April 12, 2011

Eurozone project can either change or go down the drain

Posted in Sunday Business Post · 98 comments ·

When was the last time you pulled a cork from a bottle of wine? In the wine industry, there is a debate raging about whether the cork itself is to blame for wine being ‘corked’.

Whether this can definitively be proved or not, the upshot of the cork being blamed for the oxidation – and the subsequent mustiness – of the wine’s taste has led to a dramatic shift in the way wine bottles are sealed.

Increasingly, wine producers are switching from corks and towards screw tops. Could this switch become the norm?

And, if it does, what is the connection between the wonderful ceremony of popping a cork and hearing the delicious gurgle of new wine cascading into a glass, and the latest, supposed ECB/IMF ‘bailout’?

If you have ever driven through Portugal, You may have seen the thousands and thousands of cork forests populating that beautiful country. Many years ago, while in Alentejo, I remember taking a nap in one of these splendid orchards, bees buzzing all around, snoozing in the afternoon sun . . . heaven.

Today, Portugal is the world’s largest exporter of cork. But what happens if the market for cork is undermined by a structural shift in the wine industry, which Portugal can do very little about? It means the demand for cork will fall, along with its price.

This fall means that the average Portuguese farmer will have to sell more and more cork in order to buy, let’s say, a VW Polo. In economics, this shift in the value of exports is called a downward shift in its terms of trade.

As the demand for cork falls, Portugal will see its trade deficit rise.

Therefore, it will run a current account deficit and will have to borrow to cover this. If it is shut out of the markets, it can only borrow from the ECB/IMF.

But – and here is the rub – the only way it can get back on to a growth path is to reduce government spending massively, which the ECB is now advocating.

But in a country like Portugal, this will cause the economy to contract and it will suffer the twin pressures of internal and external contraction, leading to more Portuguese waiters in west London, more Portuguese grape-pickers in the south of France and more Portuguese workers in Munich Airport.

It also points to the fact that the European elite has now officially presided over a two-speed, two-tier Eurozone, where the voters on the periphery are second-class citizens and those in the core are a protected species, shielded from the internal contradictions of the monetary union.

If those who lend money to either Irish banks or the Portuguese government are insulated from the implications of their reckless lending, and the citizens of these countries are forced to bear all the burden, what hope does the currency have?

After all, this is the third time the IMF has been in Portugal since the 1970s.

What more signals do you need? All this evidence was ignored in the ECB-inspired lending bonanza of the past few years but now, financial reality has hit.

The eurozone will be divided between debtor countries and creditor countries, where the citizens of the debtor countries bear all the cost and those of the creditor countries get a free lunch.

Could it be possible that ECB president Jean-Claude Trichet wants to scupper the euro himself and cement this division? It certainly looks that way.

The countries on the periphery of Europe – the ones with the huge debts – need lower interest rates and looser monetary policy, yet Trichet has moved to increase interest rates and, therefore, he has tightened monetary policy.

This will exacerbate the strains between the creditor and debtor nations, making it more difficult for the debtor nations to pay their debts, ensuring more austerity, which will contract those economies further and thus begin the gradual process of a two-speed economy in the eurozone.

After awhile, the politics of this move are pretty straightforward.

Whether it was 100 per cent true or not, this approach to the debtor nations will increase opposition in the periphery to the euro, and Europe in general. Such opposition, whether it is effective or not, will lead to lingering question marks over those countries’ commitment to the euro project, which will further heighten financial market tensions.

Such tensions will be manifested in higher risk premiums for the periphery countries, keeping interest rates high and undermining the very fiscal adjustment policies that Trichet wants to enforce.

To keep the eurozone from a trophying, the elite – two of whom are Portuguese (European Commission president Jose¤ Manuel Barroso and ECB vice-president Vitor Constancio) – will have to come up with a new blueprint.

Most likely, they will push for further political integration, which the European electors – both in the core and the periphery – have voted against.

So they will have to go back to the solution that has been screaming at them for ages, which is that debts have to be restructured periodically in a monetary union made up of countries that make corks and countries that make cars – or countries where the population is old and saving, and others where the population is young and spending. We need a clean break.

Sticking with our wine theme, what the European elite is trying to do now by pretending that the system is not broken is nothing more than putting ‘new wine in old bottles’ – corks or not. In the Bible’s parable of new wines in old wineskins, Jesus said: ‘‘And no man putteth new wine into old bottles; else the new wine will burst the bottles, and be spilled, and the bottles shall perish. But new wine must be put into new bottles; and both are preserved.”

He was trying to make a clean break between his new Christianity and the old religion, Judaism, suggesting that the disciples couldn’t just graft on to Judaism the bits they liked and continue as before. According to Jesus, they had to create a totally new faith or the new wine would simply break the old bottles.

Therefore, they had to start afresh.

The same could be said for the financial architecture of Europe. If the elite tries to preserve the old system, rather than trying to re-think the whole thing now, they are only buying time, and the old system, like the old bottles, will break apart.

  1. Dorothy Jones

    ‘Bible’s parable of new wines in old wineskins’

    From Kathleen Barrington’s article in the SBP 10 April 2011:

    A speaker at last year’s conference [organised by the Sovereign Society] to lower their incomes taxes, discover little known global investment opportunities and avoid invasions of their financial privacy, was Patrick Doherty, a former Anglo Irish Bank employee who is now a senior vice president of international private banking with Valartis Bank’s Austrian subsidiary.

    Valartis is the Swiss bank that acquired a €600 million Austrian deposit book from Anglo Irish Bank in September 2008.

    • I find it hard to maintain peaceful and non violent thoughts…. really hard in deed.

      • Dorothy Jones

        Georg and Shtove: Add to your thoughts the piece in yesterday’s Irish Times; ‘For Some People the Dole is a Game’. I won’t paste it here, a google search brings it up. It is a poignant piece from the heart.

        • Thanks for the hint Dorothy, but I have to apply some psychological hygiene to stay sane these days. I am not reading IT, Independent and stuff as much as I used to anymore, I don’t need Dr. Fitzgerald to lecture me on ‘talking down the economy’ or similar BS published there on a regular basis. Same counts for THE IRISH ECONOMY blog, while I really value Karl Whelan, Kevin O’Rourke and a handful others informing and sharing opinion, the regular flood of Mc ‘HALO’ style jabber is unbearable.

          Re the Dole Game, I am not astonished though, you might remember how HARTZ 4 recipients are treated in Germany.

          I say the unemployed are not the problem, but unemployment, and fwiw, we do not need JOBS as in more telecenter customer service slave jobs…. we need REAL WORK instead.

          The tendency to use the weakest in our society for political spin purposes disgusts me to the bone, but is stereotype for any right wing mindset. It is all a distraction on purpose, refuse a referendum Iceland style, and continue sucking dry this ring fenced country under EU/IMF governance until EVERY BANKSTER HAS BEEN PAID!

          Then…. who cares…. let them default….

    • shtove

      Yes, what a bunch of wineskinners.

      The most revolutionary of Jesus’ sayings – “Render unto Caesar that which is Caesar’s, and unto God that which is God’s” In effect, don’t let the state dominate your existence.

  2. wills


    The old Empires at the heart of EU do not give a flying fcuk beyond their vested interest s, future income streams and geo-political standing.

    The Old Empire elites own the private banking industry controlling the EU economy. Not running the economy open to all free market principles of enterprise etc, controlling the economy.

    The PIIGS insider crony networks fed off the crumbs from the Old empire investment banks CDO mezzanine pyramid scam.

    Now that the CDO / CDS mezzanine pyramid scam has collapsed what we are all been fed now is the false paradigm of IMF / State control.

    But this is a fraud. Just like the unregulated markets of the past 20 years is a lie.

    Its all smokes n mirrors with this lot, playing confidence tricks on the sharecroppers working 9 to 5 providing the labour power to keep their wealth transfer feudal plutocratic system ticking over.

    • Yep… re feudalisation…hence privatising power is the current step in their game plan… the ultimate goal you may ask?… How about the IMF as a global treasury?

      But you know what Wills, today two chaps replaced the windscreen of the car, and I had a chat with them. They were in their mid 20s early 30s and I asked them what they see for the future in Ireland.

      We are fucked was the straight forward answer. I asked them whether they discuss these things in their peer group at all, I was particularly interested in this age group.

      You guessed it, they don’t. What’s the point talking about it, one said. I answered that before Iceland stood up and told these financial terrorists to stuff it, a lot of talk happened amongst the people, to better understand, to come to conclusions and move things out of the way….

      The political apathy in Ireland is the real Killer, the Banksters and crooks in politics could be dealt with, if only the people would stand up and act!

      As for David’s post. I keep saying this since a long time…it is The EURO LIE.

      • wills


        Yup, resistance no matter how small, or localized, resistance defeats them.

        The edifice of their plutocracy stands on *implied consent* of the sharecropper.

        Sharecropper withdraws *implied consent* and their plunder system collapses in on itself.

        • Of course Wills, Georg et al
          Resistance is the key to this whole problem.
          Particularly well organised and intelligent resistance!
          The first question is at whom do we direct our resistance?

          1. The government with street protests? – I was on the march in November when RTE reported first 20,000 then 50,000 marchers – Well there was a lot more than that and anyway it had absolutely no effect on anything that I can think of? Plus I don’t think the next one would be peaceful – The national anger has understandably grown!

          2. What about the banks themselves? What if there was a national embargo on paying mortgages for instance? Well I think in this case the EU would just sit back and watch us go into self-inflicted economic meltdown? (Or am I wrong?)

          3. The EU themselves? – This is, in my view, where the focused protest should be. Georg, in previous postings, has already mentioned the EU citizens appeal process. Is this the only sensible solution while we travel in our car crash slow-motion mode?
          Is there another way that the injustice can be highlighted, ridiculed and affected?

          • I am an advocate since long to organise and talk other countries under governance of the EU/IMF Finance Gaddhafi’s.

            I suggested to think and organise a fake referendum to mobilize the public at large for starters, but the response was zero. I don’t mean in this blog here, but people I wrote to.

            Civil disobedience on an individual basis brings nothing but pain to the individual, on a larger scope the problem shifts to those who were disobeyed.

            Hands on heart, how many people do you think know how much cash in total was given to these fascists since 2008? How many do you think know what the level of people’s wealth destroyed is to date?

            I would think there are more people here in this country who know in details the latest GA club jabber than about any fundamentals of this Heist.

            In January this year, short before Lenihan was given the boot from government, he still insisted to pay bondholders roughly the equivalent of an entire year worth of social well fare in this country, I kid you not! The best part however is that these bondholders cashed in on bonds they gambled on in 2006.

            The last 2 years of the so called political opposition in this country, now government was a history of media propaganda events, hollow phrases with no substance.

            You know, on a personal level, I knew there is no opposition here in Ireland when the second Lisbon referendum was called, and they all stood behind it.

            As for you 1. Well, we had more than 500,000 direct victims of this Heist, those who lost their job as a consequence, but roughly only 10% in total managed to express their demands. There should have been 1 million people on the streets of Dublin 2 years ago in April after the Motion on Banking Stability was voted on in government, every day until they leave government.

            But this time has passed, and as i said earlier, they are playing the time card on us, continue to pay back financial fascists until every penny has been accounted for, then they don’t care, the EU can afford a poverty house in their boundaries, and it comes in quite handy, they can drop thousands of Windmills all over the country side as a battery backup for the rich Europe that screws us.

  3. Praetorian

    Christ’s very first miracle was at the wedding at Cana where he turned water into wine, he enjoyed seeing people enjoying themselves.

    The European Project on the otherhand is hopelessly corrupt, run by money and power grabbing elites, it may well have to fall for the people of the European Union to be properly represented because the current system is a mere charade of democracy where referendums are re-run until the right result pops out.

    The way NATO is running around Afghanistan is a disgrace, the exploitation of developing (African) countries and the disgraceful way immigrants are criminalised and dehumanised speaks volumes of the true agenda at the dark heart of the EU.

    • CitizenWhy

      I like that phrase “the dark heart of the EU.” We need to regularly use this phrase in referring to the EU.

      • Deco

        Stick alongside the FG slogan “at the heart of Europe”. The phrase was used a lot by the Irish Times also.

        We are not at the heart of Europe. These muppets should stop patronizing us with their drivel, and have a look at the atlas.

        • coldblow

          Nice one Deco. Back in 1987 when I arrived I used to ask people (I don’t remember why) whether they felt more European or Irish. Most of them (they were younger people) said they felt more European, or so I seem to remember. There were also loads of shops with names like Eurospar or Eurocleen. They all used to tell me, being a gullible new arrival, that the population was young (true) and highly educated (doubtful).

          In Europe I saw people going into shops and leaving their bikes outside unlocked. In Dublin it would be gone when you came out again, locked or not.

          Back then I once heard Maid Marion musing on air about what made us (the Irish) so unique and interesting. Maybe it was that we were so European?

          We need a new St Patrick to drive out the BS.

          • Deco

            To be honest I always thought that “I am a European” statement as a bit of a brand BS trip. A lot of those people are in negative equity now. they are not stuck in Navan or Carlow with a 280 K mortgage. They are stuck in places like Leopardstown, Stepaside, Celbridge with an 800K mortgage. Big difference there.

            Comptempt leads people to disaster.

  4. Gege Le Beau

    Remember Iceland – it played tough with the markets and looked what happened…………..

    Iceland broke the rules and got away with itNow Ireland and Portugal wish they too had got tough with the markets

    I expect Lenihan is already preparing “we were given faulty information at a pressurised time, we made decisions in the best interest of the country” speech.

    • Deco

      Iceland has voted a second time in a Referendum concerning the issue of liability for bankers gambling and speculation.

      As far as the leadership of the EU is concerned, Iceland keeps giving the wrong answer.

      Therefore, the referendum will have to be put to the Icelanders again until they get the “right” answer.

  5. CitizenWhy

    The following quote is completely true, except that the phrase “with the collaboration of the periphery’s local political and banking elite” should be added. These elite will become even richer as the economies of their countries shrink, immigration increases, and the middle class grows poorer. The elites have every incentive to join their Euro masters in exploiting the periphery.

    “It also points to the fact that the European elite has now officially presided over a two-speed, two-tier Eurozone, where the voters on the periphery are second-class citizens and those in the core are a protected species, shielded from the internal contradictions of the monetary union.”

    Remember in Braveheart how the leading Scottish lords were willing to accept English rule but Wallace, a legitimate heir to the Scottish throne, upset the deal – until they found a way to get rid of him.

    • Deco

      There is also a battle scene in Braveheart where the nobles desert the field because they have been bought off by the English king. And the commoners were left to fight on their own and suffered greatly. You could see the contempt on the faces of the betters before they cowardly turned away.

      • CitizenWhy

        The irony is that Scotland, as power devolves to its Parliament and sovereign independence may occur, can learn from Ireland, Iceland and the periphery. By staying out of the Euro, by not allowing its banks to borrow heavily from foreign banks, by providing a low corporate tax rate and by continuing to fully support its excellent university system, Scotland could become the new Celtic Tiger, replacing Ireland as the US, and possibly the Chinese, gateway to Europe. Who knows, at some point maybe the people of Northern Ireland, Catholic and Protestant, will vote to join Scotland rather than Ireland or England.

        Remember. the Celtic Tiger occurred under the punt. With the coming of the Euro the Irish economy opened its gates to huge “capital inflows” (that is, huge loans from foreign banks to be invested in a real estate boom far beyond the capacity of the country to sustainably absorb all that new real estate). The economy became swollen with runaway banking and finance, not a healthy thing for any economy.

        The FG government is now desperate to present to the Irish people a deal between it and the ECB . That deal will no doubt include making its corporate tax rate the same as that of France and Germany, thus stifling any future growth in the Irish economy. But the FG government will be able to say that they negotiated a lower interest rate on part of the ECB/IMF loan.

        Good luck to Scotland. This is your chance to step over the corpse of Ireland and get on with your future.

      • coldblow

        Ah no, I saw the start of it before giving up. It helped me realize that I was allergic to filums. Medieval mounted warriors apparently had contempt for the humble footsoldiers, who were likened to the snow melting away on a warm day.

  6. Deco

    Concerning dependence on the bottle cork business, Portugal can sit there like as if it is incapable of doing anything, and ask for or it can adapt like the Swiss watch industry. Basically, obsolence happens in many sectors. Maybe Portugal might make more money from having people sit under cork trees than from harvesting the cork ?

    I mean Portugal has to consider changing circumstances, in it’s core markets. Having Barrosso in charge of the EU is not an industrial strategy. In fact it is more of a hindrance, because he will advocate the case, that Portugal is allowed dodge the issue.

  7. Deco

    Just wondering. French Aristocrat Giscard d’Estaing drafted the EU Constitution. It was rejected by the French – obviously not to keen on aristicrats. And it was rejected by the Dutch – maybe not too keen on superstate structures.

    Then it could recycled and repackaged under Bertie Ahern, as the Lisbon Treaty.

    Does this constitute putting old wine into new caskets, or putting new wine into old caskets ?

    Either way, it is funny business and not healthy.

    • nono

      Valery Giscard d’Estaing was born Valery Giscard. He bought the name (and title) d’Estaing much later on and is therefore not an aristocrat, merely a pretend one…

      • CitizenWhy

        You know your history of French pretenders, with Mitterand leading the lot. But pretend aristocrats are the worst kind.

      • Deco

        Unbelievable. But either way he still has a lot of contempt in his blood for the commoners.

        • Gege Le Beau

          As is well known, the French elite are schooled at the ‘Grandes Ecoles’ of which one is L’Ecole Normale Superieure, they are groomed for power and rule, items seen as something they are entitled to, kind of birth right. Major class issues however simmer under the surface of French society (beautifully depicted in Haneke’s film ‘Cache’ (Hidden)), an issue which occasionally explodes as in 2005.

          The treatment of the children of immigrants from the 1960s which France was happy to use as cheap labour is astonishingly bad, excluded, criminalised, discriminated against in terms of employment, housing (again depicted in the film ‘L’Haine (Hate)), access to opportunities etc, the usual bag of tricks.

          L’Haine with English Subtitles

          • coldblow

            Hadn’t heard of Cache. I’ll keep an eye out for it. I’m sure ‘er indoors would love to watch it too!

  8. martino

    This was one of your more insightful articles David and I hope many people get to read it. It goes beyond the technicalities of Finance and reveals how people and whole countries are strangled by debts the Euro has brought to being. And of course, after everything you describe comes to pass, the elites will go to these countries and buy them up cheaply. It is Financial Imperialism.

  9. Harold Plinth

    David writes that “The countries on the periphery of Europe — the ones with the huge debts — need lower interest rates”. I differ.

    The countries on the periphery of Europe — the ones with the huge debts — need no interest rate. How can one member of our European family charge interest to another? Would you apply interest on money given to assist your family?

    All Ireland should reject the payment of interest.

    • Would you apply interest on money given to assist your family?

      Oh….I witnessed such a few years ago, children had to sign a contract for a loan from their Dad and interest rates where included. May be worth stating that this was a very very rich man, and his both kids were early 20s.

      Trust me, you do not want to be invited for dinner to this family! LOL

      • Colin

        Lot of strange families out there I guess, just like that sports journalist accused of statutory rape being ratted on by his daughter.

  10. I know someone tried a similar idea nearly 100 years back but if anyone is free the week after next we might be able to break free from all this debt!
    Friday Good?

    OF THE

    LIMERICKMEN AND LIMERICKWOMEN: In the name of God and of the dead generations from which she receives her old tradition of nationhood, Limerick, through us, summons her children to her flag and strikes for her freedom.
    ………………….etc.etc etc

    As for the 25 counties…..the best of luck to yee all and don’t worry you won’t need a visa to come to visit us. And we’ll even accept your currency- You’ll get two Wogans for one Euro!

  11. I know someone tried a similar idea nearly 100 years back but if anyone is free the week after next we might be able to break free from all this debt!
    Friday Good?

    OF THE

    LIMERICKMEN AND LIMERICKWOMEN: In the name of God and of the dead generations from which she receives her old tradition of nationhood, Limerick, through us, summons her children to her flag and strikes for her freedom.
    ………………….etc.etc etc

    As for the 25 counties…..the best of luck to yee all and don’t worry you won’t need a visa to come to visit us. And we’ll even accept your currency- You’ll get two Wogans for one Euro!

    F*** your sovereign debt I’ve a horse outside!

    • CitizenWhy

      My mother’s family had direct experience with the Limerick Soviet, as the Republic of Limerick was called. They lived on a prosperous farm near Limerick, and were sympathetic and cooperative.

      Limerick was taken over by the working class for 6 months before the British authorities finally suppressed them, and businesses were run as worker enterprises, as soviets. Unfortunately the enterprise took a rabidly anti-Semitic turn and lost many of its supporters. The enterprise was also extremely pious and Catholic. This extremism was one of the reasons it turned ant-Semitic. This whole experience reinforced my mother’s family, as active Republicans, in their firm belief that church and state must be completely separated and the Catholic church not be privileged after independence.

      The Limerick Soviet, as it was known in Britain, inspired the socialist/communist working classes there. It also made the British government genuinely fearful of an armed socialist revolution in Britain. In fact, when negotiating with Collins, the government made its fears clear. The Unionist/Loyalist officers of the British army in the north of Ireland had actually mutinied as a protest against an independent, Catholic dominated Ireland. The British army everywhere depended on a lower officer class of Ulster Protestants and their cousins from Britain. The British government saw the Army as the only deterrent to the feared working class revolution, and so they were adamant with Collins that they could not include the Protestant dominated north in the Free State. In their minds they were not going to risk a civil war in Britain by allowing a 32 county Ireland.

      If you want to learn more there are some videos on the Limerick Soviet on YouTube.

  12. adamabyss


  13. ahimsa

    Would have been nice if David had referenced Jesus in the more appropriate context of injustice and liberation from debt and slavery.

    Short article here by Michael Hudson on historical biblical precedence for debt jubilees:

    Jesus was a radical activist preaching non-violent resistance to the political & banking authorities of the day. -Interesting piece here on interpreting Jesus thinkings in the context of political struggle and “empowering the powerless to seize the initiative even in situations impervious to change.”

  14. Problem? What problem?

    Move the government, parliament and capital to the Blaskets.
    Now the current Republic and signatory to all international agreements is headquatered in the Blaskets.

    In disgust at the move have the mainland 26 counties declare a breakaway Republic Part Deux with a new constitution its own currency and fiscal controls. You never know one day we might even join an EU that has actually considered economic variation?

    Pin the whole f**king mess on the people of the Blaskets (Is it still the Haugheys? – Now that really would be sweet revenge!)

    Blaskets permanently out of bond markets — However the Republic Part Deux is the best investment bet in the western world!

    Problem solved!

    Eh lads if yis have any more problems……just ask!

  15. manofiona

    When monetary union was agreed in principle almost 20 years ago in the Treaty of Maastricht its full implications were not understood.

    When the Euro was introduced in 1999, some of the peripheral countries took advantage of sharing a hard currency whose value is based on the entire productive effort of the Eurozone by having a big party.

    They generously overpaid their public sectors and hugely overallocated resources to unproductive bricks and mortar: roads that lead to nowhere in Portugal, large and ugly houses to disfigure the Irish countryside. In the atmosphere of easy credit which prevailed generally at the time, banks were happy to finance the unproductive spree of the PIGS by recycling euros from the more productive core.

    Party time is now over. Sharing a currency means sharing the productive effort which gives that currency its value and that means huge adjustments at the periphery.

    The peripherals resent the adjustments and many people at the core resent the fact that their credit is being pledged to help ease the adjustment.

    However, the long-term implications of sharing a common currency are becoming clearer and they include very close coordination of economic policies among the member states and indeed convergence of the economies of the member states around a common model -which is likely to be influenced more by Germany and France than by Greece or Slovenia….or Ireland.

    The Euro can indeed brea

    • Deco

      When monetary union was agreed in principle almost 20 years ago in the Treaty of Maastricht its full implications were not understood.

      100% in agreement.

      Just look at the way the Misbon Treaty deal was reached. Negotiations commanded over by the biggest pretender that Drumcondra and Ireland ever produced. The deal was agreed at something like 03:00 in the morning. At that stage in any EU shindig, Biffo would usually be Blithero. When asked if he read it, Cowen replied that he did not have to answer that question, because he wrote the Treaty.

      These things are always massive fudges, with lobbyists influencing matters in the background.

      The second piece of evidence that the impications were not understood can be seen in the idiotic decision making going on in the banking system, and the idiotic policies advocated and follwoed by the political establishment.

      Nobody at the top had a clue what they were doing. But they are all in a job, and drawing hefty pensions. They knew what they were doing in that department.

  16. manofiona

    break Europe, if the member states are unable to achieve the necessary convergence. However, the effort involved in such convergence will bring the states closer to facing the underlying reality of currency union and that is the ultimate necessity for a real political union in Europe.

    Only full political union can ensure the policy coordination, resource allocation and solidarity throughout the Eurozone which will be necessary if currency union is to benefit all parts and all people of the zone.

  17. bernardbrennan

    Very well thought out article David. Does anyone know can a referendum be brought by the people demanding it? i.e. so many signatures on a referendum petition?. If so come on lets get it on.

  18. Malcolm McClure

    Deeply philosophical article from David this week. ” In the wine industry, there is a debate raging about whether the cork itself is to blame for wine being ‘corked’.”
    In my opinion that is the key to the problem. Rather than drawing monetary parallels with old wine and new wine, we need to think about the differences between palatable wine and the taster we politely spit in the ice bucket.

    Europe’s fundamental problem is that ‘good money’ is being squeezed out of the market by ‘bad money’.

    ‘Good money’ is that which has been earned by traditional honest toil, building cars, roads and houses, catching fish, growing food, mining and oil.
    ‘Bad money’ is that conjured out of thin air by bank and governments’ printing presses in futile attempts at Quantitative Easing, and through the laundered proceeds of smuggling, extortion, tax evasion and drugs.

    The world is awash with ‘Bad money’ at the moment and it is distorting the economies of every nation. One reason that the EC is so set against the low Irish Corporation Tax rate is that it is attracting an overwhelming proportion of Bad money into Europe through the Irish back door, where it is competing unfairly with indigenous European Good money.

    It is the role of Regulators in every country to keep out Bad money by whatever means; in Ireland even if it means sacrificing out 12.5% CT rate.

    The other side of the coin is that we should honour all debts incurred with fully accredited Good money and reject all debts incurred with Bad money of whatever origin.

    The debasement of currency and counterfeiting has been going on for thousands of years.
    People need an honest currency if business ad democracy is to thrive and it is in all our interests to insist on having one.

    • Great post(from you, Malcolm), though I disagree with the “deeply philosophical” in DmcW putteth bit:) Its a bit of a testimonial to winos, but I’m prejudiced, don’t drink, except some Bud or lefFt(maybe spelling wrong), if I’m in Amsterdam..

      Tricky Trichet’s Achilles heel is he can’t bear to see banks fail, interesting link here Summers and Wolf on Bretton Woods, do I detect digs that Lehmans at 2% exposure to US economy was good to go and austerity as practised in Ireland, UK and other peripheral countries is doomed to failure.


      Trichet’s policy seems to be pay up or else, we can’t pay up, so else means default. So this means Trichet wishes us to default on sovereign debt so we pay the debt of our banks?

      To end on a corker, shouldn’t we be doing this the other way round!

  19. paddythepig

    What do you do when you can’t sell cork? You grow something else, and sell that instead.

    As Gunny Highway said in the movie Heartbreak Ridge, you ‘improvise adapt and overcome’.


    You don’t sit on your ass feeling sorry for yourself, falling asleep in an orchard.

    • Colin

      There’s a business opportunity for you there paddythepig, off you go to Portugal and sell them your solution to their problem. How’s your Portuguese?

  20. Deco

    If Brussels will not listen to millions of dissenting citizens, but instead routinely patronizes them or avoids them, then they will not listen to you regardless of your track record.

    The problem is not you. It is their inability to listen until disaster show up.

  21. OK. You can have your referendum. As long as you agree to have another referendum if we the Media & Political ‘mainstream’ disapprove of the result. Same terms as usual in other words.

    You Irish have had your fun, now please resume drinking the koolaid* while we process you.

    It only hurts if you resist.


  22. FAiken

    Check out MK’s post in response to the article in the link. His post is about a third down the page.


    MK, if you’re out there you’re a pretty smart guy!

    • Malcolm McClure

      FAitken: You have done us all a favour by exhuming this earlier DMcW post dating from the most critical time in Ireland’s downfall.

      This post and its responses from many familiar names is well worth re-reading as many of us recognized full well the dangers of the bank bailout undertaken by Lenihan, at David’s instigation.
      It is also interesting to read David’s justification at that time, which now rings a bit hollow.

      As well as MK’s piece that you mention, several others were quite prescient of the dangers of a comprehensive bailout.

      Of particular interest is Anne Osbourne’s post halfway down the Newer Comments page and AndrewGMooney’s response, where he says “It increasingly appears that ‘Austrian Economics’ is a far more reliable map and compass for our current predicament”. I still think that it is the only viable course to follow.

      • coldblow

        I don’t think Andrew himself still holds by that if I’ve been following things correctly. While sympathizing with some of your sentiments, on sifting and weighing the evidence (within my, er, limitations) I think its immediate application would be a recipe for chaos and disaster, although it would be a worthy aspiration, possibly, in the fullness of time.

      • coldblow

        Forgot to mention, also intersting in Michael Hennigan’s response. He didn’t condemn it as such, just saw it as another Irish short-termist solution.

    • Thank you FAiken
      Fascinating look back at postings 1st October 2008 – Interesting that what was then called a “Masterstroke” may end up in the Guinness Book of Records as the most incompetent fiscal strategy in capitalisms history (per capita).
      For our economy less of a “Masterstroke” and more of a debilitating “Massive Stroke”. Still it’s good to see how many people were rightly suspicious of it.

      However and ironically the thought struck me as I read through 2008′s postings, from a bevvy of familiar names, what will the postings of 2013 be about on this site? For surely the game will have moved on to a new level by then?
      Will there even be a “this site”???
      Anyone like to speculate?

  23. Black Cat

    Two points in Europes defence that I can come up with:
    Didn’t Merkel suggest burden sharing even before we weren’t able to borrow on the international markets anymore?
    Didn’t the EU urge us to cool down the overheating economy during the so called boom years – but our government ignored them.

  24. Black Cat

    “We won’t allow taxpayers alone to bear all the costs of a future crisis,” Merkel said.

    Mark Rutte, the Dutch prime minister, echoed Merkel’s comments, saying that any effective crisis mechanism should “emphasise burden-sharing for the private sector”. Her argument also made sense in terms of basic justice. She said on numerous occasions that those who profited from the high interest rates on eurozone bonds should be asked to incur losses when the value of those investments dropped. She said at the G20 meeting in Seoul that taxpayers could not keep being told they “have to be on the hook for certain risks, rather than those who make a lot of money taking those risks”.

    To the eurozone’s lasting regret, perhaps, she convinced Nicolas Sarkozy, France’s president, to support her call for the private sector to suffer losses, as part of the deal that the two struck in Deauville on 18 October, itself the prelude to the unhappy European Council ten days later.

  25. Philip

    Cracking article as are all the attending comments. I think this is hitting the core of the current problem. Keep digging. We need people to start to openly question the governance structures in Europe and its history. We need more questions on the real base value of the Euro and where it is coming from. we need to see why one nation in Europe can hold others to ransom at a whim and finally, we have to properly understand who is really paying our politicians to foist harm on their local protectorates.

    Right now, the concept of Europe is dwindling to a geographical region from the lofty one of a unified cooperative for the good of all within it. Mobility and an open press is highly limited by language barriers and cultural differences. We are now in a pressurised situation and the ranks are closing fast. The investment of trillions is about to be thrown away for the sake of pin money all becasue we have idiot leaders.

  26. paddythepig

    Why are these peripheral countries borrowing so much money in the first place? This is the real issue. If you didn’t borrow so much money, you wouldn’t have to pay it back with interest.

    These peripheral countries, and Ireland is the prime example, are addicted to spending other people’s money, and invent bogus theories about why they should not live within budget.

    Austerity is a good thing for these countries in the long run. It’s the only way to learn what truly has value, and what truly generates wealth.

    No pain no gain, as the fella says.

    • Deco

      Well, actually there is a thing called the Irish concept of authority. I mean, given the performance of 40 gaffs Fahy, Dithering Bertie, and all the money that they get in pensions and lumps sums, there is going to be a shortfall somewhere.

      And when you have mediocrity always prevailing over meritocracy, then you can expect to see an awful lot of shortfall. It shows up as some sort of structural financial deficiency. (the gombeens are paying themselves far more than they are worth, and they are doing massive damage).

      We need to sort ourselves out. Continual money flows into the country, ensure that the establishment can prevent this being given serious thought.

    • Dorothy Jones

      The pain is being felt by taxpayers, many who did not spend or borrow, is it not? I agree with the principle of hard work and prudence; however it seems that many of those who borrowed foolishly at a grand scale feel no pain at all. This is a broad brush view of course, but optics would depict it so.

      • paddythepig

        Hi Dorothy,

        I prefer to concentrate on the broad economic themes, and leave the analysis of injustices therein to others. Not because they don’t disgust me – they do; more because even if all these injustices were to be made right, the fundamentals of the problem would still exist.

        • Dorothy Jones

          Hi Paddy
          I understand your point. But if I borrowed an amount from the bank or from any source, I would not expect others to pay it back. It would be my responsibility to do so. It is a binding contract and the law does not protect someone who ‘makes a bad bargain’ unless certain criteria apply.
          Your mention of ‘the fundamentals of the problem [which] would still exist’ is of interest. The issues may perhaps include: control, exercise of judgement, due diligence, ability to keep one’s part of the bargain and all of that good stuff. Polonius observation comes to mid: ‘Neither a borrower or lender be’..

    • coldblow

      No pain, no gain.

      Don’t want to go into details here but this is a sentiment I once shared but after a bit of thought and looking back on past experience I no longer believe it to be true, on a whole lot of levels (two areas which spring immediately to mind would be eyesight and education). The phrase would probably be serviceable but I think you’d need to replace ‘pain’ by a different word. But then it wouldn’t rhyme.

      • coldblow

        Need to add, if I’d read my own comment above in the past I’d have been irritated by it as it seems to offend basic justice, and maybe it does. But all the same I don’t think no pain no gain is actually true, although it’s arguable.

        It’s much easier to dismiss platitudes like “those who can do, those who can’t teach” which are plainly just wrong. Relying on these sayings in argument is a bit of a throwback to olden days where the layperson’s moral universe was constructed (maybe entirely) from these simple bits of folk wisdom, parallel to the Puritans’ reliance on scripture.

        Ó Cadhain saw the traditional Gaelic culture of his day as being utterly incompatible with a modern, creative literature. For starters you couldn’t say anything new which hadn’t already been said before, which does limit matters somewhat. We still seem to have some of our own contemporary folk wisdom. TINA, the fundamentals are sound, you can’t lose on property etc.

    • Colin

      “Austerity is a good thing for these countries in the long run. It’s the only way to learn what truly has value, and what truly generates wealth.”

      Here’s an idea then paddythepig, you write a letter to the revenue commissioners, instructing them to remove your tax free allowances so that you pay more income tax because you think austerity is a great thing altogether. Lots of pain for you, lots of gain for the nation’s coffers to throw more money into the banking black hole.

  27. Deco

    Well, it looks like “Be with AIB” will no longer apply in a matter of employment sense for 2000 people, from a moment soon forward.


    AIB in retrenchment.

    Just wondering, what is the pension being received by Suds, Dermot Gleeson, Lochlain Quinn, Eugene Sheehy, etc.. and is it still being paid ?

    The bankers – they have not gone away you know.

    I find it intreesting the way we get told that AIB lost 10 Billion last year, as a sort of a minor story, released to justify the retrnechment.

    • Dorothy Jones

      Deco, there was an article a few days ago in the paper [IT?] on Eugene Sheehy who was enjoying the sunshine on a bench in Trinity. He seems to be taking a course there. Anyhow the article mentioned his substantial pension. When questioned, he did not have to much to say on the stress tests. He certainly wasn’t too worried though.

  28. paddythepig

    ‘We must separate our bank debt from our sovereign debt. But we must honour our sovereign debt.’

    How many times have you heard that in the past few months, especially during the election. The premise behind such a statement is that bank debt has no connection to the average Joe, and that sovereign debt does.

    But the end product of misinvestment in both sovereign and private debt is very similar. For example, if you take a drive through Cork City centre, there you will see the Elysian Tower, a product of a failed private initiative, a waste of money. Today, all we are left with is a tower which no-one lives in, a modern day Connollys folly. Yet only a few years ago, there were hundreds of citizens employed there ; the materials used were acquired from Irish retailers ; I bet the concrete used came from CRH or Kilsaran concrete, and other materials were sourced from within the economy. The workers then spent their pay acquiring goods and services from local businesses.

    Then for example, let’s take then the sovereign debt required to pay civil servants to take 3 years paid leave, with a guaranteed job to return to, at 12500 each per year, without an iota of change to the services provided. A waste of money, where the Government is too cowardly to do the right thing and introduce redundancies. What will these folk do with their 37500? They will invest it in goods and services in the local economy, and do the exact same thing as their private counterparts.

    There is very little difference between the two. Misinvestment is a bad thing, no matter whether it’s public or private.

    One could draw several conclusions from this. Here are mine.

    1. Borrowing for public waste is as insidious as borrowing for private waste, and should be immediately eliminated.

    2. An external investor would have some justification in seeing little difference between providing a public or private loan into a country. The end product is very similar.

    3. The imperative to honour public debt, but dishonour private debt, is based on a very dodgy premise. The same rules should be applied to both.

    4. Private debt in instigated from within the population by a borrower and lender, and has willing participants in the form of workers and other stakeholders. The vast majority of other citizens have little or not input into this process. Public debt is instigated from within Government by a borrower and lender, and has willing participants in the form of Government workers and other stakeholders. The vast majority of other citizens have little or no input into this process either.

    • Harper66

      “The imperative to honour public debt, but dishonour private debt, is based on a very dodgy premise. The same rules should be applied to both. ”

      What line of work do you make your living from Paddy?

      I ask because I am presuming self interest motivates your spurious reasoning….

      • paddythepig

        Self interest motivates everyone’s reasoning.

        But you assume wrong. I have no vested interest with regard to either the public or private debt.

        Do you?

        • Harper66

          Self interest doesn’t motivate everyones reasoning.
          It does seem to have been the prime concern of all those who have dragged Ireland into the dire position it is in now.

          I find your post spurious as your argument is the antithesis of capitalist thinking. A capitalist system should allow failed ventures to fail without intervention from the state – is it not a communist that would argue “The imperative to honour public debt, but dishonour private debt, is based on a very dodgy premise. The same rules should be applied to both.”

          For the record I do have a vested interest when it comes to private debt – my interest is in not paying debts that are not mine.

          • paddythepig

            I disagree. I have yet to read a post on this blog, or any other blog, that isn’t motivated primarily by self interest. Except we have some people who disguise their self-interest as the public interest.

            Everyone who receives payment from the public purse for example, has a direct vested interest in maintaining the fiscal deficit, to the expense of the rest of the population. I don’t see many public servants coming on here volunteering for pay cuts, or to give up their spurious job in a quango.

            You miss the point of the original post. From the point of view of the creditor, there is very little difference in lending to Ireland the country, as opposed to lending to Ireland’s banks. The money gets distributed into the economy in an almost identical way ; the only difference being who is asking for it, and what purpose they use the money for.

            The post concludes that for a creditor to penalise a country for lack of supervision of it’s banks, and vice versa, is valid.

            And from the punters point of view, I am questioning whether public debt is ‘yours’ to pay at all. The only link I have to public debt is that I live in a country where once every five years, I have 1 vote alongside 4 million other people, and I then have to put up with all kinds of fiscal mismanagement and theft, which apparently I should feel compelled to honour. It is this presumption that I am questioning.

            Why don’t you object as vehemently to the public debt, as you do to the private debt?

    • well… I would recommend the film THE INSIDE JOB.

      We talk about fraudulently imposed debts. I don’t care whether the law at this point in time calls it just debts, then the law needs to be changed, because it is UNJUST!

    • @paddythepig

      Re: “3. The imperative to honour public debt, but dishonour private debt, is based on a very dodgy premise. The same rules should be applied to both.”

      You are unnecessarily confusing yourself there, so here are the rules:

      1. Honour public debt… GOOD.
      2. Honour private debt… BAD.
      3. Honour private debt of private investment bank
      providing no commercial branch outlet utility
      service to the public and in so doing threaten
      to bring down economy of a country… VERY VERY

      To suggest the average Joe was down on Howth Beach waving passing ships onto the rocks with lighted oil lanterns is STUPID and DUMB.

      Next up you’ll be quoting the Bible at us:)

      Speaking of which I was fortunate some time ago to catch the following fascinating documentary

      Those interested in the literary, historical, social and political history of the English ‘putteth’ speak language of the King James might be interested…

      • To suggest the average Joe was down on Howth Beach waving passing ships onto the rocks with lighted oil lanterns is STUPID and DUMB.

        imho this is much more than stupid and dumb, and was suggested by Lenihan when he stated ‘We all had a party’…..

        I consider such, not referring to paddy above, the statements of financial fascists.

        • yeah it was Stupid and dumb, they’d need to place themselves around Howth Head to get the ships onto the rocks:)

          But I take your point, I was being naive, the question of criminal conspiracy arises if you begin to question the raison d’etre of the guarantee and examine the arguments given out at the time for it.

          Oh, its just a solvency matter, our banks are solid as a rock….then, we take the hook…oh no, its a liquidity issue, ‘so how much do we need’, €3bn, we take the hook and pay up, then the price jumps to €8bn, €16bn, €24bn, €70 bn and climbing.

          So who is criminally responsible for not knowing how much the damage was? And they’re all still in their jobs and not behind bars?

      • coldblow

        Colm, I only saw a few seconds of this (it showed a New England chapel I think). Personally I don’t like the KJB style any more than BBC Drama Dept Austen-speak. It doth put me off, Sir! I’d recommend reading the first chapter or two of Bill Bryson’s Made in America (and the rest). Yea, verily, vanity of vanities. Hey, people are saying yea again.

        Agree with the rest of your post.

      • paddythepig


        You do not set the rules as to what debt should be honoured, and what shouldn’t.

        Serial debtors don’t have such a luxury, creditors do. I’m sure you’ve heard the old phrase ‘he who pays the piper calls the tune’.

        You points 1 and 2 above reveal a remarkable idealogical bias. If a Government wastes your money, you regard that as good ; if a banker wastes your money, you regard that as bad.

        If you put yourself in the mindset of a creditor, the ultimate point is that both sovereign debt and bank debt are distributed into the economy in very similar ways. Who could blame the creditors of the world if they came to the conclusion that regardless of whether you lend to an Irish banker or businessman, or an Irish government, that there’s a good chance that your money will be blown away and wasted.

        • >>Re “regardless of whether you lend to an Irish banker or businessman, or an Irish government, that there’s a good chance that your money will be blown away and wasted”

          This actually gives me a great laugh. I heard Richard Bruton make a similar remark on Primetime. The argument goes, if we burn bondholders, no one will lend to us.

          HMMM, lets see now, Argentina, Russia, the Nordic countries, which countries are not being lent to at the moment? Couldn’t be any of those countries not burning bondholders. Oh, but it is, its us!! They wont lend to us because we are too stupid not to burn bondholders!!

          I thought I was pretty clear on my anger the Irish government pouring tax payers money down the toilet was something I objected to. So I guess you must be a troll to make the point I approve of it:)

          Can you blame any creditors for not lending to this disastrous response to our mess. Can you blame people for not spending and taking their money out of Irish banks during this dead cat bounce!

          Default is on the way. Re ‘ You do not set the rules as to what debt should be honoured, and what shouldn’t ‘ Oh really, the courts do this all the time. The courts use terms like extortion, false pretences, the old lady whose life savings are stolen by some con artist…citizens conned by banks into accepting loans they can’t pay back…banks conning shareholders and borrowers with B&B money transactions that pretend the bank is solvent when its bust…

          Sorry, accept it if you will:)But I won’t accept gombeen arguments I’m responsible for the private debt of Seanie and his cronies:(

          Personally my ideological bias is to allow the evidence and facts speak for themselves.

          Its remarkable though in the face of this evidence, you hold the views you do.

          Which leads me to the question, is there some profiteering for you in these illogical arguments you ideologically provide?

          What’s in it for you?

          Re point 2 above, when I say ‘honour private debt..BAD’ I do of course refer to moral hazard that seems to believe citizens should be put on the hook for the debt of private banking.

  29. CitizenWhy

    If you want to understand the bank bailouts, and their moral lseaziness, read this article by Matt Taibbi in Rolling Stone. It covers the US Fed’s bailout, but it also reveals how the WORLD banking system exercises vast control over the US government and other governments.

    Warning. It’s a shocker.


    • great link thx…non recourse loan windfalls…unbelievable

    • Yes, and this here:



      applies to our situation with different names as well. The political class protects the real forces behind the scam, slaughters a black sheep Maddoff/Fitzpatrick to satisfy the Pleb and keeps the real players in the game.

      They changed nothing, absolutely NOTHING. On the contrary, new financial products hit the market from 2008 to date that are constructed for the very same purpose.

      They rub Basel III into our face as the honest and strong effort to change and avoid this from happening again, when in fact Basel III was dictated by Banksters to policy makers.

      This Heist is far from over! It is over when the extortion has drawn the last blood from it’s citizens, fear and insecurity is so high that a new order is implemented and people are willing to sacrifice their RIGHTS for the sake of a faked security, being threatened with chaos and anarchy by the propaganda maschines, telling them ‘THERE IS NO OTHER WAY’ in good ole Goebbels style Lenihan slang.

    • adamabyss

      Good old Matt, glad to see he’s still around. He wrote an article about my company (one of them) years ago. That’s my claim to fame. Sorry, couldn’t resist that, haha! He’s obviously moved up in the world though. Will read this article later on and look forward to it.

      • coldblow

        Stephen Kenny recommended his book Griftopia here a while back. Described as a lively account of global hi-tech larceny by the man who invented the vampire squid label for GS.

  30. Philip

    I think a plainer expression of the scam is needed here. If we were a “normal country” with control of our own interest and exchange rates, you have to ask would this have happened. Answer – Not a snowballs chnace in hell. The interlock between exchange rate and interest rate would throttle the speed of money long before it became a problem. Basically, perceived affordability is well managed.

    When money floods in with no control (the whys and wherefores etc. are a mystery to me, all I see is a bunch of bankers satisfying an unregulated demand & can you blame them – makes you wonder what the ECB were playing at) – lots of strange things happen to percieved affordability. People “felt” 100K or 500K was small money and this rippled through the rest of the economy to drive outrageous excess. What happened was that that money spent was way in excess of the net productive capacity of this country and the local services grew apace.

    Now, if this was a case of Galway County council versus Big Smoke Dublin, it mean the former having a major budget cut and increasing local rates and endangering local tourism – and I expect a few of the local TDs may start withdrawing support on a number of issues in the Dail. In Europe we do not have any negotiative ability. No Political umph. Nothing. We are still too local in our think to know how to play with these big boys.

    I hear a lot of phraseology about… bloody French pseudo aristocrats, or German pseudo barons etc… All I see are play actors and we simply need to up our game at bit and stop being fobbed off with cap in hand.

    • coldblow

      Iceland had their own currency but it didn’t spare them the bubble, so I’m not so sure about how far you can push your first point.

  31. Author Adam Nicolson is a fan of The King James, good at research and done a good documentary, not aware he’s a verily member of the KGB, or KGB have taken over the BBC:)Interesting the Whigs went on in the US to have Abraham Lincoln in their number, on banking they believed in protective tariffs and nationalised banks if I’m right, they’d like the Bank of North Dakota and be disgusted at our lot of treasonous pro bankers anti citizen parties…

  32. Dorothy Jones

    ..’the old system, like the old bottles, will break apart’….
    Hardy wineskins on tonight’s cracking lineup on VB : Max Keiser, Constantin, Paul Sommerville, and Brian Lucey.

  33. Praetorian

    Elties in Europe and elsewhere are trying to save their careers and their reputations, this isn’t about bailouts for peripheral countries, it is being spun as punishing the ‘reckless’ with straight profiteering thrown in for good measure because bankers and their friends fund political campaigns and Obama, Merkel and Sarkozy won’t bite that hand.

    • Colin

      I wouldn’t mind an elite who were good at running the country/EuroZone. What we have is an elite who are either clueless or corrupt.

  34. A bit of light gibberish meditation on the nature of propaganda:


    Squealer: Squealer is an intriguing character in Orwell’s Animal Farm. He’s first described as a manipulator and persuader. Orwell narrates, “He could turn black into white.” Many critics correlate Squealer with the Pravda, the Russian newspaper of the 1930s. Propaganda was a key to many publications, and since there was no television or radio, the newspaper was the primary source of media information. So the monopoly of the Pravda was seized by Stalin and his new Bolshevik regime. In Animal Farm, Squealer, like the newspaper, is the link between Napoleon and other animals. When Squealer masks the evil intentions of the pigs, the intentions can be carried out with little resistance and without political disarray. Squealer is also thought by some to represent Goebbels, who was the minister of propaganda for Germany. This would seem inconsistent with Orwell’s satire, however, which was supposed to metaphor characters in Russia.

  35. curiouse

    Off topic perhaps – but this anthropologist’s take on debt, credit and money has some interesting parallels. http://www.eurozine.com/articles/2009-08-20-graeber-en.html

  36. PORTUGAL BAILOUT: How Housing Will be Effected…

    Faced with its worst financial situation in over 30 years, Portugal avoided default on Friday by paying off maturing 2005 bonds.It depleted its cash reserves and sold €4.2 billion ($6.1 billion) worth of bonds, with the 10-year yielding roughly nine …..

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