant value, cannot be reached or is already encumbered.

    These fiscal deficits will eventually lead the U.S., the purveyor of debt-dollar discipline, into a sovereign debt crisis. Attempts to decrease the national debt have been rendered useless by the financial disciplinary system, as it requires private or public credit growth for economic health. Without the underlying private growth, cuts in public spending will most likely make deficits worse and debt servicing costs greater (the current Euro zone crisis is an ongoing example of this dynamic). ”
    How will the 21st century go into the history books?
    We are at the dawn of a new era “The internet is the Guttenberg printing press on steroids. Let’s not forget that the Guttenberg press was key in sparking the Renaissance.”
    Una Mullally wrote yesterday
    “I’m intrigued by how more and more alternative tools at odds with established powers are emerging. These in turn lead to the creation of parallel societies, which is what is happening in Ireland too. We are becoming a nation so disenfranchised that the government and all its associated organisations have no support from the people and no mandate to make any decisions on our behalf.” l
    Many people read David Mc Williams articles in Newsprint he has over 15000 followers on twitter and many more readers online here. His ideas on a deal with bondholders has been heard on the airwaves and from the stage. The government have dismissed it as populist domestic noise.In real democracy if the people had a choice who would win the vote Plan A or B?
    Our elected representatives will vote on this deal on Wednesday.The PR battle seems lost and the deal will get a rubber stamp. How will this affect our respect for the Dail? Do we wait for the final line in todays article
    “As we are likely to default anyway, why not have a plan up our sleeve for that eventuality?”
    From what I have observed the next grouping our democracy puts in the house FG Lab will have no sleeves in the strait jacket.
    The people are not fools that is why the Irish banks have lost the deposits.
    Back to the start of this piece “The system has now limited its own ability to extract future wealth, as financial consumers have very limited capacity to repay existing debts, let alone incur new obligations. If the people stop paying the mortgages the wheels come off the wagon.
    Is this is the time to look at parallel systems and societies because the existing ones will not support those who like myself many contributers on this blog cannot fathom why the political elite cannot engage with the proposals or ideas from D Mc Williams C Gurdgiev B Lucey S Kinsella M Kelly and others?

    • from your link:

      “The details were released by the Dutch government, which is owed €1.2bn (£1bn). The deals are on better terms for Iceland than the previous one which had originally demanded a rate of interest of 5.5% on the loan and also a floating rate, linked to market rates, which would have forced up repayment levels if rates rose. Now, Britain is accepting a fixed rate of interest of 3.3%, and the Netherlands a rate of 3%. Payments will not begin until July 2016 and cannot continue beyond 2046.

      Iceland has also secured a limit on the amount it is expected to pay out relative to its national growth. Payments cannot be lower than 1.3% of Iceland’s GDP nor exceed 5%. “The assessment is that the cost falling on to the state treasury will be within 50 billion crowns or just over 3% of gross national product,” the Icelandic negotiating committee said. The principal on the loan is intended to come from the recovery of assets of the collapsed Landsbanki.”

      They threatened to walk on the deal and note as well as down from 5.5% to 3%+ they got the crucial
      “Payments cannot be lower than 1.3% of Iceland’s GDP nor exceed 5%.”

      Compare that to what our Gombeen ‘charge of the light brigade’ gombeens got us!

  8. ladygee2

    As per usual, David, has ‘hit the nail on the head’. If I were to put a fine point on things this idiotic government of ours should be thrown into jail and serve a lifetime of hard labour. What a complete and utter shower of dickheads!!! Anyone who goes away and votes for FF in the upcoming General election would want to be completely off their heads altogether!!!
    NO HOPE stated in his comment that there’s not a teaspoonful of common sense in Government or in the mandarins that run the Civil Service, well, never a truer word could have been said. Any one who says that private bank debt and sovereign debt are one and the same simply haven’t got a clue of how to run a country never mind an economy!!!
    The time has definitely come for us to regain our country from the lunatics who have been supposedly in charge of running this country for the last 13 1/2 years.

  9. Re the zero coupon Brady bonds, given the likelihood these bonds will not be issued to Ireland by the ECB, should we be looking to leave the euro and join the dollar, or better still, return to a punt following the dollar. This would be even a better deal than the icelandic one above!

    • Euro- dollar- return to punt
      Time for Steady State Economy with world first debt free web based platform finiancial system??

      • That would be great but at present impossible to achieve given the volatility imposed by the present system base corroded by rigged market capitalism, gambling speculation, off the balance sheet unregulated derivative gambling, lack of regulation, lack of reporting and plain skullduggery and thievery by irresponsible lenders.

        Trichet is responsible for some of this at euro level but wipes his hands of any responsibility for his bondholders eg who lent loan cocaine to Anglo.

        Think of multiple mortgages on the same property, welcome to the world of derivative trading and similar questions how safe much of it is.But this is of vast scale. Even naked shorts allowed against the euro by funds that can borrow anything without any deposit base!

        World’s financial system in need of huge reform to return it to some fairer steady state system.

        Could be a start to rein in investment banking and derivative trading but these efforts have been blocked by Congress in the US.

  10. wills


    The common sense econ 101 you write on is addressing the *problem* from a perspective of clear non skulldugerry intelligent thinking.

    The insiders in power who are making the choices are for the most part a bunch of crooks, so, they are going to implement choices that work for them and that is what they are doing and what we are seeing.

    So, lets record it all and climb into the shoes of the crooks and get into their world of thinking and get ahead of their curve and do a sherlock holmes on ‘em!!

    • michaelcoughlan

      Hi Wills,

      I happen to disagree with David on this article. Remember Connstantin told us the debts are too big to pay so we know we are going to default sooner or later.

      David’s article has been written with the assumption that we are going to pay back all the debts which we know is mathematically impossible. Also he has compared us to Iceland again and as we know we can’t be compared to Iceland since we are part of the Euro and they are not.

      Despite what he says about the Brady initiatives we have a line of credit in place which allows us to sort the problem in our current account (a sort of Brady initiative). Once this happens the bank bondholders will be skewered in my view.

      The time has come to display personal leadership and each one of us should start focusing on our personal solutions to our problems and don’t wait for the government to sort anything out because they won’t. Remember we need to focus on positives not negatives.

      • wills

        Hi Michael,

        Its not a direct metaphor its an indirect one the Iceland example.

        Also, the debts been repaid I think from my reading on it D is agreed that the debts in size can only be but sent back the other way to the owners of the debts and what they do with the debts is another story, which I agree on.

        The problem if the banks debts are the banks problems and NOT the citizen concern and certainly not the citizens worry.

  11. StephenKenny

    I agree with michaelcoughlan. This whole debt default argument is irrelevant as default is a mathematical certainty.

    The problem that no one is looking at is that of what happens afterwards. There’s a massive structural government deficit. What’s going to be done about that?

    An interesting interview with Sanjayit Das, an Australian economist, covering much of current goings on. (You can listen to it from the site by paging down a bit).

    • re ” This whole debt default argument is irrelevant ”

      No, we have choice. We can default now and leave the euro and structure this , or have more choices imposed painfully later! thx for link

      • StephenKenny

        OK, we agree that a default is inevitable and will certainly happen, so let’s stop worrying about that.

        The next question is the direction of the necessary restructuring, and once that’s decided on, how it’s going to be funded.

        Leaving the Euro or not is part of that calculation. There is a huge amount of politics to be factored in. e.g. how much would leaving the euro affect the other Euro members – might it cause a cascade? Might Germany take the opportunity to leave? Create a 2-tier euro? throw out the other PIIGS? What would Russia do re the eastern euro members? etc etc etc almost ad nauseam.

        All these factors will affect the best approach, but unless there’s a fundamental appreciation of, and agreement to, the new direction after the restructuring, then it’s all pretty academic.

        • Trichet has no solution that involves burning bondholders.

          So, we have to ask whether its better for an Irish citizen to be kept on life support as a debt junkie for the IMF/ECB, or we decide to live outside the euro. Staying within the euro we agree will lead to inevitable default.

          The euro project has no solution to our problems, so we must look elsewhere for a solution.

          The kind of restructuring we need involves taking that decision of go/stay first. If go, lets restructure and default back to the punt.

          • michaelcoughlan


            We sort the problem in the national current account which will put us in pole position to either let the banks go to the wall or give us more leverage with our european partners in convincing them that the ECB should take the hit since they are the ones taking the risk on lending to insolvent institutions.

            They have us by the goolies at the moment since we have such a problem in the national current account. This must be sorted in any event.

      • michaelcoughlan


        No we can’t leave the euro now because if we do the IMF and ECB will pull the emergency funding and what then? The banks will close and then we will have to worry about runs on shops and not banks which I can assure will be a lot more serious.

        • We’ll agree to disagree on this. My belief the ‘bailout’ worsens and deepens our problems. It doesn’t sort the problem in the national current account. It worsens it and will bring on inevitable default.

          Key to solving problems like this historically has been speed eg Argentina, Sweden. ‘Kick the can’ solutions eg Japan deepen damage and make the problems worse especially instability.

          Watch as our fiscal problems become more unstable until we reach the point of default.

          We cannot bury our heads in the sand. We need to act quickly. Allow Anglo senior bondholders go suck. Its the only way out!

          The current account deficit and the other banks can be solved with a mixture of Brady bonds and other resolution see Iceland above solutions.

          We’ve wasted enough time. We need to default on Anglo now. Let IMF/ECB go suck, back out of the euro if necessary. Make a clean break with the banking debt and sovereign debt.

          Odds are daunting, but we’ll give it a fighting chance. This is the only way to reach sanctuary.

          The alternative is slow suffocation due to a deadly economic constriction we are now sadly anchored to courtesy of Trichet and our gombeen failure to stand up for ourselves.

          Enough fear of a run on banks. We already have that:) Is there any spirit remaining on Ireland Inc or are we doomed to watch her sink under the waves?Surely zombie morons can’t be allowed to sink us?

          • wills


            One side of Ireland is suffering a slow death its insider squadrons structure is cracking as it suffers the stress from trying to hide the debts from its banking machine in a race against time

      • paddythepig

        Mugabe would be proud of you. Debasing the currency is the solution to all his problems.

    • BrianC

      They have only one true option the ECB being lender of last resort must crank up the printing presses.

      All this Euro Bond stuff is a veil pure simple veil masking the truth. The is so much debt out there it has to crystallise on somebody’s balance sheet. They crystallised it on the Greeks and rightly so as theirs is a fiscal issue. However, Ireland is a banking problem one foisted on the Irish Citizen to recapitalise and once the bond holders are paid they exit causing liquidity problems. Hence the ECB is trying to apply an overdraft type loan structure and the Irish negotiators are too stupid to negotiate.

      Coward Cowen claims they are permitting a debate in the Dail regards the bail out when in truth he does not want a court to adjudicate which could go against the govt so it is easier to stage a debate and whip in the desired result aided by goombeens. He is happy to do this as it further provides them with an opportunity to institute a platform to promote their asinine actions for the up coming election. The shell shocked stupid public will look on at an opposition where Gutless Gilmore and Banjaxed Burton will make the government look credible. Footless Goofy FG led by Knackered Kenny and Noose Arguement Noonan will ply their weak infirm lack lustre mirror bail out proposal. The main opposition lacks any creativity to muster a cogent argument because they too believe that the bail out is a must.

      The only ones who will put it up to the government that there is an alternative is Sinn Fein but have very little speaking time hence to the greater degree muzzled. But due to the admirable performance of Pearce Doherty who is in touch with the sentiment of the Irish people he may gain greater attention. The question is can he raise the right arguement to show that the alternative is credible and light a candle for the Irish nation.

      And Cowen will try to put in the performance of his life to reinflate his credibility. Will the media have the mettle to pierce the new found vigour of Coward Cowen and his hapless leadership efforts and commit him to the political graveyard where he truly belongs.

      There is one sure thing there is a mathematical certainty that the government will will the Dail vote not unless there is a miracle. Then the problem can be handed over to Trichet with the simple message ‘Too big to save for Ireland but very cheap for the ECB to recapitalise’

      • re ‘but very cheap for the ECB to recapitalise’ I think this is rather naive and part of a psychological problem preventing us standing up for ourselves and solving our own problems.

        There was a similar view out there before the IMF/ECB got involved. A sort of sit back and lets watch while others eg ECB sort us out.

        But what happened? 5.8% happened plus a demand immediately €10 bn of €67.5 be put in from that loan to recapitalise the Black Hole! And another €25 bn reserve be put up! And Dukes tells us, what we already know and Morgan Kelly et al has been telling him for years, ‘look out for the mortgage debt landslide!’

        It time to take the bull by the horns, get up off our arses and solve this problem once and for all.

        Negotiate from a position of determination to default and leave the euro. The rest will follow.

        Its quite clear what has to be done. You just don’t see it yet!

        • Pedro Nunez


        • BrianC

          Hi cbweb

          Yes I agree with you. As Paul Sommervile says play very hard be lethal point the default gun at our head. The ECB has no option but to solve ‘their’ problem. The only way they can resolve their problem is to print more money and pay off the bondholders now what sort of deal that they do with their member banks well that is their problem. The only way that is ever going to happen is if the debt is put back onto the bank balance sheets but the Irish Government for some reason will not entertain this route this avenue is blocked by their perception that they will not be able to return to the bond market for funding. This is stupid reasoning.

          Now the gun scenario can be driven up a level by highlighting the by pointing to the juggernaut domestic mortgage on the horizon that you rightly point out. That should give them a further incentive to sort the problem out.

          If we put the debt back onto the banks then we are the spectators because it is nothing to do with us and the fiscal debt reduced so a manageable level. On the other hand by accepting the socializing of this debt we are forced to be a spectator of what is forced on the Irish economy.

          We may have a common currency but there is no common will to resolve the financial dilemma. No matter what way we want to look at it Germany is the inertia to taking the right route and by forcing the debt back onto the banks the German banks who control the ECB will have to make the final decision to do the right thing and print more money. They will try to avoid this at all costs because it will impact on their competitiveness delivering the dreaded inflation into their economy but if they pursue the austerity program we are headed for possible stagflation.

          • wills

            ONE THING THOUGH,

            The banks always knew the debts they rung up using the insurance CDO Ponzi inter bank lending pyramid scam, the banks had it all ready to go to pass the buck over to the taxpayer.

            So this is intentional and so means its something else.

  12. Peter R.

    Bringing the country into disrepute – bankrupting our kid’s future – condemning future generations of Irish people to emigration and/or high taxes – taxing the poor to pay for the mistakes of the rich – bailing out your cronies at the expense of Ireland’s hard fought independence ….

    This is high treason – it’s a pity we did away with hanging. We should also think about changing the first line of the National Anthem.

  13. Dorothy Jones

    Yes, the patient continues haemorrhaging,it is time to apply the tourniquet – to all limbs.
    On Marion Finucane yesterday, 12.12., you did not say no when she asked if you would ‘consider running’.
    Now, drains and all of that aside: would you?
    Also: please do!

    • coldblow

      I was listening to that too. Shame they kept reaching for the ad breaks when it started to get interesting. I liked the anecdote about Dick Spring who was contacted by a constituent on Christmas Day about a problem he wanted sorted out for him.

      Spring: Don’t you know it’s Christmas Day?

      Caller: That’s why I rang today – I knew you’d be in.

      David, if you ever get elected please leave a number so I can ring you if I have trouble with the drains.

      • Yeah, we got to get away from the parish pump drain fixer politics:

        We also limit our selves to the loss of excellent candidates the citizens cannot vote for because they can only vote local.

        We could do with a professional, efficient List System. Free list system below could be good and democratic and would break that local gombeen element you describe.

        If also a percentage of candidates could be added to the list on the basis of their possible contribution and talent in specialist areas, this would further bolster that system.

        The system we have has clearly failed us.

        Other devices are used in a small number of jurisdictions to add additional flexibility to open-list systems. In Ecuador, Luxembourg and Switzerland, electors have as many votes as there are seats to be filled and can distribute them to candidates either within a single party list or across several party lists as they see fit. The capacity to vote for more than one candidate across different party lists (known as panachage) or to cast more than one vote for a single highly favoured candidate (known as cumulation) both provide an additional measure of control to the voter and are categorized here as free list systems.

    • Julia

      Excellent article as always. Like Dorothy, I was impressed by your contribution on Marian’s programme.
      What I like so much is the fact that you always look for and can see a way out. There’s always the next positive act to counteract the last crazy act of the Government. It amazes and impresses me every time. You are a big picture man. A man with a vision and whats more practical ideas for implementation.

      There is no place for someone like you in Dáil Éreann as it stands.

  14. breltub

    How about something like this.

    Take the 85bn from the IMF, buy silver, gold, and every other precious metal. Bring it in and have our own fort knox.
    Start printing our own currency.
    Tell the IMF/EU/UK/UK to go a jump, do a deal on the debts and tell them they will be paid back in the new currency on our timeline.

    The new currency would not suffer a run backed with precious metals.

    We would have 85bn of gold standard currency swishing around in our own economy, more than enough and as the dollar/pound/euro devalue due to their own print-baby-print schemes we’d be laughing.

    this isnt a complete plan obviously, but why not take the 85bn and completely undermine their system by doing something like that.

    screw the lot of them – right now we are losing this battle.
    If you can’t beat them join them!

  15. adamabyss


  16. madman

    I admire your perseverence David, banging your head on a brick wall comes to mind! What amazes me is 1. is the people in charge this Thick! with their present strategy or 2. are they hiding something??
    Either way the biggest dissapointment is the apparent apathy of the Irish People, (it seems if you got a problem in Ireland you ring Joe Duffy!! for f…. sake! In my opinion if the people of this country had a backbone instead of a streak of yellow there would be mass demonstrations outside Leinster house demanding the resignations of Government at least. Even so the present opposition will make no difference (they cheerleaded for the EU too remember) and they will most likely be the next government, and this is what leaves me feeling things are hopeless! Radical root and branch change is what is needed, the problem is how to demolish the present self-serving political establishment. has great ideas courtesy of Mark Coleman, getting to a position to implement them is the problem. At least Sinn Fein in fairness has said Anglo would not get “one red cent” courtesy of Pearse Doherty, while the rest of the opposition sits on the fence!

  17. Tim

    Folks, great to see David’s show “Outsiders” is repeatedly sold out in Theatres. More light being shone into dark places for ever-more people. He is educationg the people of the country regarding the behaviour of the gambling bankers, bondholders, EU and DoF mandarins and politicians of most parties and some of none.

    “Education, education, education” to replace the old mantra of “Location, location, location”.

    Let’s keep at it!

    • paddythepig

      Tim, you forgot to mention the mis-behaviour of unions, the gambling greed and recklessness of a large section of the population who ‘invested’ in property all over the globe, the idiocy of those who campaigned for and voted for Bertie Ahern throughout the boom.

      Not to mention the large section of David’s audience were willing participants in the folly, and are looking for someone else to blame for their own failure. No wonder they love being told ‘It’s not your fault’.

      Education, Education, Education!

      Let’s keep at it.

    • Colin


      How do you feel about your guy, Joe Behan (ex-FF, but not yet Genetically Modified FF – for those of you who are not aware of him), the man you canvassed for, voting with the government on the Budget and other votes, tell me, do you approve of his voting record?

      Has he ‘let you down’?

      Do you intend canvassing for him should he stand in the next election?

  18. Remember Radio Caroline?
    Yep the ship that broadcast Rock and Roll to young people craving for self expression in a grey regime.

    I joined this forum some time ago and quite frankly am more than impressed by most subscribers observations and thought processes. This kind of stuff is just not available in the mainstream.

    Georg R Baumann opens this discussion board with a fascinating article bringing us on an economic journey from the 1700′s to present day.It effectively illustrates human frailty which at the upper levels of society still hasn’t been properly regulated.
    Brian C continues and ultimately lays bare that our public representatives are no longer fit for purpose. And Transitionman reminds us of other (Bigger) issues coming down the track at an alarming rate.
    I’ve seen many examples of subscribers asking “what can we do?” and it occurred to me that we are already doing something – We’re openly discussing and therefore educating ourselves and other observers!

    And now for my point – I’ve been involved in Community Radio for some time and whatever its faults it’s truly egalitarian! I had envisioned it eventually as an online resource and Georg’s article would already resemble the script for a very interesting and informative documentary. (With a great Mahler backing track!) Likewise Transition Mans links to Feasta Reports and other recent links offered on Peak Oil.

    An online radio station which informed those interested in “The Truth” might be just what the doctor ordered at the moment. What with tenticles reaching into Facebook and Youth Sites etc. It could cover the issues that RTE Pravda won’t and invite inputs from the likes of SF and any other party who were interested in talking truth in a forum where they could be properly challenged.
    And who would the presenters be? Well that would be you guys! Or anyone who chose to upload a pre-recorded program or video?
    To quote Brian again;
    The world needs a new kind of education system that goes well beyond a Certificat Diploma or Degree
    I would suggest a non political party approach and maybe invite the likes of David to help with it’s launch?
    Anyone interested in exploring?

    • irishminx


      Hi, I am interested, I have 6 years of radio experience.

      My email address is



    • Now why didn’t I think of that. Flippin’ brilliant idea. Research on the way re; licencing, compliance, registration etc.

        Try this for starters. Cheap and cheerful. If the thing takes off (meaning it attracts advertising therefore money) then a more accomplished set-up can be invested in (preferably by private finance).
        Doubtless CBWeb would slaughter me on knowledge relating to this and I’m sure, provided the content was suitable for watershed audiences (no vulgarity or naughty accusations), that an investment proposal could be drawn up.

    • Harper66

      Wonderful idea….methinks the worm is turning.

    • Radio Caroline is still fondly remembered because it did something powerful – it gave people a voice. Around that time people in the old Soviet Union used to gather in underground meeting places where they listened to the music of the Beatles. People in the USSR were put in jail if found in possession of their records. The song ‘Back in the USSR’ meant a lot to Russian people as it sent them the message that we had not forgotten them and their plight.

      A radio station is a great idea and I am interested in helping if you feel I could be of help.

      The reason I am interested in this is because I know that there are many intelligent people in Ireland who feel cut off and who do not often get the chance to discuss our thoughts with like minded people. Living where I do I can’t remember the last time I had an intelligent conversation and the only people I can identify with are the bloggers and the posters on here. Last week someone told me they were thinking of voting for the local Labour candidate but that he felt that the guy had a dodgy looking moustache!

      Regarding a radio station does anyone have any thoughts on how it would work? The simplest solution for posters on here would be to hold a discussion as a conference call and record it. The recordings could be filed on this site under ‘podcasts’ and available for download.

  19. dwalsh

    Sarkozy recently:
    “Experience has shown us that uncontrolled financial liberalisation can expose our countries to systemic financial crises…We need clear international rules of the game and institutions to make them respected.”

    Merkel is saying similar things.

    This is the direction global political thinking needs to go. We need to realise that the myth of the market as promoted predominantly by the financial sector – ie those who most benefit from economic instability – has been shown to be false. Even the arch-free-marketeer and midwife to the current global meltdown, Greenspan, has admitted as much.

  20. paddyjones

    DMcW is becoming even more desperate in his default/debt for equity rantings. Thats his only solution….thats his only input.
    Our debts are mainly ECB and soon to be ECB/EU/IMF they will not allow a default, they are the lenders of last resort. That is where we are there is no way out.
    We must live with debt, lump it or like it.
    The truth of the matter is that austerity will be the main thrust of economic policy for the next decade.
    The Irish government are seeking to set down the terms of any loans as seen in the letter to the EU and IMF. But this is futile the ECB/IMF/EU will dictate terms of any loans not the Irish Government. I wouldn’t be surprised if this process is postponed until after the election.
    Dont expect anything different or radical from FG/LAB as FG are the same as FF more or less.
    Deleveraging and austerity are the main drivers of the Irish economic outlook as Lenihan put it “we must work off the excesses of the boom”.
    I wish DMcW would change the record!

    • @Paddy

      Your living in a cosy little fantasy world there. The land of perpetual debt where we slowly pay back our debts over time.

      The reality is the cosy fantasy of fiscal austerity and slow payback simply cannot happen. We would need a functioning economy to even have a hope of going there.

      Instead, we are on a countdown to default whether the ECB/IMF allow it or not! This is a mathematical certainty.

      ECB/IMF havn’t saved you. They’ve plundered you and ensured default. Yourself and FF like Groundhog day are doomed to make the same mistakes over and over again.

      Lenny and Clown have the IMF in town. They have put all the blocks in place to guarantee default.

      Its just a matter of time to wait for the gombeens to bring it on! Wednesday is Groundhog day!

  21. wills

    Georg and BrianC,

    Great read up top.

    This is my take on the system.

    Its rigged to steal from people.

    The world can offer all a roof over head and food and utilities without debt.

    The system in place is designed to stop this outcome.

    Adam Smiths free free market and invisible hand would bring this prosperity for all outcome.

    Its been hijacked in order to make inequality to feed an egomaniacal culture.

    • uchrisn

      Because of Science and Technology certainly in the developed world we have the resources to have a home and food and clothing for everyone.
      In Ireland I ahve heard that there are more than 80,000 people on social housing waiting lists and young people simply can’t afford a home.
      There are a couple of wide considerations to make here.
      1. Housing should not be used to make speculative returns for speculators. Housing like food and clothes is a basic human nessesity. Imagine if you were charged excessive prices for water, like 10euros a bottle, but you had to buy it. Good business right? The housing market regulation has still not been fixed in Ireland simply becuase it is an easy way to make a profit for the wealthy.
      2. Not having access to housing for people is a way of controling the population. As MR. Lenhihan Senior remarked he would not like to see to many people living on his Island.

  22. John Q. Public

    The balls on this guy! Why doesn’t he write a letter to the bondholders in Europe while he is at it!

    • Can anybody remember when this guy actually said something which was not proven to be untrue later? Friday we’re told there’s nothing he can do and bonuses will be paid. One letter later (which was obviously forced upon him possibly by cringing backbenchers) and hey presto!
      And of course he tells us that bailout is also compulsory?
      To the cringing backbenchers I say – Your country needs you to grow a set of !!!!s

      As per the famous conference call I think you might all find it helpful to replace the sound of his voice with Chimpanzee noises!
      It’s far less irritating and far more sensible!

    • Pedro Nunez

      Big fish in a small pond, snowballs when it comes to the real calls!

    • Dorothy Jones

      Why now? AIB did not challenge the claim in court on the basis that it was still a valid contract; the court allowed the claim.
      So what now? The use of the ‘drawdown fund’: it would appear by minister’s behaviour that this is at the minister’s discretion.
      This will surely lead to a further situation where legal matters will be disputed in the courts at taxpayers’ expense.

      • adamabyss

        Yeah, it doesn’t mention that in the article. I don’t understand how they can block the bonus payments legally.

        • Dorothy Jones

          Contract law is one thing. I am looking at the commentary on VB. There seem to be 2 paralell strands. Have my own thoughts but will research first. I have some homework done on the issue, must join the dots.

      • Dorothy Jones

        Piece on Newstalk Breakfast today 14.12 at ca. 8:20 by Ercus Stewart [brother of Duncan btw] on the bonuses and the legal issues surrounding it. It still didn’t explain it fully to me i.e. the point at which the contract is ‘broken’ [not the legal term, I know] Hopefully there will be some empirical, forensic, reporting in the media as well as commentary from the usual suspects. Are any posters here up to speed or have any links?
        Also where does leave the boards who previously paid out similar bonuses in z.B. Anglo?

        • Dorothy Jones

          Brian Lenihan on now. Still doesn’t explain it to me. One thing for sure, this dithering is providing another earning potential for lawyers, barristers. Maybe BL himself will take this one up when he is out of office.
          Asleep at the wheel as Ivan just said….

          • @Dorothy,

            re @johnpublic link:

            “The High Court last month ordered that AIB would have to pay backdated bonuses to some staff after the bank failed to enter a defence against a case taken by trader John Foy.”

            Have you found out anything? Great bonuses stopped. But what’s the precise ‘stop’

            As far as I know Lenny got caught unawares by a leak re bonuses.

            So, how can the AIB refuse to payout on an order from the High Court, on the basis of a letter from Lenny telling them they won’t be paid taxpayers money unless the bonuses are stopped?

            Just as a matter of factual curiosity?

          • Dorothy Jones

            In Carol Coulter article in today’s Irish Times, the ‘supervening event’ renders an implied term of the contract unenforceable, in that the Bank cannot pay the bonuses out of its own resources.
            Also the public law right of the Minister to act in public interest cannot be lost by reason of a contract. The bank matters are now deemed to be in the vrealm iof public law.
            It still seems less than watertight to me, but there it is.
            You could have knocked me down with a feather when I heard Brian Lenihan wax lyrical about the decreasing numbers on the live register……. Insult to injury, reminds me of the type of priest bellowing fire and brimstone from the pulpit to what thery perceive as an ill-informed public.

          • @Dorothy,

            Thanks for the clear explanation. I get it now.

            As for the national tragedy of the decreasing numbers on the live register due to forced emigration, maybe even some forced evictions, who knows….enuf said!!

          • re “In Carol Coulter article in today’s Irish Times, the ’supervening event’ renders an implied term of the contract unenforceable, in that the Bank cannot pay the bonuses out of its own resources.”

            Pity he doesn’t apply the same logic to the senior bondholders and say contracts unenforceable and we are prevented from bailing you out because obligation to the public interest…!!!

            “Also the public law right of the Minister to act in public interest cannot be lost by reason of a contract.”

          • “Also the public law right of the Minister to act in public interest cannot be lost by reason of a contract.”

            Quite so but he has the Constitution on his side also when making Law in the public interest;

            Namely Article 45

            =The State shall strive to promote the welfare of the whole people by securing and protecting as effectively as it may a social order etc etc

            =The State shall, in particular, direct its policy towards securing:

            =That the citizens.. may through their occupations find the means of making reasonable provision for their domestic needs.

            =That the ownership and control of the material resources of the community may be so distributed.. as best to subserve the common good.

            =That, especially, the operation of free competition shall not be allowed so to develop… to the common detriment.

            =That in what pertains to the control of credit the constant and predominant aim shall be the welfare of the people as a whole.

            =That there may be established on the land in economic security as many families as in the circumstances shall be practicable.

            =The State shall favour and, where necessary, supplement private initiative…..

            =The State shall endeavour to secure that private enterprise shall be so conducted … as to protect the public against unjust exploitation.

            =The State pledges itself to safeguard with especial care .. the infirm, the widow, the orphan, and the aged.

            2° The State shall endeavour to ensure… that citizens shall not be forced by economic necessity to enter avocations unsuited to their sex, age or strength.

            Now when a Minister is making Laws using these Social Principles for the good of the People then he is protected from legal attack by vested interests (Davids Insiders) by this nugget;

            “..The application of those principles in the making of laws shall be the care of the Oireachtas exclusively, and shall not be cognisable by any Court under any of the provisions of this Constitution.”

            Or I blowing smoke up a Camels Ass………

          • Dorothy Jones

            Furry, cb
            Share your sentiments on the selective approach to contracts and protecting the vested interests. These catchall clauses in legislation allow a ‘pick and mix’ approach across many areas. This as we see is not a good thing……..

        • Dorothy Jones

          Last piece by me on the technicalities of the bonus. I read yesterday’s post on Namawinelake with detailed information. It raises a lot of questions, but whoever this Namawinelake person is, they are doing the public a great service. Thank you Namawinelake!

  23. John Q. Public

    But it is so obvious he is chasing votes.

  24. Pedro Nunez

    Lennie is putting it up to the AIB corporate finance ‘banksters’ and their bonuses to deflect from all he ‘blinked on all’ for the taxpayer to keep the me feiners custy the lack of proper governance decisions done on the ‘me feiners’ watch.

    Worried that Rabbite in the headlights and Brutal Robin Brutal are also still at the same sh1t.

    we need to move on……

  25. toddles

    Am I right in thinking that ony physically preventing some of those FFers showing up to vote is all that’s between us and a world of sheyte?

    • Yep!
      But there may be hope?
      If you’re one of the lucky ones who can actually pass out a dole queue you might say to yourself – Now thats a queue!
      Or maybe catch a train to Cork and you’ve guessed it – You queue to the platform!
      Or maybe at a cash machine? Or maybe in a bank? Or at the Doctors or a bus or…….
      But has anyone noticed at constituency offices up and down the country the queues? Okay how about two people waiting outside? One anyone?
      Nah didn’t think so!
      But now for the hope! – One of my fellow constituents may die tomorrow, hopefully peacefully in their sleep after a content and fulfilling life.
      Well that means removal will be on Wednesday and my local FF TD who claims €4454 every month will be there and so miss the vote!
      Or am I just being cynical?

  26. paulmcd


    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: Executives at the two main banks are receiving “supplements” of at least 6 figures in the form of pension top-ups plus other benefits, contrary to the recommendations of CIROC, the Covered Institutions Remuneration Oversight Committee. READ AT LINK BELOW:

  27. uchrisn

    Another enlightening and interesting option from David. There are many international commentators expecting Ireland to default, and actually the ECB/EU and IMF expect that, just they want to get their own financial systems protected as much as possible from any shock before that. They have even said as much if you read between the lines.
    So what to do then is a good question for Ireland, these bonds are certainly a good option.

  28. How in God’s name can an orderly retreat occur for any country from the Euro?
    There would be chaos and capital flight after the first hint of it.
    Perhaps this is already happening in the PIIGS countries?
    I for one are keeping German denominated Euro notes in my safe-just to buy the tinned food and shotgun cartridges when the rainy day finally comes.
    There will surely be absolute chaos.
    Has David any suggestions for an orderly separation of the PIIGS nations from Deutschland & France?

  29. Tull McAdoo

    Aine Brady junior minister with responsibility for older people, will you PLEASE resign today????
    Aine Brady will you please consider a career doing something else?????
    Aine Brady you should be ashamed of yourself!!!!!

    • +1

      Saw that documentary RTE investigation last night, kudos to the excellent reporting of Adrian Lydon & team, 4 month investigation into chilling serious abuse by private, unregulated, homecare companies providing services to the elderly.

      Questioned on whether regulation was required, Aine Brady wondered if instead more education and training was required.

      Seems that whole area is as sick as FAS and even more corrupt. Regulations might be brought in/examined next year. HIQA or HSE no inspectorate unit to police untrained exploited employees and exploited, abandoned clients victims of ROI (Rip Off Ireland)

    • coldblow

      As Colm says, all victims of Rip-Off Ireland. I imagine a similar scenario in other walks of life? Is more regulation and training the answer or is it that the owners of the agencies, etc are ‘over-incentivized’ to chase profits? (In other words taxing these profits or making the owners more accountable might help.) I’m just speculating…

      • Taxing profits, financial side, is a separate issue.

        More urgent is regulation to enforce proper standards based care with frequent checks by HIQA inspectorate charged with doing this.

        Right there is where the banxters are siphoning money from the public service that would otherwise benefit citizens.

        • coldblow

          My point is that the call for regulation appears to be an automatic response and other solutions should be examined. I didn’t see more than a little of the programme and what I saw struck me as a bit sensationalist to be honest: “and she lied about her staff’s qualifications and experience”. Lied? Perhaps the programme’s makers should get out more.

          Regulation is often used inappropriately and while it may improve the conditions and pay of the staff affected it costs in various ways, although the relevant educators and bureaucracies would benefit directly.

          As it happens I was thinking only yesterday about the school inspectorate. “Déithe beaga” in the words of an old boss of mine,they were apparently the “Untouchables” within the Dept of Education. They often surface in world literature too, illustrating life’s absurdity and futility.

          I can think of many other examples, but I’ll just mention the driving test. My German teacher was amazed that there is no sight test for Irish drivers and wouldn’t accept that there was no need. (What would she have made of the old days here where people just used to drive a car if they had one?) And indeed Ireland has a golden opportunity to set a new world standard, incorporating written, aural, oral, visual, tactile, medical, psychological and simulated elements. Available as a three-year modular course from your nearest university.

          While regulation and inspection may well be the right way to go here my default opening position in these matters is sceptical.

          • @DWalsh

            Your nature is too trusting. It’s bad enough with regulations, ask the Gardaí. Without regulation is like asking doctors not to have a license:)We’ll have to appoint you as Alan Greenspan of the Irish Home Care Industry. Aine Brady would love you:)

          • coldblow

            I could be pushing this argument too far but my postition is as follows:

            Doctors, pilots – regulate
            Home care staff, drivers – maybe
            Guards – need to feel the slap of firm regulation (!)
            Bankers – just lock them up while working out what to do with them (regulation “has failed them”)
            Ditto laywers
            Keep a very close eye on everyone else

          • dwalsh

            @ cbweb

            Hi…I take it your comment about me being too trusting was meant for someone else.

  30. coldblow

    Excellent article from Eichengreen on the same topic here:

    He makes the point that it should be done in a co-ordinated EU-wide way and will require EU (German) leadership. Maybe Ireland could somehow force the change?

    • Thx for great links, eichengreen is only echoing what DMcW has been saying above and elsewhere, Germans won’t have that. What’s alternative? We move to a two tier Europe to allow devaluation of peripherals? Or we leave the Euro given the appalling deal offered to us by Europe, which is another option?

  31. coldblow

    Interesting discussion here on another possible approach, debt buyback at a discount:

    This is more technical and ‘underhand’, or so it seems to me. Coming clean with an open debt restructure as in David’s and Eichengreen’s articles seems to be the way forward, however.

    Also, David says:

    “This [investors flooding back] has happened in every country where the default was accompanied by a change in the way the country does business.”


    “… as the country adopted proper economic policies, the risk fell…”

    Bit of a problem there?

    • @coldblow

      Debt buyback has huge merit in my view. But it demands as well as high negotiating skills, accurate data upon which deal can be based.

      Its a solvency issue whereby both the debtor and lender in an insolvency restructuring situation agree terms that guarantee the economy a) can afford to pay the terms b) will not sink the economy.

      Debt for equity swap and Brady bond could be factored into it as well.

      All this comes down to development of a decent restructuring model to get off the rocks without the hole under the waterline we’ve got now.

      My belief is we won’t get this from the ECB, so we should back out from the euro rather than accept terms as indentured vassals condemned to EU imposed penury with a countdown to default!

  32. dwalsh

    On a hopeful note folks :)
    Humanity has a collective consciousness that we are all connected to and affected by – the noosphere. As more and more people wake up to the insanity of what is unfolding; the insanity of a civilisation and a monetary system based on debt and competition and greed, the tide will turn against the current elites who have clearly lost the run of themselves. It’s just a matter of time before the ‘hundredth monkey’ gets it…then a whole new age begins for humanity and the Earth.



    Just a quick note: The latest report from Bank of International Settlement is quite interesting, here:

    One in eight Euros of German banks lending went to Ireland, Greece, Portugal and Spain.

    2. This adds up to a sum that equals the German Budget figure of Euro 318 billion.

    However, only adding private lending paints the full picture of German exposure to only these four countries, which adds up to Euro 512.7 billion.

    I think these numbers speak for themselves, and the thought has crossed my mind on the Maastricht treaty that rules member states not to exceed 3% deficit per annum. Forgive me, but where does the treaty rule on export surplus at the same time? It does not of course, and herein I see one of the many fundamental flaws.

    However, even more striking is this:

    Daily average foreign exchange market turnover reached $4 trillion in April 2010, 20% higher than in 2007. Growth owed largely to the increased trading activity of “other financial institutions”, which contributed 85% of the higher turnover. Within this customer category, the growth is driven by high-frequency traders, banks trading as clients of the biggest dealers, and online trading by retail investors. Electronic trading has been instrumental to this increase, particularly algorithmic trading.

    I have written a longer text on HFT here before, dark pools, icebergs, sniffer sharks, sniper, guerilla etc. such are the names of the game, HFt is at the core of international rigged market fraud. The nano latency freaks are running the show here.


    • that’s only currency exchange market, there’s another more secret unreported market in derivative trading that eg Hypo got snared with, what’s the scale of that, who, what, where, how much and why?

      • That is the bomb under the entire euro butt in deed.

      • dwalsh

        I have heard mainstream acceptance that there is more than $600 trillion in the American system alone. Some estimates put the global figure at $1.4 quadrillion.
        All of this on the back of a planetary GDP of maybe 65 trillion. There is no hope this mass of toxic financial paper can be made good. As george says, this is the real crisis and it is global.

  34. Deco

    Letter from the Minister for Finance to the Ballsbridge clique…

    Of course this is only one small part of the job of disciplining Ireland’s most persistent corporate offender….a series of mishaps, misadventures, and mistakes…costly mistakes.

    Everytime that there is a recession, it seems that the Ballsbridge Bankcentre are in need of a taxpayer bailout. The fools never learn. Time for BA Baracus to introduce his friend “PAIN” to them clowns.

  35. A heartfelt note of commiserations to any Italian readers of this site. Looks like you can only get rid of Berlusconi through old age and severe dementia, the latter being at an advanced stage already, the former disguised by the wonders of organic chemistry and surgeons.

    Chi pò, non vò; chi vò, non pò; chi sà, non fà; chi fà, non sà; e così, male il mondo va.

    Who can do, don’t want to; Who wants to, can’t do; Who knows how to do, won’t do it; Who does it, doesn’t know how to; and, so, badly goes the world.

  36. Anybody picked up on the rather odd exchange between Sean O Rourke (I believe it was him) on Morning Ireland when O Rourke questioned Lenny regarding Dukes remarks on the possible coming down the line exposure of Anglo to hitherto unreported mortgage debt?

    Lenny said Honahan had taken this into account in his stress account of Anglo and that the set aside of €10 bn with €25 bn bailout collateral would cover it.

    The odd bit was Lenny remarked that Anglo was not in the business of residential mortgages in any case!

    So what’s that about?

    Has Anglo been doing illegal side deals with its toxic developer lending, piggybacking undeclared mortgage deals that allowed developers to build up otherwise undeclared mortgage based property portfolios alongside their other commercial property loans?

    The above should be cleared up by Dukes as only one of Lenny and Dukes, Alien Vs Predator, can be right!

    • Legality does only apply for people in this business in a reduced meaning Colm. They always operate on the fringes and hire a phletora of extremely well paid legal eagles to help them operate in this realm of not really illegal but but not really legal too, and it is a vast space to discover.

      • Georg,

        My question relates to the strictly known unknowns and not your unknown unknowns:)

        • I am afraid as long as it is known that FF/FG gombeens deal with the unknown, the Anglo Saga remains unknowable due to their quasi religious belief to walk the only way possible… you know ;)

          It is sickening Colm! I guess all we can hope for is that people are storming the Bank and demand all documentation past and present, WikiLeaks, or a solid 8.5 event on the Richter scale bringing down the IFSC in the process as well.

  37. antmcd

    Hello all. I have spent the best part of 2 years out of Ireland looking for work, backpacking, the usual story for one of Irelands 21st century nomads. It is so frustrating to follow the mess in Ireland and feel embarassed when I have to tell someone that i am from Ireland. Especially embarassing considering I now live in Berlin! I must tell you now that I know next to nothing about economics (which probably puts me ahead of Leninhan). All I know about economics is whatever I read in David’s articles or in these blogs. I try to watch a bit of Vincent Brown and try to avoid RTE. Anyway, what is most frustrating is the complete lack of hope among the people. My friends (the few left in Ireland)have decided that this is it, dole for the foreseeable future. That is a tragedy. Thankfully i got out when I did. The only thing stopping the rest leaving is that they haven’t enough money.
    There will be an election next year, likely March. FF are finished. What is the alternative? Swapping FF for FG/Lab is like changing to sweeteners in your tea – the package might look different but the result is the same. I was never a big Sinn Fein fan, but they seem to be making the right noises. There are those who say that they haven’t any good economists among them. Bit rich that one, considering the clowns we have in Dail. Maybe there is hope. I see there are rumours that David could stand in the next election. I assume that he won’t go as an independent, that is pointless. We all saw what FG did to George Lee. I wonder has David been approached by Gerry and co. yet? It would be a brilliant addition to Sinn Fein and would combine Davids ideas with a party willing to carry them out.
    Just thought I would give you a view from some of us “nomads”.

    • Hehehehe!

      I think this is as likely as Dr. G joining FF.

      • Free balaclava with every SF membership?:)

      • antmcd

        ….and about as likely as anything suggested by david changing their minds now. Might as well write about the weather, more chance of changing it. Talk, talk, talk.. You people here know what you are talking about. When are you going to do something?

        • Hi Ant,
          Paul here, Sorry to hear your nomadic – I was in the 80′s/90′s and I know how you feel. Anyway if you look up the page you’ll see a suggestion for an online Radio Station where the people on this site (the ones who know what they’re talking about) may play a more powerful hand. And the good news is that that would include you!
          To the five people who expressed an interest so far (and in particular furrylugs for the piece of research) might I suggest a meeting during the Christams break – maybe Portlaoise as it may turn out central to all interested.
          I know if we were up and running I would love to do an exposé entitled “The Men who sold Ireland” – This would be a series which would include a TD’s name (those who voted for the Bailout), his/her constituency, how much he/she claims per month and what has been his/her most tangible contribution to his/her constituency. Not a program one is likely to hear on mainstream but valuable non the less!
          And going back to Ant – The emigrants view is probably even more valid given that you’re a victim of these knobheads!
          Kind Regards

          • antmcd

            Thanks Paul.
            That is more like it. Shame the lot of them. They should be too ashamed already to stay in there, but they are an ignorant lot. Show them for what they are, as useful as an outdoor toilet on a jumbo jet.
            I wouldn’t be available for Portlaoise but the best of luck to you all. I am sure there are plenty of emigrants on this willing to help.

            P.s. why stop at radio?

          • uchrisn

            good idea on the radio show

  38. 9pm RTE news that ‘the bailout’ for Ireland included a surcharge of 2.9% amounting to approx €5bn extra charges!!!!

    Why did negotiating team not walkout in protest?

    This was never levied on any other bailout and is unprecedented, anyone got further details on this extra penal rent extraction?

    • coldblow

      No, I didn’t find anything on it. I know that the govts lending to Ireland all stand to make a profit (as long as there is no default) by borrowing funding cheap and lending it on at a high interest rate.

  39. wills


    Bottom line maths.

    Paper money is no longer sound.

    The insiders know this cos they are all to well aware oh how much of it they’ve created in the last 5 years.

    An insider class has literally printed the paper money into oblivion and if one looks at it from a scammers perspective the insiders cannot believe their luck in how much of it they are printing and getting away with.

    This is how all the other stuff id going on.

    It all adds together when one sees it from the perspective of the money printing machine and where certain insider factions are placed to funnel the cash into their accounts and quickly buy hard assets up.

    So the euro is nothing but what the dollar has been since it came off gold in 1971.

    Its literally just an gang if insiders looking around and working the system trying to print run as much paper money they can for as long as they can until the effects of running this paper money scam catches up on the scam and it hits the brick wall of zero confidence.

    So its quite spectacular and brilliant and wild to think they’ve managed to get this far and still up until now get away with the confidence trick of making people think paper money, the euro, the dollar, the sterling is a valid medium of exchange but if anyone could actually see the truth behind the curtaina nd the robbing off the printing presses going on right now people would go mental.

  40. wills


    The dollar —————— the euro ————————-> paper scam robbing real wealth from average worker.

  41. wills


    The economy ———- rigged ————–> to hide the paper scam behind a curtain.

  42. wills


    How much time left in paper scam ———> till enough people see the truth that the paper money is been funneled off the printing presses and into an inner circle.

  43. wills


    There is no limit to the paper and the ink available to keep printing.

  44. John Q. Public

    I’m going to like this guy if he keeps going down this track! He really is growing balls!
    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.

    • Tull McAdoo

      Linehan is the nearest thing we have to Richard Nixon here in Ireland. He is an Habitual liar who has knowingly mis-led the people of this state. People are making a list of his pronouncements and when he is booted out of office he will be called to account.He is constantly playing with words and changing there meaning when he is caught out. He is worse than the mad hatter ” words mean what I say they mean”. Bloody rogue.

  45. Harper66

    Rosemary Healy Rae daughter of that bastion of democracy Jackie Healy Rae has been appointed to the criminal injuries board.Her appointment was one of the final political acts of man so crippled with arthritis he will be forced to retire at the next election (whenever that is….)

    Micheal Healy Rae appointed a member of the Citizens information board. Appointed by Mary Hanfin.

    Taking 2000 years of inflation into account, would it be fair to say that in todays money 30 pieces of silver is roughy equal to the political appointments of family members, a hospital and more miles of roads than you can wave a flat cap at?

  46. EU Citizen Initiative

    A citizens initiative can be brought forward to the EU commission which then is required to react within 3 months. This is new and could be used to renegotiate the loan shark agreement forced upon us.

    Requirements are 1 million signatures from 7 countries.

    Beyond any doubts, we have friends in Greece, Spain, Italy, Portugal, Belgium, Germany and Ireland.

    Just an idea….

  47. Maire

    “As for Anglo we simply default on it. The debt wasn’t ours in the first place” I must say David you have got a brass neck, Anglo would be long gone if you had not convinced Brian Lenihan to guarantee that same Bank. How can you write lines like the above. Have you done what the Government have done, buried your head in the sand, do you think if you keep writing such things that the people of Ireland will just forget that it was you who was the cause of saving the bond holders in Anglo in the first place. Am I wrong David? Was it not you who saved Anglo?

    • Harper66

      Nonsense.Your thesis is without any serious foundation. Your an FF troll.

    • Maire,

      There is a huge myth that the decision to guarantee the banks was a result based on a couple of hours decision making.

      The guarantee was the result of weeks if not months of foreknowledge decision making.

      DmcW views fed into that. Obviously his view in support of temporary guarantee helped.

      Read DmcW articles since then campaigning against the stupid decision to extend that guarantee into a permanent one.

      You need to free your mind from a false assumption.

    • Dorothy Jones

      Ah Maire…
      I was just wondering when your usual post would appear…. You visit this blog regularly. Have you ever considered actually reading the material on it by the host? Or is a computer generated message?
      Try 31st December 2008 Marie Antionette post sometime.
      It’s in the archives on this site, shouldn’t be too difficult for you to find.
      No doubt you wont read it and every possibility that the usual comments will appear addressed to David and the posters…

    • coldblow

      Some discussion here:

      Here’s a good comment at the end:

      “47. Tim O’Halloran Says:
      December 11th, 2010 at 2:06 pm
      @ AMcGrath
      I must agree that it is absurd to think McWilliams had any influence on the guarantee decision. It is dissapointing to see how enthusiastic other contributors are about pretending to believe he may have had an influence.
      There is a distinct lack of enthusiasm to investigate who then did give the ‘expert’ advice. It was not the civil service, not Merill Lynch. If as now seems to be the vague implication, it was Europe, then we must believe that Christian Lagarde is a liar. That leaves the oligarchs, who we know we have God-like status to the clowns in FF (who never worked in the private sector ever in their lives and have thus never really understood the nature of ‘wealth creators’.
      Once again I pose the question, did Dermot Desmond and Denis O’Brien discuss the situation with Finance, as reported in the Sunday Times, and if so, what did they advise?
      As Private Eye used to say, we should be told. I can’t understand the reluctance of economists and journalists to pursue this question.”

      There was a bank run starting and it would have been very destructive not to ward it off. The guarantee worded by the Govt should have allowed it to be voided where a bank was engaged in deceit, as in any bog-standard insurance policy. From what I can gather the guarantee decision would have been prepared well in advance. The EU would not have wished for any Irish bank to go bust that owed billions to other EU banks (which I think they all were).

    • Yes you are wrong and I explained it to you before.

      Is something wrong with my explanation you can see that I don’t?

    • Maire

      You may have noticed that my comment was addressed to David McWilliams and not any of the below. I really could not care less what any of you think, who are you only Davids little cheerleaders, afraid to say what you really feel. I asked the question to David or can you not read? I am sure David you have read my comment and I wonder why you have not answered my question.

      • Dorothy Jones

        Ah Maire……
        Your response tells one everything they need to know….
        Pray tell, do you wish to share your agenda with anyone?
        As to ‘can you not read’, Can you not read? Certainly not many of the hosts the articles it would seem. Whose cheerleader are you by the way? Just curious….

        • Zaphod

          Maire is still a dipshit.

        • Maire

          Dorothy I have no desire to converse with you, you are a nobody.

          • Maire, all this talk about English essays and ‘nobody’. I feel a poem coming, my favorite one of all, Emily Dickinson:)

            I’m nobody! Who are you?
            Are you nobody, too?
            Then there’s a pair of us – don’t tell!
            They’d banish us, you know.
            How dreary to be somebody!
            How public, like a frog
            To tell your name the livelong day
            To an admiring bog!

            Happy Xmas

            don’t get bogged down:)

        • Maire

          Dorothy, by the way, your comment makes no sense as you contradict your opening line with the rest of your comment, you were not top of you’r class at English essays then.

          • Dorothy Jones

            Ah Maire…….
            Hope you get some Christmas cheer over the season. Your own posts are beacons of light in terms of content, grammer, tone, and presentation.

  48. December 15th 2010 – Ireland sold to the lowest bidder?

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