December 15, 2010

Separate bank from state debt or else face econocide

Posted in Banks · 149 comments ·
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We are only fiscally delinquent when we attach our banks to the people, so we should cut them loose

The 13.00 train from Waterford to Dublin pulls out bang on time in glorious sunshine and sneaks its way up the River Suir before turning right and heading inland, towards Kilkenny. Yesterday, the Sunny South East certainly lived up to its reputation as the low winter threw long shadows on the fertile fields either side of the track.

It was that very combination of river, sun and productive fields, which made Waterford the first city in Ireland.

The Danes — the Ostmen — founded the city in 914. The Danes, driven demented by the type of Arctic weather we are experiencing, set out from Scandinavia to find more fertile lands and more clement temperatures. They found us.

Initially, they sent raiding parties, but soon decided to settle and Waterford provided a perfect site on a huge river — close to the sea — which could be easily defended.

Interestingly, one of the reasons they settled in this part of the country might be the sunnier climate. In the days before industrial agriculture, the single biggest factor affecting wealth was agricultural productivity and, the biggest factor affecting productivity was the quality of the soil and sun.

Because the South East had more sun and longer days than the rest of the country, the yields per acre were marginally higher than anywhere else. But marginally higher yields meant an agricultural surplus and an agricultural surplus meant trade and that’s what the Danes did. So it was not by accident that the Vikings chose this part of the country.

As the train speeds north towards Thomastown, past huge medieval abbeys and castles, you can see how sustained agricultural wealth, broad trading rivers and proximity to the sea, made this part of the country more commercial and richer than anywhere else for centuries. That is why the abbeys and castles are here in such abundance; these people were rich.

Today, that is not the case. Waterford city has seen unemployment rise from 5,200 in 2008 to 11,500 now.

As I left Waterford following a performance of ‘Outsiders’ in the wonderful Garter Lane Theatre, it wasn’t the Vikings who crossed my mind, but the memory of John Redmond.

Redmond — the last boss of the Irish Parliamentary Party — was the Nationalist MP for Waterford. He was the last of the great nationalist leaders of a great parliamentary party, which stretched back to O’Connell. He and his party were destroyed by Sinn Fein in 1918. They were on the wrong side of history. In one election, 100 years of Irish political continuity was turned on its head and the idea of a negotiated, peaceful settlement with Britain — the working assumption of the Irish Parliamentary Party — was rejected emphatically.

Today’s vote in the Dail on the EU/IMF so-called “bailout” might turn out to be a similarly pivotal moment. The Establishment is pitted against the people, leaving a huge vacuum, which will be filled.

The people clearly do not want this EU deal. We know that you can’t solve a problem of too much debt with even more debt. You solve a debt problem with less debt.

We also realise that no other country has ever tried this policy combination of four years’ austerity with no debt restructuring. The reason is because it is not possible.

We are embarking on “econocide” or the deliberate killing of the economy. It is rarely practised for obvious reasons, but our Establishment seems intent on doing it. We must stop them.

These are the people who brought you the housing boom. These are the people who told you there would be a “soft landing”. These are the people who told you the banks were “well-capitalised”. These are the people who told you the bank bailout was “manageable”.

You would be forgiven for not believing a word that comes out of their mouths.

Next year, the economy will contract further under the pressure of the State taking out so much money. This might be tolerable if we restructured our bank debts and got them off the national balance sheet and achieved an interest holiday, while the economy reeled with the tax hikes and spending cuts.

Without this type of deal, the end result of the Government’s policy will be a bigger debt crisis in two years’ time. But in the meantime, more bank creditors will have been paid and the process of soldering the banks to the State will be complete.

The only argument the Government can come up with is the craven colonial riposte, no doubt heard in 1918, “sure how else will we get the money?”

We will get it from the market after we have passed a bank resolution law, which severs the banks from the State and forces the senior bondholders of the banks and the ECB, which now hold Irish NAMA bonds, into a debt-for-equity swap.

This is how banks are wound up in every proper country. This is what the Americans did in the early 1990s. Problem solved. It ain’t pretty and there will be plenty of shouting and roaring, but that’s the way it goes. That’s capitalism.

If we take the banks off the national balance sheet, the debt/GNP ratio of Ireland falls below that of Belgium, which raised money yesterday at 1.8pc. The world knows that Ireland’s growth potential, if we do the right thing, far outstrips that of Belgium.

Our debt/GDP ratio without the banks would be 75pc. The corresponding figures for other European countries are: Belgium 96pc, Greece 126pc, Italy 116pc, Portugal 76pc, France 78pc and Germany 73pc. We are only fiscally delinquent when we attach our banks to the people, so we should cut them loose.

If we did that, it is easy to say where the money would come from: it would come from the same markets that have always financed us. In fact, Irish treasury bonds — shorn of the banks and the obligation to pay off the bank creditors — would be the buy of the season. Money would flood into the coffers and we could then deal with our cyclical budget deficit without torpedoing the economy.

We could then outline a plan which would get the deficit down over time. This will impress the markets because it will ensure deficit reduction without econocide.

To reverse econocide, we need to turn the tables on the ECB and let the world know that the ECB is culpable. In fact, in this entire sorry European debt mess, arguably the man most culpable is Mr Trichet who presided over not a new currency but an inter-country, inter-bank debt pyramid, where out of control German and French lenders lent to out of control Irish, Spanish, Greek and Portuguese borrowers. According to the figures of the BIS (Bank of International Settlements), the banks of the peripheral countries owe the banks of Germany and France over €973bn.

That figure explains why the IMF is here. It is not here to bail us out; it is here to bail them out. The bailout is a bailout for the banks of Germany and France and the Irish taxpayer foots the bill. It is that simple. And where will the EU and IMF money come from? It will be borrowed from the very investment banks that will be bailed out. So they will get interest payments from us, in order that we pay for their mistakes.

Therefore, politicians who are queuing up to vote for this sell-out and stitch-up would be wise to wise to remember the fate of John Redmond in Waterford.


  1. Philip

    Look, we have a non-representative democracy where a small cabinet can issue a party whip to pass any dail vote. Debates are a waste of time. Our problems are not economic. They are political. These rational articles for all their merit are useless.

    Anyway, are our economic problems really that big? We lost 30% of our economy overnight with the crash of the construction economy and we are still standing and stable and showing signs of growth. The problem we are facing is a political system that does not follow modern social needs. In a way, I am relieved we are in the Euro, because make no mistake, this ruling crowd of nutters would have us go the Mugabe route and our currency would not be worth the paper it is written on.

    • Philip,

      how can they be useless when so many still do not know what hit them? Seriously, there are many who do not understand what all that was and is about, and they are NOT to blame for not understanding it.

    • Valerie

      Philip,
      re your comment on the constrution crash, at the last census they discovered that 15% of houses in Ireland were unoccupied. Empty. 2nd homes and holiday homes would only account for 2% of this figure. Did the developers stop building, banks stop lending, anyone even listen? No, we never do. That’s why we’ve allowed this to happen, will allow the bail out, have3 allowed Anglo to remain open so “the lads” can get their money out.
      It will all fall to the taxpayer, as usual…if there are any of us left that is. The time for action was at the last election, Bertie was before a tribunal proving beyond a showdow of a doubt that he was a liar and yet FF got a landslide victory. I dispair, I really do.
      Oh and we’re only growing our export business cos most get their funding from foreign banks!

    • dwalsh

      The Ifish political problem is a social problem. We are still largely a peasant nation run by a crony system. Therefore I agree with Philip that we are and will be better off as part of Europe.
      To those who blame the German and French banks: do not forget this crisis is a global crisis. It is a crisis of global financial capitalism. Practically the entire global banking and monetary system has been infected with masses of toxic unregulated, unreported, off-balance-sheet financial instruments called derivatives. this is where all the bailout monies are really going – here and in Europe and in the USA. Into a derivatives blackhole. And the hole is geometrically beyond the capacity of the global economy to fill. The bailouts are merely buying time.
      We are facing the very real possibility of a global systemic failure and that is something we do not want to face alone…I think.

  2. Anybody out there got some serious tips on how to stop this?
    Georg’s suggestion of Citizens Petition to EU – 1,000,000 signatories from seven countries?
    I’m a member of http://www.avaaz.org I wonder if they could help us?

    • Harper66

      Hi Paul,
      just checked out avaaz – very interesting.

      I think time is short,re – inventing the (political and social)wheel in a short period of time would be very difficult.The up comming election should be the focus.

      I think it would be better to use the period between now and the election to achieve the following –

      1 – organise local meetings which would culminate in a national meeting centred exclusively around ending the econmic treason ie the “bail out”, nama, and why the common sense econmic policies of D McW, Morgan Kelly, Brain Lucey et al are not being listened to.

      Provide a simple unifying message to the people to unite under and then present that message writ large by means of public protest.An event organised around econmic reform with out any political slant would draw a massive massive crowd.

      2 – this would have the effect of sending a message to our disconected political elite that the desire for change is strong and that things as they are will no longer be tolerated.

      We see this is the point David makes in todays article – change policy to keep with the mood of the people or face being wiped out.

      • Thanks Harper but I despair at the lack of awareness amongst most people. I had my sister in law round about five and mentioned that the Gov had won the bailout vote. She said “ah well” and that she won’t be voting for anybody again – that was her simple solution and alas I’m afraid echoes most ordinary disinterested people. The problem is we need their votes especially and that would be very difficult without a respected figurehead. I’m up for organising a local meeting but I wouldn’t be confident of a major turnout? We need a major figure to step in? Or we need a McAleese miracle! And let’s face it – the latter aint gonna happen!

        • The key to this thing has to be transforming the above “Ah wells?” into “What the F***s!”

          • dorn

            I’m not sure what you’re trying to say here? That people who didn’t/don’t vote now should? For who then pray tell? Every irish political party have the exact same ridiculous goals, manifestos and ideas – all rehashed into slightly more baffling word games. There isn’t a single party amongst them who would have done things any differently or who have what it takes to pull us out of this financial chasm that we are in.

            There is nothing wrong with not voting when there is not a single entity in this land worth voting for. Irish politics refuse to engage the younger population – most of whom are now unemployed or emigrating. Kindly name the party who has a proper idea for creating long term national employment on a massive scale that doesn’t involve dragging in another multinational corporation that wipes out local rival businesses and ups and leaves a few years later, or doesn’t involve propping up the ridiculous construction industry (we have too many builders) or motor industry (we have too many car salesmen too).

            Proportional representation is a joke in a country with an aging population. It disenfranchises the youth, because the older population will keep voting for no-change to the status quo that keeps them happy. We need grass roots changes in the politicial system, but there is no way to get the current regime out of power sans revolution. Voting doesn’t get you a revolution.

            We need local money going into local banks funding local business and local infrastructure. The current nationwide policies benefit Dublin and few others. Most of the other cities and towns are now wastelands of unemployment and empty buildings. These are places that never saw a proper boom and are now suffering because those that did made a complete mess of it. Carrying on with the current ecosystem will not change this one bit.

            I’d love to have a person or idea to vote for – something that would improve my lot, but there isn’t one of either being suggested anywhere.

        • Harper66

          Paul,
          any viable movement would need a solid respectable face to attract the “average” irish person. I know who I would pick..

          There is a huge amount of people going about their day to day business privately seething .An economist or group of them would be perfect – hold an event around the economic policies that need to be enacted and get respected ecomomists to present proposals.Ask people to come and listen.They would come.

          There is a huge youth vote that could be tapped into get some people who have infuence in the youth sphere to lend their weight to the movement …Davids kilkenomics is a good example of mixing cred and politics.where are our musicans to lend support to a peoples movement?

          If it was possible to tap in to and unite the average people who feel betrayed and violated by the current governments proposals the “Ah! wells” would follow. “Ah! wells” tend to follow.

          with regard to local meetings I agree a figure head would be needed, it would also need to attract the middle ground of Irish society.This is where you would get your numbers. Davids shows seem to selling out every where he goes…the desire is there.

          get a respected figure head to highlight the movement and inform people to look out for meetings in their locality hold a quick succession of meetings in as many different localities as possible mobilse those people to attend a mass rally. ideally this would be done over a short period of time begin in early jan for a rally mid feb – the purpose would be to inform the electorate. Post up pamphlets to inform people what questions to ask from canvassers, what issues to demand answers to and policies to demand to see enacted…

          Politicians ignore the voters at your peril.

          • patrick74

            I think you are forgetting your competition- The current Political parties, as it stands, are very well oiled machines- funded, massively organised and with die hard supporters ready to engage with voters on their doorstep. While you would be looking for staples to post your fliers- these guys would have the town, and the next town covered in thousands of expensive and glossy posters.
            Musicians championing a peoples movement? Why not get Bono to do a telecast from Holland?
            It’s idealistic to think that organising some local meetings over a month or two will change anything. Local meetings most likely held in the same halls as all of the other political parties, discussing roughly the same set of agenda. If you want to start a party/movement- you are already too late in my opinion- the players are already set- It’s down to the normal voter to start getting involved with the current parties- they are democratic themselves in how they work – to change from the inside what’s rotten- not sit on the outside and try and reinvent the wheel.
            Who is this respected figure? They will need to be radical, brutal and popular. I don’t see anyone waving their CV from here.
            Engage with ANY or ALL of the current parties,administrations, bodies and unions- Lobby, harass, make your voice heard to the people who actually have the power- don’t try and take hold of it yourself.

          • Harper66

            Patrick
            Thanks for your reply. The points you make are valid and well thought out.

            I am in agreement with you about it being very late to start a new party for THIS election. I do think new parties are needed.

            I agree with you that the focus should be this election and getting a clear signal across to the established parties that what has gone on in this country and in the Dail will no longer be tolerated.

            I advocate a short lived movement to achieve the following in the run up to the election –

            1 – allow people to gather enmass and express their anger at all that has been foisted on them. This is vital. It would empower people,whom at present feel without any power or control over their political and social fate.Present a unified front to the parties, let the politicians know if they want power they must act in the interests of the people.

            2- inform people of what is going wrong in our current political system and more importantly inform people what questions to ask of canvassers when they are on their doorstep. David McW , Brian Lucey, Morgan Kelly have been speaking common sense and it is being ignored by the political parties. Also is not common knowledge to the average person .Get their message to the people.

            3 – the entire movement would have a short lifespan focused on this election, local meetings to organise people to attend a large gathering in Dublin where people like David McW etc could address the crowd asking why sound economic advice has been ignored and casinos have been granted to Tipp in order to enact economic illerate and treasonous policies.

            Create a list of say half a dozen points that every person should ask of every canvasser at their door. I agree we should “Engage with ANY or ALL of the current parties,administrations, bodies and unions- Lobby, harass, make your voice heard to the people who actually have the power” and harass then with a common message.

            I am talking about a one day event held in Dublin to highlight sound economic policies, and allow the people of Ireland to express their anger in a peaceful dignified intelligent manner.Economists could speak, musicians could play (expect Bono) and comedians could perfom. Most importantly people could learn what to look for from the next government and what questions to ask to ensure our children will not have to go through what we are going through now.

            I see the comedy festival David ran as good model to get the young interested and talking about

          • patrick74

            Harper66 – I admire your faith in people and while a rally/event is noble it is not likely to change a thing- sorry to say it.
            The way I see it the Banks- like David says- German banks, French and UK banks have a strangle hold over Governments – When it happened exactly I don’t know – but clearly Governments now create policy to appease these Banks – and the people who run them.
            Given that a bank doesn’t make money unless it has somebody to lend to, they will always find a new way- The interest on these bailout loans, replace a previous revenue stream that has now dried up.
            It’s ironic that these banks are lending the money to the Irish state to pay back their own speculative lending to semi regulated Irish Institutions. but not surprising- – I fully agree that we need to work with what we have now – engage with and strengthen the parties that are in opposition today so that they can Defend what is left of this country.

          • Harper66

            Patrick,
            While we seem to agree on the broad picture, I disagree agree with you on some of the finer points.

            I think the electorate is stunned and afraid. This is creating a stupor amongst people where they will swallow down bulsh~t from politicians and newspapers. For example – the nonsense from the irish times today that the majority of people support the “bail out”. This is clearly not the case.

            I believe a public display by the people would have massive repercussions in changing public opinion from stupor to activity.As I have stated already a public demonstration would also have the effect of informing a large amount of people of what is really going on. This would in turn force the opposition to develop rational commonsense policies.

            You advocate people engaging with the established parties – what do you think will give people the impetus to start lobbying?

            Secondly,I only advocate working with the established parties for this election because at present there is nothing else.The established parties are inept at best and equally compliant in the gombeenism at worst. Sinn Fein are hoovering up votes because they are vocalising the anger of the people.

            Come January when pay packets are bit lighter,people will start to take more of an interest.

          • patrick74

            Point taken Harper – There’s a misconception- Surely an event at Áras an Uachtaráin on Tuesday December 21 at 2.30pm is the time and place? http://www.rte.ie/news/2010/1217/banks-business.html

          • Harper66

            Fully agree Patrick – but what could be organised in two days?

            Interesting article in Financial Times –

            to read it search google for “Irelands Bail-outs unintended consequences” or follow link

            http://www.ft.com/cms/s/0/2684fcde-09ed-11e0-8b29-00144feabdc0.html#axzz18ZqHRATf (free registration required)

            Here is a quote from it –

            “As one Irish establishment friend of mine says: “There is zero support for what the government has done and are doing. Every time they had a chip they threw it away. If a mad dog government came in and reversed their policies, it would have substantial popular support.””

          • patrick74

            Interesting article Harper – thanks.
            2 months or 2 days – How do you do it?

    • I admit, it is a somewhat desperate move to utilize tools they so ‘generously allow’ us at our disposal, but I am convinced, we need to raise the levels of solidarity in the countries most affected, it mattered to us what happened in Greece, vice versa.

      That is why I got in contact with Iceland so early in this tragedy.

      The limited tool they offer, at the same time offers an opportunity to raise solidarity, counteract the divide and conquer we are all exposed too.

      Just a thought.

  3. adamabyss

    subscribe.

  4. John Q. Public

    It is a question of what happens in a default. It is inevitable bearing in mind we won’t even be able to pay the interest. Anybody know what happens then? Why can’t we get all our top economists into a room and agree on this(they already do)publicly. The economists of Europe should unite and voice their expertise.

    • michaelcoughlan

      Hi,

      It all depends what the default occurs in Bankbondholder senior debt or national bonds. If the default occurs in senior bank bondholder debt the load will lighten for the government and national bond interest rates will plumet. It will become cheaper to borrow in the markets ie. problem solved but we still have to sort the problem in the national current account.

      If we default on national bonds this side of solving the problem in the national current account you better make sure your fishing, hunting and small holder skills are up to scratch.

  5. It’s the inconsistency of it all that is so galling. If it were out-and-out predatory capitalism, you could at least respect its internal integrity but this bastardised version where all the profits are privatised and all the risk socialised is like getting mugged by Donald Trump.

  6. SoccerBoy

    Once again I have to agree whole-heartedly with David. What is the hang up with a default by the Irish banks? Ireland – the sovereign – has previously defaulted. Devaluations of the Punt in the past were DEFAULTS and funny enough we never had problems getting overseas investors to re-invest once we had taken the right steps that put the Country to rights. The ‘markets’ don’t take defaults personally. The ‘markets’ are not one homogeneous mass and some (and Ireland is so small it won’t take too many) investors will be happy to invest in Irish bonds once they are confident that that the Government is competent and is making rational decisions.

  7. VincentH

    Redmond and his party was destroyed in 1916 on the Somme and in the Ypres salient later.

  8. paddyjones

    Firstly it was not the fault of German and French banks for lending our banks “too much money” it was our banks fault for borrowing too much to begin with.
    As for separating the banks from the state its TOO LATE.
    The ECB have been giving us charity as have the IMF and the EU why are they cast in a bad shadow??? Its a bit like advocating that mice chase cats.
    DMcW has no sense of responsibility if you borrow to much and live beyond your means it YOUR fault.
    Defaulting is not the answer , we should treat these debts like a mortgage and keep chipping away at it as normal people do with mortgages.
    We have not reached the bottom of our financial difficulties and we must start with good housekeeping and try to get a balanced budget only then will we be in a stronger position so the 15 billion adjustment over the next 4 years will really need to be 21 billion.
    We must embrace austerity and make it work in our favour.
    DMcW is right the reason for the bailout is really to bail out German and French banks but this is an obvious statement but from their point of view we have turned out to be a bad borrower with an attitude problem. Even when we are given charity people like DMcW still try to make out that they are the problem not us.
    I find DMcW is trying to argue for a quick fix, an easy way out, no moral hazard, no reponsibility.
    In my eyes DMcW is losing the arguement.

    • paddyjones,

      These two statements are somewhat contradictatory:

      “Firstly it was not the fault of German and French banks for lending our banks “too much money” it was our banks fault for borrowing too much to begin with.”

      “…no moral hazard, no reponsibility.”

      Who is losing the argument again?

    • VincentH

      The ECB has not been giving us charity. What it has been doing is converting questionable private bank debt into government debt. It is still working off a hymn sheet from two years ago.

    • Tell me then, why do you think they borrowed us these sums?

      I would suggest that this here:

      http://www.ifsc.ie/

      holds a lot of reasons for the sums that were shoveled into Ireland.

      • healthadvisor

        I was at Davids show last night in Blanchardstown. It was amazing. As he has toured the country, he has sensed that those who turn up are the converted, who have read his books and can see the light. Unfortunately, our govt colleagues were all in the Galway tent when the books were launched. There is a huge appetite for change, away from our 3 political parties. We need to set up a forum, of David, George Lee, Morgan Kelly as economists for our new Ireland. WE need healht experts, finance people to step forward to be leaders. The audience want it, we all want it, but someone has to step forward or we will never rid this country of the corruption that has killed this great country. Shane Ross would also be improtant and ensure that any one connected to the Old guard, a bit like Saddams republican guard, or Baathist party, never get into power again. David advocates a 4 year govt, and those in athe audience said we need a candidate in every constituency to have a hope. Those who are so ignorant that the say “ah well” are the people we live with and k now, and i know some too. However, i have had enough and am willing to stand up and be counted to get back the honesty and integrity that has been missing in this country since Noel Browne was minister for healht in the 50s. We have many amazing people who are unemployed, managers, people from all walks of life and Ireland needs you like it has never needed you before. We need to start meeting and kick this robbery called a bailout out of town. What has happened today is akin to Jailing the rape victim, not the rapist.

        • Go for it lets meet see my comment to Georg below.

        • irishminx

          I suggest you take a look at this site healthadvisor. They are called Direct Democracy Ireland and are currently seeking enough signatures to register as a new political party in Ireland.

          You’ll need to download the form, sign it and return it to them by post. Photocopy a few and request your family and friends to sign also.

          I’ll be voting for them, if they are successful.

          Their only policy is to bring power back to the people via referendum, which we had in the first Dail in 1922, but they took it away from us!

          I wonder why?

    • Fergal73

      If Gunther lends money to an acquaintence (Mickey), who then borrows more from me, (and more, and more and more) and Gunther don’t investigate where he is spending the money, then Gunther can’t really expect to get it back in full when it turns out that Mickey was actually buying coke and hookers (instant gratification, no long term return).

      Gunther can’t go along to the guy’s mother (Bernie) and say – hey, I lent your son Mickey all this money to buy drugs and hookers – you owe me. (If Gunther is a money lender / thug, maybe a he will do that, but that’s another story)

      The Irish Banks (Mickey) were spending the money they borrowed from the Germans / French (Gunther) on bad loans. Those loans made their asset base look fantastic (fantasies – they were).
      Now the Germans / French have figured out that the Irish banks were spending foolishly. They’ve had the ECB) to go to the Irish Government and say – hey, we lent this money to your banks, now you owe us.

      The Irish Govt has said – “OK, we’re sorry our banks took you for a ride, but it’s ok, we’ll take on his debt.

      Moral Hazard works both ways. Gunther and the Germans/French should have pulled the plug years ago on the Irish bubble. They share responsibility for stupid lending.

      The Irish people are not directly responsible (except in their apathetic lack of interest in how they are being ruled by gombeens) for the debt. The country is full of seemingly rational individuals who don’t understand that voting matters – and that who you vote for matters too. Vote for parish pump politicans, and that’s what you’ll get. Too many – like referenced above say “ah, sure they’re all the same, I won;t vote for any of them!”. That’s an action in and of itself.

      • EconomyNow

        I disagree with some of the points you’re making.

        If “Gunther” hadn’t lent “Mickey” the money in the past, I would imagine “Gunther” would have been the scapegoat back then!

        The Irish person wishing to take out a 100% mortgage despite a lack of savings and insecure job prospects would have cried out: “The bad Germans won’t give us any cheap loans! We can’t get a mortgage! We can’t get a big car! Shame on Germany!”.

        Of course, international banking practices play a big part in the creation of this mess.

        It is an international problem, and many Germans are just as frustrated by this extreme type of financial capitalism or the exorbitant bonus payments paid to some bankers.

        Irish and German citizens who did not invest in highly speculative products, or those who borrowed cautiously and responsibly should not be blamed. However, it is sometimes all too easy to deflect from the responsibility that lies with each one of us when making financial decisions.

        I will never forget when in 2006, a friend of mine told me she was looking into buying a 3-bedroom house in the west of Ireland at a 100% mortgage. She had just started the trial phase of a new job. I pointed out that the price of the house seemed inflated compared to the price of a similar house in Germany, and whether she was sure if she would keep her job long enough. I asked her would she consider renting for a while. Her comment was “oh people have been saying that for years [i.e. that the economic climate would chance]. And yet, houses have increased in value the whole time”. She went ahead and bought it. I’m not sure what her house is worth now, but I do know that her company has announced job cuts.

        I’m not trying to sound like a smart ass here. But there are people who warned about this as early as in 1998, as the following clip shows:

        http://www.youtube.com/watch?v=a37sRjkLtWw

        Another point I’d like to make is, why is criticism mainly directed at German and French banks? Why not British banks? I’m not saying that German banks don’t harbor greedy unethical individuals. And yet, when we choose a name for our sample culprit, we prefer to call him “Gunther” or “Helmut” (Irish Times). At least I haven’t come across “Tommy”.

        • EconomyNow

          Correction: that the economic climate would go down

        • Fergal73

          If you look back at the 80′s, when the US was booming, the latter parts of the 80′s when the UK was booming, Ireland was in the depths of a recession. As I recall it, there was no blaming other countries for their successful economies.
          Ireland got grants and significant economic aid, and it was gratefully received. There was no sense that Ireland was entitled to aid – politicians went to Brussels and sought it.

          I believe in terms of scale, German banks are the biggest lenders, then the French and then the English. (Correct me if I’m wrong).

          I’m not saying that the average Joe is guilty in this crash, but a great many are. Your friend who bought during the bubble must take partial responsibility. I’m 37, and still rent. I emigrated in 2004 and a great part of that was because I felt Ireland was in a bubble.

    • Paddy,
      Firstly I borrowed a managable amount of mortgage in
      2002 (How lucky was I?)
      Secondly my children borrowed nothing yet!
      Thirdly my grandchildren are not yet born and ergo have not borrowed yet.
      Yes we have a fiscal deficit which I believe is managable but with all the civil minded will in the world I refuse to pay back other peoples debt!
      You use the term “Good Housekeeping” What sort of a housekeeper (or parent)would I be if I apportioned a major part of my housekeeping budget (and my childrens and grandchildrens) to finance fallen members of Gamblers Anonymous?
      There’s austerity when required, after that there’s utter stupidity!

      • Fergal73

        Paddy – I wouldn’t be so comfortable. I looked at buying in Dublin in 2002 and saw a bubble then.

        I had worked in a variety of countries – England / Romania / Nigeria / United Arab Emirates over the previous few years and only Nigeria (Lagos) was more expensive (That is because if you want to live crime-free, you have to live in v upmarket areas. The middle class is tiny.).

        There is an old reality – that the expenditure on your mortgage should not be more than approx 30% (used to be 28%) of income. Another rule of thumb is that the average house should cost between 3 and 4 times average wage. If the average wage is EUR 35K, then you can figure out what an average house is ‘worth’.

        Bear in mind that minimum wage is down, taxes will go up, interest rates will have to rise at some point, and companies will use the economy as a reason to (at best) stagnate wages. I think 2002 prices are still a bubble. Reality was 1996 / 1997.

        Make sure you’re grandchildren learn a foreign language – Mandarin / Spanish / Portugues. As is, your unborn granchildren are hugely in debt, the only way out for them will be emigration.

        • Hi Fergal,
          I’m Paul – disagreeing with Paddys analysis! I didn’t buy in Dublin and got what I got at pretty much 1997 prices (I built my own on a site)
          And you’re right they all have to learn mandarin or urdu if we accept tagging bank debt to sovereign debt!

          • Fergal73

            Hi Paul,

            Yeah – I saw that afterwards I had said “Paddy” where I meant “Paul”. Sorry about that.

            I’m glad you stayed out of the madness that was Dublin in the “naughties”.
            From where I am (NYC), it seems that most people in Ireland still haven’t come to grasp that housing in Ireland are still bad value.

          • uchrisn

            Hi Ferghal, I think there are people out there who see housing and rents in Ireland as bad value. however have to buy because they need Shelter. There is collusion and price-fixing going on in Ireland in so many industries and the housing industry is one of the most profitable ones for this. I have been advocating regulation to avoid specualtion and price fixing in the housing market in Ireland. However the banks, developers and even current homeowners would lose out if fair house prices were allowed to happen. So they are just going to continue to leave 15% of the houses empty instead and make the middle class pay for them.

          • Fergal73

            Hi uchrism,

            I’m 37 years old, I still rent. Renting provides shelter. The decision not to buy was heavily criticised by virtually everyone I knew “you’ll never get on the ladder” / “you’d better buy now” etc etc.

            A Ponzi scheme needs people at the bottom to keep buying into it. The Government should have called a stop to it – removed the tax incentives, altered the tax structure, but FF focus has only ever been about power and giving / receiving backhanders.

            If current homeowners lose because prices return to a reflection of economic value, so be it. As long as prices are high, Ireland can never compete as wages need to be high to pay the mortgage. Young people with brains and big horizons will leave. The tax base will diminish further, there will be less enterprise and innovation.

            House prices must fall for Ireland to recover.

    • michaelcoughlan

      Hi Paddy,

      Have a look at the following.

      http://en.wikipedia.org/wiki/Predatory_lending

      Nowbody ever said that a sociopath in charge of a lending institution may be anything other than charm itself.

      regards,

      Michael.

  9. irishminx

    Finally David you have called a spade a spade. That Ireland is in fact bailing out the French and German banks.

    Ireland is being scape-goated by our so called EU community.

    What I don’t truly understand is why our current politicians don’t see this and indeed why so many Irish folk don’t either.

    The ECB, the IMF and the EU have told us the BIGGEST lie ever, for their gain. And somehow, there is also a gain in this for the people we have voted into public office, who claim to represent us!

    Irish politicians are no more than DICTATORS!

    May God forgive them!

    This link at first glance may seem inappropriate, however, it is a society and world I desire to live in.

    http://www.youtube.com/watch?v=pR98TQVnCQc&feature=player_embedded

    God grant me the serenity to accept the things I can not change,
    Courage to change the things I can and wisdom to know
    the difference.

    This is my prayers for our politicians.

    Minx

  10. RADICAL?….

    David pointed to John Redmont, and while reading his article it triggered some thoughts on the Radicalization effects we can observe in our societies today.

    Radicalization is a process. It describes the shift of a person or a group towards an extremist position often sanctioning the use of violence to enforce their agenda, but not always. Both terms, ‘extremist position’ as well as ‘violence’ are relative and depend on the context they are used in as well as the observers or commentators positioning. When certain conditions come together at the same time they provide fertile grounds for the radicalization of peripheral social groups or even whole societies.

    One major goal of any social consent forming a civilization should be the absence of war, however, peace is much more than the absence of war alone, and in our complex globalized world of networks and Lobby driven centralization of interests and assets, the term war itself has a new meaning.

    The wars of WWI and WWII for example had clearly defined participating parties. The frontline reporters sent their observations back home and the papers and radio stations provided their findings, of course, only after a certain census was applied, before the propaganda machines started spinning their wheels and used parts of frontline reports to force feed entire nations with the spin of these times. This is not much different today.

    What is different today is the applied methodology, the pre text and the execution of wars fought on real battlefields and in the realms of financial markets and the Internet.

    The legacy of Bush and his Hawks is this war on the world that he waged against all of us, Bush has strong perceptual and emotional deficits combined with fatalistic views, and his legacy of war and destruction, as well as his memoirs are evidence. At the Earth Summit in 1992, his father George H.W. Bush forcefully declared, ‘The American way of life is not negotiable.’

    These words should echo for two decades to come!

    The reactions of governments all over the world on the WikiLeaks publications is another aspect that should make one stop in it’s tracks and wonder about the state of affairs in our so called democracies. I have argued before that we do not live in a democracy anymore, but totalitarian bureaucracy instead, that the structures were undermined by bills and laws, the lobbies and cronies occupied the system. They left nothing but a hollow shell, such as the in it’s original form excellent German Constitution, the German Grundgesetz was rendered useless through amendments and bills enabling the implementation of the Lisbon treaty, a hollow was left shell that forms the Illusion of democracy, left for the people to think their votes would matter. Do they really matter?

    Around 2:00 PM in Rome yesterday people were cheering on the streets, a rumor had spread that Berlusconi lost the vote, but this rumor turned out to be wrong, Berlusconi withstood a vote of no confidence with 314 to 311 votes, and I intend to agree with international commentators that the vote was rigged, Berlusconi simply bought the required votes. – Tutto bene! -The cheers on the streets of Rome spontaneously changed into violence and riots.

    This rigging of votes is something we are very familiar with in Ireland, the bribing of Independents to maintain a papyrus paper thin ‘majority’ is a political insult to anyone with his senses of social justice still intact.

    Justice minister Dermot Ahern has appointed a new tribunal team, chaired by barrister Sinead Behan. It will serve up to 2013.The seven-person panel of legal experts includes barrister Rosemary Healy-Rae, daughter of Kerry South TD Jackie Healy-Rae.

    Source:

    http://www.sbpost.ie/news/ireland/victims-of-violent-crime-paid-over-17m-by-state-53002.html

    It is really hard to digest, Healy-Rae’s daughter has now been appointed to the Criminal Injuries Board, a fool who would think that Celia Larkin on the National Consumer Agency, and so many others on this list that goes on and on would be coincidence, of course not, it is part of this dysfunctional pseudo-democracy.

    It is the other side of the coin contributing the radicalization process, the disconnect of those in power, serving their own agenda and representing not the people who elected them, but special interests instead by hollowing out and abusing democratic achievements. Achievements that our ancestors in Europe paid with their blood for to enable their children a better society. I might become a bit too emotional here, but my blood starts boiling in the face of such injustice, such blatant obviously rigged votes and the arrogance of those in power when they appear on the media and try to fool the general public with their spin. Such as this stunt of Lenihan, the white Knight saving the Irish taxpayer 40 million peanuts in bonus payments towards AIB staff, and fwiw I doubt he will succeed! How bloody stupid do they really think we are? They are utterly delusional in their judgement of the wider public and what kind of kites and smoke screens they can pull on us. In deed, it just shows them for what they really are and how intellectually deprived their perception of the world has become. – Sigh! -

    X X X X

    SIPRI is The Stockholm International Peace Research Institute and one of the most reputable independent sources you will find on matters of arms control and conflict research.

    If WikiLeaks activists succeed to continue they may be able to lift some smoke on issues concerning nuclear arms, it is here where we face a massive democratic deficit as well, the secrecy that surrounds this issue was highlighted in the SIPRI publication Governing The Bomb that was launched this November.

    Although the world has been led into an engineered financial mega Gau, the industry that is flourishing the most is the arms trade. India, Saudi Arabia and Brazil are ‘radicalizing’ their positions by acquiring massive amounts of high tech weapon systems. The trade in combat aircraft accounts for one-third of global transfers in weapons in the past five years alone. There are links to be observed between financial markets, dysfunctional state forms, dissolving of social cohesion and the international arms trade.

    The post cold war NATO, which in my view has long outlived it’s use, is kept alive nevertheless and the increase of ballistic missile capabilities is utterly insane. Arms control does not work here, and their new strategy ‘Active Engagement, Modern Defence’ here: http://www.nato.int/lisbon2010/strategic-concept-2010-eng.pdf that was adopted end of November 2010 in Lisbon – Lisbon, again Lisbon, geeze, this stunning beautiful city is taking some abuse! – leaves no doubts on the increase of military strategists leading the shopping spree. Missile shield is the keyword here, but you tell me, when was the last missile fired onto a European country? Today it is FRONTEX that ‘deals’ with the flood of refugees that started to stream into Europe, will NATO every play a role here as well? May be my thoughts are a tad to dark here, but I would recommend to keep a close eye on these developments.

    X X X X

    Radicalization has many aspects, Julian Assange currently suffers from the deliberate radicalization of his transparency initiative by external powers. He has been declared an enemy of states, public representatives in the US were calling for his assassination. – You could not make it up! – At the same time people all over the world are organizing themselves to retaliate against structure and organizations that joined the attacks on WikiLeaks, and they use the Internet to coordinate these attacks in a guerilla style cyber war fare that leaves the incumbents puzzled.

    The collateral damage Iraq videos were a historical event of immense proportions. One thing I found to be very interesting is the audio aspect. I watched the video without audio and covering the subtitles. What I saw was just another day on FOX News, just another report on state legalized high tech killing operations.

    Only by listening to the voices in the AH-64D and HQ you will be submitted to the utter insanity of this event, the real ugly face of war, the reality behind the people who are paid with taxpayers money to perform their killing acts, young men and women sitting behind these triggers in your name, in the name of freedom and democracy I might add.

    Global expenditure on weapon systems is up big times, parallel with the engineered financial heist, expenditures went up.

    WikiLeaks has opened a door for the people of these nations, some do not wish to have a look through this door, Plato’s cave, again, and some can’t wait to break down the walls that hold such doors in place.

    It is a global movement now, and you owe it to yourself to do your research and come to conclusions whether you wish to support WikiLeaks, stay indifferent, or disagree on their activities.

    Your Irish ancestors have fought to the blood to enable freedom for their children. I think we owe them something. You owe it to yourself to demand change, to expose what is wrong and unjust, to give a voice, to raise a hand, to stand up on your feet and say ENOUGH! You owe it to your children and your own self esteem as an intelligent human being that was not born to be the debt slave of Banksters and vested interest groups. We all breath air and need to sleep, we all want a roof over our head, enough food and peace. We all want out children to grow up in a world that enables them to become strong and upright people who care, and not zombified sucker uppers who brown nose through life.

    I do not care whether you are black, yellow, white or red, I do not care whether you believe in Allah, Yahweh, God, Buddha, or whatever your belief is made of, as long as you do not try to force it on me or my children.

    I do not care if you are right or left, I do not care if you want to make millions of dollars, I do not care if you want to have 20 Ferraris in your Garage, but listen very carefully, I do care if you steal the bread from my plate, if you steal my children’s future, you will unleash a wrath you have no idea about!

    X X X X

    Radicalization is also a politically abused term to describe anti establishment groups such as we witness in WikiLeaks these days.

    It also shows in people expressing thoughts that I hear over and over, ‘I never thought I would vote for Sin Feinn but now I vote for them.’ Ordinary people become radicalized by the events that we all were submitted to. People with no history of violence, suddenly start to loose the plot and go berserk, of course, this is extreme but happened as well. People go through plenty of pain before they come out of their protected cocoon and express their discontent, it really takes a lot to mobilize an otherwise politically ‘tranquilized’ average citizen who had no hand in the global heist, not a finger, but is thrown in to his neck now.

    The triggers vary of course, it is this straw that brakes the camels back, this wee bit too much, that little iota of unbearable, that spark that can cause violent expressions such as in Italy yesterday.

    As a very young man, I meet a highly educated gentleman from Sri Lanka. Dr. Saveri was member of a monastery order that lived with no personal possessions. He was a friend of our family and whenever his travels brought him to Cologne he came for a few evenings to spend some time with us. I was 16 and deeply involved in my classical music education, spending hours each day on my piano and reading books like other people drank beer. The rebellious age as some call it, or what I rather would call it the age of awakening in a young persons development.

    My mother was the private secretary of a high ranking church representative, and I was brought up in a rather strong catholic influenced environment, but my own thoughts and reading history brought me to the point where I left the church officially with 16 years. I used my pocket money and paid the fee only under protest, because I felt this to be extortionist to force me to pay for leaving an institution that I never joined out of free will in the first place. In Germany you can make this decision without parents consent when you reached 14 years of age.

    You might imagine the turmoil, fights and stress my decision had caused in my family.

    It was at this time that Dr. Saveri came for one of his usually unannounced visits, he never called, he just rang the bell and there he was. It was always a pleasure and I was chased in the cellar to get the best whine from the storage, food was dished up and we had a break from the fighting and bickering about my decision. Of course, he sensed that there was an atmosphere, and at some stage he just asked my parents straight away, what would trouble them. They made excuses, did not say what was wrong and insisted everything was fine, of course, I got the evil eye signaling to shut the fuck up, which he also picked up and asked me then what might be troubling us. I explained it to the embarrassment of my parents who were ashamed about this, understandably of course.

    To make a long story short, because I want to bring you to another event of this evening, he succeeded to ease their pain with his gentle and educated insights, sharing with them what it means to make a deep and meaningful decision such as I just did, he explained the process to them and how difficult and upsetting it is for the one who goes through this. It was good that he came this evening, he succeeded to ease the storm that was constantly battering family life since I made this step.

    Late this night at around 1:00 AM he left, and it was a warm summer night, and he said he is going to walk back, my parents insisted to pay for a taxi, but he really wanted to walk and asked my of I like to join him. I was a walker all my life, and often did long walks at night in my hometown, the meadows on the River Rhine are magic at night, another of these things that caused parental distress I might add. [grins] It was safe to do that back in the 70s, if you stayed clear of certain areas. Today this would be a different story.

    So we left and passed by a new construction site where some buildings went up. He loved this stuff, and we climbed over the fence to have a look around, were goofing on the site for a while and then continued our approximately 1.5 hours walk.

    He was one of the many people from the church that I got to know over time and he was one of the very few that I had respect for, and this for good reasons! Naturally we started to talk about my decision, and he treated me as a full and equal adult in our talks, he always did. Then he explained about the ongoing armed conflict in his native Sri Lanka, and we sat down for a while, and I listened to him. He was talking about the savage and the killings, his own family was victimized, and while he was talking about this some tears rolled down his cheek. Then he made a remarkable statement that I will never forget, you have to consider that he was a catholic priest. If memory serves, at this time he was working on his 5th PhD, an intellectual heavy weight by all means.

    He said that there would be a point where he would pick up a gun and take another persons life if he was forced to do so, against his deepest religious belief, committing a death sin, something he deeply believed in. He was willing to commit this sin, if circumstances demanded it.

    We talked about ethics for the remainder of our walk, and I can say we developed a deep respect for each others position on this occasion. Dr. Saveri was a radical!

    Two years later, I went in front of a tribunal to explain why I refuse military service. My main arguments were my active practice of martial arts, and Kant’s categoric imperative, I won my case in the first instance of three possible.

    Radicalization is often accompanied by circumstances that bring people to the very edge of their existence or ethical boundaries.

    This does not mean that radicalization is always interconnected with violence, not at all. It is radical to demand transparency and open the secret vaults to the documents of people in power. It is radical to demand peace, democracy and prosperity from nations leaders. It is radical to say ENOUGH!

    It is much more radical however to enslave nations in a debt trap against their will, to enforce laws and rules by abusing power, obstructing true justice, making a mockery of democratic processes such as the vote in Italy or probably in the Dail today, this is radical as well.

    In the 17th century, thousands of Catholics had been transported abroad or resettled by English Protestants. Catholics had to pay a fee for their land, and a series of penal laws for Catholics were passed. The Celts colonized Ireland during the Iron Age, and in the 9th century many Vikings from Norway and Denmark settled here. In 1002, Brian Boru became the high King of Ireland, in 1172 Henry II of England gained Irish lands and from the 13th century on English law was introduced. in 1801 the unrepresentative Irish parliament had to give way for a union with Britain to establish the Inited Kingdom of Great Britain and Ireland. The period of famine 1845-1849 was caused by destructive farming methods, rapid growth of rural population, the potato blight that ruined crops for three years and last not least British economy policy. The populations dropped 25%, 1 million died, and 1 million emigrated, the consequences were the Easter Risings and the Home Rule Bill, which John Redmont demanded for his political support.

    Hate creates nothing but more hate, violence creates only more violence, and adding more debts onto exiting debts creates poverty and 21st century slavery.

    It is about time to become a little bit more radical in a non violent way, questioning authorities, existing abusive powers and structures is not only a democratic right, it is our ethical duty.

    Best
    Georg

    Full disclosure: I am not supporting, direct or indirect, any of the currently existing political parties!

    • Too long George! Much of it incoherent rambling nonsense that could be cut down to a paragraph or 2.
      Lol

    • Dr. Saveri probably also realised “the monster within” I’m afraid it’s in us all whether we like to believe it or not. It explains genocide – genocide is not necessarily carried out by the reluctant following orders! I met my monster while serving in Lebanon back in 1985 when I was a very young man. It was a devastating discovery that even I would possess such a dark underbelly in my nature. The best defence is awareness! But circumstance plays a big part! And there are many who can be carried away by events!

    • Great article Georg needs to be published.
      “It is about time to become a little bit more radical in a non violent way, questioning authorities, existing abusive powers and structures is not only a democratic right, it is our ethical duty.”

      My sentiments too.
      I attended the launch of CPPC a new political party last night what brought my there.? A party with one policy Democracy. For 2 hours 30 people who did not know each other engaged in democracy. How the party will progress is difficult to say as the movement needs to empower people to see that the existing political structure is not in the interest of the people. Most commentators here agree with David
      “The bailout is a bailout for the banks of Germany and France and the Irish taxpayer foots the bill. It is that simple.”
      We need to meet up those who are like minded to see if we can organise
      a movement to revoke this deal at the ballot box.
      Time to meet up face to face.?
      Personally I think there will be no recovery of the growth-oriented global economy. The austerity agenda demonstrates that no one is even trying to revive it. The new crop of sovereign debts in the EU, created by the bailouts, can never be repaid and were not intended to be repaid. They are a mechanism of perpetual debt slavery, as long used in the third world by the IMF.

      • I never heard about CPPC, but it is encouraging to learn that people are getting together. It is a very slow, probably intimidating process for many as well, but eventually something positive will come out of it, I have no doubts on that part.

        To raise awareness is the first step, the ‘avalanche of knowledge’ is something that remains unpredictable, but all over the world, people are talking about the very same subject in this very moment, this alone is a reason for hope.

        Then again, on a humorous note, was it Charlie Chaplin, I am not sure, who said ‘I feel better now, I gave up on hope.’ ;)

    • coldblow

      Georg

      Interesting post. Your decision at 16 strikes me as typical etravert-type adolescent rebellion (don’t mean this in a disrepectful way, only that it fits a pattern). Why exactly did you leave the Church or lose your faith? Was Dr Saveri Singhalese or Tamil and what was pushing him to the edge? Would it have been more radical for somebody like yourself not to rebel? I wonder if you ever took up smoking (at a wild guess around age 16)? Did your friends think along similar lines and if so what motivated them?

      “Hate creates nothing but more hate.” It interests me why you feel the need to make such an obvious statement, are you worried that people will think you might be guilty of this? (Others have made similar statements in recent weeks. Why?) Would radicalism help here or make it worse?

      I came across a fair bit of “radicalism” among my fellow students at university and I thought at the time they were acting out a script written by their elder peers seven or eight years earlier. (I still believe that.) So as radicalism went it was harmless.

      Another poster, Lorcan RK, made the point here (I think) a long time back that radicalism wasn’t the way to go. SF are a radical party all right, but do we want that? Ah, questions, questions!

      Just thinking out loud. But I enjoyed the post and read it all the way through (all right, I skipped a few bits on Bush, Wikileaks).

      • Coldblow,

        briefly, I always had an interest in studying the World’s belief systems, even traveled on this purpose. Honestly, I never believed in any of the major (or minor) religions to start with, or a ‘higher’ entity, or afterlife, or any of such concepts, ever. Guess I am the lost soul then. [smiles]

        As for hate, I can see this spreading again in Europe, rather sooner than later, that is why.

        P.S.
        I smoke native american spirit roll ups since I lived in the US :)

  11. ladygee2

    Once again, David, is talking complete sense! Our so called ‘political elite’ are just ‘taking us for a ride’. Well, I can tell you one thing when they all start to come around canvassing for our vote one thing’s for certain and that’s that the FFers are going to get an earful and so will the FGers if they don’t start talking sense. I’ve always voted for Labour in general elections, but this time I’m seriously thinking about voting for SF, because they’re the ones that seem to be the only ones talking with any sense.
    The bank debt should be separated from the sovereign debt and if one or two of the banks fail then so be it. It’s their problem not the taxpayers!!! What we need are politicians with balls and the only ones who seem to have any balls at the moment are Sinn Fein. I know that Sinn Fein have a certain history, but it’s about time that the Irish people began to wear their hearts on their sleeves and make the ‘leap of faith’, because that’s the only way that the Irish people are going to get the changes that are needed. The so called ‘Insiders’ in this country have been getting away with it since the foundation of the State, so, I think that it’s high time the ‘Outsiders’ got a chance to rectify things.

  12. More madness from Lenny today will top his speech of March 30 last http://bit.ly/9JEAsv

    “Already, we have reaped the benefits of this growing confidence. Since last April’s Supplementary Budget and the announcement of the decision to establish NAMA, borrowing costs have fallen and our bond spreads have halved. This trend was reinforced by last December’s Budget which outlined the next stage of our plans to return to a sustainable fiscal position. That is why we must retain our fiscal discipline.”

    I believe he was saying it was impossible, a better deal could not have been negotiated.

    WrongAgain Lenny has totally lost it. He needs to be put alongside Mugabe or Ceausescu. You see it’s one thing to make mistakes, its quite another to go on repeating them like Groundhog day as if you have some sort of an addiction to the same mistake you can’t do anything about!

    He’s alienated the people of Ireland and destroyed FF and persists in alienating citizens further.

    Poor man is apparently enslaved by deluEconMe (economic delusion caused by our membership of the EMU leading to sudden banking collapse).

    Not helped at all by his grooming by Tricky Trichet leading him up the garden path to madam la guillotine.

    DmcW makes valid comparison to Redmond who drove the people into the arms of Sinn Fein.

    OT great article. Opening paragraphs resemble opening of ‘The Idiot’ by Dostoevsky http://bit.ly/g5m1tS Could be emerging novelist there.

    Once heard Maeve Binchy describe how she got inspiration for characters from observing people in crowds and coffee shops.

    Anyways Lenny regards us all here as idiots!

  13. How did they say it ? hat were they thinking ?

    Imagine if back then when the Danes first arrived what did they say about the place as they entered from the seas towards Co. Waterford .They said ‘ Helvick ‘ and it means ‘Sunny Bay’.They knew from that moment after feeling good in Helvick that something better was further up river.Eventually that was Kilkenny and Waterford.

    Have we on this forum found our own Helvick that we can feel happy about to go anywhere?Or are we just like the Peerog Boat people from Somalia who are prevented from making their way to Europe by thighter security zones along the way?

    We need to re-invent ourselves a new boat that will takes us anywhere we want.

    • Perhaps there is a distinction that needs to be made between ‘seeing’ and ‘doing’.

      This forum helps me see certain things in a much more informed way. In that way so far its a success.

      People should be free ‘to do’ with the info whatever they like.

      But good, clean information, unlike what’s coming from the banking sector and Government, is priceless!

  14. We are all Terminal immigrants with different times of arrivals on our ~PPS numbers.

    Our birth certificates just tell us when there was no more room and we decided to just pop out > We only decided the time not the place .Afterall we could not get back in.

  15. BrianC

    The Dail is just a glorified talk shop where they endeavour to justify their existence. They are sterile of any creative original thought but very adept at softening the blow on their own pockets. The bail out is a joke. It should be called a rip out or in tune with David’s latest article the rape and pillage of a nation. A tribute extracted by force.

    You can bring a horse to the water but you cannot make him drink. This epitomizes the Irish Government.

    George Soros pointed out the crash was a result of excessive use of credit and leverage where private credit lost credibility and to stem contraction was substituted with state credit which commanded credibility. The input of state credit worked initially worked as the 2009 G20 delivered remarkable unanimity but this dissipated as political and ideological differences emerged. In Europe the Maastricht Treaty established a monetary union without a political union realizing a common central bank without a common treasury. So whilst member states enjoyed a common currency they were on their own regards national sovereign credit. The EU system was flawed for full proper union which was not our error. And rather than marshaling and imposing our argument on the EU that they damaged our sovereign credit worthiness with a flawed monetary system we let them walk all over us.

    I know the IFSC is a focal sore point for all other EU members but even though Ireland is less than 1% of the overall EU population it was their massaging of the Irish National vote that delivered the EU to its present state. Ireland was forced to commit to the will of the EU to deliver a flawed state of affairs. We are fused to the EU and they show no intent or will to support the Irish none whatsoever save put us on the treadmill of penury. If there was a common treasury it would not have been possible to panic Ireland into a blanket guarantee forcing private banking debt into sovereign debt and Ireland would not be in the mire of the private banks making permitted by the common central bank.

    I do not want to bore people by adding a litany of other facts. But the simple point here is this. In order for the Danes to make their way to Ireland raid it and then settle they had to have a sense of purpose and initiative. The Irish Government has neither a sense of purpose or initiative the only thing they are experienced at is consensus. So rather than argue the true facts of the matter to force the EU into recognizing the true facts that Ireland was thrown to the wolves to defend itself when it should have had the support of the Union thus left to its own meager devices culminating in a guarantee. Our so called EU partners have constructed a gallows and we have simply marched up and put the fiscal noose around the neck of the country to strangle our future putting future generation into servitude.

    Forget all the economic figure of ratios GDP and rubbish nonsense it is time to force a few real facts down the throat of the ECB hand back these bank loans to the banks and let the ECB sort out its own mess. The Danes who settled here had leaders with vision initiative and zeal we have no leaders just a group of corpses dead before they even put the noose around all our necks.

    • Hand back to ECB….+1

      Brian, not only does the Irish Government no sense of purpose or real initiative, but the very same counts equally for the EU, for the very reasons you described to the point, there was nothing but a monetary Union, the EU grand Ponzi scheme, a political Union never existed.

      As a result, the pseudo Government, the EU commission, is not even a team of people working together. It is really nothing but a very bad and way overcooked lasagne of civil servants passed sell by date, mixed with some nationally rather unwanted political figures that were promoted to get rid of them, lobby playgrounds with unbelievable fertile grounds for funding and idiotic subsidies, let aside the entire deficit of the democratic process within Council-Commission-Parliament itself.

      My hope is that awareness raises amongst our friends within Europe to establish a common voice and perspective on these matters eventually.

  16. wills

    David.

    X = ‘We are embarking on “econocide” or the deliberate killing of the economy. It is rarely practised for obvious reasons, but our Establishment seems intent on doing it. We must stop them.’

    Y = ‘That figure explains why the IMF is here. It is not here to bail us out; it is here to bail them out. The bailout is a bailout for the banks of Germany and France and the Irish taxpayer foots the bill. It is that simple. And where will the EU and IMF money come from? It will be borrowed from the very investment banks that will be bailed out. So they will get interest payments from us, in order that we pay for their mistakes.’

    X + Y = The insiders running Ireland are facilitating the euro fiat paper money project engineers by implementing measures of a nature which ensure the survival of the euro going forward. They are selling out to the euro project cos the euro is offering the insiders paper money in quantities beyond their wildest dreams. The measures the irish insiders are implementing are all about keeping in the *euro paper money scam loop*. By tacking on the banks debts onto the State the insiders across the euro political spectrum are manipulating situations to ensure the survival of the euro currency while its printed in such extortionate quantities. Its all about generating anxiety into the system in order to invoke in the people a desperation and so an inclination to cling to money as comfort and so reboot confidence in the paper money over and over and over which stops it falling apart despite the fact its been printed in such vast quantities and been funneled off.

  17. idij

    Is there even any bank debt left that we can properly default on? I’d love to see a proper breakdown of what exactly a bank debt default would achieve. As far as I can see the last two years has been about converting all the worthless debt from the banks into real taxpayer backed sovereign debt, transferring ownership of that from speculators to other sovereigns, and making it so that it’s us that the banks owe the money to. We’d be defaulting on ourselves for a bunch of it. I’ve no doubt we could save some money still, but would it justify a trade war with Europe? My feeling, and I’d love to be proved wrong, is that we have been trapped such that we have no movement possibilities.

    We are to be farmed for our taxes and our resources.

  18. concannon

    McWilliams talks common sense. Voltaire said “common sense is not that common”. He also said “It’s dangerous to be right when the established view is wrong”. The guy that said we are all to blame and therefore we all should pay is completely muddled in his thinking. The reality is a few hundred developers and a few banks are to blame and also the foreigners who gave them the money. In a capitalist free market system these entities should fall on their swords. That’s how the system cleanses its self out. It’s pretty simple. Also the foreign bond holders would have insured their bonds using credit default swaps. So maybe it’s the American banks that would be worried if Ireland default on the bank debt. As from what I know the entities that created these CDS don’t really have any security behind these insurance instruments and it’s just a huge ponsi scheme. A person has no moral or financial obligation to pay some one else’s debt. AIB BOI Anglo debt is not mine. The question now is how do we get honest people with common sense into power. Could someone on this forum make a list of such people and then get them to run for election.

    • uchrisn

      Your right about the CDS and BOA, JP Morgan, Goldman, AIG, these guys would be set to lose heavily in case of a default on the banks senior bonds. However they are smart and have great intelletual arguments to give to governements about why they should be bailed out. The American government also has a large stake in them.

  19. michaelcoughlan

    Hi David,

    “We will get it from the market after we have passed a bank resolution law, which severs the banks from the State and forces the senior bondholders of the banks and the ECB, which now hold Irish NAMA bonds, into a debt-for-equity swap.”

    “If we did that, it is easy to say where the money would come from: it would come from the same markets that have always financed us. In fact, Irish treasury bonds – shorn of the banks and the obligation to pay off the bank creditors – would be the buy of the season. Money would flood into the coffers and we could then deal with our cyclical budget deficit without torpedoing the economy.”

    “We could then outline a plan which would get the deficit down over time. This will impress the markets because it will ensure deficit reduction without econocide.”

    Thank you thank you and thank you again. I was always dubious as to how we would fund ourselves if we tell the EU and IMF to take a hike this side of a solution to the problem in the national currently account but now you have clarified the options open to us. THANK GOD. What you say makes sense. The establishment would despise us though however the ordinary people all over Europe would thanks us for throwing off the yoke of financial tyranny.

    I presume the national bond interest rates will start to rise again in two years time when this line of credit from the IMF EU runs out. Better to pull the pin now and deal with the consequences.

    For anyone who wants to figure out what to do now we have a two year window to prepare for the financial tsunami which will engulf us when the IMF EU money runs out my two cents worth is that I have opened a bank account in NIreland and will pay my bills out of and put my savings in there. I have a small amount of gold in vaults in Europe but have declined to increase this further unless I take delivery of the gold itself based on advice from another poster regarding dubious virtual accounts.

    I have two deep freezes full of food which would last six months in the event of an Argentina type situation and have committed to growing a half acre of potatoes on my small holding to provide feed for small scale farm animals including fowl.

    Finally the small Project Management practice I work for has focused on the exporting to overseas markets our skills which are in short supply in those markets.

    Remember as free citzens of a great Republic we must focus on the positives and solutions to the problems and not the negatives if we are to save ourselves from the Irish and European Establishments.

  20. Fergal73

    To misquote Winston Churchill:

    “Never in the hisory of economic governance has so much been owed by so many to so few”.

    FF led Ireland down this path.

  21. ict

    Does anyone else share my disquiet at the role in all of this, or more accurately the apparent avoidance of any role at all, for the so called President of Ireland. This might seem a bit trivial in the circumstances, and it is certainly not central to current events, but I do think the office should have some relevance.

    Many contributors here have questioned the constitutionality of much of this government’s recent (ie post sept 2008) financial legislation. Regardless of the technical rights and wrongs about this, the reality is that a hugely unpopular government, with technical but not legitimate authority, is making enormously controversial commitments on behalf of the people.

    There is provision for the president to refer any piece of legislation to the supreme court. If I am not mistaken, she could at least convene a meeting of the council of state (OK that would include Bertie, as an ex Taoiseach, but it would be better than nothing). The legislation may well be declared to be water tight, but at least some due process would have been seen to be done. There would have been some formal recognition of the enormity of the decisions being taken. What on earth could be the case against such a review?

    The sad conclusion is that MacAleese is tainted by being a former Fianna Fail activist (and a failed FF Dail candidate I believe). Don’t forget that she was the FF candidate for the presidency way back in 1997. I don’t want to be unfair to the woman. I am not accusing her of anything more than complacent inaction which may well be an inevitable consequence of 13 years as the pampered “Celtic Tiger” president. I also accept that comparison with her immediate predecessor may be unfair as Robinson was of exceptional calibre. But she does have a duty to make some effort to be seen to be upholding the constitution and not to be seen to be behaving as a government stooge.

    If the president sees her role as little more than that of a “minor royal”, i.e. turning up at major sporting events and opening community centres etc while uttering meaningless platitudes, but shying away from any constitutional role whatsoever, even in the face of the state facing an existential crisis, then what is the point of the office at all?

    • cmsaint

      President needs to be made a real political position with powers to intervene when government is not working in the interests of the people.

      • ict

        But thats my point,
        As it stands the president does have pwers to intervene, albeit in a very limited and restricted way.
        She is just choosing not to exercise them

    • Yeah, I do!

      A number of online petitions have sprung up also venting concern:

      We Demand Democracy
      http://bit.ly/hD712g
      That the Irish President unyoke the Nation’s Welfare from Private Banking Interests
      http://bit.ly/eDvggh

      Not only should we be concerned re the silent support through inaction of our President, but
      I would be very much concerned re the general public’s lack of information with the veil of secrecy pulled about the financial affairs of the
      banking collapse. Kudos to DmcW theatre tour and articles etc on getting the word out.

      There is a growing agenda of financial fascism meaning ministerial powers of non disclosure and secrecy are growing by the minute just as the spending of citizens money on private banks grows by the second!

      The public interest is not being served by this rights violation.

      Samuel Taylor Coleridge
      http://bit.ly/pBFI

      Described ‘willing suspension of disbelief’ as a prerequisite for good audience appreciation of the theatre.

      DAIL Eireann itself is being turned by government into a theatre, where even FF’s own deputies, have become willing audience, who mostly know little, if not nothing of the antics of Lenny and Clown’s financial dictatorship, their ludicrous financial policy on the banks. They swallow it all, no questions asked!

      They grandly lead all by the nose to default, they themselves, political stooge Gombeenism in the hands of Tricky Trichet!

  22. cmsaint

    For a political expression of the need for change look to;
    IDP-Irish Democratic Party. irishdemocrats.com
    ILP-Irish Liberal Party. irishliberalparty.org

  23. liam

    David, Thanks for a nice talk today in Newbridge. I have stolen wholesale some of your ideas below.

    All, I’ve had just about enough of this nonsense.

    Our democracy may be weak but within the next ten weeks we will have the only tool in the toolbox available to us to effect change: the vote. I suggest we use it. The 14% who will vote for the status quo are unlikely to be rescued from their folly, I am more concerned that the remaining 86% make a good choice.

    Below is the text of a letter I intend to send to every candidate of every party standing in my constituency. I suggest you do the same and get your friends to do the same. If you do, consider printing signing and posting a real letter, not an email. Physical artifacts are much more impressive and harder to ignore than emails, and something through the post will get more attention than something wrapped around a brick thrown through the window…

    Happily, I’m not an economist, so its a bit light on the details, and its mostly stolen from people better informed than I. But then again most of the folks I am writing to are likely similarly ignorant. But you welcome all to pull me up on any dodgy bits.

    Dear [],

    Ireland is in the midst of the deepest crisis since the foundation of the state. Our political leadership has repeatedly sought to protect a small vested interest that was responsible for creating the economic woes at the expense of all members of society. Not only that, it actively facilitated their behaviour during the boom.

    Now we are pouring good money after bad in to the black hole of the banking system, money that we cannot afford. There is not a single economist nor investor in the world that believes the we are not now in a defacto default position. This situation cannot go on, and it is up to the Government to respond to this proactively. I’d like you to consider the following points:

    – The EU needs us as much as we need them. Why do our negotiators not recognise this? An Irish default will have disasterous consequences for the Euro and possibly the entire European project. An Irish default is now a certainty. Angela Merkel said last month in a speech in Seoul that the banks that lent should share the burden of bad debts, why are we not following her advice?

    – Investors want their money back. A return of cents in the euro is better than nothing and even better than that is to convert their losses in to equity in the banks. Far better to be a shareholder in a functioning company than a creditor of a dead, insolvent one.

    – We have a very serious structural problem that is being addressed by austerity measures. These have been judged to have no merit in terms of job and growth creation by commenters and financial/economic experts outside of the Government, on the left and the right. Whatever austerity measures we now institue are meaningless unless we uncouple the zombified banking system from the state. The state can simply give away its less-than-worthless stake in the Irish banks or where necessary shut the banks down, whichever is appropriate based on a conluded deal with the creditors.

    - Our corporation tax rate has been defended and now we have to use it. There is €900B of capital owned by US companies sitting in the IFSC that cannot be moved to the US, ever, for fear of it being taxed at 39%. Offer the US companies a way out: let them create a tax free investment fund for Irish companies that will return money to US companies as equity and shares, thus attracting no corporate tax, over a number of years. Imagine what could be accomplished with just 10% of that €900B

    – We are facing a situation where there is a very real possibility, regardless of what we do, of the Euro imploding in conjunction with German withdrawal from the Euro. We should be positioning ourselves to be best placed should this scenario arise. That means dealing with our debt, and that in the main means de-coupling Ireland from these private companies that have destroyed the financial credibilty of the state.

    There is a concern that by ditching the banks, we won’t be able to borrow on the international markets. This is nonsense. Investors will invest where there is a prospect of a return, and in the case of a country, that means growth. There is simply no prospect of significant growth in Ireland that would allow us to compete with Indonesia, China, Rwanda… Even the ECB, the only people now prepared to loan to Ireland, has acknowledged that our growth projections are optimistic.

    Despite what the Government has said, there were alternatives to their chosen course of action and there are alternatives still, if we have Government that is prepared to stand up and be counted as representatives of the people, and not merely the banking industry, property developers, estate agents, and the protected professional classes of Ireland for whom NAMA was designed to benefit.

    We have a window of opportunity here that is fast closing. 70,000 people under the age of 30 have fled the country so far. Think about that. These are not poor and under-educated Irish workers of the 1950s and 60′s, my fathers generation, maybe yours, these are the future entrepreneurs, innovators and business leaders that have got degrees from Irish Universities, exactly the people we will need in the comming years to keep developing this country.

    I expect the incomming Government to do the following:

    – Withdraw the banking guarantee within six months of assuming office.
    – Initiate a negotiation with the creditors of the banks where they will be forced to accept a write-down on their investment with a possibility of a debt for equity swap, on the basis of whatever assets are available now, without resporting to borrowing that will cripple future spending.
    – Reject the “bail-out” from the EU and the IMF on that basis.
    – Wind up NAMA and institute proper banking resolution legislation

    You and your colleagues will seek election to the Dail in the comming weeks. What I have to say is very simple: I don’t care about the traffic on the school run, the potholes, the zoning laws, nor the planning system. If we don’t look at the wider picture now, none of those details will matter. If you, personally and as a prospective TD are unprepared to unambigiuously commit to these actions as a minimum, them I will under no circumstances consider giving you my vote.

  24. HAC

    Humpty Dumpty had a BIG FALL!!!

    These truly are “Demon Days” and the Irish government is totally possessed beyond ANY redemption. By ignoring the voice of the people their actions will bring disastrous long term hardship for every Irish citizen. As MACKER has been saying for some time it is now imperative to “SEPARATE BANK FROM STATE DEBT OR ELSE FACE ECONOCIDE”. Ireland and the government is rapidly running out of precious TIME to turn back the clock before the day in 2011 that will change our lives – overnight…

    http://www.stansberryresearch.com/pro/1011PSIENDVD/PPSILC43/PR

    • thx looked at that apart from the hard sell at the end and the non user friendly widget used meaning you don’t know eg how long the preso, no replay etc, is, very interesting. But this is a global debt problem not just effecting the dollar. Dollar in trouble, other house of cards can tumble as well. Interesting mention of an IMF paper on Bancor, april 13 2010 need for new world reserve currency..

  25. MadaboutEire

    Interesting one………..

    Tánaiste promised funds that did not exist

    TÁNAISTE MARY Coughlan made a commitment to give the nationwide Your Country, Your Call (YCYC) competition Government funding of €300,000 even though her then department did not have the funding in its budget.

    The Department of Finance officials, with whom we were in regular contact in preparing the estimates, were unaware of the arrangement to support YCYC and, given the timing, it was not possible to have an additional €300,000 included in the department’s published estimate for 2010.”

    Mr O’Keeffe told Labour TD Ciarán Lynch in a response to a parliamentary question on December 1st that no funding had yet been paid.

    The department did not respond to questions sent by The Irish Times . Separately, the Standards in Public Office Commission said yesterday it had carried out a thorough examination of two complaints about the competition and was satisfied donations given to it were neither given nor received for political purposes.

    Full story
    http://www.irishtimes.com/newspaper/ireland/2010/1216/1224285654581.html

    • Deco

      It was an idea from Marty McUseless….green jersey wearing and all of that….Why can’t the McUselesses chip in and pay the bill. They are provided with a mansion, free transport, expenses, a government jet and 300 K per annum – in return for being …eh….useless.

  26. fram7rip

    Commenting on the need for emergency measures, Prime Minister Geir Haarde said on 6 October, “There [was] a very real danger … that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could have been national bankruptcy.”[2] He also stated that the actions taken by the government had ensured that the Icelandic state would not actually go bankrupt.[3] At the end of the second quarter 2008, Iceland’s external debt was 9.553 trillion Icelandic krónur (€50 billion), more than 80% of which was held by the banking sector.[4] This value compares with Iceland’s 2007 gross domestic product of 1.293 trillion krónur (€8.5 billion).[5] The assets of the three banks taken under the control of the FME totaled 14.437 trillion krónur at the end of the second quarter 2008.[6]

    http://www.eftasurv.int/media/decisions/571071.pdf

  27. manofiona

    Getting worked up about what the Irish government or Irish politicians might or should do is irrelevant. The debt problems of the Eurozone peripheral countries, however caused, have created a problem for the Eurozone as a whole and that problem can only be dealt with at Eurozone (indeed EU) level. The issues to be examined at European level have been the subject of some interesting comment in the last few days in both the Financial Times and the Wall Street Journal. Ireland’s absolute lack of real influence in the outcome of those discussions is nicely summed up by Arthur Beesley in the Irish Times this morning. Fastasising about an independent Irish initiative on a matter which can affect the whole Eurozone is pointless.

    • uchrisn

      Manofiona I understand what you are saying, however Ireland has the oppurtunity to show leadership on this issue. We should be confident in ourselves that we can lead Europe down the path of justice. We can be confident that it is justice to have the people who funded the Irish banks property price fixing and dishonesty to suffer the financial losses. Perhaps some peoples lives would not be as financially comfortable in the short term, however the IMF and European rescue fund have to bail us out in any case so peoples lives wouldnt be that bad either. I believe that in the medium to long term it would be better for all Europeans.

  28. coldblow

    David talks about the wealth of the sunny south-east and that ties in with my own understanding, as follows. Because of its milder climate Britain would be on the edge of the W. European birthplace of “agricultural capitalism” where harsh winters and a cooler climate in general than the Med. and warmer regions to the south (where you needed no capital but some seed and a patch of land to scatter it on, a bit like the spuds in Ireland in a later time) encouraged the accumulation of capital in the form of oxen, saved hay etc in isolated clearings in the forests, and this slow, very gradual process was the basis of modern capitalism, along with the institutions (eg private property, constitutionalism, checks and balances, possibly a particular kind of work ethic) that developed along the way. Ireland would have been firmly outside the British ‘grey area’ and missed out on this process – put simply, it rained too much, livestock would be left out over the winter, tillage was an uphill struggle. The Normans would have introduced more ‘capitalist’ practices, including and emphasis tillage (as opposed to the ‘barbarian’ native practices) but were gradually forced by the climate to abandon these and adopted the local pastoral, cattle-raiding ethic. In other words the process of becoming ‘more Irish than the Irish’ was economically determined. The last bastion, the only place it ever stood a fighting chance, would have been in the Pale and the south-east, again for mainly climatic reasons. So capitalism was associated with a good husbandry, solid yeoman-type, gradually-accumulating-things kind of approach which was never really bred into the Irish over the millennia. So Weber and his Protestant Ethic and Spirit of Capitalism hadn’t really identified the root cause. Anyway, it’s a nice argument and I like it. Hope nobody noticed I mentioned this before.

    • Deco

      Weber was writing in the early 1900s – at a time when Protestant Britain dominated one quarter of the globe, Lutheran Prussia was the centre of economic growth in Europe, and the US was the growing economic financial power of the world.

      Had he been alive in the 1600s he would have seen Italian domination of finance, Spanish domination of the Americas, and the growing power of France dominating continentatl Europe. Had he been around today he would probably marvel at South Korea, Hong Kong, Taiwan, and the coastal regions of China. And we would have seen different phases and philosophies concerning the progress of society and capitalism.

  29. uchrisn

    The ECB – owned by the European Central Banks, inturn owned by Private European banks, in turn owed money by the Irish banks. German, French majority.
    The IMF – U.S. Majority, owned by its biggest funders, mainly U.S., Japan, German, U.K., French, Italian governments. These government are heavily influenced by their respective private banks and wealthy individuals. In turn owed money by the Irish banks.
    The EU Commission – stongly influenced by German, French, Italian, Spanish and U.K. interests. These government are heavily influenced by their respective private banks. In turn owed money by the Irish banks.

    The corner stone of the negotiation for these guys was that the senior creditors would not have to take any losses. They said that.
    They are desperate to get this enshrined in the law before our government goes out of power.

    They may not be all evil people, they are mainly looking after their own interests.

    They are probably just surprised they had it so easy.

  30. uchrisn

    I understand the main confusion of the general Irish public seems to be that the ‘rescue fund’ is dependent on the senior creditors being repaid.

    They are being purposly misled.

    Iceland refused to refund the creditors. The senior bondholders got back 7cents on the euro (Austailian Central bank) and it was still availed of the rescue fund.

    Gaurds, Teachers, Nurses, Welfare recipients you would still get your rescue fund. You are being misled again by our government.

  31. fram7rip

    Bankruptcy and reorganization procedures for cross-border banks in the EU: Towards an integrated approach to the reform of the EU safety net:
    http://www2.lse.ac.uk/fmg/documents/events/conferences/2009/regulatoryResponse/1161_Nieto.pdf

    • Consider a junction with loads of car accidents and casualties. Consider then a hospital with an A&E unit.

      The report there is a bit like improving the A&E while doing nothing about the junction!

      No new rules for investment products. No new rules for investment banking, derivatives and other paper.

      Plus no determination on the moral hazard aspect of a crazy guarantee exposing taxpayers to unregulated lending practices of cross border bondholder banks. See ‘some classes of creditors’ qualifier below.

      What about all banks contributing to a regulatory structure and supervisory regime and insurance scheme that would also make it illegal for governments to tap taxpayers for bailouts!

      The cost of the insurance scheme would soon see regulatory practices improve.

      As an interim measure there could be opt in and opt out with those opting into such a scheme getting AAA rated accordingly…

      Anyways that doc goes no way to address the real problems in the banking system!

      Here’s ‘major reform’ proposed

      “This seemingly lack of consistency in the approaches of prudential supervision and reorganization and resolution of cross border banks raises the question of whether a common decision-making structure to deal with cross-border banks and, more in general, financial conglomerates in crisis is needed (see Mayes, Nieto and Wall, 2008 for a proposal of a collegial approach to bank resolution).

      The creation of a bridge banking group would be roughly equivalent to a government recapitalization of the bank, except that the shareholders in the failed group would permanently lose their claim on the group and losses may be imposed on some classes of creditors. 57 Someone will have to have managerial authority over the bank and in almost all cases the home country supervisor will be the logical party to appoint the new management. The bank’s management should be overseen by a board with representatives from all of the affected countries. In these authors´ views, this function can be performed by the resolution college.

      “and Winding-Up Directive (2001/24/EC) and it explores areas of coordination with other EU directives that also deal with relevant aspects in the bank financial crisis management. Our main recommendations focus on the following aspects:
      - In the absence of a centralized prudential supervision for cross-border institutions, policy makers should give priority to ensuring the convergence of supervisory powers and disciplinary actions for the reform of the EU safety net and the revision of the reorganization and winding up Directive are to be effective. Moreover, such convergence should ideally encompass a framework for early intervention by colleges of supervisors based on common triggers that include also market indicators while acknowledging that this approach has limitations in the case of systemic crisis.
      - Greater harmonization of depositor protection schemes is also warranted and, among other aspects, in relation of their role as resolution agencies. Consideration should be given to establishsing not only minimum level of deposit insurance coverage, but also to cap deposit guarantees and ensure adequacy of funding.”

      Finally, in parallel with the developments on the potential centralization of supervision in the EU, consideration should be made to create an EU wide deposit guarantee fund with capabilities to reorganize and resolve cross-border banks licensed in the EU.”

        • thx, great link, very much look forward to reading it very shortly, firstly I must do the dishes, or the wife will kill me!

          “ADDRESSING THE FINANCIAL CRISIS:
          THE EU’S INCOMPLETE REGULATORY
          RESPONSE

          Stijn VERHELST
          December

          The Egmont Papers are published by Academia Press for Egmont — The Royal Institute for
          International Relations.

          Founded in 1947 by eminent Belgian political leaders, Egmont is an independent think-tank based in Brussels. Its interdisciplinary research is conducted in a spirit of total academic freedom.

          A platform of quality information, a forum for debate and analysis, a melting pot of ideas in the field of international politics, Egmont’s ambition — through its publications, seminars and recommendations — is to make a useful contribution to the decision making process.”

        • The reforms in that document though welcomed do not go far enough. A bit like trying to regulate an alcoholic without banning them from drink.

          What’s needed is a return to a stable and more secure Breton Woods monetary system and a complete banning of derivatives( the weapons of mass destruction referred to as by Warren Buffet ), brought in in the ’80s, that exploited deregulation and the severing of the dollar from gold in early 70′s by Nixon.

          “These derivatives, known as collaterized debt obligations (CDOs) and credit default swaps (swaps), did not exist until the 1980s and yet it’s generally acknowledged they were largely responsible for the interconnections between banks and other financial institutions, which ultimately caused the 2008 global financial meltdown.

          Bundled, sold and resold as Subprime mortgages in the U.S. were bundled into CDOs, then sold and resold until it was impossible for the ultimate buyer to assess the real risk it was assuming.

          NB, its important to understand, see Stiglitz and others on this, the 2008 collapse was not brought about by subPrime mortgages, but by the toxic financial instruments CDO’s and derivatives themselves exploited by Wall Street trading in these defective financial instruments. Wall Street is the problem, not Main Street.

          AIG (American International Group) was among the victims of swaps – a complex contract theoretically designed to act as an insurance policy against risk. But, unlike a real insurance policy, a swap isn’t required to have a capital reserve and more often than not, it’s used for pure speculation.

          In December, 2007 over $681 trillion U.S. in derivatives changed hands internationally in over-the-counter, private, unregulated trades,­ 10 times greater than the gross domestic product of the entire world.”

          “http://en.wikipedia.org/wiki/2010_G-20_Toronto_summit

          “Each leader of the G-20 brought their own agenda to the summit.[8] The prime issue of the summit was the recovery from the ongoing global recession and the more recent European debt crisis.[9] However, the leaders were divided over strategies on tackling the problem. The European Union wanted to focus on austerity to cut their deficits, while the United States sought to maintain economic stimulus spending to encourage growth.[10] India was said to pitch for “durable, balanced and sustainable” global growth.[11]“”

          What a complete farce that was. No banning of derivatives there.

          What of the VerHelst document you have quoted:

          “”Governments prohibit certain ways of conduct deemed abusive, in order to allow financial markets to function properly. In the EU, rules been has grouped in the Market Abuse Directive. Since the financial crisis erupted, there have been
          calls to revise this Directive and to limit additional forms of market behaviour,especially with regard to short selling and credit default swaps. In contrast to other regulatory proposals in the field of financial regulation, there seems to be less of a consensus on the need of actions in case of market wrongdoing.”

          There is suggestion for clearing house, voluntary codes, but nothing substantial that would avoid OTC or other workarounds to continue the damage wrought by derivatives.

          Given the failure to address the problem, the problem will probably worsen.

          It was galling to read the following in the above document:

          “”The final field in which the Commission proposes harmonised rules concerns the resolution of a bank. Such a resolution should only occur when there is no realistic prospect of recovery, although the Commission again still needs to define specific
          thresholds. During such a resolution phase, authorities would be able to sell a bank or parts thereof without the consent of shareholders. In addition, it would be empowered to write off shares and write down debt or convert it into equity61.”
          “61. Such a conversion would constitute a so-called bail-in.”

          DmcW, Morgan Kelly, Whelan, Lucey, Gurdgiev have consistently backed such a resolution for Anglo as part of the negotiating demand of a resolution of our banking crisis and as a basis for any IMF/ECB ‘bailout’.

          It could have been used as leverage in negotiations. But our treasonous Gombeens not only did not demand a resolution of Anglo on those lines, but they ‘welcomed’ the bailout that came with custom-made 3% penalty clauses for Ireland bring our interest on it to the extraordinarily ludicrous 5.8%

          thx again for the great link.

  32. Some news re Enda in Brussels on Morning Ireland, report of €25 bn of senior bond ‘unguaranteed’ that might return upwards of €12.5 bn to taxpayers, if FG get their way.

    Don’t quite know the difference between ‘guaranteed’ and ‘unguaranteed’ as I presume the ‘guarantee’ was to include all debt, eg senior bondholders, previous and subsequent to the guarantee.

    I’d like to know the finer distinctions, if legally under the guarantee, such distinctions can be challenged, or not?

  33. Bonds Bonding Bridges Buildings Better Baker Poker Pie

  34. The Euro may be a basket of currencies but it could become underwritten by a single eu bond if Germany agrees but that will not be the same as the US dollar .It would be interesting to know the merits of each afterwards were it to come to pass.
    Something has to give otherwise it breaks .

    • idij

      Go away with your borrowing! The last thing we need is a fat Euro government with the power to borrow and having zero real accountability. It’s bad enough having our own wastes of space doing it.

    • Hi Georg,

      Poster posted link to Soros preso a couple of articles back, sorry forgot to keep ref to it:

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

      “There is a real danger that the premature pursuit of fiscal rectitude may wreck the recovery.”

      In your chart, Japan seems off the chart, but it has access to home grown low interest rate bonds, so its debt burden is manageable.

      Ours is not, because at 5.8% our ‘growth’, approaching minus as it will shortly, when inflation(again this is a minus) is added to offset the 5.8%, the figure comes up way short of any sustainable repayment.

      So, correct me if I’m wrong, but according to Soros, we would be caught in the grip of a twin vice:

      1. Debt burden surge to 100% in 2013, see below as a consequence of ratio of debt to GDP, see below

      2. The high risk premium interest rate of 5.8% increasing the debt burden above.

      Not sure how up-to-date this is with our ‘bailout’, but its recent:

      http://bit.ly/9pXFbW

      “Devine said it seems clear that promissory notes should form part of the deficit and debt. As such, the debt to GDP ratio will reach 87% by the end of 2010 before peaking at just over 100% in 2013, assuming the Government sees through in full the outlined fiscal consolidation (Chart 19, Appendix 1 above).

      The decline in the nominal value of the economy will make it more difficult for the Government to reach its target of reducing the deficit to GDP ratio to below 3% before 2014 without additional measures being implemented.”

      Perhaps Constantin can do a representation of what the parameters and calculations are to describe just when our tipping point for default will come!

      Meanwhile for sure meetings must be taking place all over Ireland’s 5star castle hotels this weekend to plot just how the banks are to coordinate a raid on the remainder of the bailout, now that we are cash rich once again:)

  35. Eoin Fahey

    http://blog.kbinvestors.com/node/71

    Eoin certainly must be a contender for Lenny’s Chief Economics Advisor, or perhaps a spokesperson for Pravda RTE, or maybe a job lecturing in Galway with Alan Ahearne….

    “The above is a fairly simple analysis of course. If interest rates were to rise sharply, for example (which could happen if the rest of Europe were to grow strongly) the Irish deficit could rise to even higher levels than the 10% I assume here (though this seems very unlikely). But it serves to point out that while Ireland faces a truly scary set of economic circumstances, one of the few things it does NOT have to worry about for the foreseeable future is being forced to seek the assistance of the IMF.
    Eoin Fahy’s blog”

  36. Harper66

    http://www.universitytimes.ie/story.php?id=519

    excellent article outlining some of the huge payments recieved by some of Irelands most consummate insiders and quango members.

  37. fram7rip

    The Mad Hatter told Alice that “words mean what you want them to mean.” He would have been at home in the European Union, where “no” means “yes” and political propaganda is passed off as information. If Ireland votes No to the Lisbon Treaty, the EU will continue and Ireland will be part of it, but if they vote Yes the Irish will find they have even less leverage in Europe than today:

    http://online.wsj.com/article/SB10001424052970204488304574435471966748620.html?mod=europe_opinion

  38. Dorothy Jones

    David
    Congratulations on the TV3 Media Award, Story of the Year, for your reporting on the economy and related matters.
    The question arose again on Vincent Browne on whether you ‘would run’. Don’t worry too much about the drains – go for it!

  39. StephenKenny

    Something interesting seems to be happening in the US:

    http://thefourteenthbanker.wordpress.com/2010/12/17/sell-your-soul-to-the-devil-this-christmas/

    The consequences of this are so enormous, I’m actually speechless.

  40. Fair dues to the petitioners et al who’ve lobbied for this. No lobbying from Pravda RTE. Seems they’ve been blindsided, pressure entirely internet based. But its only limited to the new draconian banking powers not bailout! Can’t get any detail so far as coverage is mostly about gutters and weather:)

    http://www.rte.ie/news/2010/1217/banks-business.html

    • Pravda RTE squeezed in a piece with Joan Burton interviewed. Council of State convened for Tuesday next, nature of the deliberations not given, members of CoS not given. Pres McAleese will not be bound by their advice and can reject it. She can decide to refer it to Supreme Court (where it should go). Main concern is Section 53 where Lenny accords to himself the power to legislate for the banks without same legislation, as is the norm with any legislation, that it go before the houses of the Oireachtas, the Dail and Seanad.

      OT: Re Lenny’s financial fascism above,
      On a day when Fitch have issued a further downgrade, its fitting to recall Lenny’s crazy strutting peacock speech below:

      http://www.finance.gov.ie/viewdoc.asp?DocID=6255

      Lenny’s April Fool jokeof last March 30

      “Our determination to deal with this imbalance in our public finances through firm and decisive action has engendered real confidence in our economy on the international stage. The world out there believes in us and in our ability to work our way through our difficulties and return to growth.

      Jean Claude Trichet said: “In the case of Ireland very, very tough decisions have been taken by the government and rightly so,”

      More recently, Mr Trichet’s colleague, Jose Manuel Gonzalez-Paramo on the ECB said: “The Irish measures are very courageous. They are going in the right direction.”

      The French Finance Minister, Christine Lagarde said: “Ireland has set the high standard the rest of us must follow”.

      On a recent visit to Ireland, the German Minister for European Affairs, Dr. Werner Hoyer said: “I think there is a deeply rooted trust and confidence in this country’s ability to sort out its problems. … There is a fundamental belief that the Irish are going to solve it.”

      Already, we have reaped the benefits of this growing confidence. Since last April’s Supplementary Budget and the announcement of the decision to establish NAMA, borrowing costs have fallen and our bond spreads have halved. This trend was reinforced by last December’s Budget which outlined the next stage of our plans to return to a sustainable fiscal position. That is why we must retain our fiscal discipline.”

  41. [...] for Ireland At last, our economy gets shot in the arm Ireland?s rating cut five levels by Moody?s SEPARATE BANK FROM STATE DEBT OR ELSE FACE ECONOCIDE Mortgage arrears and the banks Net tightens on Anglo suspects with DPP files. Anglo moves [...]

  42. Dan

    Website claiming to have a list of the Anglo Irish Bond Holders? Open the following and scroll down to see the list.
    http://dailybail.com/home/rothschild-bank-and-goldman-sachs-are-both-on-the-list-of-bo.html

    • Harper66

      Dan
      excellent link.very informative.thanks.

    • Deco

      I have a question for everybody.

      Do you provide business for any of the companies listed as recipients of the Anglo Bailout ???

      If you do, then you might wish to exercise your conscience and leave them in the cold, without your business ever again – no matter how much they spend on advertising trying to buy the silence of the Irish news media.

      One in particular sticks out. Johnny Cash, Ballsbridge and all of that….

  43. Deco

    Well, it seems as the banking fraternity in Ireland never learn.

    We had Madam Bowler deciding she will opt for an orderly step-down. (Did she jump or was she pushed ??).

    We have AIB again in the soup.

    And now BoI are found to be paying well connected boyos in secret without anybody officially finding out until it is too late.

    http://www.independent.ie/national-news/probe-into-euro500000-secret-bank-bonus-2465716.html

    These people are still to comfortable, too unaccountable, and too crony-driven. One wonders why anybody still trades in shares of these companies. It is like as if they are speculating that the gamblers running these firms might accidentally get it right.

    Price-fixing, and market rigging in Ireland’s private sector are responsible for the sustainance of crooked intergenerational hierarchies of cronies.

    The best disinfectant is sunlight !!!! (I think that was a quote from Mark Twain – but I am not 100% certain).

  44. Deco

    David – you are correct concerning John Redmond’s role with attempting to serve the Old Empire, with the current Irish political class trying to be of service to the new enpire. At the end of the day these empires are serving their own interests. And soveriegnty is an ability to do the same.

    I am watching the rise of Sinn Fein, and coming to the conclusion that recent commentary by Nigel Farage, MEP are correct. Ireland is a comparitively wealthy country compared to Hungary, Lavia, or Greece – yet even here we have a movement that wants to play the herd instinct.

    I do not know how to fix this at EU level, because at EU level if Irish bank bondholders get a haircut – then immediately the Spanish authorities will start trying to get the same deal – and then before you know it – the world will be told the truth about the spanish banking system – and we will be in an AIG style collapse in Europe. And this will be resolved by dollar printing.

    “Print-baby-Print”..

  45. Deco

    The issue of Belgium’s national debt will become topical when Belgium eventually goes for divorce. When Czechoslovakia split, the Czechs opted to pay the bills. It was amicable. And many Slovaks still wanted to stay, even though they were getting a free lunch out it.

    However in Belgium neither side can make any such commitment. They simply cannot agree on the bill, or indeed anything concerning state money. It is a disaster.

  46. vincent

    “The Money Masters” A documentary worth watching…

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