April 7, 2011

We need to show ECB it's not the only show in town

Posted in Banks · 123 comments ·

To stroll around the old walled city of Dubrovnik on the Croatian coast is to savour one of Europe’s gems. From its marbled streets to the immense baroque cathedral, the heavily fortified harbour and the oldest pharmacy in the world, ancient Dubrovnik exudes affluence. In fact, many of the cities of Dalmatia’s coastline — where I am writing from — attest to huge past wealth.

With the world’s oldest orphanage (founded in the 14th century) and one of Europe’s oldest synagogues, it’s clear the people of Dubrovnik were both enlightened and tolerant. So where did the cash come from?

The Dubrovnik Republic was one of a number of very powerful city-states that emerged in the Middle Ages of which Venice was the most powerful and influential. The city-states were constantly playing the role of middleman between the big powers, sensing the big powers’ weaknesses and anticipating their next move.

As long as a city-state juggled its allegiances and avoided any military showdowns with the big boys, it could trade and export its way to prosperity.

The elders of Dubrovnik realised that the city was in a delicate position, occupying a crucial strategic point in the Adriatic, half way between the expanding Ottoman Empire to the south-east and the rapidly developing Renaissance markets of Italy, France and Flanders in the north-west.

Trading with Renaissance Europe in lead and silver from Turkish-occupied Serbia and Bosnia (the silver mines still exist in Kosovo today) and silks and spices from the Levant, generated Dubrovnik’s immense wealth. Indeed, the Republic’s most famous son, Marco Polo (allegedly born on the nearby island of Korcula), epitomised the swashbuckling, capitalist adventurers of the time.

In the first example of a national branding campaign, by the early 17th century, Dubrovnik had opened trade consulates in 80 cities from Alexandria to Marseille. As a result, Dubrovnik was always watching the big powers and seeing where their interests were heading.

Today, small countries like Ireland could take a leaf out of the book of the old city-states. Instead of committing ourselves totally to one sphere of orbit, we could play a trading game, seeing where the big powers’ interests have shifted and altering our own policy accordingly.

Events of recent days have shown how dangerous it is to be dependent on one large trading bloc. It is clear our Government was slapped down on burden sharing at the last minute. In a world of free moving capital, this humiliation has to be acted on.

Maybe Barack Obama’s visit next month, along with that of Queen Elizabeth, will open our eyes to the fact that there is more to the world than Germany and France.

In fact, the changing relationship between Germany and France may explain why our Government was left isolated in Europe last week.

Think about Germany. It is clear to anyone who has watched German diplomacy in recent years that Germany is falling out of love with Europe — or at least a certain type of Europe. German tolerance has ebbed and its willingness to turn the screw on us might be more a reflection of the fact that its concerns are elsewhere and it is not as obsessed with Europe as it used to be.

One of the explanations for this might be the chart in the accompanying cartoon. It shows that the influence of China and Russia on German trade and shows how together with Poland these new trading partners are eclipsing France as Germany’s main market. The Germans are turning east at a rate not seen since they turned west in 1945 and this trend is going to continue.

The Germans know that three-fifths of Germany’s population will be aged 60 or over by mid-century, and it seems unlikely that the country’s fertility rate of around 1.3 births per woman will change even if Mrs Merkel were to return to the old cash-for-babies policy.

So in crude terms the Germans have to “bank” their competitive advantage now in order to pay for the old Germany of the future. They won’t do this if they have to keep bailing out the likes of us, so they have doubled their bets on the east and clamped down on what they see as ongoing transfers to the EU’s periphery.

But frankly, that’s their problem and once you figure out the weakness of the people on the other side of the table, you begin the process of strengthening your hand.

I come back to the so-called bailout because we can’t pay for the banks’ debts and, interestingly, there are not so much “our” banks as “their” banks because the main creditor now is the ECB and as we all know from Leaving Cert economics, the creditor owns the company.

One other weakness the Germans also realise is that there are no real sanctions against a default in a monetary union. This is why they threatened our Government last week. The threat was that if we pursued “burden sharing”, the ECB would cut off funding to Ireland and flood the rest of the periphery with liquidity. This would show exactly what happens to a country that breaks ranks and imposes on German banks the losses that they should have taken anyway.

Well this proves that they don’t want to understand how a monetary union works. They could have cut off European liquidity to Ireland as much as the old Irish central bank could have cut off Irish liquidity to Mayo.

The money would simply find its way here as excess liquidity spilled over into all the nooks and crannies of the monetary union. Irish banks would have got liquidity as other banks lent on to the new Irish banks with the cleaned up — post default — balance sheets.

Their lack of comprehension about how a monetary union works on the way up when money cascaded into Ireland is only matched by their lack of understanding about how a monetary unions works on the way down. Yes, we would be downgraded, but there would still be ample euro financing around and, more importantly, as our balance sheet improved, together with a credible budget adjustment programme, money would flood into Ireland to recapitalise us.

We have to understand that this ECB Emperor has no clothes. There is no sanction against an Irish bank default within the euro bar threats and these threats are idle because the system is set up to make sure that liquidity seeps around the union. The threat is as hollow as Gerald Ford’s threat to New York City when in 1975 he said he wouldn’t bail out NYC and told the bankrupt city to “drop dead”. Of course he did a deal. The ECB and Europe’s politicians would do the same.

Yes their priorities have changed. Germany needs China more now then ever and this dependence will increase, but that’s our opportunity. Like Dubrovnik of old we should be watching the big powers. China is now the world’s banker and increasingly Germany’s future. But all this does is generate more surpluses in China because China is using German heavy machinery to add value and export even more. So where will all this money end up? Back in Europe of course and we need to look elsewhere for bridge financing if only to show the ECB that its money isn’t the only cash on the table.

  1. Save the People

    Excellent article David. China is the way forward. Keep it up. The people deserve to be made aware of this option. Once the citizens of Ireland become aware that there is in fact an option other than the ECB IMF bailout, then the stage will be set to demand real change from our government. Change that will bring about prosperity and regain our sovereignty. Keep up the good work.

    • paddythepig

      Bejaysus we’re saved. Now if we get a 0% interest rate like the
      US treasuries, we’ll be suckin daysil. As Mickey Martin might
      say ‘chinaman say to me … You oirish … Velly good at

      • chthonic

        “Aw., Bejasus, David, me foine bhoiyo, That’s da ting now. Whoih diddant we th-ink a dat beforr- ha? We could gow a’hll da ways back ta da beginnin an get da tailors ta make up us suits from quilted kapok stuff just loke da new Choina did after der’w war wit da Ko-Min-Tang. Dats da thing ta do ta save a bit money, now. we would all wear da same color. An a good start wid some enthusiasm in da oul Doyle. What d’yez th-ink a dat, eh.

        I loved this article. Very enlightening. Thank you indeed as all your articles are. Many thanks. S

    • NO HOPE

      The problem is we have only had a change of faces, not Government. They reneged on promises before they even actually took office! Anyone recall FG promises to axe 30 000 overpaid, over holidayed, public sector workers? Gilmore said no, and they agreed on 18 00 voluntary redundancies. What are they going to do if there are no volunteers? Now they are simply implementing the same FF policies of balling the bondholders (yes, that is balling……). Now there is talk of cutting welfare again? Sound familiar? Jesus, who will we vote for in 2yrs time when Gilmore and Kenny have a hissy fit with each other and the coalition collapses? Who reckons on a 60% chance of that happening? We can`t seriously vote for them again as they lied to us in their election promises. We should run to china and ask them to fund us, then let them repossess Ireland when we can`t pay, and then run the place here instead of the IMF and the current regime of same old, same old….

  2. Very enjoyable article. Our problems have been, our bankers know little about banking, our politicians know even less about banking or economics.

    To have creative input in DmcW suggestion into our economic and banking system, we would need expertise afforded by the likes of those who ran the banks of the city states of Croatia and Italy, eg the Medici family who ran the bank Of Florence in the fourteenth century…we’re back to zombies and gombeens again:)

    But we’ll have to think outside the euro project as its getting ready to blow soon. Future build on our economy on sound items like trade and value goods/exports; avoid borrowing money not worth the paper its written on, take a leaf from those city states, we should do very well if we sort the banking mess:)

  3. TalentCoop

    ‘Very enjoyable article. Our problems have been, our bankers know little about banking, our politicians know even less about banking or economics.’cbweb

    Says it all really… but they like us need educating.

  4. wills


    Dissect and reveal.

    Empires are in flux.

    The article connects.

    However, the insiders are running the shop. Their interests are not aligned with running a free market system which is not under their control.

    Thus, the euro chess piece is a spiders web spun by the euro insiders with a geo-political agenda.

    Irish insiders gamed the euro and landed the country’s economy in the euro spiders web.

    Two things here.

    First, at least now the Irish people can see the country is under the grip of insider elites with no loyalty except to themselves, fumblers in the greasy till.

    Secondly, this euro spiders web in which the countries finances have been entrapped into, on the back of the blanket guarantee you where duped into providing, may offer an interesting opportunity for us to understand the mechanics of empire in a real way instead of a being a spectator which we are no longer.

  5. ladygee2

    I agree wholeheartedly with everything you’ve stated on this website, David. If only the current and previous governments would’ve listened and listen now and do what had needed to be done and what needs doing now things mightn’t have been as bad as things have turned out. I know that certain people have said that the advice you gave the last Government in regard to the Bank Guarantee back in September 2008 is the main reason why we now find ourselves in the position that we’re in. You know and I know along with a whole lot of others that’s a whole load of bullsh1t. There’s a big difference between gauranteeing bank depositers and gauranteeing every Tom, Dick or Harry who has recklessly invested in what have turned out to be ‘zombie banks’.Common sense would tell you that!!

    This new government of ours seems to have no appetite to go away and do things unilaterally like they promised to do leading up to and during the election campaign. I watched Lucinda Creigton’s performance on The Tonight programme on TV3 last night and I wasn’t impressed by her performance. Every time she opened her mouth she put her foot in it, but what can you expect from somebody who hasn’t got a clue about economics. The so called ‘celebrity’economists have been proved right time after time and still it would seem that our politicians won’t and don’t want to listen to what’s been said. Yourself and Morgan Kelly kept on telling them what was going to happen during the last decade, but they didn’t listen or else they didn’t want to listen, but now the ‘chickens have come home to roost!’

    Your call for the people to have a chance to decide by referendum whether or not they want our government to carry on and bankrupt this country or to tell the ECB, the IMF and the rest of the EU where to go in no uncertain terms will gain even more ground as time goes by.Whether the people will get the chance to do that is another thing. One can only wait and see, but I won’t be holding my breath!!!

    • paddythepig

      Here’s a direct quote from David’s article on September 28 2008, the day before the guarantee was made. You can read the full article here.


      “The only option is to guarantee 100 per cent of all depositors/creditors in the Irish banking system. This guarantee does not extend to shareholders who will have to live with the losses they have suffered. However, it applies to everyone else.”

      • Colin

        If the Government took the McWilliams solution, wouldn’t you think they’d have the decency to pay him a fee for the advice?

      • Tim

        paddythepig, You still don’t get it? Jeez.

        • paddythepig

          Eh hello … get what Tim? I merely quoted David word for word from his article.

          Are you denying that this is the verbatim advice that David wrote in his article on the day before the bank guarantee was given?

    • Deco

      Yourself and Morgan Kelly kept on telling them what was going to happen during the last decade, but they didn’t listen or else they didn’t want to listen, but now the ‘chickens have come home to roost!’

      Correction. Morgan Kelly did not discover that there was a problem until late 2006. He left it very late. At that stage, we were seeing evidence that houses were not selling for higher values. Oil prices were climbing upwards and the market for commuter homes was getting softer.

      If you were relying on Morgan Kelly to tell you when the economy was going to go down, you would have been given six months notice. Of course, he sounds serious and solemn, but he barely noticed in the nick of time.

      Big difference between that and David telling us in 2002 that housing was a scam.

    • Colin

      I heard Morgan Kelly went on holidays to Italy, and when he visited Pisa, he told anyone who’d listen to him that the tower was in fact leaning and about to collapse if nothing was done to arrest its tendency to advance its leaning.

  6. alanmh

    The position being taken by Germany and France is very similar to the Allies approach at the Treaty of Versailles. One would think that of all countries Germany and France would realize the corner they are pushing us into…

    • coldblow

      Actually, I think it was the American insistence for GB and France to pay back the loans extended to them at commercial rates before their entry into WWI in 1917 that was the root of the problem, leaving GB and Fr with little option but to turn the screw on Germany. This appears to have been a foolishly literal-minded approach to debt on the part of the Americans.

      • Gege Le Beau

        There was a vicious cycle of repayments (war debt) but it was the French who turned the screw the hardest on the Germans. There was considerable ill feeling after the Franco-Prussian war (1870) and the humiliating treatment of France (loss of Alsace & Lorraine for example), Prussian troops marching through Versailles, German unification followed some time later.

        During WWI, France had arguably suffered the most in terms of damage done to the country and the millions of French soldiers killed (at Verdun 300,000 dead alone).

        They were out for serious revenge (ignored wise counsel to the contrary) and they got it, including occupation of the Ruhr valley (where they ruled with an iron fist), return of the provinces mentioned above and war reparations which quite simply drove the Germans to the edge of an abyss as their Finance Minister commented at the time. Interestingly, the French Prime Minister commented in 1919 that the Versailles Treaty had ensured war within 20 years , he was only out by about 5 weeks.

        The Americans and British stepped in with restructuring the reparations with the Dawes and Young plans but the damage was done and events took a dramatic turn for the worst with the Wall St. Crash and the Great Depression.

        Hitler and the Nazis, who were pretty much a side show in the 1920s, securing a tiny vote in the 1928 election, were in power within 5 years and wasted no time in turning the country into a one party totalitarian state and the rest we know is history.

        • chthonic

          And then Hitler told the Allies he would Germany not pay out any more war reparations, etcettera. But by that time he had built up and had continued to build up, his air force in Russia (The Urals) under cover of a treaty with Stalin. And then, lo and behold, nothing was done
          in regard his renagueing …. and everything went on just as before (even markets) more merrilly and more swimmingly into World War 2. And then, as Gege Le Beau says, “The rest is history!”

        • coldblow

          Thanks, Gege, but I thought that was all well-known already to anyone who knows anything.

          The point I made is taken from M. Hudson’s Super Imperialism. Although it was recognized by all that their European allies were fighting their war for them too and that the assistance provided by the US in WW1 pending their lengthy preparations to enter the fray was part of a united war effort the Americans still insisted on treating these as commercial loans, at full interest rates, after hostilities ceased.

          Here’s a quote:

          “It would be false to say that the United States provoked WW2 out of malice or out of knowledge of the results on insisting on repayment of its war debts by a world utterly unable to repay them. It is true, however, that no act contributed more to the genesis of WW2 than the intolerable burdens that the US imposed on its allies of WW1 and, through them, on Germany. Every US administration from 1917 throug the Roosevelt era employed the strategy of compelling repayment of these war debts, above all by Britain. The effect was to splinter Europe so that the continent was laid open politically as a possible province of the US.

          Private finance capital could not have achieved that end, especially as the US disarmed after WW1. The division and immiseration of Europe could achieve it, had the world not tumbled into a depression. Not only did the US not escape the Gt Depression, it became the principal sufferer from a collapse of its own creating, as a result of its own highly debt-leveraged economy. It came to recognize that it needed markets to maintain full employment and prosperity, and that bleeding Europe dry by over-indebting it was counter-productive.

          The first great foray of US govt finance capital into world power politics thus ended in ignominious failure, and utlimately in a war pf do,emsopms vaster evem than WW1. It was a war that the US had no desire to bring about, but had no deep feeling that it should prevent. Despite the disaster that followed its first great venture into governmental financial imperilaism, America had learned a basic lesson in power politics. Between Treasury and Treasury, and between central bank and cb, decision s could be reached of far greater and more enduring significance than those reached in the normal course of diplomacy. Money was the lifeblood of nations. A creditor overwhelming on international account could control the pulse of nations. A powerful nation, as usurer, could dominate the actions of equally powerful nations as debtors.

          There were many paths the US might have followed to safeguard the integrity of its financial claims on Europe without rupturing the world economy.” (Super Imperialism pp112-3)

          There are some uncanny parallels with the present debacle.

          I think mainstream history misses or fails to understand crucial points. For that reason if I were to study history again I’d do it in conjunction with economics or similar.

          Also one of the reasons why Lee’s History of Ireland is so useful as he understands economics.

          • Praetorian

            You are wise to combine economic/financial history with mainstream historical accounts, when you super-impose one on the other, a very interesting and much fuller picture emerges.

            For instance, if we apply that reasoning to the attack on Pearl Harbour, the sanctions on Japan (in particular oil, it still imports around 80%, not too dissimilar to 1941) was a key factor in the decision making. The Japanese, despite the invasion of China, felt encircled by Western powers so they struck out because they knew they only had a few months with sanctions to ‘keep the show on the road’. They miscalculated thinking one devastating strike would bring the ‘soft’ Americans to the negotiating table, nothing could have been further from the truth, but they wanted and needed to believe in this because it helped justify the unjustifiable.

            Interestingly, in Germany, Western banks were once again on both sides of the deal, they benefitted from German reparations payments and the repayment of loans by Britain and France, and they also benefitted enormously from German rearmament, industrialisation and the massive public works programme which Hitler instigated in the 1930s to get unemployment down.

            All short term policies with long term consequences, with war offering Hitler ‘a way out’ of the financial bind that was unfolding and also territorial expansion and opportunity to secure resoures like the oil fields in Romania and the Caucaus region. After operations in Poland and France and the seeming invincibility of the German armed forces (which was the most powerful military force in history at that point), Hitler moved on Russia in June 1941 and almost pulled it off 9the 6 week delay probably cost him the campaign). The Soviets destroyed 4/5 of the German army in the ‘Great Patriotic war’ as they call it, which makes Normandy and the Western theatre of operations look like something of a side show in terms of scale.

            Despite the machinations of the US in the inter-war period, in 1945 they were the last heavyweight standing and had suffered no homefront war damage (bar some acts of sabotage and U-boat campaign in the Gulf of Mexico and Eastern coast). Their dominance led to the creation of the UN, GATT at Bretton Woods, but that power has gone into decline over the last 50 years, certainly they have reduced moral standing and are viewed suspiciosly in light of the disastrous wars in Iraq and Afghanistan, while 250 academics have just signed an open letter to President Obama condeming the treatment of Bradley Manning, surely a remarkable low point for any US presdiency.

            “In a stinging rebuke to Obama, they say “he was once a professor of constitutional law, and entered the national stage as an eloquent moral leader. The question now, however, is whether his conduct as commander in chief meets fundamental standards of decency”.

            Benkler told the Guardian: “It is incumbent on us as citizens and professors of law to say that enough is enough. We cannot allow ourselves to behave in this way if we want America to remain a society dedicated to human dignity and process of law.”

            He said Manning’s conditions were being used “as a warning to future whistleblowers” and added: ”

            I find it tragic that it is Obama’s administration that is pursuing whistleblowers and imposing this kind of treatment.”

          • coldblow

            Praetorian, interesting re Manning. I wonder what’s become of Gore Vidal these days?

          • coldblow

            How about the following as a paraphrase from Hudson’s quote?

            “It was an event (crippling the Irish economy) that the EU had no desire to bring about, but had no deep feeling that it should prevent.”

  7. adamabyss


  8. ocallaghanr

    Ever feel like you are wasting your breath D?

    I watched the video you posted of the Prime Time programme from 2003. Not only did the policy makers not listen to your sound advice, the people at large did not either. 3 more years there were of demand for the bubble commodity of the day.

    I am reminded of a melancholy Don McLean lyric…

    “They would not listen,
    They’re not listening still.
    Perhaps they never will.”

    • NO HOPE

      Not that they are not listening! Not a brain cell, or a bollock betwixt them all. Bunch of tired, one trick, grossly incompetent, ponies. So sad when there are real competent people on the dole who could run the country with their eyes closed. Instead we have the yaaaaawn factor of these lazy, useless politicians………

  9. Peter Atkinson

    Arriving back into Dublin on Tuesday night and to dodge the state controlled taxi rank at the arrivals I nipped upstairs to meet my lift.I was just heading out the door when I noted a huge queue and looked up at the overhead sign to see where it was destined for.Guess what.It wasn’t the States ot Oz. No it was Riga.Thats odd.That must be the capital of Jepordy cause I heard that there was another shit load of jobs in Jepordy while I was away.Then the penny dropped.It was the first Tuesday of the month.Ah that meant I was sorted for my cheap L & M cigarettes.The ultimate import/export operation.Cigarettes in and welfare money out.And to think we deploy a team of traffic Gardai to nab those henious drivers who commit appauling crimes against the state (non payment of road tax owing to job loss).Wise up lads.It doesn’t take a genius to see where the Gardai need to be deployed.First Tueday of the month at the Airport at 5am for the inbound and 12 midnight for the outbound “redeye” flight.

    • Deco

      Took a flight last Sunday morning. I was there taking my place, thinking Ireland is broke.

      There were five blond 45ish married Dublin women in party mood. The background was Northside and pleb. Except when it came to spending. First thing on the plane and they ordered Champers. And they bought gifts from the Aer Lingus catalogue. Made lots of noise. They were celebrating two birthdays, and they got an announcement to declare this. And they made it clear with all their talk of brandnames that were going on a shopping, lifestyle trip. To be honest it was all silly and pretenscious. There was a lot of pride there also. I don’t know where the money is coming from for this sort of thing. But borrowing for it is no longer an option.

      It was like time travel back to the binge era. Do people ever learn ? People are still living beyond their means in Ireland, and still “putting on a good show”.

      And this from a country living on IMF money to run it’s hospitals.

      Something does not add up. The Irish concept of lifestyle does not add up. For a lot of Irish people, it is not up for negotiation.

      • Colin

        Pat Kenny remarked last week on his radio show that he recently went to an upmarket restaurant in Dublin, and was astonished to discover it was packed to the rafters. He had an American commentator on the show and the American said that this happened in USA last summer and no one could understand it at the time. However, by the Autumn these spots were suffering again. Kenny asked what’s it down to, and the answer he got was “eventually people who are unable to continue paying their bills and mortgages basically stop scrimping and saving and say to themselves, hey, lets enjoy spending our money on the nice things in life like fine dining and to hell with the house and the car which we’re not gonna be able to keep anyway.

        Or maybe the ladies are married to Bill pennyapples Cullen types who are making money from car scrappage deals?

        • Deco

          That was the thing that puzzled me. What made them so confident that they could continue like this ?

          You have reminded me about Mrs. Cullen aka Jacqui Lavin.


          Moan, moan, moan. Angry Bill.

          The hilarious bit is where they discuss the fact that the chopper got moth balled. I thought Bill, being a car salesman, would not be seen in anythng other than a “Rennawllt”.

          • adamabyss

            Haha, I don’t know much about this Cullen guy seeing as I was out of the country for so long. My mother wrote a letter to the Independent (about six months ago?) pointing out that it’s about time he stopped going on about his humble roots (does he? – I wouldn’t know) and it got published! He gave a lecture up at Maynooth last Friday which some of my classmates lapped up. Watching this now Deco, I had to stop it at 1.01 to have a laugh at how rudely Pat Kenny cuts off the lady (whoever she is). Pat obviously just wants to talk to Bill. He’s almost been as rude as that tosser Turgidy – not quite though. I’d bitch slap him if I got my hands on him.

          • adamabyss

            The lady was utterly taken aback too at how rudely she had been cut off! Hilarious!

          • adamabyss

            He made a few good points about the government not doing anything, and this was almost two years ago. They still haven’t done anything.

          • adamabyss

            Well the government doing nothing except ‘shoring up the banks’ – which they are still doing! Lunacy!

          • Deco

            That woman was his Missus – except she is not his Missus. (I can just hear the uncle Bill character on Newstalk….”ah God….well now..what would Old Mother D’arcy have made of that carry on ?”).

            For a lad who was born of humble roots, he married a woman who thinks that class has far more meaning than a bunch of kids sitting down learning lessons.

          • Praetorian

            As for Cullen, well I heard from a source I respect that he is an honourable guy. I looked into his background, read his autobiography,he strikes me as the exceptional that proves the rule, and in recent times might have a bit too much of the American seminar speaker/positivity industry about him.

            Somehow he got the Renault dealership, turned it around, fair enough, but I saw him a few times on the TV telling people to get up at 5am or something, go out and knock on doors, that’s fine for a handful but 460,000 would result in a lot of door answering, just not credible or feasible, think he comes from my father’s generation of ‘you need a good kick up the arse to get started’ which tends to alienate people, but he is a product of hard times and poverty (not that everyone turned out like that).

            There are structural issues with the economy which were ignored and are now causing serious difficulty and can’t be waved away with generalised statements about ‘action’. Some unemployed had the ability, skill-set and confidence to start companies, create employment for themselves, which is admirable, but we are dealing with an unprecented fiscal crisis and economic contraction with reduced disposal income, tried up consumption and the obvious knock on effects, issues which won’t be solved by getting up early in the morning and putting on your best suit (cold calling can get demoralising pretty quickly).

            I think young people felt a bit insulted on Frontline the night Cullen appeared, he came across as a tad combatitve (which probably wasn’t his intention but he does look for ‘warriors’), but I don’t think his approach is suitable for an entire country.

            What we need is to build a sustainable and equitable society where we don’t have gazillionaires but people on wages they can live on, have a home, a family if they wish and not have to prostitute themselves to the economy. If we had an integrated transport system (trams for all cities, inter-rail, on time bus service), there might be a lot less cars on the road which would better serve the environment.

            As one poster wrote ‘we got massively expensive (over budget) roads to nowhere’, ever driven the Waterford bypass? Its like something from the Shinning, you’d be lucky to see another car. Cork-Dublin road is also very quiet for a principal route. Not the way to go.

        • NO HOPE

          Who The F%&*! is Bill Cullen. Is that the wanker who says unemployed people should work for free? Seriously who is Jacqui Lavin???

        • chthonic

          It is well kown fact that during deressions, wars and the like people tend to seek out the enjoyable to bury their heads; they buy and they spend and nobody knows from where the money comes. Entertainments of all kinds, some better than others are the investments of the times…

      • Praetorian

        It is not one size fits all, there is a lot of nuance out there.

        Just because the country is in seriously difficulty does not mean every single person is. Some people are still seriously wealthy from the boom, others continue to make good money (look at the professionals servicing NAMA, legal teams doing work for the State, the tribunals etc), the gap between rich and poor is always growing and I would expect the kind of restaurants Pat Kenny goes to to be packed to the rafters, he himself is on a massive wage, took a cut but it hardly mattered given his cumulative earnings.

        I dated a woman once who updated her 5 series BMW whenever a new model appeared and took 5 holidays a year (2 weeks at a time) to the Med, extremely well off from the construction boom (made the right choices and didn’t get caught), money no object.

        Look at the heads of the semi-states, astonishing wage packets, same goes for the captains of industry and commerce, the political, media and academic elite, unless these people made crazy property decisions, they are well sheltered from the crisis, Enda Kenny is on €200,000 per annum plus expenses, let us not deceive ourselves.

        The rich get rich or earnings even out (and yes there have been casualties as well, those who took mad risks), the middle classes get squeezed, the working poor’s struggle got a good bit tougher and the queues for the great escape or national lottery grow longer.

  10. Praetorian

    Ireland was gifted a position between the US and Europe, plenty of EU development money from the outset, US money (like Chuck Feeney bankrolling the University of Limerick), easy access to markets, peaceful country, stable democracy, educated, English speaking population, honest broker image (whats left of it) and still we are in the position we are in.

    There are a million and one things that could and should be done but they won’t be done because the fundamentals remain unchanged, the vested interests entrenched, the narrowness of society continues.

    What reform have we seen? What change of policy?

  11. CitizenWhy

    After the collapse of the central, imperial, corrupt Roman regime in ancient Rome the bishops of the Western provinces (well governed by local senates despite bad emperors) became de facto governors of the remaining Roman citizens (hence Roman Catholics), now ruled by pagan or Arian, heretical Christian, Germanic petty kings.

    In dealing with the new barbarian rulers the bishops used a Stoic, not Christian, philosophy to rebuke and instruct the new rulers. The great stoic civil virtues were prudence/realistic foresight (seeing the consequences of actions, with a paramount desire to avoid harm), justice, fortitude and temperance. That is, prudent justice (not lax, not harsh), prudent fortitude (living by principles but not seeking foolish risks), and prudent temperance (allowing for pleasure, but not in excess). The church adopted these four virtues are the “natural” basis for the virtues of faith, with their strong emphases on active love of neighbor, actively doing good and sharing. Of course later the barbarians became the bishops, and then kings and bishops and popes ruled to enrich the royal families.

    Is Europe, or Ireland, practicing the old Stoic virtues? Especially prudence. Can anyone see the bad consequences of continuing with this vicious “bailout”? Is anyone committed to avoiding the great harm that the ECB’s stubborn exploitation and imprudent punishments will bring to Europe?

    Getting back to those old Roman bishops they constantly pointed out, as good Stoics, that the purpose of taxes is not to enrich the royal families but to promote the common good: roads, schools, baths, gymnasia, municipal services, safety and security, workable markets, the manumission of slaves. Today’s equivalent of the royal families are the rich and the many gimme banks and corporations who decide policy and write the laws.

    Can Ireland, as a consumerist society, ever return to the secular, civic virtues necessary for good governance?

    • Praetorian

      @ Citizenwhy Excellent comment. It has been so long since I have seen the words you mention that you begin to realise just how barren a country can become.

      When did you last see a poliltical leader both speak and act with virute, embody the civic values of a Republic, act with complete honour and integrity and inspire people to work for the betterment of the nation?

      In Roman times, the General Lucius Quinctius Cincinnatus (519 BC — 438 BC) was regarded by the Romans, especially the aristocratic patrician class, as one of the heroes of early Rome and as a model of Roman virtue and simplicity. Cincinnatus was forced to live in humble circumstances, working on his own small farm, until an invasion caused him to be called to serve Rome as dictator, an office which he immediately resigned after completing his task of defeating rivaling tribes.

      His abandoning of his work to serve Rome, and especially his immediate resignation of his absolute authority with the end of the crisis, has often been cited as an example of outstanding leadership, service to the greater good, civic virtue, and modesty.

      With our system (and there are honourable exceptions)most seem to want to enrich themselves or futher their own career plans. How can elected representatives treat the Dail as a second or third job with their principal focus on their private legal, accountancy or business practices?

      Others amassed massive share holdings, property empires (conflict of interest?), things that require a high degree of time and attention, time and attention that should be directly to examining best international polticial and socio-economic practice, being up to date on developments and policy, being present in the Dail for votes, putting forth clearly articulated views backed up by data and reason. Maybe the work is tedious but it is important that it gets done in the most efficient manner possible.

      We are nowhere near that, we have political amateurs who spend most of their time out, not in, the Dail. If anyone has any doubts, then simply watch the Vincent Browne show.

      At least the few independents actually want to be there, have a burning passion to turn things around, I wouldn’t subscribe to Shane Ross’ outlook but he has got in there among them as has Joe Higgins, Boyd Barrett while Stephen Donnelly looks promising.

      The rot starts at the top and it can be stopped at the top but not when people are filling their pockets from the public and private purse.

    • CitizenWhy

      I neglected to mention that the movie Gladiator alludes to the civic virtues in the person of Emperor Aurelius. His biological son, Commodus, represents the consumerist “virtues.” His spiritual son, Maximus, practices the Stoic civic virtues, which is why Marcus wishes to leave him the emperorship in his will but is killed by his biological son before this can be accomplished.

      The movie hints at the good governance of the western provinces in how his wife, with her child, stands on the open road to welcome the approaching Roman troops who turn out to be the murderous, fascist Pretorian Guard, not regular army. Maximus’s willingness to fight for Rome is also based on the good governance he has seen in his home province in Spain. But it would be hard to grasp the allusion to this good governance without knowing something of the way of life in the Roman provinces rather than in the overly emphasized city of Rome.

      The movie also picks on two big themes of Roman literature: the journey home, and the lost prince. Maximus is the lost prince, and he makes the journey home, despite great obstacles. In the movie this journey home is capped with his helping to bring a rebirth to the Roman Republic, a very unhistorical spin. But the real ending of the movie, true to history’s arc, is that the Praetorian Guard decides who is to be Emperor, Commodus or Maximus (Maximus, in the movie, ceding his rights back to the Senate). The power of the Guard to choose the emperor was illustrated in the kicking of the weapon to Maximus rather than Commodus. In history there was no rebirth. Rome was in effect ruled by the thuggish Praetorian Guard, who from then on chose the Emperor.

      At the end, the journey home is transformed from the founding of a well governed earthly city to a yearning for the afterlife, the City of God, thus ushering in the spirit of the Christian middle ages. Some might say there was a parallel to the abandonment of nation building in favor of pious conformity under the rule of deValera.

      No surprise, the movie had a Jesuit classicist as its history and literature advisor.

      • Gege Le Beau

        In a history of the Praetorian Guard, it states that the Guard not only protected the Emperor and acted as an elite force in Rome (they also fought in the field and were equal to any Roman Legion in ability), they championed just and wise rulers and had the power to dispense with the unjust and cruel, which they did, and in doing so they contributed to what is known as Pax Romana. After the death of Marcus Aurelius, the Guard went into terminal decline in parallel with the Empire.

  12. manofiona

    Ireland is not part of a “trading bloc” as DMW describes it . Ireland is part of the European Union and a member of the more advanced group of countries within that union – the Eurozone. Decisions affecting the Eurozone are made by agreement among the members of the zone: that is even more the case now than it was before the PIGS showed what happens when the zone is not sufficiently coordinated. The last unilateral action which Ireland took was to throw the McWilliams bank guarantee in the face of its partners in September 2008. As long as Ireland remains a member of the European Union there will be no further unilateral actions of that sort and the new government has learned that lesson rather quickly.

    A restructuring of Irish bank debts might well become necessary but that is now a matter for Eurozone decision. The Germans and French are by no means alone in preferring not to spook senior lenders to Eurozone banks prior to the creation of a proper legal framework for burden sharing in respect of future lending to member states.

    • Malcolm McClure

      manofiona: Ireland is a masochist search of a stern disciplinarian, preferably in lederhosen and carrying and interest rate whip.

    • @manofiona

      re “As long as Ireland remains a member of the European Union…”

      Time to leave it before it destroys us then??

      Or, should we vassals stay to help protect the euro, our banks, foreign bondholders, foreign banks and Nama ‘assets’ in whatever way we can?

      OT isn’t it time to do a post 2008 audit of wealth in Ireland to get some figures on whether there has been, for example, any redistribution of wealth from the middle class down or upward?

    • CitizenWhy

      I re[peat what paddythepig says in an earlier post:

      Here’s a direct quote from David’s article on September 28 2008, the day before the guarantee was made. You can read the full article here.


      “The only option is to guarantee 100 per cent of all depositors/creditors in the Irish banking system. This guarantee does not extend to shareholders who will have to live with the losses they have suffered. However, it applies to everyone else.”

      Yes, a confusing quote. What does creditor mean? Normally, lender, a bondholder. But I wonder if he knew at that time the extent of the European bank loans, and how badly they were used. And how they were made in violation of each bank’s own risk analysis. These banks were hardly good faith creditors.

  13. paddyjones

    The great Irish , they borrowed from Irsih banks until they were dry, then they proceeded to borrow from the ECB until dry…….now you want to borrow from the Chinese. How about just stop borrowing and start paying back debts. as if the Chinese would lend to us anyway , what a stupid idea.
    i dont like this “them and us” attitude from DMcW , Europe has been nothing but kind to us and we should be grateful and modest about it . Instead the Irish talk about telling the EU to go fuck itself when it comes to debts.
    The great Irish owe
    160 billion to the ECB
    100 billion ordinary national debt
    40 billion to french banks
    100 billion to UK banks
    127 billion to German banks
    50 billion NAMA from ECB
    And now DMcW wants to borrow from the Chinese….what an idiot!

    • wills

      Do not consider the EU banks drowning ireland in debt kind. I consider it sinister beyond belief and demanding retribution.

    • re “the Irish” and “us” ………..I didn’t borrow any of that, I believe the one’s you should take the bill to are quite a small group of banxters/politicos

      Don’t let them saddle yourself with the bill.

      I believe they’re trying to pawn it off onto all the Irish.

      We’re not thick enough to allow ourselves to be landed with that bill though, are we:)?

      • Also the old people tell stories at bedtime to their children of a small group who invented this huge, black bubble PIG. A reincarnation ever there was one of the ancient TÁIN BÓ CUAILNGE, but now in the form of Muc Mór FF ….

        A huge monster that stalked the land offering riches to everyone, disguising itself as bankers, property developers, politicians -> offering loans for nothing, even increasing peoples wages to pay for the loans.

        It frothed and bubbled all over the land pouring houses, estates and commercial property everywhere and anywhere, trying to buy up the rest of the world as well.. creating fear among the young they might be homeless forever if they didn’t get on board the frenzy it caused..

        It disappeared having sucked the country dry of all wealth. Then those who conjured it through some terrible magic told all the people of the land, they had to pay for all the losses and black debt left in its wake.

        Crazy story…I wouldn’t believe any of it, how could people have failed to recognise it was a scam and they weren’t responsible for it?

        …The story goes on to tell of a small secret group who fed the black bubble pig every day until it turned on them and ate them up:)

    • Deco

      The other half of the equation is what we got for all that money.

      Have we anything of value to show for all that borrowed money ? Probably nothing that is close to the value/cost that we paid for it.

      • We got highways to nowhere built at scam cost, some good road infrastructure nevertheless, a standard of living that was built on borrowed money, lots of corruption, not a lot else..

        Agree, “Probably nothing that is close to the value/cost that we paid for it.”

        • Deco

          Yep. And speaking of corruption, and funny business….7 Billion Euro of that money we borrowed has ended up via wheeling and dealing into the deposits in the IoM branch of Anglo Banglo.

    • silentobserver

      Ah, Paddy, I don’t owe a red cent to anybody, except my rent each month, groceries and utilities. But apparently I’m forced to give a “digout” for all the imbeciles that do, via a punishment of prudent taxation system! I’m sure I’m not the only one.

      • paddyjones

        The FG/LAB government are continuing where FF/Green government left off. The EU/IMF bailout will add another 65 billion to the above. In 2012 Ireland will hit a brick wall.
        You can stick your head in the sand and not face up to debts which now are Irish societies not the bankers/politicians/developers. Its not right but thats the way it is, it government policy to make the debts ours.
        The way to tackle debt is to chip away at it slowly and over time, maybe 20 years it will be dealt with. The problem is the interest on debts will far outstrip Irelands ability to pay, Ireland will have to run to stand still.

        • Colin

          Your analysis suggests a default is inevitable if we continue on this course which the new government are taking us on. You’ll find yourself in agreement with David on that matter.

      • Deco

        I am very distrustful of people who mention phrase with “one red cent”. No offense. Denis the Menace has gone quiet.

    • dwalsh

      Why on earth should ordinary Irish folk who were conned into exorbitant property prices and life-time personal debt also pay the gambling losses of irresponible bankers and financiers?
      Your tactic of socialising the current losses was not applied to the enormous profits that were enjoyed by the few during the boom. I dont think the moderate trickle-down of affluence which the general population experienced was quite the same as the gorging that went on at the top. Your tarring of the “great Irish” with the same stick as those who were complicit in what was a scam is low and objectionable.

      • Deco

        “fool me once, shame on you.
        Fool me twice, shame on me”.

        Lack of self respect, is a factor I reckon.

        It is absurd subsidising these gombeens, and then subsidizing them again to make sure they keep the proceeds of what we gave them in the first place.

    • Colin

      I presume you mean former Galway West TD Frank 40Gaffs Fahey, the Baron of Ballsbridge Sean Dunne, Bertie NoBankAccounts Ahern, Mick PinkShirt Wallace et al when you use the phrase “The Great Irish”.

      Me, a mere humble citizen owes nothing to the banks, nothing to furniture superstores, nothing to car financing operators.

    • Deco


      it will be all solved if we just find creditors with deep enough pockets, and thin enough brains to keep throwing money at us, so that we can sustain our lifestyle.

      We just have to keep searching…..

      Personally, I reckon we should explain the reality to the bondholders. Namely you can buy the lodger in the Elysee Palace, but not the Irish people. The bondholders are going to have to take a bath in the North Atlantic. And then work and save to get the system working again.

    • Tim

      paddyjones, Have you seen how much they owe to the Irish? Clearly not. Jeez. (are you and paddythepig the same person?)

    • chthonic

      Why not borrow from them – it must be quite safe as their money pit must be quite unfathomable and sure now,they would hardly miss a few quid put into the
      Morebeg-Begmore Estate?

  14. Deco

    I don’t agree with David’s thesis, put forward in this article, about our best strategy. But I do agree that we should have better links with the Anglosphere, and think outside the “Brussels” Box.

    I also think that we have to change our business culture and our societal culture. The problem is that the political culture is deluded and off-track in respect to both. They simply fail to understand that the dominant Irish concept of management is a serious impediment to us fixing our economic and societal issues. Therefore we need a completely different political option or set of options to bring reform.

    The problem, and the solution is within us. It is as simple as that. No need for some sort of grand theory. Just get your act together Ireland, that is all.

  15. BnB

    Interesting graph at the top of the article. There’s another one here that shows German exports to China overtaking those to the US at the end of last year:

    The way things are going, Germany will be asking itself if it has any need for the peripheral countries of the EU, and China will be asking itself if it has any need for the US. Maybe they’re both asking themselves these questions already and are preparing for a global economy that they dominate together.

  16. dwalsh

    I disagree with David’s unilateralism. The crisis should and will be solved in Europe because it is a European crisis… and beyond Europe, it is a global crisis. It is a crisis of our proto-global civilisation.
    I disagree with David’s provincial unilateralism.
    That’s not the way forward. We are not living in the myopic medieval world any longer. We have to find an agreed, rational and humane way forward into a new arrangement with our neighbours. We are all of us in the same boat now…Mother Earth. It’s no longer every man for himself; or time to play Billy off against Jack. We need to talk together and act together while there is still time. We need to open our minds to a vision of a new kind of world; a truly rational and humane planetary civilisation.
    (Which means harmonisation not homogenisation)

    • @dwalsh

      There’s a question that confuses the whole debate re membership of EMU.

      We have to distinguish between the EU and the EMU. They are two different projects.

      I’m all in favour of the EU and closer cooperation and harmonization between states along the lines of ‘ a truly rational and humane planetary civilisation ‘.

      But questions have to be asked if the euro and fiat money system are retarding that project.

      So, if the EMU is not serving the needs of the EU or its member states, pragmatic decisions will have to be made by member states.

      These will have to be unilateral decisions if sovereignty is not to be ceded to the mother ship. Or if the mother ship is going to feed us to the lions. That’s why I believe we need to leave the euro but stay in the EU.

      Plus if you believe the euro or dollar are going to blow anyhow, which I do, we are simply going to have to come up with a more economically diverse world uncorrupted by usury and debt and fiat funny money.

      DmcW city state template of the Dubrovnik Republic is certainly one I’d go for as far as leaving the EMU goes for this island of ours, unfortunately our lot with those cards to play are a mixture of gombeens and zombies doing very well out of our current mess, thank you:)

      • dwalsh

        Yes I agree with all you say.
        Especially re the EMU which through the ECB is the local enforcer of the global scam of “usury and debt and fiat funny money”; the neo-liberal fascistic financial capitalism that underlies this crisis.
        We need real economics and a real economy not the global casino called ‘The Market’.

  17. Chin up chaps. Be positive. We, the Irish, are being administered a harsh does of financial reality.

    Lets learn from it.

    As individuals we should understand that we are most likely (no certainties in life etc) one of the first dominos to fall in a global sovereign debt bubble.

    Listening to your government and the reactionary mainstream media will prove dangerous to your health in the long run. The wise among you will protect any remaining wealth you possess by investing in commodities (wheat, oil, precious metals, coffee, ‘pork bellies’).

    The numbers just don’t add up. This ship is going down….. probably ;-)

  18. Tim

    “Paddy”s give the Irish people a bad name. Might want to change that…..

  19. au-gay

    I have followed your articles for many years now, mostly in the context of the stupidity of Bertie Ahern.
    But this article reminds me that, more than 40 years ago, Germany was dumping cash into the Balearic Islands, allowing industry a 200% write-off of all Tourist Projects in Spain.
    In turn, a Travel firm, called Neckermanns, prepared a large brochure setting out, rather like Green Shield stamps, what a German worker could book in the islands.
    These were Bonus Points earned and gave an entitlement, rather like Air Miles, to a holiday. The more Bonus Points, the better the hotel etc.
    It was a neat device to reward the workers, whilst getting rid of an embarrassing trade surplus, which might otherwise have been appropriated by other members of the EU.



    I would agree with a Bank Default. It is no more than what a receiver would demand upon appointment.

    Allowing that Ireland does default on all but sovereign debt, there still remains the problem of payback of the balance of outstanding borrowings and the creation of a viable Business Plan.

    I would suggest the shrinking of Dail representation to 1 TD per 100,000 of adult population (perhaps even taxpayers only!)

    In turn, I would confine the Cabinet to five Ministries, as hereunder:-
    Justice (including Defence);
    Natural Resources;
    Human Resources;

    A Chairman – call it any name you like – would act as Minister Without Portfolio and deal with Foreign Affairs). The Chair might rotate.

    Agriculture is the natural resource that could be developed. After all, Holland, which is the size of Munster, supports a population of 16 million, all below sea-level. It has a huge agri-business and exports all over the world. Its climate is no more favoured than Ireland’s. It’s just that the people work harder & the Government do not support idlers.

    It would be hugely beneficial if Ireland were to construct 2/3 Water De-Salination Plants; replace the old leaking reservoirs; polluted canals; rivers & lakes. These projects could be carried out by persons presently receiving free handouts in the form of dubious welfare.

    The Police and Army should be amalgamated and engineers from the Army utilised in the design & planning of the Plants. Wave power might provide energy; there would be tons of saleable salt and it is likely that the Plant would filter in tons of fish, which could be processed or sold.

    Taxation needs a complete overhaul. Germany is moaning about the 12.5% CT. Perhaps it might calm their ruffled feathers if we were to introduce a Distributed Profits Tax (DPT). It would need to define all distributions, in whatever guise managers might try to conceal them – viz. benefits-in-kind; swaps; capital return from liquidation; bonuses; barter; bonus shares; acquisitions etc. But it is fairer & might kill the envy extended to Bank CEO’s.

    On this theme, it might be beneficial to consider a move from Income Tax (IT)- an unfair imposition on labour & entrepreneurial skills – and replace IT with a Consumption Tax (CT). This would be a graded sales tax with zero or minimal rates on absolute necessities rising to very high rates on luxury goods and non-essentials.

    Of course, this would mean leaving the EU, but this may not be altogether a bad idea if the reduced Cabinet was composed of Professionals, with energy; ideas and determination.

    Much has been debated about a Property Tax (PT). I think that one is essential, to provide parity & fairness.

    Consider registering all land in a dedicated Property/Land Folio. Any house or similar owner-occupied dwelling on this land would be allocated a plot of land for the use of the owner.
    All other land would be subject to a property tax, as would fallow land; empty houses etc. The plan would be to obtain maximum utilisation of that resource.

    These are all practical issues; not political.

    They are made into political issues by incompetent TD’s for their own self-interest & to retain the votes of their constituents.

    In a properly regulated Administration, elected TD’s would reside, where they would have their Clinics – all-year round in their constituencies. Concerns of voters would be computerised; logged and collated and a frequency chart would determine priorities. It would then be up to the Finance department to find the funds to resolve the more pressing issues.

    As was shown during the disastrous ministry of Bertie Ahern, whose cosy relationship with the Mafiosi in the Trade Unions & The Poverty Party (CORI) destroyed the Celtic Tiger – or what might have been salvaged after the collapse of the sub-prime market in the USA.

    It would now seem appropriate to have just two representative bodies for wage-earners – one for manual occupations and a second for all other occupations. The current bank accounts should be subjected to a sequestering order from the Government and the Funds deposited with Central Bank, under the control of a re-jigged Labour Court, with appellate powers, for the benefit of the members – not the various officials.

    This is a brief overview of what might be possible under an efficient Administration. The cost of the changes will be significant, but the pay-back would be enormous.

    It is oft said that the Black Economy is far and away more efficient than those who pay Income Tax.

    It does not take a PhD in Applied Common Sense to see why.

    Over to you, David and good luck with you mission.

  20. Some great ideas there, but “On this theme, it might be beneficial to consider a move from Income Tax (IT)- an unfair imposition on labour & entrepreneurial skills — and replace IT with a Consumption Tax (CT). This would be a graded sales tax with zero or minimal rates on absolute necessities rising to very high rates on luxury goods and non-essentials.”

    Forget just cigarettes, this would fill our beaches with illicit contraband … illegal imports boosting the black economy…maybe go easy on that one:

    Tax the wealthy and their wealth instead.

    • adamabyss

      Yes, some good ideas. Unfortunately I don’t know if they’ll ever come to pass – not in my lifetime anyway. We live in an ignorant and unenlightened age – despite all our technology and global inter-connectivity – ‘mutton dressed as lamb‘. People need to change their mindsets first before we can properly and humanely utilise the tools and opportunities that science has given us.

  21. BnB

    “Instead of committing ourselves totally to one sphere of orbit, we could play a trading game, seeing where the big powers’ interests have shifted and altering our own policy accordingly.”

    I think that that’s exactly what Irish politicians have tried to do in recent years but it’s ended in failure because they’ve been completely out of their depth at playing that game.

    The policy has been to be America’s gateway into Europe, as Enda Kenny described Ireland lately. This has meant dropping corporation tax for American multinationals, and at the same time agreeing to do whatever the expanding EU empire asks. This is a very tricky juggling act and Irish politicians are just not up to the job. If there’s any truth in what was reported by Faisal Islam of Channel Four, Enda Kenny was humiliated at his meeting with Sarkozy and Merkel when he tried to negotiate an interest rate reduction.

    I’m sure that Brian Cowen didn’t impress them too much either. They’ve all been involved in the gombeenism of local politics for such a long time that they cannot see the big picture. They belong more in Ballymagash urban district council than amongst world leaders.

  22. Praetorian

    Courts finally making some kind of stance against mortgage lenders, the government has been too quiet on this issue, some intervention is required


  23. Noticed this site down yesterday afternoon/evening with WordPress error message, ‘account deactivated’..?

  24. paulmcd

    “They could have cut off European liquidity to Ireland as much as the old Irish central bank could have cut off Irish liquidity to Mayo.”

    Isn’t it extraordinary that no Irish county has so far considered seceding from the Irish Republic?

    I would have expected my native Cavan to be the first to do so.

    If the people of Cavan were to vote to be integrated into Northern Ireland and be re-absorbed into the UK, then their per-capita debt would fall by over 80% as part of a much larger jurisdiction of 60 millions.

    I no longer expect to see a United Ireland in my life time and today’s Republicans may as well accept the fact.

    JUST THINK: “Fellow 6-County Nationalists, join with us in a New 32-County Ireland where your debts will be multiplied.”

    • paulmcd

      Apparently the results of a poll to be published in tomorrow’s Business Post show that Enda and his Continuity FF Government have not lost in the popularity stakes.

      I think we should adopt a headless chicken as the new national emblem to fill in the white space on the Tricolour.

      • CitizenWhy

        People o not like to admit mistakes. They want optimism, until …

      • Malcolm McClure

        paulmcd: If Donegal seceded, it would immediately boost the economy of the county by 100%.

        20% of that would be accounted for by realignment of public service salaries and 30% by avoiding being saddled with somebody else’s bank debts; 30% by inward investment from NI and 20 % by reduced distribution costs and realignment of shop prices. It would result in mutual benefit to both Derry and Letterkenny

        Of course it will never happen, because Neil T Blaney would turn in his grave.

        Unfortunately, there is a distinct lack of radical, out of the box, thoughts like this on this site. Most might be impractical but some might be worthy of further discussion to iron out the creases.

        • paulmcd

          Malcolm, No harm to have Blaney and his ilk turning in their graves.

          In fact, let them spin at 2,000 rps and burn up the earth such is the level of betrayal on the part of their pedigree.

          I think a slow education process is in order.

          Main danger: If the people of Cavan were to evolve SECRETLY in the way I am proposing, and the advantages were to become patently clear to the rest of the Republic we might have a drive for a 32-County Ulster, the debt burden of which would sink the UK taxpayer and the entire Commonwealth of Nations!

  25. au-gay


    I’m afraid that I must fold my tent & leave.

    Nothing personal, but some of the comments, above, are so negative & irrelevant that I must look elsewhere for an intelligent debate on a very serious matter (not smuggling cigarettes on Ireland’s beaches, as one respondent opined).

    Maybe someone in authority should declare a State of Emergency.

    And it did occur to me after I had written (my only offering) that were Wave Power to prove viable, a network of trains, connecting the spatial hubs around the coastline of Ireland, together with a High Speed (TGV) link between Galway & Dublin and Derry & Cork, with an interchange at Athlone, might get all those gas-guzzling motor cars off the roads & reduce greenhouse gases, very significantly.

    Wave Power could provide cheap energy…

    … and cheap (if not free)public transport.

  26. Philip

    The Euro is overly undervalued for Germany and possibly France and overly overvalued for the peripherals. Germany is leveraging its growth from the flat to negative growth of others. They love the EU – or should. It is directly in their interests to keep the growth and economic prospects a poor as possible for the peripherals.

    Europe never integrated and looks set to disintegrate because it seems the prevailing mood among people in various nations is that it does not work. And can you blame them? The MEPs are on a gravy train and do no real work of involving their countries. Stupid Germans shoot their foot and Stupid Irish loose a gateway and source of local and rich opportunity. Everyone is stupid except the insiders who shorted the hell out of the system.

    There is some emerging consensus seeing that the whole thing is about to fall apart. I think that Ireland needs to be seeing as helping to keep the whole thing together rather than threaten it has other options (which I believe are rather overstated and vague in DMcW’s article). The UK could wind up stealing our thunder and I beleiev Ireland needs to make huge efforts to call and make all realise we have a European crisis that needs solving in Dublin.

    The time for being nationals is over. We are European, now let’s prove it and stop thinking like medievalists!

  27. Philip

    What is happening in Ireland in the context of Europe is no different than the complaints of over-centralisation in Dublin by the west counties. If Europe was working properly, we’d have proper media coverage roasting the arse out of MEPs across Europe on a daily basis.

  28. Colin

    Iceland rejects Icesave repayment deal.


    This is a great example of how democracy works. Can we learn from this? The ordinary people of Iceland should not have to repay the deposits in the UK and The Netherlands, just as we, the ordinary people of Ireland should not have to pay the German & French bondholders.

    • @Colin

      “Can we learn from this?”

      No, we can’t. Just lined to Joan Burton on Marion say she lived in Africa in countries under managed default by the EMF, she gave impression this was an awful experience for these countries, not one we should contemplate. She went on to say negotiations with Europe will be intensive, protracted, and over a long period of time. Earlier she disagreed with austerity analysis of Joe Stiglitz http://bit.ly/a6wGGV (he repeated this somewhere else in papers this weekend, link required) Overall, appears Burton is tubed up to the long term hope her begging bowl for Ireland will be filled up by Europe, so both Europe and the financial, political class she represents get to continuing feeding off taxpayer victims. Default might take her bowl away. Such scare stories are a coverup for the ongoing rape of Ireland by the financial class bleeding us dry and bringing us to inevitable meltdown..

  29. austerity analysis of Joe Stiglitz …. (he repeated this somewhere else in papers this weekend, link required)


    Well, I pointed to Iceland early in the tragedy as a point of reference. A political dysfunctional class that follows special interests and not the common good can not be expected to support a referendum on the banking matters.

    Welcome to Absurdistan, where a morally corrupted Elite takes out decisions on behalf of generations with no mandate to do so, but people like Peter Sutherland and other sitting on their shoulders.

    The mission of Bankers in our dysfunctional democracy is one of self preservation exclusively, they have no useful contribution to offer to a society that is based on equality and fairness.

    I am truly delighted that friends and neighbors in Iceland did the right thing. we in ireland should have demanded this from the incoming government, to hold a referendum because they have no mandate to take such decisions on behalf of all of us. Period!

    • Malcolm McClure

      cbweb: Excellent link. Thanks

    • Thank you cbweb.

      A great piece, like
      “The dummies guide to why debt-restructure”

      Alas I think it’s going directly to the “Let’s ignore it!” filing cabinet!

      That must be crammed at this stage?

    • paulmcd

      This article is well worth a read. However I will take issue with the statement concerning Argentina – impossible to say whether Stiglitz or Cragg is responsible for following remark:

      “Argentina, after its debt restructuring, grew at an average annual rate of more than 8 per cent for six consecutive years until the global economic crisis hit.”

      Iceland commenced restructuring IMMEDIATELY making for a more ORDERLY process.

      Argentina, like Ireland, postponed, dithered and dallied and experienced quite a DISORDERLY default and recovery is still a very long way off.

      The damage already done to Ireland’s interests is very considerable and is being exacerbated by the Real FF (FG)/Continuity Green (Labour) Coalition.

      The most we can hope for is the earliest possible collapse of the Coalition and a somewhat LESS THAN DISORDERLY AND CATASTROPHIC ARGENTINE-STYLE “RESTRUCTURING”, but I am not optimistic.

  30. CitizenWhy

    I have figured out the real problem with Ireland – it’s St. Patrick. He’s the patron saint of Purgatory and he’s determined to make the Irish suffer not only for their own sins, but for Europe’s as well. He has a lot of clout with The Big Guy, so he can pull it off. Perhaps a new patron saint is in order.

  31. The Political Class In Ireland or… START A FAKE REFERENDUM NOW!

    Iceland again rejected to pay UK and Netherlands, bravo!

    Here, we had an initiative by the so called ‘technical group’, while technically of political impotence due to the system inherent design of Irish democratic structures, they nevertheless started a initiative to call for a referendum on banking matters.

    To no surprise, the closed ranks of FG, Labour and FF prohibited this essential leverage to be given to politicians to go to the EU and tell them what the people here refuse to do.

    Of course they disallow the Irish public to vote on this matter, it is the same inherent arrogance of power that allowed them to hold the Lisbon referendum twice, the second time fed even with more deliberate disinformation and lies, fear mongering this nation into a YES vote.

    The outcome of such a referendum is a no brainer. Regardless whether they call for it twice, three times or more, the result would likely be the same within variations.

    So, on the one hand we have the political class that denies the people of Ireland to have a say in these matters, pointing to legalities of them being the elected representatives, on the other we have the Irish public that is continuously being fed with spin and tons of faked realities.

    It is a time game, and the way it looks, the Irish representatives are willing to deliberately loose this game, as usual for the benefit of a few, and the major disadvantages of the most. New, well not really new faces, but certainly same policies. Period.

    It is other people who whisper into governments ears what to do and what not to do. What you see on television or read in the press is the front end of a well oiled propaganda machine.

    Essentially, the political class in Ireland, and not only here, has turned into the executioners of special interest groups, hence is politically totally dysfunctional, driven by vested interests, and disarmed by powers beyond their control, but handsomely rewarded by non executive positions after they served the cause, Charly McGreevey and others are shining examples of the reward structures in place.

    Ireland’s choice is very simple. With a political class no longer representative of the majority will of Irish people on major issues such as a clear default on imposed banking debts, the way out of this can only come from within the Irish society.

    Only by a Gras-Roots movement strong enough to be heard and taken serious, change in a given time frame is possible.

    One possible start would be to call on the Irish people to cast their vote in a ‘FAKE REFERENDUM’ on a given day, say May 22nd for example, I call it fake because technically the political class is in their right to utterly ignore the outcome, practically however, it would be of major social-political impact, which can not be ignored.

    This could be the start of a Gras Roots movement in Ireland to take control of our future, instead of leaving it to a dysfunctional political class that is steered by special interest groups.

    With respect, I put this idea to you for your consideration.


    • CitizenWhy

      Perhaps it is time to form an Independent Provisional Government in Ireland, with all members pledged to reject having the government pay the debts of privately owned banks.

      1. Find candidates for some – not necessarily all – electoral district in all regions. Meet as a provisional Dial. Choose a provisional Prime Minister.

      2. Educate the public on why the bank bailouts must be rejected.

      3. Create and conduct an online Referendum on whether to reject the government’s bailout of the privately owned banks.

      4. Elect members to the EU parliament.

      5. Demand a new official election, with a slate of candidates pledged to reject the bailout of the privately owned banks.

      This won’t happen of course, but it could make an interesting novel/movie.

    • It’s the same old story everywhere Georg and you are preaching to the converted in my case.

      Sometimes I feel that there is no point in even talking about anymore because I have had enough.

      Libya, Egypt, Greece, Uk, US and so on. People everywhere feel powerless and have had enough.

      Gombeen classes run the show everywhere and because of their childish and psychopathic behaviour the world has become a shit hole. Ireland is just a microcosm of the world at large and being a small place makes it is easier to observe human nature and all it’s faults

      Does the thought of Lowry and Fingers dining with Prince whats his name not make people ask just what the hell is going in in this jurisdiction? It feels like the vultures are sitting on the window ledge eyeing up the food on our plates.

      I think that one day soon the Irish people will tell the world that enough is enough. Keep the faith Georg.

      • coldblow

        You’re not the only one who thinks along these lines.

        From a recent comment on irisheconomy,ie from a Paul Hunt (who does not appear to be a revolutionary):

        “But the noble Nobel Laureate [Stiglitz] is a little behind the curve in his quaint American belief that the democratic process governs financial capitalism and that financial capitalists are prepared to take their lumps like all good firms and citizens operating when things go a little pear-shaped. It is amazing that those who oppose the Neocon hegemony so vigorously, such as the noble Nobel Laureate and his fellow Laureate in the NYT, fail to see the extent of its hegemony and the extent to which it has simply re-written the rules. In a sense it’s like the shift from Newtonian mechanics to quantum mechanics.
        Markets in all classes of assets, goods, services and commodities are being subverted by a huge layer of financial or paper trading. For example, nobody believes any more that the price of crude oil is being driven by fundamentals. The price is being determined primarily in the paper market.
        Financial capitalists rule supreme and the US Feds QE has simply given them more money to play with as the glut of liquidity coming from German and East Asian surpluses begins to shrink. The EU may be squeezing Ireland unjustly and unfairly, but it is doing so out of fear of the forces of financial capitalism and because its politicians convinced their voters that these financial capitalists were really very nice people and now dread asking their voters for the pound of flesh these ‘nice people’ want.”


  32. Praetorian

    New Labour…….

    TANAISTE and Foreign Affairs Minister Eamon Gilmore has insisted he did not know Prince Albert of Monaco attended a controversial dinner with Michael Lowry and Michael Fingleton during his visit to Ireland last week.

    The Labour leader’s deputy, Social Welfare Minister Joan Burton, said yesterday she was shocked by the reports of the unofficial gathering organised by businessman Dr Michael Smurfit, Ireland’s Honorary Consul in Monaco – a position controlled by Mr Gilmore’s department.

    The dinner took place in the K Club, which is owned by Dr Smurfit and is where Prince Albert usually stays when he comes to the country on private visits.

    Prince Albert was accompanied by his fiancee, Charlene Wittstock, at the dinner.

    Also on the guest list were disgraced TD Mr Lowry, the former Fine Gael minister officially reprimanded in the Dail the previous week following the Moriarty Tribunal report, and Mr Fingleton, the former Irish Nationwide chief.

    Despite demands from the Government, disgraced former banker Mr Fingleton has refused to return a €1m bonus he got from the building society after it ran into difficulties.

    Irish Nationwide provided the loan to Dr Smurfit and property developer Gerry Gannon to purchase the K Club in Co Kildare.


  33. coldblow

    Good article from Will Hutton in yesterday’s Observer:


    “It’s a race against conventional thinking – and time.”

    Similar stuff from William Keegan in the ame issue:


    • coldblow

      From Hutton’s article:

      “Countries, with Britain and the US in the forfront, had to use the state to prevent a first-order financial collapse, but now the very financial system them saved is rounding on governments, pillorying them for having the very public debts that saved the banks.”

      Money and debt – it’s all IOUs and, for the moment, the IOUs still function, but for how much longer under the present rules?

  34. Lilja Mósesdóttir is a former member of the governing Icelandic Left-Green party and a member of the Icelandic parliament. She resigned from the Left-Green party in protest at the IMF dictated economic programme being implemented by the government. She visited Ireland last week, and agreed to answer some questions on Ireland, Iceland and banking for Politico. …


  35. Large Financial Institutions: Panel at INET Bretton Woods Conference

    Seven Videos http://tiny.cc/vvupk

  36. Philip

    Just finished listening to the AIB results. They will be lucky if they get away will “just” 2000 jobs being lost – and with overdue cuts in public expenditure (overdue becasue relative to the rest of the country you could argue it has grown), confidence is going to take a further bashing. Looks like a kleptocracy which robs from the productive and talented to give to a black hole – and yet Howlin is howlin’ that all we need is confidence to free up some of that save up cash the corporates and private individuals are hoarding away. Well, he and the rest of them can go and F^%$ Off. I or my children and many others (who are not rich by any means – but highly mobile) am not working for a black hole.

    Now, I am not sure if giving the EBC the 2 fingers is the way to go either. That particular agency is given too much credit for being able to to anything useful and really it should be made work for a living. The way I see it is we have a broken EU and if you are of a reasonable mindset, you cannot expect the leaders to go back to their countries and say they forgave the debts and not get lynched 5 minutes later. It’s like the Lord Mayor of Dublin telling Galwegians that it owned a lot of money to the big smoke (mind you harps back to another element of problems local which we need not expand for now). In the current setup, EU are not integrated.

    The Icelandic route may be forced upon us sooner than we expect via default and we should not underestimate the level of pain it will bring. I just feel the notion of a genuine united EU should not be so easily dashed aside given the level of investment and work done from both sides. This is not just about economics – it is about people getting on and negotiating a breakthrough. A Euro Bretton Woods is badly needed.

    • +1

      Especially agree with your last paragraph, but this needs more than a Euro Bretton Woods, it needs a global resolution at the G20 level. I believe this will come about as pressures mount within the dollar and euro mount maybe because of pressures coming from Japan and fallout from the earthquake/fukushima. Also pressure will come from us as the IMF finally do the Math with Howlin the Blind and figure, the more austerity, the more damage we do to the economy, the closer default, gameover.

  37. CitizenWhy

    In citing Iceland as an example, remember that the Icelandic Parliament has twice passed a bill agreeing to IMF terms. In response the President insisted on a referendum. Both bills were voted down in the referendum, but by a much slimmer majority in the second referendum. The second bill passed by parliament contained much lower interest rates, so the first referendum made the IMF willing to compromise.

    When the Icelandic Parliament passes a third bill agreeing to IMF terms, that bill just might win approval in a referendum.

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