February 9, 2011

Forget the TV sideshow - we must focus on Europe

Posted in Debt · 184 comments ·
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IT is quite surreal to see the opening days of the campaign have been dominated by arguments about whether party leaders will appear on TV programmes.

This doesn’t seem to be the sort of thing that will determine the future of the country. Arguably, the next seven weeks will shape what kind of country we are going to live in. I say next seven weeks because although the election is crucial, it is not the end of the project. The EU summit four weeks after the election is likely to be just as important for us. This summit could be the battleground between European countries like Ireland, Spain, Portugal and Greece — the debtor nations — and Germany and France, the creditor nations.

The script is being written. The conversation is being set and the parameters of the debate are being framed. The problem for Ireland and Europe — a continent deeply divided between creditor and debtor nations — is that the pen is in the hands of the creditors, who have as their key objectives the protection of their banks.

What is going on at the moment is nothing more than a titanic struggle between the interests of the citizens of Europe and the interests of the finance industry in Europe.

It is one the citizens must win. Otherwise Europe will be turned from a democracy — where, broadly speaking, economic policy is framed with the interests of the average citizen in mind — to a bankocracy, where economic policy is driven exclusively by the interests of the banks.

Germany and France want to introduce a common corporate tax rate and rules about government spending. They are trying to make Europe look more and more like Germany. But these are the concerns of creditor countries, with old populations who are in the business of wealth preservation. Countries like this need slow steady growth and low or no inflation — both designed to make savers richer.

This is all very well if you are owed money.

In contrast, if you owe money these policies will make your predicament untenable. Ireland owes money, lots of money. If we sign up to these rules we will simply ensure that the economy implodes under the strain of low inflation and enormous debt payments. In its simplest form, once your total debts reach 100pc of your income, which is the case in Ireland with the bank debt soldered on to the country’s debt, your economy has to grow at a rate faster than the rate of interest for you to keep your head above water.

But the EU rate of interest at 5.7pc is well above the growth rate that our economy can muster. So the debt dynamics of such a situation imply that the debt will explode.

What does this mean for us as a nation? It means that we are well on the way towards a sovereign default, where the debt mountain simply gets too big and we do an Argentina and default in chaos. When this happens, the credibility of Ireland as a place to do business evaporates and multinationals will not consider us a safe place. Equally, and maybe more significantly, as the situation deteriorates, the locals will pull their cash out of the banking system, ahead of an expected default.

So the new government has to face this with the utmost urgency.

What can we do? Are we going to do nothing and hope for the cavalry to emerge over the horizon? Are we going to risk everything for the bankrupt banks, which are not even functioning as providers of credit to the system? Is there an alternative way out?

Let’s look at some numbers. The total unsecured bank debt of the banks in Ireland is €21.4bn — €15.4bn senior and €6bn subordinated.

We can take the Anglo and the INBS debt out of that equation, as those banks are being wound up at the moment and presumably the bondholders will have to wait in line and pick up the scraps.

That gives us senior debt of €11,623m and unsecured debt of €5,743m.

Savings on this would be quite easy. First, wipe out the subordinated debt thus saving €5.7bn. This is what happens to subordinated debt in a crisis: it goes.

THE senior debt that remains (about €5bn each for AIB and BoI) can then be restructured. Those senior creditors should be offered a debt for equity swap. This will allow them to take over large portions of the ownership of the banks and these former creditors, who are now owners, will have an interest in the recovery of the relevant bank.

But won’t this cause panic?

Well no, not at all. In fact, the opposite is the case: not doing anything causes panic. Last weekend we got an example from Denmark of what happens.

A small Danish bank called Amagerbanken was put into administration by the Danish financial authorities on Saturday. The bank had assets of €2bn and liabilities of €3.3bn. Instead of the Danish government making up the difference, they are forcing losses on senior bondholders of 41pc.

The Danish authorities said to the bondholders: ‘You invested in the bank, so you can share the assets amongst yourselves, don’t come crying to us when there is a shortfall.’

And guess what? Did the sky fall down? No. The Danish banking system hasn’t collapsed. In fact, Danish 10-year bonds — the bellwether for risk in a country — hardly moved. They were at 3.3pc on Friday and they are still 3.3pc today. Nobody cared. Capitalism works.

Unfortunately for us, the Danes are not in the euro. They chose to stay out and keep their currency in 2001. This means they do not come under the diktat of Germany and France.

However, the Danes have shown us that when you do the right thing — let capitalism work — the market moves on. The losers take losses and get on with it. That’s how it works.

The new government needs to go to Europe and make this case for us. It’s not a choice but an imperative. Forget the TV debates, this is what the election is all about.

David McWilliams will teach a new economics diploma at the Independent Colleges Dublin beginning next Monday.


  1. adamabyss

    subscribe.

    • mcsean2163

      Hi adamabyss,

      I hope I’m not overstepping the dictates of polite society by suggesting that perhaps it might be a bit more interesting if you could muster up something a bit more stimulating than the single word, “subscribe”.

      To what do you subscribe and what are your reasons for subscribing?

      • adamabyss

        mcsean2163 I need to make a posting so that I can receive all the subsequent comments directly to my email inbox, rather than coming to the site to read them. There’s no other way to do it. I explained this to the webmaster back in 2009 and he couldn’t find a way around it. I do comment quite often at more length but am not qualified nor interested in commenting at every juncture. I mostly subscribe to and agree with David’s articles and the respondent comments on this site, with occasional exceptions. All the best, Adam.

      • stiofanc02

        mcsean2163 needs to mind his own business, and it would have been polite to say thanks to Adam for explaining his position.

  2. Surely the reason the interest rate is so high (5.7%) is because the creditor nations (and financial institutions) know we are good for it.

    And because we will continue to have a strong trade balance because of low corporation tax, are the creditor countries not actually skimming off some of that tax forgone. In other words, what could be better: we have a low rate of tax and they enjoy the benefit of our interest payments, into perpetuity if David’s prognosis is correct.

    • 34m0

      The interest rate is 5.7% because that is the going rate for the bailout fund available to all struggling euro nations. Why it was set so high was to avoid a morale hazard – they want to punish countries who accrue large debts like Ireland and Greece.

      • CitizenWhy

        Well, there’s moral hazard in being so exploitative that you leave only two options: austerity/poverty/no growth or default. The smart money is now taking about how it will be impossible for Greece not to default. Of course as this default develops the interest rate for Greece could be greatly lowered, allowing its politicians to claim a victory as they move Greece to make austerity cuts.

        But Ireland would probably borrow more, at higher interest rates, to satisfy Europe’s demands.

      • Deco

        But you have to ask yourself – what rate of interest would you want if you were the one who was loaning money to the Irish establishment ?

        I mean they are a risky proposition….and add a risk premium to the Irish government debt. Isn’t that right Suds ?

  3. shtove

    I despair.

    Speaking to Irish relatives over the past few weeks, they all say that nobody has a clue, what can be done?

    One word: Iceland.

    Ireland should be fronting up to the obnoxious bank bastards – and I’m not talking about the government.

    The PEOPLE, who are being forced to mortgage their futures for the sake of the international slimeballs, can stand up and force a better deal. Even if it means renouncing the €.

    Here’s how:

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

    Better than the Cairo protests – because it worked!

    • CitizenWhy

      Iceland would be a wonderful model, except for one thing. Iceland has its own currency, and Ireland does not. When you have your won currency you have many options, including telling international creditors to get out of town. But Ireland’s political class is desperate to say in the EuroZone no matter what the cost to Ireland. Being in the Euro somehow represents to them that old Irish hang-up – respectability.

      If Ireland gets uppity it could be expelled from the Euro Zone. Which would be a difficult blessing to manage, but a blessing nonetheless. Yet expulsion would be a curse if no one in Ireland is currently working on how to manage the post-Euro situation. Perhaps Iceland would allow Ireland to use its currency for a while, who knows?

      • shtove

        The euro is a negotiable instrument. Let the Irish negotiate, with the threat of default.

        That’s not being uppity – it’s just standing your ground.

        Problem is that Fianna Fail has staked out the ground according to the wishes of the permanent bureaucracy and the banks.

        Time to shift the ground.

      • coldblow

        “But Ireland’s political class is desperate to stay in the EuroZone no matter what the cost to Ireland. Being in the Euro somehow represents to them that old Irish hang-up – respectability.”

        I disagree. My opinion/hunch is that staying in the Euro is simply because the gains of the insiders (the politicians and those they represent) are held in Irish banks in Euros. When a sufficient number of them have their money safely offshore then the scene can safely be set for default. A preemptive default could scupper this process and might also endanger their foreign-held savings and foreign property if other countries retaliated by seizing Irish-owned assets in their jurisdiction (how much was spent on the latter? I think Finfacts mentioned €60bn, or was that €80bn?) – arguing with reason that they had been funded through loans of their own citizens’ savings to Irish banks.

        Default with Euro exit, be it managed or not, would wipe out remaining savers in Irish banks, iie those without connections or informed advice. A managed default, with the agreement of our EU partners and choreographed with them, would have the same outcome for domestic savers but those with offshore wealth would be more confident about hanging onto it. “Follow the money” – respectability is no more than a deliberate cloak for underhand dealings.

        As I say this is just my own uninformed hunch and it could be very wrong, but one I have had from day one. It’s one of the reasons I have always argued that there should be full transparency re the finances of all. I’d be obliged if someone could disabuse me convincingly.

        Two things are very likely whatever your own interpretation of events, however, and that is (1) that the outsiders will be muggged and (2) that the waters will be muddied so that this can never be proved. It’s the unspoken assumption on which this election is being held. It’s unspoken because it wouldn’t sound good out loud.

    • astainexile

      I agree with you re Ireland viz a viz Iceland but not your postscript. Having watched the protests in Egypt (not just Cairo) since they began on 25th January, I have nothing but admiration for the integrity, stamina,
      determination and ability to keep cool of the wonderful Egyptian people. A true social revolution is under way – so inform yourself before you comment.
      By the way – news just in Mubarak has gone!!!

  4. [...] This post was mentioned on Twitter by David McWilliams, Al, Hannah Rushe, Sinead Power, Michael Kelleher and others. Michael Kelleher said: RT @davidmcw: New on the site: Forget the TV sideshow — we must focus on Europe http://dlvr.it/GBkpY [...]

  5. Harper66

    The major issues facing our country, such as bank debt, are not being discussed in main stream media or by the main stream political parties.

    Thanks to David for providing informed opinion backed up with facts and figures.

    Here is an article of interest from Wall street Journal linked from irisheconomy.ie –

    http://online.wsj.com/article/SB10001424052748704422204576130221506662118.html#articleTabs%3Darticle

    What Ireland has to learn from Kazakhstan about dealing with a banking crisis…

    • CitizenWhy

      Why are the media not reporting on the problems? Because they are not on the agenda of the political class. It took a long time for the priest sex scandal to be discussed, although it was well know for decades (a cousin of mine organized against priest abuse in the 60s and was considered a traitor to Ireland). The problems have to turn into severe crises before they will be acknowledged. That could come sooner than the political class realizes when mass mobilization against the government occurs.

      • projectallende

        “The media” is private and has revolving door policies or it is public and therefore alligned (RTE) with public interests (they create the interests). Radical change is not on their agenda” — the kids are making their own media and invited David McWilliams to host this week.

        I wrote about it here in an article called
        “Out of the chat rooms and into the streets” http://www.densidadregional.com/?p=276
        Make your own media

  6. David,

    What you say makes sense. I am in Toronto where it is estimated that over 2,000 Irish have arrived in January alone and who will not have a say in the forthcoming election which you rightly say is crucial for the future of our country which seems to be slowly but surely imploding. We have to prevent this implosion from happening. We have to stand-up to the interests of the Franco-German alliance and their banking associates. You’re right, we shouldn’t allow our nation anod others like it to haemorrhage so that the interests of the few are sustained. Our political leaders should take note and take the appropriate action and if they are incapable of doing so then we need a new generation of political leaders to step forward and stand-up for the rights of Irish citizens everywhere. Despite what the French and Germans may think, Europe needs Ireland to survive this crisis because if not then the European Union itself, and all that has been achieved, could be in danger of imploding.

    • CitizenWhy

      Economic analysts are coming to the conclusion that the Euro as we know it cannot last for more than 3-5 years. For it to survive at all it needs to bleed Ireland, Greece, etc. or expel them. It’s conceivable that a Franco-German Euro could survive, with a few other countries, but that is not likely. The French people do not like the Euro and will eventually turn on Sarkozy.

      The “rally” in the Euro is just a game being played by traders. The higher the Euro goes, the deeper it falls, the more money they make.

      Greek default is almost a given now. Irish default is the smartest thing for Ireland to do but its politicians will do that only when there is a popular uprising. Defaults plus the huge surge in the price of oil/energy will derange the Euro.

  7. macroscian

    Substitute ‘the world’ for ‘Europe’ and you are closer to the mark.

  8. Ollie

    Hi David,
    Thanks for another article which attempts to educate the public about the reality of our economic situation.

    You write: “once your total debts reach 100pc of your income, which is the case in Ireland with the bank debt soldered on to the country’s debt…the debt dynamics of such a situation imply that the debt will explode.”

    Sorry to ask a simplistic question but
    What would happen if we tried to stop borrowing completely and live within our means?

    I know it would be hard, but isn’t that what households up and down the country do when a job is lost and income plumets.
    Why is borrowing at 3%of GDP an accepted target. It is unsustainable. Why does the general public and all politicians accept it?

    • paddythepig

      ‘What would happen if we tried to stop borrowing completely and live within our means’

      George Hook asked the same question to Moore McDowell about 6 weeks ago. and McDowell nearly choked as he tried to answer. Reason ; because McDowell would and others would have to take a big haircut his over-inflated public service pension, of the order of 30%.

      The Jack O’Connor brigade, and the tens of thousands who follow him would be similarly hit. Public service wage bill, welfare etc would all need to be cut by around 30%. Things like foreign aid would be wiped out totally. A huge redundancy programme in the public service would be unavoidable.

      The general public accept it because the vocal elements of the public – the unions and their members – need a deficit to perpetuate the over-spending.

      The politicians accept it because they don’t have the balls to tell the public the truth. All they want is to be re-elected.

      • Deco

        Sorry to be so brutally honest – but the entire third level sector in Ireland is overpaid considering the hours completed at work, and the “output”. It is also extremely overstaffed, and there are far too many courses at undergraduate level – many of which are not being filled because of employment trends – but the courses continue in any case because the lecturers in architecture and other areas simply cannot be told that the economy has moved away from them.

      • Deco

        Where is Jack O’Connor ?

        I have not heard from Jack O’Connor in months.

        and where is David Begg ?

        Have not heard from him in months either.

        Come to think of it. Danny McCoy of IBEC has also disappeared. And so has Tom Parlon of the CIF.

        Has the “real” government of Ireland gone into hiding, while the population gets all worked about the delusion that is called Democracy ?

      • coldblow

        Obviously we need to get to a situation where we live within our means as quickly as possible, but isn’t the lesson from the Depression that if you cut back too quickly then you worsen the deflationary spiral? Some argue that this is the case in Ireland:

        http://notesonthefront.typepad.com/politicaleconomy/2011/02/now-we-know-in-early-2010-the-government-was-projecting-nominal-gdp-growth-to-be-121-percent-over-the-two-years-2011-and-2.html

        Apparently it is very hard to get everyone to take cuts all round. A devaluation does this quite smoothly. PS and private sector employees’ wages take an instant hit and, presumably, don’t recover as quickly as others who can just increase their charges. I seem to remember a wave of this immediately after the introduction fo the Euro. If you have savings, or resources, live off interest, rents or dividends, or are engaged in a specialized occupation that is in demand, or ar in a profession controlled (ie protected) by legislation, or working in the black market then your relative slice of the pie increases. If you are in the security services (eg the police in Thatcher’s Britain) you might find your wages increasing in nominal terms. Others would argue that we are better off aiming for a larger pie.

        I suppose it comes down to whether you regard the system as entirely rotten thus justifying its complete destruction and starting again, or merely in need of reform, ie that it’s more efficient to retain the existing networks there (eg human capital, systems, skills etc? – including human happiness).

        There seems to be a global imbalance between the claims of capital and labour with excessive returns to the former as reflected in the increasing proportionate wealth of the richest say 1%. The former wishes to retain the debt system obviously.

        In Ireland it’s not easy to tell the exploiters from the exploited. There’s a propaganda war going on.

        I’m no expert. Just thoughts off the top of the old head.

        • paddythepig

          The deflation is unavoidable, and will happen anyway. It’s a question of how much of our kids future output do we use to offset it’s effect, such that economic indicators remain within politically acceptable levels.

          To be fair to the children, we should use as little as possible of their output ; in other words, we should borrow as little as possible ; the only limitation that we don’t cut so quickly as to kill the patient.

          The fiscal problem has been clear since 2008 ; it should have been dealt with by 2012. There has been way too much dithering.

          The Joan Burton’s and Jack O’Connor’s of the world bleat on about the ‘defhlaaationary spiral’, as though an extra 3 or 4 billion cuts in a year will topple the economy. It’s utter cack. People will still do their day-to-day spending ; the economy will not fall off the cliff.

          Devaluation is a terrible option too ; it suits politicians as people aren’t as conscious of it as other more concrete forms of reform. And the fact that to get out of this crisis, we will be forced to reform, to be more productive, is to our long term benefit.

          Thank God we don’t have PaddyPunts.

  9. 34m0

    Even if an debt for equity arrangement was made, and the government managed to avoid that 11+ billion euro bill, that still leaves a lot of debt still to deal with. We are so deep in this hole, unless we find a lot of oil and gas off the west coast, I believe a sovereign default in inevitable.

  10. The delusion called democracy continues. The claim that voters are offered an alternative with any of the established parties is false.

    The ridiculous idea of ‘tax harmonization’ can not be laughed at loud enough, take two or three dysfunctional tax systems, through them in a pot and you get what? Exactly, another dysfunctional tax system.

    Until the public understands that we are in a war of vested interests, where workers and low income parts of european societies are abused to maintain status quo, lowering wages and at the same time necessities such as food, water and energy will climb sky high, nothing will change.

    The phlegmatic Irish public is politically impotent.

    As someone who is closer to the Irish psyche than I am recently mentioned to me rightly, ‘The Irish will not complain, they moan instead!’

    Well, I do not think this needs an explanation, anyone living here will understand such subtle but crucial difference.

    Davids and others, relentless edutainments and creative thinking have not changed a sausage.

    The strong EU attempts to install a franco-german totalitarian ‘bureaucrazy’ are in full swing. As black cat said somewhere earlier, the real dangers to our all are not coming from Frankfurt or Wallstreet, but are dangers that threaten survival for billions, and in deed this should be at the center of all activities like yesterday, but unfortunately, old cronies and buddy systems are prohibiting real progress on that front, instead we have loopers like Ryan et al. preaching about land based wind turbines and e-cars, go get a tofu and shut the Hell up is all I can say to that utter none sensical BS.

    Green Finance…. yeah right! The next scam is already prepared.

    I would not be astonished of this election will have the historically lowest turnout ever, of what i am hearing left right and center is representative of turnout, than this might just happen.

  11. BrianC

    The article makes pure sense. Sadly our politicians are infected with impure minds thus unable to accept the sense of forcing an equity swap. They are too removed from reality and not practical minded. They are of a deferential mind set and will do as told by the ECB who implements the will of Axel Weber and his cohorts.

    Yes this is a battle between the focused financial aristocracy and the leaderless rabble plebs. So the financiers have the upper hand dictate the terms imposing their arguement of austerity to force deleveraging and demise of capital value transfering the wealth from the many to the few core capital financial cohorts. Just look at the language hair cut burn the bond holders default and so on. This type of language is designed to reinforce a mind set of contraction prohibiting the thought of create financial restructure.

    Equity swap forces responsibility and enforces accountability. They are not being burned they are being given the opportunity to earn their way out of the financial mess their reckless behaviour created. Nobody is receiving a bail out it is a forced loan an excessive interest rates.

    I would have no faith in any Irish politician putting Irelands case forcibly to the EU so that the bureaucrats are instructed to do the right thing which George Soros has already conveyed to remedy the issue of fissure in having a common currency without a common treasury.

  12. P.S.

    They are at it again, to fusion Deutsche Boerse with NYSE with majority of germans. building the largest Ponzi scheme stock market construct to date.

    http://www.nyse.com/press/1297249827662.html

    Sigh…

  13. Gege Le Beau

    I am no financial expert but I have been following things as closely as a person possible can for the last 9 years.

    I think this article from start to finish not only lays out the current reality politically and economically but also shows the way to go, think this prescription will be followed because it has to be followed, it is the only game in town, we have seen these scenarios before, Weimar Germany, Argentina, Bolivia etc, they all had unsustainable external debt which caused a societal implosion, in the case of the former it contributed to the rise of the right and the emergence of a certain Austrian strong man.

    With Ireland’s external debt, wilting economy, massive level of unemployed and looming mortgage crisis plus bottomless pit banks, we are heading for a classic economic storm, while some continue to ludicrously boast about exports as an indication that things are improving.

    When the dust settles and the new government implements a plan along the lines of above then agents from the new agency of while collar crime division should call around to the leading players and inform them that their pensions have been halved and lump sums blocked, moreover they should be given notice of a Dail enquiry into the role they played in a debacle which destroyed the 1st Republic, while the actions of the cabinet, Minister of Finance and senior civil servants should be drafted as a case study in how not to manage a financial crisis.

    Iceland showed the way, we however chose to slavishly and in good post-colonial fashion, look after those who should never have got a penny.

  14. JohnD15

    I agree with some of your points – especially the madness of the high rate of interest on the ‘bail out’. But I think every option should be explored prior to any sovereign default and great caution when it comes to bank default. Even a managed default will have very significant and very negative consequences. I know the Danish bank in question and I can tell you that it is a very different case. It is a tiny monline bank with many of it’s creditors being local and deposit holders. Also as you say it is not in the euro. The solution is for the ECB and the other EU institutions to not only increase liquidity but reduce the cost of liquidity, not only buy back our debt at discounts but then offer it back at cost which effectively write off between 15 and 20% of nominal debt BUT impotently not trigger a default – as it would be consensual. If not, the big losers (apart from us) will be Germany, France and the UK our biggest creditors.

    • malone

      Basically who gives a bollox about the Germans ?
      They do not give a damm about us
      they lent to us and now they want their money even if we have to starve and do witout basic services

      If they loose 120 BN so what ? they have a lot more that that
      Population 80 Million, average savings
      20000 Euros each
      Total 16 trillion Euros
      120 BN not a very part of that
      It would teach them a good lesson , do not lend recklessly

      They sure as hell dont give a crap about us , they want their pound of flesh now

    • Deco

      Bernanke, Krugman and Geithner are going to print enough money to make sure that no banker gets left behind.

      “Print-Baby-Print”.

      Let them eat currency. (it is made of cotton and we know have farmers in rural China hoarding cotton. Maybe they know something the rest of us are not being told in mainstream news ?)

  15. Mary Jenkins

    HI David

    IT IS TIME THAT THE IRISH PEOPLE SHOUTED STOP!

    Is this of any use to you?

    http://europa.eu/lisbon_treaty/glance/democracy/index_en.htm
    More participatory democracy
    There are already many ways in which European citizens can find out about and take part in the political process of the EU. The newest of these is the citizens’ initiative, whereby one million citizens, from any number of member countries, will be able to ask the Commission to present a proposal in any of the EU’s areas of responsibility. The practical details of this initiative will be worked out once the Treaty of Lisbon takes effect.

    GOOD LUCK! MARY JENKINS

  16. SeanOC

    @johnd15
    I agree we should avoid hitting the nuclear switch on default the impact would be even more devastating except for the US hedge funds who are betting big time on a euro default and using ireland as a proxy. I think many media economists are oversimplifying the cinsequences of a sovereign default. There are other options as you point out, including the bond repurchase schemes. But we need to put the pressure back on Frankfurt and Berlin, as they stand to lose as much as us and even more, when you consider the domino effect to Greece, Portugal and possibly Spain. We need to pile the pressure on, threaten default – as it hopeless otherwise – and hope our bluff is not called.

  17. CitizenWhy

    As they used to say in the UK, the Irish banks were the craziest lenders they had ever seen. Except the capital the Irish banks were using came from crazy German, UK and French banks. Perhaps the German bankstook the risks because they knew that their government would protect them at the expense of of non-Germans, and they also knew that the lapdog Irish government would also protect the German banks at the expense of the Irish people.

    Martyrdom is ennobling, is it not?

  18. Apparently 85% of Irish people want to tell the banks to get stuffed while right wing political parties consisting of yes men will get the lions share of the votes at the coming ‘election’

    This is a glaring contadiction and proves that Germany and France and not our enemies because the real enemies are living right here in Ireland. Sadly this includes a large section of the Irish people who clearly don’t have a clue what is good for them. Warped

    When the politicians bleat on about negotiating they make Chamberlain look like Ghengis Khan and I feel like slapping them and telling them to waken the fuck up. Mick Collins would certainly have done so and called them stupid spineless bastards while he was at it

    The JP Morgans of this world fucked the FIAT currency system and the property market good and proper and they are now into commodities such as rice and other essential foodstuffs. They will starve us into submission and have no qualms about doing it as long as they make a buck. There is no such thing as negotiation with certain types of people and you need to be a hard ass to get the message across

    The Egyptians are showing the world how you deal with an immovable force yet there are still people in Ireland who are smug and think they are above all that. Well we will see about this when they start screaming about the repo levels forecast for 2011

    Arguing over the technical aspects of interest rates and banking systems is intellectual wanking and getting you guys nowhere while the world moves on. There has not been one radical idea in Ireland since the crash and neither is there likely to be in the coming months. Where is the all the ‘knowledge’ and highly educated young people who were going to be the stawarts of Celtic Tiger 3 knowledge based economy?

    Trouble is too many people believe in their own bs and are legends in their own lunchtime. Problem was that too many people swallowed it without engaging their brains

  19. malone

    It was interesting today that the the propaganda machine mentioned about the Bank of Scotland which said that they would start to restructure some mortgages in cases where the mortgage holder could not pay the money back and had very big debts outstanding
    Now we know that debt restructuring is the only way forward . Is it possible that somebody has seen the light at last ?

    Now what we dont hear at all in the press is what is going on in the backround of the global finincial players and also of Europe.
    These are the people who with any experience and who know their stuff see that Ireland will default.
    They saw this coming .It is a matter of time. As long as the IMF agreement stays in place I think the default is a certainty.
    Now even the people who subscribe to this column can see that and we are not economists well maybe not all of us. Now the repercussusions of that will be felt all over Europe and there is no way that the
    sausage loving Germans will get their money back.

    As for the big financial players ,are they panicking too, Do they know what to do ? So what are they going to do ? What is the next plan ,What plans are they hatching even as we speak here ? What is going on in the boardrooms of Deutche Bank, Credit Suisse Bank, Société Générale,Santander, Rabobank (Dutch banks are also in trouble) Barclays etc
    Now we here a lot about the EU and all its mechanisms and committees but we do not hear much about the financial connections beween banks and the big financial players as David mentioned and also that they are behind EU ministers and behind the policymaking of the EU ? and dont let us forget about that other wonderful democracy and true bastion of freedom and champion of the ordinary man
    , The United States

    The next few months promises to be very interesting
    and as David has said the big one now is the EU summit.
    Has nobody realised that if Ireland were to agree to the common corporation tax that the multinationals
    would be on the first Aer ligus plane ( if they are not on strike) and that will extinguish any hope that Ireland has of even meeting just the interest due on the IMF bailout ?
    Anybody know where the British magician Paul Daniels
    is , maybe he could congujure up something
    while we are all pleasantly distracted by
    his very eye catching assisant( was ) and Berlusconi´s Mistreses, who knows , maybe some of the Irish politicans who went to Italy on trips were entertained by these women as well ?

  20. I always thought we had passed Denial now I believe we have not and that we are stuck in a Limbo of NOTHINGNESS .How much more can we take? What baggage are we holding that keeps us Down .How do we Let Go?How many more Children must leave before its too late?
    This IMPLOSION is self inflicted……and Fatal.

    We have Enemies around our Isle who are Angry and Greedy and are counting their Meal ~Take to Rob Us and we continue to Lie Low.Is this a Mind War between us ?

    The World continues to Watch US.

  21. We may like to believe we are a Nation of People .If we remain obnoxious long more we will become a Nation of Factions .We all saw what happened in Lebenon .

  22. uchrisn

    Nice anaylsis. David and most the bloggers here who agree with him have been proven right by time over the banking and public debt sitaution. Basically that Ireland can not afford to pay for it banks debts.
    Unfortunatly the message was not spread out enough and believed at the time. People chose to believe Mr. Lenihan/RTE/ random economists.

  23. Tim

    Folks, David will do his own thing; he has a plan. The rest of us have a chance to support him and vote for an independent.

    Take that chance, please!

    We all know that FF/FG/LAB will not change politics in our country.

    Vote for your independent candidate and David will help him/her.

  24. Witches to be jailed for inaccurate soothsaying
    ….this is in the Independent this morning .

    Why have the Gov not jailed the Bank Auditors in Ireland not only for wrong reporting of facts but also wrong projections too?

  25. Conor Woodman

    http://www.channel4.com/programmes/around-the-world-in-80-trades/articles/interview-with-conor-woodman

    For any young person who has the determination to walk the globe maybe this man can give you inspiration.

  26. Shane Ross should go public and say that presuming he is elected it is his intention to invite all elected Independent candidates to a meeting to form a group that on the national stage will stand for David’s policies and employ David to be an advisor with regard to negotiations with one or two of the other parties that would have the numbers to form a Government.
    Vote Independent is the message to get out there.!
    We are being spammed on TV and radio constantly with the main parties and Independents are by and large not getting a look in

    • Eireannach

      You must be out of your f**king mind!

      DMcW is the man who advised the Minister for Finance to unilaterally guarantee all bank deposits and bond-holders WITHOUT, I repeat WITHOUT consulting the other countries in Europe that this was Ireland’s plan.

      That stunt could’ve totally sunk other banks all over Europe. What actually happened was the British and German states extended bank deposit guarantees of their own. But neither Britain nor Germany had any intention of letting their get hijacked by private bankers. No! It could this sneaking, greasy country to try to pull a fast one on everyone else. Hence all the punishment and burden carrying that has occured since.

      Germany et al are merely REACTING to an astonishly self-centred event that threatened everyone of our European partners.

      And who advised the government to pull a fast one? If DMcW ever got near power Germany would practically wage war on us just to teach us a lesson for putting this dead-of-night, pull-a-fast-one ‘adviser’ into the position of being our representative!!!

  27. The Pre’s :

    Twinky and her cohorts are all doing the ‘Preees’ this week in Laurell Hill and todays ‘SCRIPT’ is

    ‘To Be or Not To Be’

    ( sub – titled – Sovereign Default )

    This is the question we have been discussing so long and so far the jury has not returned.

    Our energies seem to focus on the Elections for what is really a national council forum without a mandate that is relevant to do anything we need them to do because it is no longer within their remit .

    Where are our EU representatives now ? What are they saying ? We have them still do we? Has our President already resigned ? Who speaks for us anymore?

    Unless we do something more the Irish Media personel will become bankrupt and our national Media will be filled with foreign correspondents ( solvent ones).And the Legal Profession ……oh give me a break.

  28. Gege Le Beau

    According to a report in today’s Irish Times in relation to FF canvassing, Minister Peter Carey TD, when asked why the bondholders couldn’t be burned answered ‘because there were credit unions among them’.

  29. Deco

    I sat there watching the Debate on TV-Drivel on Tuesday night. And the obvious thought hit me.

    The debate consisted of three millionaire pretenders, talking about the problems and hardships of everybody else, and trying to make a better living out of it.

    One who was a Minister long enough to become a millionaire out of it. His opponent benefitted from a TD for almost thrity years, and whose wife sold a site to a school in the middle of nowhere, and who got half a million for it-from the same department where she works – the same department that the said TD was telling us needed more resources. And we have a millionaire boradcaster who always manages to shove himself to the top of the pile and pay himself well, even when the rest of the business is scrapping by.

    And here we are in a moment of great truth. Millionaire 1 vs. Millionaire 2, trying to sell hope to those “up to their necks in debt” as a commonly used phrase mentioned many times in the debate describes the situation.

    Any of those out there wondering about a career, should consider socialism as a career option. You can become a millionaire out of it. Hilarious, isn’t it ?

    The really interesting part was actually the bit that followed where three adjudicators discussed the event.

    We had Terri Prone, who is a long time FF supporter. We had Kevin Rafter, who is very obvious ILP supporter.
    We had Matt Cooper, who is a long time FG supporter.

    And these three provided “the analysis”.

    How come nobody asked GimmeMore for his views on Quantatitive Easing ?

    • Julia

      Actually, VB earns a total of E55,000 a year between newspapers and TV3. He told us this a couple of months ago when he was attacked in this same way by a politician who probably thought he wouldn’t answer. Don’t know about the others. Often agree with you about many things but there it is.

      Vote independant.

  30. Deco

    Just been told that GSucks have a massive amount of money in cash. Not sure how true it is. Does this mean that suds and his chums are waiting for another stock market crash ?

    Will Suds Junior tell the EU Commision ?

  31. Incident

    David,

    Agree with all of your sentiments.

    On Newstalk, Alan Dukes this morning in his position as our appointed representative in Anglo, without reservation states that €50 billion is a more accurate bank loss figure. Now does that number sound familiar?

    The “merchants of doom and gloom” have stated this for a long time but were rubbished by the establishment.

    The same establishment in the guise of Brian Lenihan also on Newstalk this morning has again rubbished Dukes’ prognosis. BL who appointed Dukes in the first instance is stating that all is ok as Patrick Honohan is on top of his game!

    Finally while Newstalk were debating this latest horror chapter in our sorry Isle, PRAVDA’s main headline was the “appauling conditions in our prisons”.

    I am now very very nervous.

    • Deco

      This is a case of cost creep.

      We had this for about twenty years in all state projects. Classic example was the M50. The bill just kept on creeping up all of the time.

      The same is now happening with the bank bailout.

      It is like as if the same organizational cultural flaws that existed in one part of the state’s arm of governance is to be found in another.

      And then we have the HSE. Yet another example. And while you’re at it, why not build a HSE for Education (believe me there are people behind the scenes pushing for it), and for Social Welfare,(again there is a push here also under the cover of “fighting welfare fraud”)…. and for whatever else you have in mind.

      Maybe we should just call the state system the GSE Government Services Executive ?

      Actually, GSE has a meaning in the US also. Goverment Sponsored Enterprise. A catch all that could be used to describe a range of entreprenuers who benefit from various bailouts, state contracts, and dubious regulatory approvals….

  32. Whats the difference between a Danish Bank and a Danish Pastry ?

    A Danish Bank has balls and a Danish Pastry has cherries.

    This explains why Irish Banks only have cherries in the Boardroom

    • Deco

      Jens Peter Bonde – can we elect him to Seanad Eireann ?

      A Danish politician, who has been advocating institutional trasparency and taking aim at the EU commision’s behaviour and machinations over the financial crisis.

      If the Danes did not behave responsibly with regards to their banks, there would be a Parlaiment full of Jens Peter Bonde’s inside four years.

      Our muppets are almost to the point of apologising for not helping IBEC’s anchor tenants enough.

      • Deco – Have you forgotten WISSUM SAGEN in discussions a year or so ago? Do you remember who the Real Bond was ?

        It was me Deco in my alter -ego from the Deserts in Morroco to the Sinai and Tel Aviv – meeting Rabat on the beach in front of the Conrad Hotel ( blasted with bullets )with his complements of Mossad body guards – the jewish shepardic army general in armani and his prostituted Irish girlfriend daughter of an ex Limerick Mayor and doing business in Dorchester London .There was only one Bond Deco that made this book a best seller and jailed a famous lawyer in Denmark brought a downfall to a Big 8 Audit firm in Copenhagen .Its a tale of ten lives where the HQ in Phoenix park were in the zoo searching for the white bear and eating the kit kat at the same time.It was all around them and they could not see it.

        Deco my camel was my best friend .Her name was Nadeen.

        • Deco

          John, it takes great courage to do what Niels Lunde did.

          And it took even more courage to do what you did because the media is paid off by the advertising penny, in this country. And now that the media took their money, they are now posturing as if it was all the bankers fault.

          But if the system was so absolutely rotten, then why were the media looking the other way for fifteen years.

          Why did Ruairi Quinn’s brother get soft treatment when he was chairman of AIB after the Rusnak scandal, when it was obvious that the board and management of AIB were prone to instruct people to do really stupid things to acheive their bonuses, and their promotions ?

          the answer – it was all an effective coverup. “Business as usual” was maintained until Ireland became the equivalent of an AIB gambling fund gone completely wrong.

          Only two people were not compromised.

          David McWilliams.
          Shane Ross.

          Of these, Shane Ross was the most strident and the most aggressive. We must also bear in mind, that whatever it’s faults, Indo News Media did protect McWilliams and Ross, and refused to take heed of the vested interests in this country which has sought to silence both.

  33. Ollie

    Hi all’
    David says “..we are well on the way towards a sovereign default, where the debt mountain simply gets too big…”

    Brian Lenihan recently said on TV,that when he was negotiating with the IMF/EU, they (IMF/EU) said that defaulting on bondholders was not an acceptable option.

    When it comes time to default, will our government have the power to make that decision for itself or will the EU/IMF force our government to spend almost everything it has on interest payments?

    During the famine, our people were not allowed to renege on financial commitments and our produce was exported to pay for landlords rent.

    This seems to happen today where poor countries spend much of their money servicing debt, even though their people die of malnutrition and lack of basic health care.
    Can this be what is in store for us?

    • Deco

      Actually, from what I remember – the IMF did not cast an opinion on the issue of defaulting on bank bond holders. But the EU made it completely non-negotionable. I remember listening to Noel Dempsey say this on Frontline – I remember him saying that the EU would not accept any form of punishment being applied to the bondholders.

      And now I also remember the slogan ” Vote Yes – for a better future ” on all the Lisbon 2.0 material and leaflets being distributed by the local rubber stamp branch of the European Liberals.

      A better future for whom may I ask ?

  34. Deco

    I think the time as come to form a new political party called the “Rubber stamp Party”. Basically, it will be an endorsement of what is going on, but with no pretence. The Rubber stamp party will offer the people business as usual, but an end to the pretence, that they are actually getting somewhere. This will enable ordinary citizens to make their decisions in a less deceitful environment. This will imprve decision making, and thereby performance for the citizens.

    Basically, when you vote for the rubber stamp party, you get whatever IBEC and ICTU agree as a compromise/payoff/fudge as a national policy. There will be no pretence that the politicians are actually trying to influence matters in the public interest. Instead you just get whatever IBEC or ICTU wants. Or what they both want.

    All the candidates will get endorsed by the media as “a safe pair of hands” – even if the candidates do not have two hands. In fact, even if the candidate has four feet, this description will apply.

    “Support our advertising sponsors”.

  35. Rory

    Take this article and doorstep your FG / Lab TD with it. Don’t wait for her/him. Knock on his door, hand it to him and ask for a referendum on the separation of private banking debt and sovereign debt. I’m off to see James Reilly FG.

    • Deco

      Nah – tell them that you are thinking of voting for Grizzley and his mates…that should shake them up…they will “explode” into action on the issue !!

  36. Eireannach

    DMcW really and truly has a lot to answer for.

    Listen to this podcast from NPR, and in particular listen to the German academic explain how shocking it was for the German public when they realised the Irish government had unilaterally guaranteed the Irish banks.

    This threatened to suck deposits out of banks elsewhere in the eurozone, and could had collapsed banks all over Europe. In reaction, bank deposit guarantees were extended by both the British state and the German state.

    Yeah, thanks a lot Brian Lenihan and David McWilliams. Your little stunt to pull a fast one on our European partners – without f**king consulting them first! – has completely destroyed all good will to us.

    Now they’re coming after our corporation tax. Revenge is sweet. But oh no! DMcW the self-confessed Atlanticist cries foul!

    Jesus H Christ man, you shouldn’t advice the Minister for Finance to guarantee banks in the middle of the night in your kitchen, and then have the insolent cheek to not even consult your partners. Disgraceful is not the word – treasonous more like.

      • coldblow

        I don’t think the issue of Irish banks stealing deposits from unguaranteed European banks in 2008 was such a big issue really. It’s certainly not now.

        Germany etc are of course pleased that the Irish state protected its banks at their own banks had lent to them. It was never in their interest for Irish banks to go bust, but neither (logically) is it in their interests for the Irish state to go bust either – for similar reasons.

        In time we will I hope find out what the EU input was into the Sept 08 decision. Likewise the ‘secret’ letter accompanying the ‘bail out’ which presumably contains EU orders disallowing the burning of the Irish banks’ bondholders. It appears to be accepted that the German and other banks are also in serious trouble but, unlike the Irish ones, it hasn’t come to light yet. They will obviously drag up all kinds of red herrings to divert attention from this, which is understandable. When the German people realize that their own out of control banks lent their savings to ours (among others) then I think they really will be shocked. I don’t know how far they have progressed by now down the path to that realization.

    • I think dmcw is a good cook too thus reason why the minister came to expect to sample some of his bakes .Like economics there are ingredients that make the taste good and if it smells as well its irresistable.DMCW knew how to serve the dish well and everyone enjoyed it.

      • Philip

        DMcW advice was never taken. It is obvious Lenihan was told to prevent a collapse of local banks at ALL costs to prevent a Euro collapse. If the banks collapsed, we would have no Euro today. In 2008 I think the contagion effect was only understood by very few at the time.

        By the way, ever think what would happen if the ATMs stopped issuing or all your savings were frozen? For a start, you’d not be able to book your exit outta Eire with Ryan Air…

  37. paulmcd

    David, It would be useful some day to do a comparative study on Irish banks versus European parents or counterparts.

    For example, National Irish Bank is only 4% of the scale of operations of DANSKE bank; and today we learn that, for the year 2010, NIB was responsible for nearly 35% of the impairment charges for the entire organisation.

    It is inevitable also that Ulster Bank will have a disproportionally negative effect on the results of RBS.

    THE WORST BANKS IN EUROPE MUST BE ALLOWED TO FAIL.

  38. Dear Eireannach,

    I have to reply to your suggestion that I told anyone to do anything. I was asked by the Minister what would I do. I told him the only two countries that had stopped a run on the banks in its tracks were Sweden and Switzerland and they both did so by issuing a blanket guarantee (but as i told him not sub debt which is share capital ). I also pointed out – as I did the week after the guarantee on Questions and Answers, that both countries swiftly followed the guaranatee by a root and branch reform of their banks,closing down bad ones, changing all management and even in the case of Sweden devaluing the currency – all in 2 months.

    I had no idea that our partners would not be consulted. In fact, I was in China when the famous late night meeting occured. And I learnt about it on the net the following day like everyone else.

    So how could I possibly be responsible for not telling the Germans?

    Snap out of it man, I was an independent economist – not an official advisor – I have never been inside the Department of Finance building and I certainly had no idea that all this would be managed in the way it was. All I know is that the man who sat with me that night had no idea what he was doing. I fully expected the gurantee to be limted in scope and time and if you followed the dismay in by writings, even by December 2008, it was becoming claer to me that the “powers’ were manipulating the guarantee for their own ends.

    http://www.davidmcwilliams.ie/2008/12/24/botched-bank-job-is-the-economics-of-noddyland

    David

    • Eireannach

      Good answer David, worthy of a possible future leader.

      So I shouldn’t implicate you so directly in this affair, not as is implied above.

      The fact is it has taken me this long to fully grasp how the blanket guarantee announced by Ireland but banks all over Europe in jeopardy, which the banks then used to hold the states to randsom to save them, effectively, from the threat to their deposits posed by the Irish blanket guarantee.

      The German point of view is this – Ireland pulled a fast one in a bid to save themselves, despite everything the Germans and other Europeans have been doing for the Irish since our accession to THEIR European Community in 1973.

      We have a “competitive” corporation tax rate – to steal money and even jobs from them through undercutting. If that isn’t enough to tell the continentals how we view our relationship with them, we then extend a blanket bank guarantee “on the sly”.

      As a result of this venality, this astonishingly ungrateful treachery, we may never be allowed to formulate meaningful policy again by Europe. Not until a new generation emerge with entirely different values.

      It is exactly the same as what happened to Germany after the war – trust will only return with the passing of the Celtic Tiger generation.

      I hope the pot-bellied golfers reflect on that as the cruise control in their 08 mercedes.

      • Philip

        Our leaders were told to guarantee the banks to protect the Euro. Plain and simple.

        • Eireannach

          It was probably the ECB who threatened Irish politicians to extend a full blanket guarantee. But at that point, Ireland should have immediately called upon European politicians to consult on the role of the state in such circumstances.

          Since we didn’t do that, we can’t know if German and French politicans were similarly passing power to the bankocracy take-over, or if they did so because the Irish situation was an act of financial terrorism against them.

          In other words, are the financial terrorists using Ireland to threaten the eurozone, or the eurozone to threaten Ireland?

          Answer: the bankocracy is playing both the periphery against the centre and the centre against the periphery to divide and rule the people of Europe.

      • Philip

        The German Corp tax regime when taken with their generous tax relief when german local services and goods are used is actually better than Ireland.

    • Dorothy Jones

      Good man David. I have referreed to that article in response to those who come out with such misinformation.

    • David had no responsibility or opportunity; to an ill politician to help
      him remember through his haze of medication the details for the elected member.

  39. joe sod

    ireland depends on the ecb to keep the banks funded with people withdrawing their deposits, i think the total figure is now 150 billion, that is much bigger than what is owed to the bond holders. So the ecb cannot cut ireland loose, if problems hit the other euro countries as they will everything is up in the air again, the deal done with ecb and imf is basically a holding solution for now, i think the only option the government had was to go along with it, the big mistake was made in 1992 in joining the euro without the british, everything else that happened flowed from that flawed decision, the only way out is for the euro to devalue considerably and allow high levels of inflation, even germany cannot prevent the inevitable, i read a headline in one of the american financial sites that the irish central bank has already created 50 billion out of nothing in order to pump in to the banks to replace exiting deposits, also the irish central bank still can print euro notes, think of the effect on the euro if stories like this were replicated in spain and greece. Therefore a softer euro and softer policy on debt and debt cancellation is the only way out and will happen but ireland at the moment doesnt have the power to push this, only when problems hit other euro countries will this happen

  40. Deco

    More stuff that is not being covered by PRavda-RTE. And no mention of this by the Old Schitzo on D’Oliers Street. This is the type of critique of the current administration of US Finance that is virtually banned in the mainstream Irish media. It is relevant. “Print-Baby-Print” policies are causing problems everywhere. But discussion here is forbidden. The knowitalls don’t want you to know.

    http://finance.yahoo.com/tech-ticker/article/535915/Ron-Paul%3A-QE2-Is-a-%22Total-Failure%22-and-Bernanke-Is-Delusional-About-Inflation

    • Philip

      That is scary. Western money system is knackered.

      • Deco

        In the beginning the FIRE economy was banjaxed.

        then we had the Ben Bernanke/Trichet/Gordon Brown/Hank Paulson Doctrine.

        Bail out the banks, with the money of the people. But the people did not have enough money to rebuild the asset bubble built on cheap interest rates.

        So they stuck the bill on the people.

        Unnecessary inflation of essentials, to prevent the necessary deflation of assets.

        It is in agreement with Keynes and Friedman.

        That is the choice between left and right, that comes to the same thing at the end of the day. Shamocracy, and a media sector that instructs us to support the advertisers revenue stream.

  41. Philip

    The Euro is in dire trouble because the European banks think they can keep kicking the can down the road at the peripheral debtor county’s expense.

    All politicians are subject to their immediate voter concerns. Merkel indicated a burn the bondholders approach originally, only to modify her statement later that maybe said burning happen around 2013. Now Sarko and Merky are taking more crap about tax harmonisation etc to keep their electorate happy because they know their relative competitiveness is dropping.

    The banks have us all by the balls because they control the utility system for making day to day money move. You burn bondholders, you have chaos days later. The politicians are all too aware of this but are not prepared to take the big actions to do a big nationalisation because then you piss off the US and other external game players. The ECB has little power.

    There are a lot of nonsense plays going on. Mark my words, there will be no screwing around with anything that will cause a collapse or a default and that includes tax harmonisation. An Ireland default will cause a domino effect if done too soon. I expect a major resturcturing Euro Wide…a Grand Bargain which allows growth to continue…but at what price?

    • Deco

      The entire EU is a kick the can down the road…just look at the social security system in Europe. In fact it sums up the entire perspective of the EU policy making…

      Sarko is protecting the French banking system which is exposed to the PIGS, and simply put, France is not capable of taking the default from Portugual, Greece, Ireland and Spain.

      The Germans have spent the last twenty years fixing the damage caused by 40 years of Marxist Joy in the DDR. Germany’s financial sector somehow or other managed to get itself heavily exposed all over the place, including all that subprime mess in the US, as well as PIGS exposure.

      As David pointed out in “Follow the Money” – Ireland is the Vietnam of LBJ’s Famous domino theory. (or Vietnama if you like). When Iceland broke ranks, Gordon Brown, the bankers socialist, put Iceland on the axis of evil. And this was for a point – to scare the wits out of us in case we did the same. And it worked.

    • coldblow

      Philip, that seems to be about it. Wheels within wheels etc.

  42. Philip

    ECB was and is our Central bank. The local CB guys were just caretakers and still are. Brussels, the commission, the ECB and the rest of the bureacracy are incompetent bejowled layabouts on fat salaries. The bankers are breaking their asses laughing.

    The system is broken. Maybe it needs to fall to bits before we see a proper solution. Then again…

  43. Ollie

    David says:

    “we are well on the way towards a sovereign default, where the debt mountain simply gets too big and we do an Argentina and default in chaos”

    What will the consequences of this be for the ordinary citizen?

    How can we best prepare for this scenario?

    • Ollie : In earlier articles by dmcw there are links to how the Argentines coped with the changes Mainly they used cooperatives and took over derilict factory plants and just worked to work until it paid them .It was cashless for a long time until time caught up and their ideas became fruitful.

  44. breltub

    Potential part solution to housing crisis

    Given this current disaster zone and how it is sucking money out of our working economy, here is an idea I just had.

    The housing crisis to me comes under 3 fault parts.
    -Mortgages
    -disrepair/ghost estates
    -future values

    1.Mortgages – Using all banks now state owned
    All mortgages with state banks need to be renegotiated so that people do not suffer unduly because of the stupid decisions made in the boom.
    The government/banks should renegotiate all mortgages currently in excess of 30k, and take a write down of 40% on what is left to pay off up to a max value of 200k, and down to a minimum of 30k left to pay.
    The reasoning is this, get people who bought these houses into a position where they can get back on their feet. People with less that 30k left to pay can manage that, the 200k ceiling is because people who spent 1 million plus on a home they could not afford during the boom were idiots anyway. Not the kind of people I think the majority of us want to help out!
    This you will say creates moral hazard, those who made the mistakes don’t pay…but here is my twist.
    Some moral reward!

    2 Disrepair/Ghost Estates
    Currently the government owns through NAMA and the banks 1000s of houses, apartments and sites, many in different states of repair, and here is where moral reward could help.
    **The people who get help with the mortgage renegotiations in the above example [1] are excluded from this, as would all current home owners who have a residence in their name**

    The unoccupied houses and apartments would be rented by the government for 10 years to eligible people for a set rate of something like 200€ per month per house/apartment. This set price lasts for 10 years, at which point the deal becomes 50/50 value split. Whereby the government and the house owner agree to sell the house for a 50/50 split based on market values at that time. This means the person renting for the last 10 years gets a chance to buy the house at 50%, and the government gets 50% of the value. Right now the value of these properties is ZERO!! so 50% in 10 years is better than the terrible stagnant black hole that we appear to be staring into. We have to put light at the end of our own tunnel

    The idea behind this is that many of the young people who don’t have houses or apartments at the moment and want to live here, or have jobs but do not want to get into any kind of property dealings with all this uncertainty, will have a chance to get their own place.
    The benefits of this would be:
    -The properties will start to have tenants
    -Ghosts estates will begin to be populated
    -The properties will be invested in by those living in them, as they know that they are getting rent cheap and they get a 50/50 deal in 10 years, plus with low rents, these people will have disposable income which will be good for local business, possibly some local tradesmen who will be needed to clean up the mess left in many of these estates!

    3.Future values
    The price of housing/renting will more or less be completely shot for 10 years while this crop works its way through the system, in 10 years a lot of houses will be bought for 50% the price in a deflated market. So to stop the flipping then, impose a 95% tax on all profits from selling on a house bought under this scheme for 5 years after the time of purchase from the government.

    *Some peole may argue that this will distort the market for current landlords – Good, many of them profited grossly during the boom. Being a landlord, and turning tricks with property got us into this mess. Investing in bricks and mortar is stupid. We need to start investing in ideas, creativity, producing something of value to people. Blowing up the price of laying a few bricks to the same as a memory stick..when you think of the skills and ingenuity needed to create both…just boggles the mind!

    Where do we write down 40% of loans, roll them in with Anglo’s toxic cesspit and can we please get on with a renegotiation or partial default or full one.

    Excuse the many flaws, this is an idea fresh out of the head, I know some of the housing could be used for social housing, some for student accommodation, etc.etc I haven’t worked fully on developing it.

    Regards,
    Brian

  45. Deco

    Dunne and Dunner……

    http://www.independent.ie/national-news/dunne-jets-in-as-his-wife-takes-control-of-second-property-firm-2535794.html

    It looks like the Dunner has given the Missus a present for Valentine’s Day…..How romantic…

  46. Ollie

    I’m currently trying to figure out who to vote for in the election. (I have it well narrowed down)

    This seems to be the only real way that I can influence what is going on at the moment.

    Who has the best policy in relation to the banking/EU/IMF mess?

    Are any of the main parties heading in a credible direction?

    • Deco

      Vote for IBEC and ICTU. They have been doing a great job running Ireland for the last thirty years….just look at the results.

      It does not matter that they are not on the ballot paper. They have proxies there for them….

    • adamabyss

      Would you be willing to be more specific on your narrowing process Ollie? It may help others.

      • Ollie

        I want to emphasise that I don’t who would do best for our people.

        Purely from the perspective of the banking/fiscal crisis, it seems to be that FF, FG, ILP, GP are willing to lead us off the edge of a cliff.

        If I rule them out, I,m left with SF or some of the independent candidates in my area.

        SF don’t seem to have a fully thoughtout plan with talk of stimulus etc., although they at least think that private debt should not be the burden of the taxpayer

        One of my local independents is also against the bank bailouts, but he is not alligned to any group and would have little influence in the dail, i imagine.

        So, ON THIS ISSUE, S.F. SEEM to be closest to the mark

        I would appreciate more informed opinion than my own

        • Dorothy Jones

          @Ollie

          I am not sure which constituency you are in. Paul Sommerville is certainly the man for the IMF/EU issue http://www.paulsommerville.com for his recovery plan. He will join with Shane Ross and some others to be effective if elected.

          • amk

            hello,

            i caught the last bit of prime time last night with constantin gurdgiev and shane ross and others. no election candidates have knocked on my door yet (they just shove flyers through the letterbox and run!) but i’m trying to get my head around the figures for when someone finally rings the bell. According to the various panelists we owe:
            85 bn to EU/IMF
            51 bn to central bank
            100 bn to the ECB
            100 bn national debt
            giving a grand total of 336 bn
            Am I missing anything there?
            As I understand it, the national debt was pre-existing and 85 bn is going into a couple of black holes (and we still don’t know whats beyond the event horizon!).
            Whats the rest for?

            Hope i’m not dumbing things down too much. I don’t want some smarmy politician to tell me i’ve got my figures wrong…. in which case i’ll probably just switch from my list of questions… to my hurley!

  47. Deco

    Coillte are rumoured to be getting ready to sell forest.

    http://www.independent.ie/opinion/letters/land-sale-will-rob-next-generation-2535767.html

    This is the best investment that there is in the Irish state sector. It is the type of investment that will be handed over to a big outside investment fund, with the locals being sidestepped. So that the proceeds can bailout out the Irish establishment.

    This will be a case of Rossport 2.0. And the establishment has made great efforts to learn nothing from that !!

    We already had this debacle over Hydrocarbons off the Atlantic coast. And it looks as if the Publican Party/satelitte branch of the European Liberals/maFFia are getting ready to handover a massive portion of the national territory (again).

    This is a real Faustian “bargain”. We are losing something which is so valuable that it should not be sold, in order to save everything that is wrong about Irish society and it’s way of doing business.

    In fact it is really idiotic. At the centre of this disaster we have the murky figure of the Drumcondra Ditherer lurking, ready once again to FUBAR Ireland, one more time.

    • irishminx

      You may be interested in this link, as it relates to the above link Deco.

      http://corkfoodweb.ning.com/forum/topics/bertie-ahern-and-the-great?xg_source=activity

      I believe it is very important that we are the carer’s of Ireland, not only economically, but also of our natural resources. I believe it is also vital that we do not allow GM crops be brought into Ireland in the guise of animal feed, as then GM seeds/crops etc are in our food chain. This will not be good.

      Now I have a question for anyone who can answer it please.

      Does Ireland really need to be part of the EU? Would Ireland fall off the face of planet earth if the Irish people just said no to being part of the EU?

      And why as a nation, if we decided, couldn’t we bring back the punt?

      I have read time and time again that Ireland needs Europe, but do we really?

      I know I am not an economist, however, keeping life simple works.

      @ amk I too would like to know the answer to your question.

      BTW I had FF canvassers at my door on Thursday night!
      When I started talking about FF bailing out the banks, one of the canvassers turned to her cohort and said “come on, we don’t need to hear this”! And they started to walk away from my door. I stated, “Yes I need you to hear this”, but it fell on deaf ears, they were out the gap!

      I reckon this is the typical FF response! They are still NOT listening.

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