May 11, 2011

A sea change is needed in ECB - or we're sunk

Posted in Irish Independent · 207 comments ·

Do you remember Hurricane Katrina in New Orleans? Do you remember the devastation, the debris, the human loss of life? Do you remember the scene of the New Orleans Superdome with thousands of people — now jobless and homeless — crammed inside with no sanitation? Well how do you think the government of Louisiana, devastated by a hurricane that cost so much that it would bankrupt the State, was able to rebuild the city?

The United States cavalry rode in to save New Orleans and the State of Louisiana. The President declared a state of emergency, Treasury wrote the cheques and the Federal Reserve credited Louisiana’s accounts. They then spent those dollars on cleaning up the city. So the central bank credited the account of the State of Louisiana because emergency economic conditions meant the State needed it. The State issued no bonds; there were no IOUs, except that the deficit of the US rose. There was no effect on inflation.

Louisiana was financed without the people of Louisiana putting their hands in their pockets. This is what is done in the US –where the concept “United” is taken seriously. The Federal deficit rises and the Fed prints dollars and the region in difficulty recovers or at least is helped towards recovery.

Could this happen in Europe? In Ireland? Is there any way the Irish government could access funds without going to the bond market and, in so doing, have an orderly reduction in the budget deficit rather than something dramatic?

The question is whether there is a third way. At the moment there are only two ways out of this crisis if we want to stay in the Euro. The first way is happening now. The ECB forces the Irish, Greeks and Portuguese into drawn out austerity packages without any debt forgiveness. This is not the behaviour of a “United” Europe. The ECB lends to Ireland at a time when Ireland is overwhelmed by debt — and adds injury to insult by demanding austerity policies that make the recession worse, inflicting suffering on the Irish people. This does not happen in the US. The ECB’s anti-European response causes a toxic cocktail of problems. It means much higher levels of unemployment, increased emigration and severe drops in wages. This cocktail makes people so insecure that they save more, which is bad for an economy in recession.

The central economic difficulty with this is that if the people who have money are saving, money is being sucked out of the economy. If the banks are bust, this money that is being saved will not be recycled. So there is a credit crunch. This is what is called the balance sheet recession and this is what is happening in Ireland.

If we are saving lots and the government is not spending lots, who is going to buy anything here? If no one else buys, the economy contracts because no one is spending. The only way a country like Ireland can grow or even remain stable in this environment is through an enormous trade surplus, where we sell our stuff to foreigners because we are not buying any of it.

So the only way that we can reduce the government deficit to zero and not destroy the economy is to have a trade surplus equal to the amount of money we are saving.

On the back of the envelope, it means that our trade surplus will have to expand our current account balance by 16pc of GDP or $30 billion in the next few years because we are saving 16pc of GDP. But here’s the kicker, according to the CIA fact book in 2010, net exports increased by over €5bn, but we ended up with a current account deficit because the multinationals sent the proceeds of their exports to other nations. No export strategy can guarantee success when it depends largely on multinationals.

With world growth modest and the ECB tightening in Europe, expanding exports is going to be almost impossible, so the government will have to keep spending.

But we can’t go back to the markets to finance this spending because the markets are shut to us. So is there any way out?

Well the second option is full political integration in Europe where we go for what is called fiscal federalism. This means that we pool our parliaments, our resources and our sovereignty together into a super-state and the difficulties of the likes of Ireland and Greece will be paid out of the central EU budget. But the problem is that no one in Europe wants this. Not the True Finns or the citizens of any other country.

So is there a third way? Is there possibly a way we can inject capital into countries in danger without going to the bond markets?

Consider the New Orleans debacle. The US Federal Reserve credited the State of Louisiana and gave it the cash to spend. Now the Fed just printed that money. It printed the money, backed by a piece of paper issued by the US government. So the US deficit rose modestly.

Could something like this be done in Europe? If you could persuade the ECB to set aside a certain amount of money for emergency economic times which would be lodged into the account of the governments of those countries which are affected by an economic emergency. How could you do this without raising corresponding taxes from the richer countries to pay for the ones in crisis?

What about just printing a certain amount of money, without any backing, and setting this aside via let’s say the European parliament for each country divided up by population so that there can be funding during a crisis?

Why would anyone in creditor countries go for this? Maybe they will see the value in this because without such a mechanism, debtor countries will be at the mercy of bond market vigilantes and will always be unstable. This will force periodic crises in the Euro, with some countries like the Greeks saying they might have to leave.

So who loses? Well no one really, if you can persuade the ECB not to worry too much about its balance sheet. If you can persuade it to be a bit more like the Fed, the Bank of Japan and the Bank of England and understand that the central bank can’t go bust because it is the only entity that can print the currency. In current conditions, the ECB could establish this emergency fund without any risk of inflation.

Only with a sea change of opinion and attitude inside the ECB can Europe and Ireland escape the economic trap we have set for ourselves. Had the Fed behaved like the ECB, the hurricane in New Orleans would have devastated the city in the way cities were erased in the old days. New Orleans would have become like Carthage, a footnote.

But the interesting thing about Carthage was that it was destroyed by men not nature. The expression a Carthaginian peace comes from the Roman idea that you obliterate a city so that it can never recover and call it peace. Is this the type of financial and economic settlement the ECB and the Irish elite wants?

David McWilliams will be on a panel discussing the Euro and the ECB on May 16 with Professor Joseph Stiglitz and British Chancellor George Osborne at

  1. adamabyss


    • NO HOPE

      No printing of money! No, never! Zimbabwe economics it is. Mugabe economics it is. Money has to have an underlying value, a root base. Printing arbitrarily devalues the currency, ramps inflation, and makes Irish politics look legitimate. No printing arbitrarily, never!

      • NO HOPE

        I am still reading about how “WE” owe money. I owe nothing. Lenihan, and the boards of the banks owe money to foreign banks. Not me. Lenihan said he partied. I did`nt party. Let him and his family pay the loans back. It has almost become a reality that “WE” owe the money. It is simply unbelievable! Well here is a message to the banks and the people who think “WE” owe the money. Screw you!!!! I don`t owe one single red cent to bail out the banks. Anyone who is going to have their pensions raided, should leave on the first plane out of here and become resident elsewhere, then they can`t touch your private pension. That is until they see all of you leaving and make new laws designed to screw you over again, and again and again. It will never end unless we default. There are still morons still stealing from you!!!

        • Juanjo R

          I’m wondering NO HOPE ( and forgive me for presuming that you live here ) are you going to avoid paying back via some form of taxation or removal of services the bank debt since the government are the ones who levy taxes and dicate services not you?

          Are you going calculate the part you don’t owe and not pay it somehow? or are you going to challenge the government in court and get yourself somekind of exemption? I’m intrigued NO HOPE enlighten me would you?

          You know this kind of Me Fein thinking, and delusion that we and the state and government are almost unrelated entities is what has us in a mess…I believe we have never grown up as a society or as a nation state we are still a bunch of individuals together on one island who can’t can think in common terms for anything bigger than the level of a GAA team…and even that does happen always!

          • Juanjo R

            *opps …the question above there should read “HOW are you going to avoid paying back…the bank debt”?

          • vincent

            There was a time in Ireland, not so long ago when people were taxed(penalized) for having chimneys on their homes and also for having windows(that’s where the term Daylight Robbery came from)-This was challenged and rightly so. Presently there is many families up and down the country in deep despair who can barely feed themselves. I think it is high time that we started to really question so many of the things that we take for granted and challenge peacefully and lawfully those that are unjust…

          • Juanjo R

            I think my question still stands Vincent – how is No Hope to remain in the state and avoid paying the bank debt?…and if you really want to challenge the new ‘daylight robbery’ ( and the tax explaination for that name isn’t the only one ) well I feel making ridiculous comments on a blog isn’t going to challenge anything with any success…

            I put in a stint of challeging ( real challeges and paid my money down and I spent many hours engaged with it for something I had no direct gain from a good 5/6 years ago and came to the conclusion – over a period of time after – that it was too late already…oh I won my challenges too…but the bigger picture was the problem and the bigger picture is our society, our state. We are imature as a society thats why in my opinion we are having a this large widespread failure now.

    • ahimsa

      This is a perfectly plausible monetary policy alluded to by DAvid.See Richard Douthwaite’s paper on ‘Deficit Easing’ (as opposed to quantitive easing)

      Deficit Easing

  2. wills

    Pettiness of vanities.

    The dudes with the money want to look the coolest.

    So they gotta keep it all.

    So they kill the free market and bobs your Uncle.

  3. A short but important addendum to David’s analogy or…
    Bold Central Bankers!


    I can understand where you are coming from, building analogies and reference to historical events, to publish a better understanding of economy is your trademark since long, and imho you do that well, regardless your ideological focus, hence underlying preference of a Keynesian message. Of what was said to date, a lot I agree to, especially on Central Banks and the political, legal, fiscal, and beyond doubts partially deliberate mismanagement, both in Ireland and the EU.

    However, please allow me to switch on a different light onto this analogy, as I feel it is left as being seen as an accurate and responsible response to this Hurricane disaster.

    It was anything but that!

    The handling and aftermath of this disaster can best be described by looking at the insurance ripoffs, government incompetence, scorn, betrayal and abandonment of the people.

    As a musician myself, my heart stopped when I learned about New Orleans, it is such a unique place, loving people, proud and strong. Eric Pershing – Spectrasonics -, probably better known amongst any musicians who should read that here, got the best of the best together and created a small library of drum performances, sold it, and gave all the proceeds to help the people.

    It was such true altruism that helped the most, coming from the people themselves.

    To describe the reality of the officials handling and the aftermath would exceed a blog comment by far, but I would point to Director Spike Lee’s outstanding 4-part Requiem:

    When The Leeves Broke

    The true lesson here is not one of failed governments response, history is full of that, but rather that there is no one to rely on, and that it is only the people who can bring real change, by demanding change, and standing up for their rights.

    Instead of this happening in Ireland, people turn onto each other with a vengeance, fueled by the political class, feeding hatred and jealous sentiments in a society of largely conservative begrudgers. Divide and conquer at work, to distract from the real culprits and avoid their prosecution, to distract from the mismanagement and cahoots of politicians in the pockets of vested interests, to distract from further implementations of a totalitarian structures, the power of decision making being taken away from the sovereign, the people of this nation, peoples rights stamped away by treaties, and their future enslaved to a world of ruthless profiteering gangsters.

    How on Earth could anyone understand the deal that was struck between Ireland’s officials, DOF, legal vultures (not eagles, they are majestic!) etc.and David Drumm concerning his US bankruptcy and the agreement to not surrender documents to Irish authorities that could be used against him any different than legalized betrayal on the people of this nation to protect the very culprits of this Heist? Or take Brian Lenihan, who abused his position to make sure that the investigation will not examine the handling of the crisis by Government and its officials.

    How many more obvious events are required to wake up this Nation from it’s apathy?

    The overwhelming majority of the political class will lie at you, pretending to help, using many words, with an army of legal eagles in the background, but in reality serve different masters, and not the very people who voted for them.

    I feel it is important to point out that the reaction to this crisis by officials in the US was a disaster on it’s own, whether FEMA or Homeland Security or others, it was a disaster, and a lesson at the same time.

    However, this shall not take away from the appropriateness of your analogy concerning bonds and IOU’s, not a sausage!

    Here is another practical suggestion, there should be a ban on all members of Central Banks such as P. Honohan to grow a beard, or facial hair of any kind.

    From here on, they shall be required to have a 100% clean shaven head at all times, and I mean 100% no beard, no hair on their scalp, bold, and especially no eyebrows that they can raise at you!

    Do we have a group photo of the worlds central bankers and a photoshop collage artist here who is willing to lend a hand? I can see that picture! :)

    The caste of priests and acolytes of Carthage were clean shaven as well, to display their supremacy over it’s population at all times.


    • Deco

      Lot of truth in there Georg – the people need to stand up for themselves, and where possible undermine the institutional frameworks that actively collude to give big business and corrupt officials an advantage over them.

    • Good stuff Georg and I enjoyed it more than the host’s article because it says what needs saying and speaks with much more conviction

      I am still trying to get my head round why our host is holding up the USA as an example of unity. It is nothing of the sort and for the record let us remember that the people of New Orleans were left for four days before the president showed his face. I suppose even mentioning this fact puts me at risk of being called anti-american but hey some of our fathers fought for free speech after all.

      Seven percent of Americans are on food stamps and 40 percent of them can’t get access to basic healthcare and more than half the GDP goes to feed the war machine. The disaster Capitalists immediately saw New Orleans as their chance to rid the state of state run schools and introduce private education.

      The same ilk are now eyeing up the assets of Greece and it is only be a matter of time before they are in here demanding privatisation and the transfer of owenership of Irish state assets as collateral for the ‘debt’.

      Geitner and his cronies in the ECB blocked an IMF move that would have calibrated the 30bn figure down to 10bn. This is the kind of behaviour you would expect from someone who is your enemy.

      With ‘friends’ like the ECB and the US Treasury we are left to conclude that this country doesn’t have many friends at all. Our politicians are not street wise and the sharks out there are swimming rings round these small town solicitor and shady estate agent types.

      It should be cringe worthy watching the movers and shakers of this apathetic and deeply conservative gaff kissing the Royal ring and smiling for the cameras when they pass Obama the obligatory pint of Guinness.

    • “The true lesson here is not one of failed governments response, history is full of that, but rather that there is no one to rely on, and that it is only the people who can bring real change, by demanding change, and standing up for their rights.”
      On the button Georg.
      David needs to read Shock Doctrine to see how the US cavalry made a disaster capitalism heist in New Orleans. ECB private bankers will have heart transplants before a change of heart. Eventually the people will feel the pain and then rely on their own resources and if lucky the local community. Morgan Kelly has shone the light on the destination and as the Chinese say “If you follow the path you will arrive at your destination”

  4. paddyjones

    Basically David is saying “give us charity” which we dont have to repay. He doesnt understand the German or French attitude to us PIGS. They have very little sympathy for us and rightly so.
    If my neighbour borrowed so much that he couldnt pay his debts I would not feel one bit sorry for him.
    Those of us who are responsible and arent highly leveraged and who save money will be ok.
    Since when was saving money a bad thing…..odd economics , I bet David has lots of savings but he tells us to spend while he saves.
    In Ireland people are much better off than their German or French counterparts, it is only the sovereign debt thats a problem.
    David is crying wolf now , he is a populist , he wants a quick easy way out of this mess. Unfortunately the road ahead is a long hard slog. Nobody will give us a free ride, its up to us to put our shoulder to the wheel and work off the debt.
    Watch what happens to the feckless Greeks ….more austerity, privatisation and cuts.

    • Deco

      We are back to the begging bowl.

      the natural outcome of the entire behaviour model of the binge era, with Dithering Bertie and his big red bulbuous nose, and arrogance.

    • @paddythepig

      Only the meek shall inherit the earth.

    • NO HOPE

      U are missing the point! We don`t anyone anything!!! The banks, Fine Fail and the bondholders owe money, not us. Why can no-one understand this simple concept??? The Irish resident/taxpayer does not owe anyone anything!!! We should not share the pain. Maybe Lenihan partied, maybe Fine Fail partied. I did`nt party. I do not owe one red cent to bail out the Irish debt situation. It is F*!!*G ludicrous. Everyone is talking about the debt as if we actually owe it. Everyone has bought into the greatest scam of the 21st/22nd century. You are all mad. We owe nothing! The banks and their board owe hundreds of billions, not us!!!!!! Wake up !!!!! YOU can slog to pay them back, how`s that?

      • paddyjones

        Now now calm down that argument is over …..THE DEBT HAS BEEN SOCIALISED . This year we paid 3 billion to Anglo that forms part of our current spending. And this will continue for the next 10 years as we have issued Anglo with a letter of credit.
        The money put into AIB and BOI has been treated differently in accounting terms ….it is an investment to be repaid but the reality we wil never see a red cent of it back.
        We owe as a country…
        100 billion ordinary national debt
        160 billion to the ECB
        30 billion to ECB for NAMA
        100 billion to UK banks
        127 billion to German banks
        35 billion to French banks

        • Colin

          Paddyjones, you can pay my debt too since you’re so keen on making a martyr of yourself.

        • AH

          Yeah Paddy, You obviously have your tongue in your cheek as you type. It strikes me that you are a man in the know, and you probably work in the world of financial services. You have nothing to lose Paddy do you, except your shirt and tie, at the next big corporate piss-up. ;) I know you don’t really personally believe that we ‘should’ actually pay all of your above itemised debt bills back to the respective creditors, do you? :) With regards to your first post above – stating how things are (the attitude of central Europe to us piigs etc.) while empirical and strikingly obvious, it enlightens us further on our national position as a small time player – the new whipping boy for central Europe. I ask you though- does it mean that the actions of all of the players that led us to the Guillotine were justified, and that they were right? Do we as Irish citizens deserve this kind of treatment? You do have again an obvious disdain for the debt-ridden John and Mary Publics out there, and I sympathize with you to some extent (if you can’t do the time – then don’t do the crime), But what is actually happening here is far more insidious than just the ECB looking for the fair play of debt-repayment, by a flathúlach and, yes, one time deluded young republic. This is economic war, oppression, and forced penury. (How unpatriotic of me) This has been the fallout of the “Great Credit Era” and let it be henceforth known as such. Anyone checked how the latest spud crop is? There’s a good analogy for you David – but a bit too close to the bone perhaps. Politics? Politics is dead in this here little country. Realpolitik will rise from the ashes, I hope in the form of some great rabble-rousing teeth-gritted maniac leader, who point-blank refuses to pay anything back. Don’t dismiss this idea too soon…..

          • Last year we had a spud surplus and shipped thousands of tons to Russia. Guess what happened next – the price of spuds here went haywire.

    • paulmcd

      Paddy, it is the BONDHOLDERS – principally reckless Franco-German institutional bondholders – who are saying GIVE US CHARITY; though their sense of entitlement and powers of influence mean they are in denial of the fact.

      If my neighbour lent money to reckless fellow gamblers and found he could not recover the proceeds I would not feel one bit sorry for him.

      • CitizenWhy

        As paddyjones has pointed out, the French have a minor exposure to the Irish bank mess but a great interest in creating/maintaining a system that ensures domination by the EU core of Germany and France. France also recognizes the power of Germany and wants to be Germany’s friend so Germany will be France’s friend. Ireland is just another little orphan urchin begging on the street.

        The debt to British banks is quite large. The man put in charge of those banks by the UK government wanted to give Ireland a fair deal, since he knows how reckless the German and British banks behaved. But Geithner of the USA bullied him out of that stand. Merkel is not all that keen on having her reckless banks get off the hook either but Geithner has bullied her too. The official stand of the US is “BIg Banks First, too bad about the rest of you.”

        In the Charity Hospital Of Financial Trauma the big banks have private rooms and the best of care, and do not have to pay any bills. The rest have a cot in a corridor or basement storage room, and they must pay the bills for the big banks.

        This is our world.

    • Julia

      Would you feel sorry for his kids?

      • Julia

        Sorry, that’s to paddyjones. Would you feel sorry for the children of your feckless neighbour?

      • That is a basic moral question Julia and no normal person would say no. Why should an innocent child have to suffer for the sins of feckless parents. I notice you didn’t get an answer to your question so I assume he was just sounding off without thinking.

        • Julia

          Exactly, Paul. And if you use that analogy in relation to the citizens of this country I don’t see why we should pay for the sins of our feckless millionaires and politicians.

          Anyway I’ll read on. Still a hundred and something comments to go.

    • BrianC

      The Banks in Europe have to much to loose if Greek defaults. They will do anything to prevent it. They have to support the Greek otherwise they loose too much. In fact if Greece defaults now it will have a domino effect and will pull them down. The same reason that Geithner would not let Ireland default as explained by Morgan Kelly the US banks were exposed based on the fact of the TARP money that leaked out of the US into Europe chasing a quick buck and the fact that a few US underwriter were exposed to the bond markets in Europe.

      Paddy if it was you who lent your money to your neighbour you would not only feel sorry for him you wild be incentivized to help him.

      In your world you equate all to responible and irresponsible behaviour. There is great merit in that but where does the true responsibility reside. Ultimately the ones who must carry the can and exposed to the risk or more succintly where the risk is realised. You know the saying you borrow a hundred and cannot pay therefore you have a problem you borrow a million and they have a problem. The same dilemma but different ends of the stick. Economics has nothing to do with responisibility it is all about resolving problems. The mechanics of money to drive value creation. You can chose to live in the two dimensional world or use your intelligence to realise the fact that you are in a three dimensional world where two dimensional solutions are useless.

      Now we can bury our head in the one trick pony austerity sand which is wide of the mark in getting a resolution. Austerity serves the interests of those ‘who have’ at the expense of those ‘who have not’ and orchestrating deleveraging increases the wealth of those ‘who have’. Let the so called free market generate the wealth and when the time is right restrain the mechanics of the free market by reducing the liquidity to create negative growth and force the market participants to relinguish the value that they created. It is the oldest economic trick in the book and used time and time again. All money is borrowed into existence and the 2% who control the wealth of the world know this and duly use their three dimensional knowledge to screw those who believe they are in a two dimensional world.

      I am not an expert in Economics but I have a fair understanding of the overall scheme of things. As I am not a medical person thus not expert in this field and if I had a medical problem I would seek out the expert advice to find an answer. Now there is a bit of a skill in knowing when you receive the right advice/ answer. But regarding Economics I would pay close attention to what Georg Soros would say on the matter. On Oct 5 201O Soros delivered a speech in Columbia University at a World Leaders Forum. The speech was ‘The Sovereign Debt Problem’. It is well worth a read. It explains all and subsequent to this speech he has spoken further about the economic problems in Europe indicating that the ECB needs to print €1.5trillion to sort the problem out. But such is not on the immediate horizon as the perspective is restricted to austerity the responsible approach despite the fact it is an irrational two dimensional equation to a three dimensional problem. Einstein said 98% of problem solving resided in correct problem definition 1% was for tenacity and perspiration and the other 1% was for inspiration. Now if we are to believe that the true problem definition is reckless consumer behaviour I ask myself this very pertinent serious question what in the name of God do they really do in the ECB. The answer is simple. It is their responsibility to assist in looking after the 2% who control 98% of the worlds wealth. Long live responsible austerity.

      Paddy I love your whacko two dimensional world.

  5. Hi David,

    Interesting perspective. I would agree that another mechanism needs to be introduced to cope with economic emergencies associated with the Euro, if Member States wish to continue with it. That said, in the New Orleans example, the Federal Reserve was quick to react to credit the accounts of the State of Lousiana, I doubt that the powers that be in Europe would have the ability to react as quickly and to the extent sometimes required. Inevitably, there would be some watered-down compromise that would take a significant amount of time to be debated by the European parliament (or Member State governments) and what would result would be an insufficient response that doesn’t deal with the issue head-on, but instead, allows it to fester underneath until it breaks-out at a later date.

    Ultimately, one needs to ask the question is the Euro the most effective and efficient currency arrangement for a collection of diverse Member States with diverging economic cycles, and most of whom do not wish to have political union? I think the answer to that question is “No”. Maybe, a smaller Euro area with core countries such as Germany, Netherlands etc. is sustainable as their economic cycles are broadly similar, but the Euro as it stands right now is unsustainable.

  6. craxihuber

    One note: The crisis in Ireland is man-made, the hurricane wasn’t…

  7. debaser

    Your solution is to print money? that will be a tough sell to the Germans.

    The piigs are a bottomless pit. There would never be any public sector reform. The currency would be devalued making savers losers.

    I read somewhere that aggregate eurozone debt to gdp is already at 80%.

  8. O H

    Maybe the ECB wants it this way… It has a lot to gain from its current tactics. Maybe all of this was finely orchestrated, instead of rallying armies together and invading countries with tanks and bombs to confiscate their natural resources, squeeze them to financial death so that they have no other option than to sell off their natural resources and everything else they may have left. Its a gamble but isn’t that what war is all about…taking risks.

  9. Deco

    David, I disagree.

    The US had to borrow the money from the Chinese to deal with the crisis.

    Louisiana/Mississippi/the gulf area is an absolute disaster zone – still.

    the Gulf coast suffered a natural, and unpredictable disaster.

    Ireland is coping with a vested interest/establishment made – entirely predictable based on the behaviour of the people who followed instructions like unthinking, uncritical dummies.

    The current crisis is escalated by the fact that the French regime is insisting on making sure that French banks do not pay for their stupidity. Kerviel got jailed for losing their money, but Chirac was acquited on counts of corruption because he could be relied upon to look after their interests. We are dealing with corruption in several locations.

    I am begining to think that the best option, so as to put an end to all this corruption is to call the Euro experiment off altogether. Germany/NL/Lux/Austria/Finland can have their Euro. The rest can have a different currency – call it the SPIGI or something like that.

    • Deco

      I meant to say
      Ireland is coping with a vested interest/establishment made disaster - entirely predictable based on the logical endpoint of the behaviour of the people, who followed instructions and behaved like lemmings.

      the greatest threat to the system is that the people will stop being lemmings.

    • CitizenWhy

      The US debt to China constitutes less than 10% of its national debt, less than the debt to EU countries and other countries if combined.

      The vast majority of the US debt is owed to US bondholders and the US Social Security system. The government collects a substantial Social Security tax but uses the money as part of its general revenue. The money is not put aside or invested for Social Security. The funds are simply raided. The Irish idea of going after pension money derives from the US practice.

  10. stiofanc02

    Hate to expose my self here but , ,..uh ,..well , here goes….we always thought you Paddy’s had a shitty way of doing things over here.

    • Colin

      Who is the ‘we’ you refer to?

      • stiofanc02

        Colin, Im from Rhode Island in the good ol U Sof A.

        • Colin


          Which shitty way are you talking about? The shitty way we present a bowl of shamrock at the White House on Paddy’s Day? Or the shitty way we are governed by previous and current governments? Or the shitty way we haven’t taken to the streets as your compatriot Michael Graham from Boston has been advocating on Newstalk Radio Station?

          How’s Print Baby Print working out for you folks over there?

        • CitizenWhy

          I too am from Rhode Is;land, the most fiscally mismanaged state in the US (with the possible exception of Louisiana). The state is in a a deep financial hole and has no idea of how to get out of it. Perhaps the whole was dug by all the Irish-American politicians but it seems that every group picked up a shovel.

  11. Colin

    There’s been a lot of talk lately, including from some posters here, about the so called unfairness of penalising savers. Well boys and girls, I have the solution, these people who have been saving can now spend their savings on themselves and their children while the state can stop giving these people the generous childrens allowance which they were putting away and calling it ‘their savings’ heretofore.

  12. Gege Le Beau

    Katrina was an exceptionally strong storm but the levies which protected the city were in less than ideal condition and needed funding for upkeep which the President at the time had cut but it is unclear if this played a large role in the failure of the levies, can’t have helped.

    Nor did the US ride to the rescue, the operation following the storm was widely condemned as too slow, and ineffective, it took days for the US military to reach the Superdome where poor people (mainly African-Americans) couldn’t afford to flee the city (they didn’t have their own transportation) languished in appalling conditions. The neologism Katrinagate was coined to refer to this controversy, and was a runner-up for “2005 word of the year.” A great deal of people were never able to return to the city while others languished in “formaldehyde-tainted trailers” which were sold by the federal government some time later for a song in what the Washington Post regarded as “perhaps the most visible symbol of the government’s bungled response to the hurricane”.

    Brad Pitt has an interesting charity ‘Make it Right’ which he established out of frustration at the poor pace of rebuilding in New Orelans.

    As for the EU and unity, Ireland got mugged by Brussels as a warning to Spain, straight and simple. In Greece, the rioters are on the streets once again.

  13. Gege Le Beau


  14. Gege Le Beau

    Katrina was an exceptionally strong storm but the levies which protected the city were in less than ideal condition and needed funding for upkeep which the President at the time had cut but it is unclear if this played a large role in the failure of the levies, can’t have helped.

    Nor did the US ride to the rescue, the operation following the storm was widely condemned as too slow, and ineffective, it took days for the US military to reach the Superdome where poor people (mainly African-Americans) couldn’t afford to flee the city (they didn’t have their own transportation) and languished in appalling conditions. The neologism Katrinagate was coined to refer to this controversy, and was a runner-up for “2005 word of the year.” A great deal of people were never able to return to the city while others languished in “formaldehyde-tainted trailers” which were sold by the federal government some time later for a song in what the Washington Post regarded as “perhaps the most visible symbol of the government’s bungled response to the hurricane”.

    Brad Pitt has an interesting charity ‘Make it Right’ which he established out of frustration at the slow pace of rebuilding in New Orelans, worth a look.

    As for the EU and unity, Ireland got mugged by Brussels as a warning to Spain, straight and simple. In Greece, the rioters are on the streets once again.”

    • CitizenWhy

      A major hurricane in New orleans could bring defeat to Obama. Why?

      Obama has had a report since 2009 in which a variety of experts insist that the newly built levees and pumps in New Orleans CANNOT succeed against a strong hurricane. The work was done under Bush, and he may not have been aware of just how bad it was being done, but the blame will be put on Obama.

      Not only has Obama had that report but he has since gone to New Orleans to celebrate the new levees and pumps as sure to protect New Orleans from another storm. The cost of this botch job, however, was only $15 billion, a relatively small sum in the USA for poor work.

  15. Colin

    Print Baby Print is the way to go, Gotta agree with David. We know its the over 60s, the Jagger generation, who are the biggest savers (through thievery from the Pope’s children during the Celtic Tiger years). Young people under 35 have little or no savings. So lets give some hope to our young people and devalue the wealth of the Jagger generation, spend some of the freshly printed money on infrastructure schemes which are badly needed, and paying young people wages with freshly printed money that they can spend in their local economies and give a boost to local supermarkets, coffee shops, clothes shops etc……

  16. CitizenWhy

    Thank you again, David, this article gets to the heart of the matter.

    Any central bank has an official and unofficial mission:


    1. Act against inflation. Tighten money supply, decreasing demand and so decreasing prices. This does not work so well in a globalized economy since money can flood into a country from abroad, as happened in Ireland during the illusory real estate boom/bubble. Regulators can be vigilant against this type of surge in capital, sure to be misused for speculation, but that did not happen in Ireland.

    2. Maybe act against deflation (see 3)

    3. Maybe increase domestic money supply, through lending cheaply or free to domestic banks, in order to to encourage domestic lending and increase employment. This is not working in the US because the Big 6 banks are mainly using the cheap or free money from the Fed to buy foreign bonds, invest abroad, lend to US companies expanding and hiring abroad, and for high risk/high yield trading (with the US govt pledged to cover the banks’ losses).

    Why this mission is not working in Ireland I leave to Irish people to figure out.

    4. Protect the currency against trading pressures. Traditionally German central banks used to resist devaluing the currency. This bias against deflation (good for debtors, bad for lenders) seems to dominate the ECB.


    1. Keep the big domestic banks alive, no matter how badly managed they have been and continue to be. Kill off failing small banks.

    This mission in fact often becomes THE mission, as in the USA, as in Europe.

    2. Provide cheap money to banks go invest in he stock market. Many of the companies reaping the capital from this investment use it to expand and hire abroad.

    • CitizenWhy

      Oops. I meant to out as # 4 in OFFicial Missions above:

      Protect the currency against trading pressures. Traditionally German central banks used to resist devaluing the currency, buying up its currency until its value finally collapsed. This bias against devaluation (good for debtors, bad for lenders) seems to dominate the ECB.

  17. Praetorian

    The Roman period also gave us the term ‘Phyrrhic Victory’ which is defined as a victory with devastating cost to the victor; it carries the implication that another such victory will ultimately cause defeat.

    We will witness it when the ECB/IMF reduce their rate and the Irish political elite herald it as a great step forward (off a cliff perhaps), with victories like that who needs defeats.

    • Juanjo R

      To some extent thats what Morgan Kelly was getting at at the weekend…that Fine Gael/Labour will be massacared in turn by the eventual national default…so i’m think who’s the next big untainted ( economically ) party – Sinn Fein no less – Gerry Adams to be Taoiseach after the next election maybe? you’d probably still get very good odds on it…

      • Praetorian

        Yes, there is a possibility that that could happen, but as we well know the Irish are a conservative bunch politicially and may well chose to stay with the devil they know, albeit in a reduced capacity. It is also one of the reasons why Micheal Martin is busy rebranding and bringing forward younger candidates in an attempt to reposition for the next election which will in essence be a judgement of his leadership, and organisational skills. I find it hard to think that Labour are in government, hasn’t been a peep out of them, probably waiting for the summer to role on.

        At least the cackling of former FF ministers has been stopped, some solace in that.

  18. CitizenWhy

    Maybe the ECB/Germany wants the Irish gas fields in lieu of some or most payments. That way Germany can acquire energy sources to balance the dependence on Russia. Perhaps Ireland is Germany’s new Romania.

  19. Gege Le Beau

    My sister gave birth to a baby girl two days ago, I visited the hospital earlier where I saw a little bundle of sleeping joy and innocence born into this financially shattered and politically corrupt Republic.

    I don’t what that little girl to be paying off private debt that has become public debt especially when those who got us into this mess will mostly be six feet under pushing up the daisies (yes boys, you’re not going to live forever).

    A deal has to be cut by the people who brought this about, this cannot become a prepetual debt situation because if it is does then we are shaping up for a country of perpetual decline.

    Full credit to the people of Ballyhea and the people who have the moral courage to take to the streets in Iceland and Greece, we need a national strike to stop this madness, where are our Unions?

  20. Juanjo R

    Ah David this portrayal of what happened in New Orleans is very badly wide of the mark. Try “The Shock Doctrine; The Rise of Disaster Capitalism” by Noami Klein for a synopysis of what happened vis-a-vis the exploitation of New Orleans’s misfortune for private gain after the disaster.Halliburton feature largely if I remember correctly. Stating the US cavalry rode to the rescue is about as accurate as saying they rode to the rescue of the Iraqi people in 2002. Vested privated interests gained and ordinary and more especially poor people lost out. Top Gear visited New Orleans in one of their challange road trips post Katrina and even an uncompassionate right wing t**t like Jeremy Clarkson was shocked at how nothing had been done with the place.

    But otherwise you are correct – if we are all such great Europeans ‘chums’ then there should be some sense of us all being in this together. What we are witnessing is what you were getting at in your last article in The Business Post and what Morgan Kelly’s expose of last weekend showed up starkly in black and white – that we the Irish people are being sold out to the heavyweights of of European Finance with astounding ease by our ‘gombeen’ class of politicans and senior civil servants!

    We have no chance David – we want this disaster thats clear! Its been clear for 10 years or more…this when it comes down the parts which have most influence on the rest – e.g. regulation, sensible efficient mangement – is a spineless country!

    ( BTW did anyone else find Brutons own spineless and pathetic scaremongering in the Irish Times to be laughable? About CAP been withdrawn and us being chucked out of the EU? And this man hels senior government positions hes no better than Lenihan or Bertie!)

    • AH

      Glad someone else noticed Bruton’s (John that is) despicable behaviour. What a turncoat! As soon as the nice fat paycheck starts coming through the letterbox from his Big Brothers in Brussels, he’s like a Eurovision singer, singing about how great Europe is. How weak is he! FF/FG it obviously doesn’t matter. All the political “parties” (ref: we all partied he he he!) share a common weakness – Corruptibility.

    • Deco

      Bruton has a trendency to make a complete spanner of himself for no known reason, at random. He was Taoiseach for 17 months or thereabouts – and he keeps reminding us that he caused the Celtic Tiger – even though he masterminded a PR flop called the Celtic Snail episode shortly afterwards.

      His main historical acheivement – approving the Esat licence. Well, that just about says it all. Bruton is not one for looking into details.

      • BrianC

        John Bruton is intellectually barren. A pure parrot. But a very well paid parrot. Bruton is a mirror reflection of the typical politician in the Dail with a ‘sole focus of self interest’ save the very few recent newly elected.

      • Praetorian

        @ Deco, hilarious, I had forgotten the Celtic snail ads, you brought it right back in focus, speaks volumes of their judgement. Bruton was on Vincent Brown and got roasted after he had given his usual monologue which I am sure he has given a million times, the guy just loves talking. The handling of the mobile phone license debacle which is likely to cost the State untold millions in court tells you all you need to know.

        Politicians claim the credit for ‘every blooming thing’ but rarely take the heat for serious errors like the overspend to the tune of €13 billion on the national roads or the appalling condition of the health service (imagine people got paid performance bonuses at a time when there was record numbers on trollies, talk about poor outcomes). So many have claimed personal credit for their role in the peace process in Northern Ireland that I thought I might chip in myself just for being Irish and peaceful.

  21. Prof. William K. Black

    Just to high light this podcast here again for those who might have missed it:

    • David,

      if Bill has an interest and some time to spend, you might want to connect him with:

      She heads up the Irish Debt Audit I posted earlier about. Just a thought….

      • Wednesday, May 4th 2011

        *Independent research to produce preliminary findings in June
        *Data will be made freely available for individuals and groups to determine action

        Details of an independent audit to be undertaken into providing a clear picture of Ireland’s national debt were unveiled in Dublin today (Wednesday, May 4th). Areas of specific reference will be to determine to whom the debt is owed, when it was incurred, how much of it is senior, guaranteed and subordinated debt, and when repayment is due to each creditor.
        The Audit will follow similar processes undertaken in Greece and other deeply indebted countries. It will be led by Dr Sheila Killian, Head of Department and Senior Lecturer in Accounting and Finance at the University of Limerick and supported by the UNITE trade union, Afri, Debt and Development Coalition Ireland as well as other trade unions and civil society groups.
        Focusing particularly on the private bank debt subsumed into public responsibility, the independent audit will seek to support people in Ireland in a real understanding of the levels of Ireland’s debt and its implications. It will be carried out over the coming months with preliminary findings published in June and made freely available.
        “The first exercise of debt management is to determine who you owe, how much you owe and how the debt came about,” said UNITE Irish Regional Secretary Jimmy Kelly. “Three years after the Irish government bought a ‘pig in a poke’ proffered by senior bankers, all of whom are now gone with massive pay offs, we still do not know to whom we owe this debt. Irish civil society deserves better and we are tired of waiting for those who should have undertaken this audit. Everyone who is being forced to pay for the mistakes of a small elite will at least know who is being funded by their pay cuts, tax increases and austerity.”
        “The independent audit will support people in Ireland to form an opinion on where the responsibilities lie with regard to the Irish debt crisis,” said Andy Storey, Chairman of AFRI and politics lecturer in UCD. “It will provide valuable lessons that will guide debt justice campaigning in the future and be shared with civil societies of indebted countries around the world.”
        “Debt audits can be a powerful tool to support civil society around the world access information on the debts of their countries in order to judge for themselves whether the debts should be paid, and the implications of any payment or non-payment decisions. This is an approach which is gaining international currency at governmental and citizenry levels. For example a governmental supported debt audit has been implemented in Ecuador, and parliamentary audit initiatives are being planned in Bolivia, Brazil and in the Philippines resulting from citizen pressure for debt justice.” added Nessa Ní Chasaide of Debt and Development Coalition Ireland.
        Further information:
        Jimmy Kelly, UNITE Regional Secretary (087) 900 3217
        Rob Hartnett, UNITE (Ireland) Press Office (086) 3851955
        Andy Storey (Afri) 087 6543872
        Nessa Ní Chasaide (DDCI) 087 7507001

  22. Peter Atkinson

    United States of America. The European Union.Difference is the word united was never used to describe Europe.It never has nor ever will be united and the powers that be were clever enough never to use this word.It was purely set up to facilitate trade between European countries and went way past its brief.

    The irony of it all is that two world wars didn’t manage to do what this economic blitzkrig did to us now.Result.We have been truly conquered.So much for our neutraility.We lost a war we never realised we were even participating in this time.As with all losers in war the victors are now in rounding up the foot soldiers and their spoils of war.The only difference in this case is the generals won’t stand trial Nurenburg style.The simple fact is we now have economic war criminals hiding out both here and around the world down to their their last billion.

    I had to listen to the “bot” Burton droning on today on RTE hoping that either an ad break or the all encompassing news would suddenly interrupt her.And if that wasn’t enough Enda sniffing after every sentence during his Dail speech.We used to know when Cowen was spoofing as he shrugged his shoulders and licked his lips after every sentence.Enda’s trademark is the sniffle.

    They should all be forced to wear a polygraph attached to electric prods and when the needle starts to fly off the page during a spoof speech a short burst 500 volt charge be administered.We just might start getting the truth then.

  23. Ireland is without a government.

    Those elected are delivery men for undemocratic forces that rob this country and it’s people.

    A Goldman Sachs firm wide executive manager is ready to take over ECB.

  24. Goldman Sachs Bank (Europe) plc received its banking license in November 2007 and is authorized in Ireland by the Financial Regulator.

  25. David’s main point is right, of course. Debt forgiveness is the only way out of this, and there’s a long history of such going back to ancient Mesopotamia. (Search Michael Hudson on this.)

    On the other hand when we (the French particularly) shackled Germany at Versailles to impossible reparations for WWI (it had taken two to tango on the war to end all wars, BTW!) and the ’30s depression exacerbated their predicament, it was natural enough that this situation HAD TO throw up a Hitler who would say “Enough!” Why wouldn’t he have been popular with the Germans, initially at least?

    Ireland’s may not be in Germany’s position (yet!), but methinks it IS well beyond time for the people of Ireland to listen to David McWilliam’s cri de coeur and INSIST their government pull their fingers out and repudiate those who privatise obscene profits then seek to socialise their losses. Where was the banks’ risk management in all this? It was THEY who were delinquent!

    • coldblow

      “The French particularly”

      Correction: “The Americans particularly” – Hudson, Super Imperialism.

  26. flowerofthemountain

    David, the ECB will never print money to rescue the Peripheral nations. But if Ireland / Greece / Portugal ever walked away from the debts it owes to the ECB, then the printing presses would crank up to protect the Core.

    Morgan Kelly certainly put the putrefying corpse of ‘odious debt’ beneath the nostrils of the ruling class, but his immediate ‘balanced budget’ solution doesn’t set out the the economic costs of social implosion / SME disintegration / mass emigration.

    The Eurozone is revealed as a giant con. These manufactured ‘debt crises’ keep the Euro-Mark lower than it should be whilst strangling the peripheral nations. A weak Euro keeps German exports uber-competitive. Greece can never ‘compete’ with Germany. Can Ireland? At what cost?

    Germany has a demographic problem. It tried to solve this by attempting to capture the youthful economic ‘animal spirits’ of the periphery with cheap credit. That gamble has blown up in their faces. But still they protest they weren’t trying to ‘game the Euro system’ via the ECB.

    Some Greek citizens are asking probing questions about the origins of their crisis. The vampire squid of Goldman Sachs features prominently alongside a historic culture of cronyism and corruption:

    • Deco

      Actually, the assumed method of handling the demographic issue, in several core EU countries, has been to think that older people could sit around enjoying themselves while young people in other countries sweated and engaged in enterprise.

      They just never factored GS into the equation, and the potential for profit increase that could be made from all sorts of messing and fiddling.

  27. Litterally Speaking DAVID

    As the Full Moon opened on the 7th Day of Advent ( yesterday )your words have spoken in stone as they fell down in Lorca Spain .

    In your above article the name Carthage ( north Africa )was mentioned and the epic center was close ( 50 miles approx )to Cartagena ( baby Carthage in Spain ).

    Watch how your mindset works close to the next advent to the 7th June when all words become meaningless.

  28. Deco

    The ECB might not be prepared to print the money to fix this crisis, but the ECB and it’s master, the EU Commissariat was fully enthusiastic about printing the money that created the crisis between 2002 and 2010.

    The ECB and Assymetric (one-sided) interventionism.

  29. Deco

    Banks are panicking.

    Meanwhile “welfare for lawyers” lobby group FLAC is circling around overhead the carcass, like a collection of vultures to see what is for dinner.

    The solution that we can expect to see being proposed is to make the law more complex so that lawyers can get in on the act. I expect FLAC to also want a Free legal aid package. Tihs way you can have court cases between taxpayer funded mortgage holders and taxpayer funded banks – presided over by overpaid taxpayer funded judges, and with the largest part of the money going to the legal profession. Another scam in the making.

    I have a proposal. Make the law as simple as possible. Let the mortgage holders default, and leave the banks with the property. The banks were telling the people, via “economists” like Dan McLuaghlin, Austin Hughes, and pals, that property was worth it in the first place. Now, let them live with their own words.

    • Juanjo R

      You have a point here Deco…let them play the imaginary valuation game ON THEIR NECKS!

      I would say that we should take a slightly different view for a solution to the imbalance betwen the law and the economy ultimately. The core of land law and contract law go back to the medieval period – way before capitalism proper and the modern economy. To that several hundred years of a gap if you had the modern speeding up ( via telecommunications and instant easy credit ) and the huge diversification of markets and banking across the world basically the laws and their attendent slow procedures are illsuited to resolving disputes in this the modern world.

      For me we need to move away from common law towards a new codified law or at least partly codified law that reflect the world as we know it. Just one law to deal with one part of these problems won’t work I think. It may solve a part of the problem at best…

    • uchrisn

      You would expect Ireland to have strong laws in favor of tenants. Given our ancestors past of living only to pay the rent under British rule. Now we have mainly Irish people who have recently decided to collude on property prices and rents to make other Irish people only live to pay the rent/mortage.
      In any case, our laws supporting tenants are one of the weakest in Europe. A guy took a case to the EU court and won. The EU court said that Irelands laws protecting landlords went against EU human rights legislation.
      The IMF and EU have told out government to shake up the bankruptcy laws as they are too favorable to the lenders.
      I really cannot undertand at what stage or why Irish law went for the rich and landlords against the common man. Can anyone explain?

  30. I reject….

    I reject the term ‘bail out’… a term which is permanently used by the mainstream media.

    I reject the term ‘debt forgiveness’…. there is nothing to forgive! These debts are not OUR debts.

    I reject the measures that are accepted by mainstream economists, implemented by the EU and IMF Banking Mafia and delivered by Irish politicians.

    I reject the legitimacy of political forces that hide behind laws designed to perform hostile acts on nations and their citizens.

    I reject the decision to exclude this nation from voting on the issues of private banking debts.

    I reject any government that holds it’s people hostage on behalf of Banks, any government that is willing to act as captured political force.

    I reject the notion that the Irish representatives would have done everything they could to protect this Nation from harm, on the contrary, all the people involved, not only bankers, but equally those in the political decision process need to be fully accountable and beyond doubts, many of them in power should stand trial.

  31. Deco

    And now, we have another phase in the ongoing mess.

    It appears that the credit unions are being trapped. I know stories from people working in the Credit Union sector, and they have told me rather unfortunate stories. To be honest, it is impossible to do business in Ireland.

    I think I know where we are headed. We are headed in the direction of Urugauy. In Latin America, you do not buy property with a loan – you have to have most of the money (60%plus). The politicians are corrupt. The police are lazy except in protecting their own areas. The regulators are asleep. And crime is rife. And the populace sits down in front of the TV and looks for distraction from all of this mess. These are all trends that we have seen in Ireland in the past twenty years.

  32. Deco

    Austrialia – the boom might being coming to an end…the Jobs market is declining. And that is before the Chinese realise that they have too many empty apartment buildings, office blocks, underused bridges, etc…

    • PMC

      Australia is in for the crash of a lifetime when the Chinese ease up on the iron ore.
      Property insanely overvalued
      Wages higher than Ireland
      Mortgages dished out
      Bullshit businesses selling / offering trash sprouting up that wouldn’t have a snowballs in a more balanced economy, due to handy credit and spend, spend, spend.

      There’s also the societal trends that we had here during the Celtic Tiger, obnoxiousness, snobbery, looking down on those less well off, everyone is now a “property investor” – The human traits in Australia at present, mirror those that existed here some years ago.

      • Colin

        Its a ponzi property scheme there, no doubt about it, but I never found Aussies to be more snobby, obnoxious and arrogant than the Irish.

  33. WillH

    Anger is an energy!

    ….. put it to good use and get involved with a political reform group so that this madness cant happen again.
    I am working with the guys in the 2nd Republic but there are many other groups, all with noble aims. Check them out and lets keep the discussion going!!!

  34. Praetorian

    Interesting article from Mark Weisbrot on the Greek situation

  35. Social Conundrum

    Increasingly through my accounting practice I am finding many becoming ill both mentally and physically and also talking about suicide.Their desperation is something I have never seen before since I have been in practice in 1977 .

    • Colin

      You could cheer them up no end by offering them one week’s board in your bolthole in the south of France for free.

    • Praetorian

      @John Allen

      I believe Lisa O’Carroll at the Guardian is interested in people who may be willing to speak on or off the record on this issue, she can be contacted at

      Here is her latest article:

      Banks driving people to suicide

      It is one way of hitting back, exposing the crap that is going on, force the appalling government to act, to intervene.

      • Actually Praetorian,
        It could be an extremely powerful way of hitting back!
        I spoke to a guy last week who use to employ 22 people.
        He had his own window company and I use to sell to him back in the 90′s when I just returned from UK.
        Anyway he’s on his own now again. He was always a guy of great integrity so I believe him when he says that there’s no work and and whatever turns up, there’s no profit!
        An accountant friend of his is currently handling 32 wind downs! (Does that sound credible John?)
        So I have to question assertions of hitting the bottom or turning the corner?
        Those 32 company wind-downs represent at least 32 families affected. Whatsmore these individuals would not be entitled to dole even though they paid their taxes? Something else I fail to understand? – So it’s no wonder that some people would consider taking their lives???

        I’d love us all to do a special on hope! I think we would be serving our fellow citizens well by such an exercise!

        • Banjaxisation

          We can call many cessation of trades in many kind of words and they amount to the same thing.Some differ because they are slower by design to buy time and fill up someone elses pockets .If accountants are making a lot of money from ‘non viable entities’ then thats sad for any nation and too many people will only suffer directly and indirectly.Banjaxes have a finit life too after that their former business slip into a wormhole and what comes out will not be the same thing anymore because it will have travelled to a foreign land elsewhere permenently.

          Banjaxisation is supported by a government sponsored body in the sureal world outside the dimensions of the general electorate.Its language is meant to confuse any businessman to protect higher interested parties untouched by working hands.

          Anyone that have met any of these hawks have heard them to be called by names such as Slime , Slick and Faceless and they cold as stone on a poker table.

        • @Paul

          How many carrots of chalices have you hoarded from the outcrop todate?

          • Don’t talk to me about bleedin chalices John!
            I reckon my vegetable garden was an old forge or something – bits of chalice everywhere.
            It’s playing havoc with me carrots!
            And the knees are cut off me! – But that’s another story!

          • @Paul
            Look on the bright side you can now afford to commence your trade as a ‘gold tooth prick fixer’ and people will travel from far and wide to you so that they can hoard their wealth in their mouth and its all tax free and safe .

            Afterall bodily parts cannot be disemboweled .


    John, you have the wrong letters after your name.Try SHRINK ! Net emigration of 50,000 per annum will allow HMS Ireland to ride the waves once more, and fill mental hospitals around the world with psychotic Paddies.NOTHING CHANGES.I see Honhan’s brother has a cushy number in the judical system, is every influential person related to a person in a similar position ? Many of the Pats working in Brussels are relations of talentless party hacks.

    • Praetorian

      Funny, when I got a job there I was asked by some Irish insiders: ‘go on then, who do you know?’ I didn’t know anyone, I got the job on merit, which didn’t seem to compute, interestingly, not one of them had mastered a second language.

  37. [...] A sea change is needed in ECB — or we’re sunk David McWilliams [...]

  38. Deco

    Here is a review of a book that investigates how institutional cronyism, and private banks on steriods wrecked an economy. We are not yet at the point where a such a book with such explicit detail exists on the Irish economic binge going sour – Irish Defamation Law is very effective at preventing this from occurring.

    No, this concerns Iceland. But, it you wanted to, you could replace the letter ‘c’ with ‘r’ – just to see what similarities exist.

    Maturity mismatching – INBS were at that a lot.

  39. Praetorian

    I would like to see the issue of commodity speculation highlighted, it is a perfect example of how insidious and unregulated the financial markets are, I encourage everyone who posts here to look into the issue as it is having an appalling impact in developing countries and amongst the working poor in the West who have to struggle even more to make ends meet while traders make all with staggering sums with the push of a button.

    • uchrisn

      As far as I know speculation on basic commodities such as wheat is illegal. However there is usually a way around. Do you know there was a Roman Emporer in the 7th century who had the idea of controlling retail prices to stop inflation. However a black market soon sprung up. I.e the sellers knocked up the prices anyway.
      In any case I hope that something can be done to stop speculation in these markets.
      Reminds me of the recent proerty crises. Speculators made sure that young people could not afford homes. Thats why I advocate legislation such as 1 person max 2 properties. Even worse when their speculation failed they made the same young people pay for the losses. Hope that doesn’t hapopen with other commodities.
      Who are they? Anyone in the world looking to make money for nothing – speculators.

      • Praetorian

        I think that is the very point uchrisn, it isn’t illegal, it is open season, the price of basic commodities including coffee and wheat have shot through the roof and a lot of people have made a great deal of money. The price of coffee has reached such ridiculous levels that even the CEO of Starbucks was out calling for regulation of the market, tells you how bad it must be for people in developing countries.

        But then multinationals buying low from poor farmers, selling high to Western consumers is called business.

      • CitizenWhy

        Controlling prices of commodities, including food, is not possible in a globalized banking/trading/speculation economy.

        One of the main causes of the uprising in Egypt was widespread hunger due to large increases in the price of food internationally and internally in Egypt.

        What caused the surge in food prices? Two main things.

        1. The conversion of huge areas of the US from food producing crops to crops dedicated to biofuels. Biofuels, by the way, are a huge cause of land pollution. Less food (supply), more demand, higher prices. The government actually subsidized this conversion. We in the US are just now seeing our domestic prices of food shooting up.

        2. The Goldman Sachs Food Index. Sheer speculation in the international price of food, involving cornering the market in some food commodities and pushing up the prices. Yes, the giant squid again working its crimes against humanity in the interest of a narrow and super-wealthy elite.

        These two factors caused huge amounts of hunger and slowly progressing starvation in all of Africa.

  40. 2Speak

    To be heard does not come from you for its the cosmic forces of the devine heavens that speak for us .Allign with these forces when the moon turns to broadcast and ‘tune into the moon’ to bring all your thoughts on stage.

    Gather from the 7th Advent of a Full Moon any month and sing your praises and watch all come forth in abundance.

  41. Adelaide

    I am finishing reading an eye-opener of a book with the not so cheery title, “Stunted Lives, Stagnant Economies” which documents the pre and post history of Argentina’s default. The similarities to Ireland are chilling. It sometimes verges on comical the parallels.

    When I heard yesterday of the government’s announcement on raiding private pensions a physical chill ran down my spine because this is a re-run of the run-up to Argentina’s default as outlined in the book.

    I am no academic but this book has informed me of a calamity that befell a country and yet our ‘talking heads’ are repeating the same mistakes.

    Are our ‘elites’ guilty of nothing but sheer ill-informed stupidity? Probably the most stupid dimwitted generation of middle-ages men to befall a country. But then our ‘elite’ are only a reflection of the greater populace. Which begs the question, are we, the Irish people (tho I’m half-German), are we basically stupid? Is Ireland a thicko?

  42. [...] general del año en Grecia acaba en disturbios El PaisGreece’s doomed generation The GuardianA sea change is needed in ECB — or we’re sunk David McWilliamsThe Greeks investigate the Germans FT AlphavilleBuiter Says Greek Debt Maturity [...]

  43. astainexile

    What is needed is a united approach targetting every single TD in the Government. There are surely enough unemployed people in the country itching to do something to force their representatives to be brave and take the necessary action to save Ireland from becoming a third world country within our lifetime. If each constituency could come up with a few volunteers to agree to meet and initiate a strategy to bombard every TD with the same set of proposals, they would surely have to listen. I am sure David McWilliams and some other influential and knowledgeable people could assist in its formation and so facilitate the mobilisation of the discontented masses. I would be happy to help in any way I could through the internet as you see, I am physically but not emotionally in exile.

  44. Alan42

    So you are reduced to grabbing peoples pensions now . How long before you start dipping into savings accounts ? Maybe just grab the lot . How long before you hear that savers are horders ?

  45. Tim

    Folks, will Peter Sutherland get what he deserves? I doubt it.The People vs. Goldman Sachs must-read piece by @mtaibbi in @rollingstone

  46. [...] A sea change is needed in ECB (David McWilliams) [...]

  47. Tim

    Folks, Goldman Sachs shares plummet after @mtaibbi’s Rolling Stone article: top analyst says, “Sell!”

  48. Great article. I think what David proposes will occur in some form post 2013, this will be done by having stronger stability pact regulation, collective action clauses that will impose burden sharing on bondholders and some form of an insurance fund for emergency drawdown.

    My view is they’ve no wish to make the above retrospective; and have no desire to do quantitive easing to provide a funding way out for more black hole money; and there is general political ease and a feeling the ECB could put itself on the hook for unlimited demands.

    A better solution would be to follow the MK path and go for a unilateral default for Greece, Ireland. Let’s say we left the EMU for a decade in order to fix our economy.

    We would need outside help eg Brady bonds to do this. I don’t believe austerity or more money to fund a broken rentier state will work.

    “Hazem Beblawi suggested four characteristics that would determine whether or not a state could be identified as rentier:
    if rent situations predominate
    if the economy relies on a substantial external rent — and therefore does not require a strong domestic productive sector
    if only a small proportion of the working population is actually involved in the generation of the rent
    and, perhaps most importantly,which the state’s government is the principal recipient of the external rent.”

    Our main challenge is to create employment and bring down the 15% level of.

    Sorry, but I believe David’s special emergency fund for ireland would be pocketed by NAMA and the broken economy built upon sand.

  49. A day in rural Ireland….or Bullfrog blues

    My shepherd had to be fully knocked out at the veterinary hospital, needless to say, I don’t like that, neither does he, but it had to be done. It is a good bit of a drive to Ballyshannon in Donegal, and on this occasion, I have to complement Nick and his very kind team on his work and efforts.

    No breakfast for him, or me, and early in the morning he was handed over to a staff member, which is a bit of a heartbreaking event, so best thing to do is to proceed as quick as possible. Then the long wait until early evening starts.

    Luckily the early morning rain went into a somewhat more pleasant day, kinda nippy, but sunny spells. Ballyshannon is close to Bundoran, a small seaside tourist resort, famous for surfing, a stroll on the beach quickly taught told me that I should have brought my storm breaking jacket. The high winds blow away the cobwebs and I enjoy the fresh breeze clearing the mind. Off to go to the next spot Rossnowlagh, more beach and surfing, a little boat can be booked for whale watching, no one around, but the plenty of holiday homes and trailer parks, mostly empty, Back to Ballyshannon, which by now has woken up. A walk into the city center is utmost depressing there are more deserted than decorated ship windows, a moderate sized shopping center, same story, 90% of the shops are not rented. The smell of fresh coffee and bagels fills the hall, a lonely shop keeper on the mobile phone.

    I leave this retail coffin and pass by Rory Gallagher’s bronze statue. I was on his concert on my stomping ground at the river Rhein, Moonchild, 1982 on Loreley, these were the days. I can’t resist, I just have to touch this statue, hopefully no one looks. – grins – Dead honest, straight forward Rock, and a virtuous performer.

    The abbey arts center, a cinema, a couple of paintings on the first floor but closed. It is midday. There is a clock tower, that must have been a church in older times, a massive four story stone building attached, apparently it was renovated to suit a different purpose for business, the windows give it away, but even from the street, it is obvious, empty. A jeweler is on the ground floor, nothing like cartier or the likes of course, but well, a jeweler. The massive round clock on the tower has the jeweler’s name written all over. The clock is stuck at 7:50AM, only the wind shakes the hour pointer, it reminds me to muscle reflexes of already dead animals. – Damn, I hope my dog is all right! –

    The barracks, is a building from 1700 something, only a plate would tell you that, otherwise you would not even come close to that idea. I stand somewhat lost on the street, in deep thoughts staring at this clock tower, a rainshower starts soaking me, I don’t care.

    A stunning red as can be haired Lady in her early thirties walks by and gives me a big smile. I probably look like a tourist with my sunglasses on in the middle of a rainshower, I just realised that I still have them on, smile back, and take them off. Her hair is extremely long, not over styled at all, just well taken care for, a plain natural wavy look, that powerful Lions like impression surrounds her face with two deep green eyes sparkling at me.

    I ask her whether she is from around here, and we start talking. I learn about a bypass street that has killed all business in the town, but not only that, ‘The recession, you know….”

    Hell yes, I do know.
    I ask her about the abandoned shops when a Audio S5-4.2 quattro roars past us at insane speed on this small road, on the other side an old man on a stick stops in his walk and looks up with a scared expression, then he shakes his head and continues his walk. I know old people, he must be in his late seventies, early eighties. His parents were around when Michael Davitt founded the Irish National Land League demanding land reform. Parnell lead the movement. The land war of 1879-1882 followed. Rents were withheld until the last moment. Anyone who took the land of an evicted tenant was boycotted.

    Rory is dead, today we have Jedward. I feel slightly depressed.

    I should see the Audio V8 again, in front of a solicitors office. I think of the old man and must smile.

    The red lion tells me that these surfer places are buzzing for a few weeks, then it is ghost town again, but even the season business went down as well. I thank her for the pleasant chat, and she makes a remark about my wet glasses and smiles again. I laugh and wish her all the best, and we walk our ways.

    Hell, this is what I love about these people.

    On the seafront again, a impressive apartment building, very modern, lots of glass, generous terraces on each apartment, it looks brand new, a big restaurant on the ground floor faces the Atlantic, stunning views, I am starving, the restaurant is closed. All apartments are empty.

    What has befallen this Island can be seen on every corner, every day.

    It is inconceivable that the less than 100 Bankers in this country who had taken on approx. 100 billion Euro in loans would not have been known to those in political executive positions. This is just ridiculous and you can bet your bottom dollar, although you might have to borrow it, that in this tribally structured society, everyone knew about it, and they all were in it, government, opposition, senior civil servants, bankers, developers, the whole shebang.

    I was given a list of Bank directors here and in the North not that long ago, a long list, handwritten from his personal contacts. He knew them all, this little man, who was in the very same boat, his greedy little eyes, his restlessness, I will never forget this moment.

    The greed and ruthless actions of a few, in cahoots with the crooks in government, they enriched themselves beyond your wildest dreams, and enslaved all the rest for generations, and as if this in itself would not be bad enough, they are adding insult to injury.

    Not only did they let it happen that the EU/IMF Mafia took over the business of this nation, no, they even pretended to not have seen it coming, pretended to not know who would have caused it. They were in it themselves to their neck, and everybody knows it. Other than a few scapegoats for the tabloid press to feast on, nothing happened, and even they enjoy freedom and the riches they secured in other countries or signed over to their spouses.

    Their waffle and whitewash rhetoric makes me sick to the bone, they nothing but lies, such blatant obvious lies.

    When the congress in the US was blackmailed to cough up USD 700 billion, no questions asked, and in the second running they bribed enough senators to pass it, this really should have shaken Ireland by it’s very core to ask much tougher questions to those responsible, but somehow, it did not.

    Bullfrog blues I on my mind.

    Two men with white hair struggle to get the boat in the water, but succeed eventually, trout, flounder, mackerels and more is out there in the River Erne in Ballyshannon. The wind drives the water from my eyes, my dog should come out of it by now, I head back to the hospital.


    • At the risk of sounding like I am writing in to ask for an application to your your fan club Georg I just wanted to mention that the post above had me hooked from start to finish. Why can’t more Irish people write with passion, frankness and honesty under their real names or are they all so beaten down that they have lost the will to fight?

      This apathy is far more dangerous to our society than protesting. At least protesting shows us that people are united against rotten corruption and that things will eventually be bent into to shape under the weight of real public opinion. The apathy is like a cancer because it is the reverse of hope.

      Remember the gombeens are terrified of one thing – that the people will one day take control and replace their cosseted world of secret and in-bred power with one of a very different design and purpose

      The people recently voted in a tory government and they got a pig in a poke. This government will not change a thing in the long term and the people are still in deep deep denial. Their conservatism is what will be their undoing and they will be left with not an ounce pride in their hearts

      I wonder do thinking adults in Ireland ask themselves some basic questions : When was the last time it felt good to know you are Irish? When was the last time you felt you were in control of your life? When was the last time that you felt in control of your own thinking? When was the last time you felt passion? When was the last time you felt fire in your belly? When was the last time you even felt alive?

      When people unite and protest it is a healthy thing for a society otherwise it never moves forward. When people protest they feel a sense of pride because they believe that they are doing their duty and something for the good of society. When they are older they will look back on those times knowing one thing – that they cared enough to speak up for change

      The keyword in your piece is the word ‘obvious’. The whole thing fucking obvious, just that it can’t be proven but if crimes can’t be proven it does not mean that they didn’t happen. It leaves a stain, or a stench, which ought to seriously damage the character of the person(s) involved but in Ireland it is accepted behaviour to shrug off crime and acts of immorality and hail the bad lads as being a rebel
      or ‘a bit of a rogue’. This delinquency has been shown to run deep into the professional classes and we should not be surprised at just how selfish and rotten they are

      Gombeens, when caught with their pants down, will claim not to have broken any rules and this in their own minds makes it acceptable because in the eyes of the law they were not guilty. The law is very clear to the small guy but it proves to be an ass when it is asked to deal with the crimes of the
      powerful and the well connected, even if those crimes are so huge that they can bankrupt a country. This proves that the law is not fit for it’s purpose and that is need to be redesigned. Make it simple

      Some posters on here will know every nook and cranny of Ballyshannon/Bundoran corner which forms the neuk of South East Donegal. I recognised all the sad places you described and then I thought of Rory. He was a true ambassador for Ireland and and he made a major contribution to the blues. He was into it all purely for the music and his honest dedication to his trade took him to some high places

      You don’t get asked to perform at the Montreaux Festival by being a muppet but Rory did it all on his own through sweat and dedication. It is a great thing for the blues that Rory Gallagher didn’t have to rely on the Irish gombeen system to get to where to where he did.

      Every time I am in Bundoran the Del Amitri song Nothing Ever Happens comes to mind
      And computer terminals report some gains
      On the values of copper and tin
      While American businessmen snap up Van Goghs
      For the Price of a hospital wing

      Nothing ever happens, nothing happens at all
      The needle returns to the start of the song
      And we all sing along lke before

      And we’ll all be lonely tonight and lonely tomorrow

    • BrianC


      I really enjoyed that. A great read.

  50. sense or censor

    Really david… Will you ever have the real guts to tell the Irish people why they are being forced into destitution or will you continue to conceal the truth behind the international banking mafia?

    Perhaps this may lead your ‘followers’ to some semblance of reality in relation to the dire circumstances we all face unless people in positions of influence such as yourself finally grasp the seriousness of our situation and start to tell the truth before Ireland becomes the Third world state it has been earmarked to be.

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