June 6, 2011

We can be the new Argentina

Posted in International Economy · 241 comments ·

If you are ever feeling a little rough and could do with banishing the lingering echoes of the night before, a shave by a barber is your only man. Last week, deep in the Caballito district of Buenos Aires, I put my life in the hands of an octogenarian barber in a fantastically antiquated snip-joint called La Epocha.

There is something vaguely terrifying about a man with a blade two millimetres from your neck, even if this man has shaved the beard of Diego Maradona.

The photo above the ancient, freckled mirrors shows Maradona laughing as the barber, Claudio, lathers him up, before applying the knife.

If this carry-on was good enough for Maradona, it has to be good enough for mere mortals, so it was up with me onto the chair. Within moments, terror switched to comfort as the soporific effect of the hot towels took hold and Claudio took charge. Reassured by his grandfatherly smile, I practically dozed as he set to work.

I wondered how much this grandad had seen in his life and what his Italian father might have expected when he, like millions of other emigrants, arrived in Argentina to start a new life in the New World. Many of those immigrants were Irish and, today, their descendants are all over Argentina.

One of these Irish Argentinians is Patricia O’Shea, the owner of the wonderful Home hotel in the city’s hip Palermo district. Ten years ago, just before Argentina’s default and devaluation of its currency in 2001, she was working as a waitress in Tante Zoé’s in Temple Bar, having emigrated from Argentina to Ireland in the late 1980s.

She came back to Argentina after the default ,with the money she had earned in Ireland. She explained tome that, after the default and the devaluation, it made sense to invest in Argentina again because the country was competitive.

The money that had left the country before the default – because it expected a default – came back. The price of all assets fell dramatically, new money gushed into the country and the economy grew rapidly – it has grown in each of the last ten years since the default on 2001.

Now, before you think I am suggesting that we use Argentina as an economic model, snap out of it – Argentina is corrupt and it is extremely difficult to do business in.

But the point is that the default and devaluation of the currency didn’t cause the economy to get worse. It caused the economy to recover because people like O’Shea invested after the default, not before it.

There is life after default; in fact there is vibrant life. If we walked away from the bank debts in Ireland – debts that are not ours to pay – but continued to pay our sovereign debt, basic economics tells you that the economy would be stronger, not weaker; the balance sheet more robust; money that had left the country would come flooding back.

Having watched the EU again deal with Greece last week by preaching the medicine of no real debt restructuring – more debt and more austerity – it seems the lessons of Argentina from 1998-2002 have been lost on everyone.

We in Ireland are making exactly the same mistakes as the Argentinians made back then. During this period, I was working for an investment bank investing in what are known as emerging markets, so I spent a lot of time watching events in Argentina, Uruguay and Brazil – and the parallels with Ireland today are disturbing.

After the Russian and Asian crises of 1997-98,most of the emerging world briefly, yet dramatically, devalued their currencies and restructured their debts in order to recover.

But Argentina did not. It was the star pupil of the IMF that had been set against debt restructuring and devaluation. In short, Argentina did everything the IMF told it to do.

Instead of defaulting and devaluing, Argentina opted for a hard currency peg – one-for-one convertibility with the US dollar – and austerity. The result, of course, was a recession.

Yet, as unemployment rose and retail sales fell, from 1998 to 2001, the IMF constantly praised Argentina for its fortitude and for staying the course, taking the medicine and knuckling down.

This is precisely what is happening in Ireland.

The failed IMF blueprint from Argentina is being deployed again here by the so-called ‘troika’ of the IMF, EU and ECB. And it will end in the same mess.

To cut a long story short, the world looked at Argentina and concluded that the people couldn’t stomach much more of this austerity and couldn’t pay the debts that had been incurred in the good times, because the policy of austerity was making the economy shrink. In contrast, just across the border, Brazil was rocking after its devaluation. So, as Argentinian risk rose, interest rates rose.

Argentina was being punished for being a star IMF pupil, but Brazil was being rewarded for being – in the IMF’s eyes at least – a delinquent! This is exactly what is happening in Ireland, Greece and Portugal now- we are being punished for doing everything that is asked of us. In contrast, Iceland is recovering, after having given the bankers the two fingers.

In the end, Argentina defaulted on its sovereign debts, not because it wanted to, but because it had to. It is sobering to think that Argentina did everything the IMF wanted it to do and, in the end, its debt to GDP ratio was only 51 per cent.

We are doing everything the troika is telling us, but our debts are at least twice that.

Argentina not only defaulted, it broke the convertibility with the dollar – and the currency collapsed. People with assets lost out because asset prices fell. People with savings lost because their savings, which had been equivalent to dollars, were now in the devalued peso. People with debts gained because their previous dollar debts were cancelled and turned into peso debts.

In fact, this is exactly the opposite of what happened here when we joined the euro.

When that happened, people who had savings in the weaker currency, the punt – which had devalued five times in its existence – suddenly got these savings revalued into a much harder currency, the euro. So savers in Ireland got a huge subsidy by joining the euro, while debtors got hammered.

So what happened in Argentina?

As prices fell, new money came back into the country. O’Shea, for example, left Dublin and returned to Buenos Aires in 2003 with her own and some Irish investors’ money and opened Home. She would never have done that before the default cleared the air.

The place is booming. It opened in 2005 and, by 2007, the ¡ber-hip Wallpaper magazine rewarded Home with the ‘best new hotel in the world’ award.

This is real wealth, created by the talents of real people. This talent, entrepreneurial drive and creative vision was liberated after the default and the devaluation. It had been strangled by the austerity that went before.

So there is life after default; in fact, defaulting makes good business sense. This is why we have a concept called bankruptcy, because it is good business to close what is bust and reopen anew. It’s called capitalism.

It is what you do after the crisis that is important. It is also crucial to understand cause and effect. In recent days, people have said that the default would bankrupt the Irish banks.

This is not true. What bankrupted the Irish banks is not defaulting on debt, but the previous reckless lending.

The default is not the cause of the problem, it is the consequence of the problem.

As I left Claudio and La Epocha, clean shaven and revitalised, it struck me that Argentina might wobble again soon, as it has allowed inflation to take off. But we know how to tame inflation. With too much activity, tighten money conditions, cut spending and the economy will cool down.

What caused Argentina’s crisis in 2001 was not inflation, but deflation. Similarly, today, Ireland’s problem is also not inflation, but deflation – no activity, no growth, high unemployment and too much debt. History tells us there is only one way out of this. Debts that can’t be paid won’t be paid.

The crisis comes suddenly, it passes, there are winners and losers, and we start again.

David McWilliams hosts the Dalkey Book Festival from June 17-19.

  1. adamabyss

    Midnight Cowboy.

  2. Greetings from the only county in Ireland that voted NO on the second Lisbon Referendum farce, Donegal.

    In the past, even the future looked better. – Karl Valentin, 1882-1948, German cabaret comedian, clown and film producer, scripted together with Bertolt Brecht (Mysteries of a Barbershop) in the Weimar culture –

    Some considered him a ‘German Charlie Chaplin, so do I. Nazi’s were not amused of course, not a sausage, and they banned his work on poverty.

    A COERCIVE ACT! The results of the first Lisbon referendum were representative, not the coerced 2nd results, and…. Banksters and Lobbies dictate European policies and laws.

    Parliamentary Elections in Ireland and Portugal a farce! The deliberate abuse of democratic tools to force the neo liberal dictate. – The EPP is Europe’s true Power Broker and acts as the extended arm of corporate Interests at the center of EU, and of course, amongst the strongest Lobbies in Brussels are Banksters. Lobbies that dictate policies and laws have turned the EU into a corporate Europe. The EU is deeply corrupted, undemocratic and implements a totalitarian bureaucracy. -

    Weekly Suggestions:
    Express solidarity with the people of Greece, Spain etc. who stand up against this neo liberal orthodox dictate that enables these devastating Bankster attacks. Promote and support a ‘Indignant Citizens’ movement throughout Europe.

    x x x x

    Perhaps you wonder on the choice of my title ‘A Coercive Act’, if you look up ‘The Intolerable Acts or The Coercive Acts’, you will see why I chose this title, Lord North lost America, well through the eyes of the British empire that is, and his coercive acts triggered the American revolution.

    If I would be asked to come up with a quick definition for a Referendum it would go like this: Consulting the wisdom of the many on fundamental questions that concern the many and their future, and not the few.

    Allow me to take you on a little trip back in time to remember some of the remarkable propaganda the public was constantly bombarded with, even blockhead scholars did not hesitate to publish their tactical and highly manipulative campaign suggestions, the ultimate expression of neo liberal arrogance or plain stupidity, depends on how you look at it.

    November 2008 on EurActiv:
    The only viable option for the Irish government to resolve the Lisbon Treaty crisis is “to hold a second referendum on the substantive question of whether or not Ireland remains a member state of the EU,” writes John O’Brennan, a lecturer on European politics and society at the National University of Ireland….

    … Despite claiming that the Irish public is uneducated about and indifferent to EU affairs, the scholar maintains that in such a referendum, voters would understand the “serious consequences attached to voting behaviour” ….

    ….O’Brennan concludes that by “refocusing the question on Ireland’s economic well-being and appealing to the more material instincts of Irish citizens, such a referendum stands the best chance of producing a solution to the EU’s protracted constitutional imbroglio”.

    Hmmm, ….refocussing on Ireland’s economic well being and appealing to the more material instincts of Irish citizens to produce as solution to the EU’s protracted constitution? – What a piece of shit! – To produce a solution allowing the EU to force a protracted state default in Greece, Ireland etc. and burden the taxpayers with ECB strategies of dumping nearly all private banking debts in our shoulders, pushing us into an endless debt spiral and recession would be rather correct Mr. Brennan. Further, it was never the question of the referendum whether Ireland remains a member of the EU as Brennan suggested.

    It was exactly the way the campaign was conducted. Here a few more fair and balanced, Fox news style niceties of his publications.

    June 2008 in the Scotsman:
    The No campaign has been vigorous, comprising a motley crew of ageing Marxists, anti- globalisation protesters, traditional Eurosceptics, and obsessive “sovereigntists”. They have sought to capitalise on the vacuum of knowledge in Ireland regarding EU affairs and the Yes side’s relative lateness to mobilise.

    There was just a single comment under his article on the Scotsman website, but sometimes, a single comment says it all.

    …it must have been written by someone with a vested interest in increasing the powers of the EU….the Irish referendum is just window dressing. No, the EU gravy train will roll on regardless of the citizens’ wishes. That is the nature of dictatorships.

    June 2008 in the Guardian:
    From the outside looking in, it seems almost perverse that Irish voters might reject the Lisbon treaty…. But in a context where the EU remains too remote from citizens and where apathy and confusion define the referendum campaign, the “No” side has cleverly packaged its message of Europe as an existential threat to Irish jobs, investment and sovereignty.

    Now, I don’t know about you, but I certainly was not under the impression that the campaign surrounding the 2nd Lisbon Referendum was dominated by the overwhelming funding, billboards ads and constant broadcasts by the ‘obsessive sovereigntist’ as he so eloquently called them, on the contrary, it was rather the case that the Government ran a well oiled propaganda machine that had slogans like ‘Want jobs? Vote Yes!’ coercing the public by an atmosphere and with the tools of fear and confusion!

    Like the equivalent of a propaganda machine gun, Brennan published this all over the world., The Guardian, 6 June 2008, the Burma Digest, 7 June 2008, Die Welt, 8 June 2008, Ziua (Romania), 9 June 2008, the Scotsman, 9 June 2008, The Jordan Times, 10 June 2008, The Daily News Egypt, 11 June 2008, the Japan Times, 11 June 2008, Buenos Aires Herald, 12 June 2008, he Daily Star (Lebanon), 12 June 2008, The Korea Herald, 12 June 2008, Interview with Chinese State Television, CCTV-9 on the Irish rejection of the Lisbon Treaty, 19 June 2008.

    On December 4th, 2008 he published a commentary paper at CEPS (Center for European Policy Studies) – Ireland’s plan to resurrect the Lisbon Treaty to be unveiled at the Brussels summit – Brian Cowen will provide a clear roadmap for an Irish solution to the EU’s constitutional dilemma and enable the EU to resolve the impasse created by the Irish electorate’s rejection of the Treaty in June….At the very least Brian Cowen has delivered on his commitment to the European Council and produced a plan that has every chance of producing a Yes vote in a second referendum. The French Presidency of the EU will be satisfied that a solution to the Lisbon impasse is now within reach.

    In December 2010 he wrote on Open Democracy: (This here is amongst my favorites!) – Ireland’s existential crisis: a contrary view – ….The bulk of media analysis framed this event [The IMF/EU occupation of Ireland] as an unprecedented loss of Irish sovereignty – all the more distressing for a country which had until recently been extolled as an exemplar of dynamic, neo-liberal globalisation….

    Yep, this was the keyword in deed Mr. O’Brennan, theneo liberal globalisation dictate! He continues:

    ….I argue that the pessimism about Ireland’s future is unfounded. The heart of the argument is that in three ways the merchants of doom are simply wrong in their appraisals.

    The first is that any objective assessment of Ireland’s “real” economy produces a large number of positives that point to a very different outcome for the country than the pessimists suggest. Ireland has, after all, moved toward a surplus in the balance of payments, indicating that it is paying its way with the rest of the world..

    I think I leave these excerpts standing here without in depth commenting, I trust the fellow readers of David’s blog are more than capable to see my point here.

    Dr. John O’ Brennan is Lecturer in European Politics and Society at the National University of Ireland, Maynooth (NUIM).

    x x x x

    Now, in Ireland the matter of a referendum has relatively clear cut conditions that require certain legal aspects to be fulfilled before this collective wisdom can be consulted. I spare you the details, but not so long ago when I asked legal council on the conditions I learned that even a theoretical one million signatures demanding a referendum on private banking debts and constitutional questions in Ireland would not legally require the government to hold a referendum. This is the privilege of majorities that need to be achieved in the Senate or the House, and the explanation why the ‘technical group’ as expected did not succeed to push for it.

    Although and perhaps especially because we know about the ‘herding effect’ that applies for example in stock markets and other human activities, to consult the wisdom of the many nevertheless in a useful way, it is crucial that the individual decision is as uninfluenced as possible, this is one of the core foundations of any representative democracy, and it was deliberately undermined by the EU interests captured Irish Government and their extended propaganda arms in academia by methods of fear mongering and electorate manipulation, which there is enough evidence on.

    Do you remember the European Peoples Party photo stunt that Enda Kenny undertook when he traveled to Germany before the elections, just on purpose to get a picture with Angela Merkel? Some in the Irish media had a hissy fit, but of course, without educating the public on the real meaning and background of this occasion. The public was left to believe it is just inappropriate to act as Ireland’s leader before he is elected, going on a state visit to Germany that short before the official election, it was presented as a faux pas, a violation of accepted social norms, but in reality there was much more to be considered.

    The at it’s core europhile EPP is the major and overwhelmingly represented right wing organisation in Europe, and the good and true democrats they are, they lead all it’s major Institutions from top down, from the Consilium, over EU Commission to the EU Parliament. They are the main steering force in Europe and FG’s marriage with the EPP is no secret. EPP stands also for a much deeper federal Europe, as well as, you guessed it of course, deregulation.

    Currently the EPP holds all the Presidencies in the three major institutions, Council, Commission and Parliament and has 15 out of 27 seats in the EU-Council.

    The light colored blue represents the EPP in the EU-Council as of March 2011, this map is form before Portugal’s election farce, with a victory for the PSD, Pedro Passos Coelho and the leader of the CDS-PP, Paulo Portas. The PSD won 38.63% of the votes and first place and CDS-PP 11.74%, both parties are members of the EPP hence Portugal needs to be colored in EPP light blue now as well!


    All the following people are EPP members.

    Herman Van Rompuy, President EU-Council since 2009.

    Portugal’s ex Prime Minister Barroso, since – Fucking Hell! – 2004 he is President of the EU-Commission.

    The EU-Parliament is held by Polen’s ex Prime Minister Jerzy Karol Buzek who took over the Presidency in 2009 from Hans-Gert Poettering who was the EPP’s chairman from 1999-2007 and held the Presidency for the two years prior to Buzek.

    This is the reality of Europe 2011, and it is not highlighted to the public of course, not at all. Do a test for yourself if you want, ask a simple question in your peer group, can you name the three main political institutions in Europe? You will be astonished to learn how many people could not even tell you the correct answer. Democratic deficits in Europe are of immense proportions.

    x x x x

    The first Lisbon referendum in Ireland was representative, not the 2nd, and I reject the results as they were deliberately manipulated to suit a neo liberal agenda and franco-german EU pressures and demands, abusing the flawed Irish democracy, and on these grounds I consider them to be invalid.

    As I stated in my article on the Frankfurt school, and for really good reasons, I refer again to Habermas’s article from 2006, you cannot read that often enough:

    If we are not able to hold a Europe-wide referendum before the next European elections in 2009 on the shape Europe should take, the future of the Union will be decided in favour of neo-liberal orthodoxy.

    The return to ruthless hegemonic power politics, the clash of the West and the Islamic world, the decay of state structures in other parts of the world, the long-term social consequences of colonialism and the immediate political consequences of failed de-colonisation — all of this points to a high-risk international situation. Only a European Union capable of acting on the world stage — and taking its place beside the USA, China, India and Japan — can press for an alternative to the ruling Washington consensus in the world’s economic institutions. Only such a Europe can advance the long overdue reforms within the UN which are both blocked by and dependent on the USA.

    The overwhelming and unhealthy power of the EPP in Europe has opened wide the door for the major lobbies to write legislation in their very own interest. It has become known as the ‘cash-for-laws’ affairs concerning MEP’s linked to the EPP. In my opinion, the power of the EPP is the reason for a corrupted Europe that follows neo liberal demands that are implemented via immense Lobby power. -I will provide some links under this article. -

    The elections in Portugal were the very same farce as the elections in Ireland, parties already agreed before the elections took place! to become EU/ECB/IMF compliance managers, ‘austeritizing’ their countries.

    I find such a stitch up highly questionable from a constitutional point of view. Sadly, Portuguese voters have no clue what is going to hit them as one economic commentator from Portugal mentioned last night. Think about it!

    When I bought my copy of the Atlas of Globalisation from le monde diplomatique back in 2007, I spent an entire week cross reading and researching the massive material which luckily was also available on a DVD attached to the book. The German magazine DIE ZEIT commented that this Atlas should be available in every school, and people like Joe Stiglitz equally highlighted the relevance and accuracy of this work.

    Now, some may try to tell you that all this belongs to the past and is no longer relevant, but I would dispute that and would say to those what Karl Valentin once said:

    Today is the good old times of tomorrow!

    I rest my case.


    • Deco

      wow. many salient points. What we are presented by the mainstream media is a deliberate abberation designed to repvent us seeing the ugly reality that is there.

      • Thank you Deco. It took some time for me to bring it down to paper this way, but I hope the one or other finds it as conclusive as I do, or at least starts to look behind the smoke screens and asks questions.

        That’s all I ask for really.

        • thirdeye

          Eu is a rehash of the old imperial powers of europe after being checked out of most places around the globe they ruled have now decided to re draw europe’s natural resources to their benefit like Germans telling the greeks to sell their islands off the greek coast to pay off the eu imf loan.Attacking workers rights as here in Ireland with Brutons reofrms of lower paid workers wages and sunday rates.Like a person following docotors orders to the letter to solve a health issue but in reality makes the person more ill.Would you continue if you know the results will not work out as planned.

  3. Travel Magazine

    I anjoyed the storey to the barber except I usually shave each day and its safer .

  4. John T

    The IMF said today in their report of the UK economy “if the economy experiences a prolonged period of weak growth and high unemployment” “some combination of the following would need to be considered: (i) expanded asset purchases by the Bank of England (quantitative easing) and (ii) temporary tax cuts. Such tax cuts are faster to implement and more credibly temporary than expenditure shifts and should be targeted to investment, low-income households, or job creation to increase their multipliers”

    Clearly the sovereign debt problem in Europe has left some countries (pigs) vulnerable to massive debt as a result of baling out their banks. These countries have no or negative growth and massive unemployment and yet the IMF preaches austerity and then openly contradicts itself by advising the UK that if they encounter similar conditions which the pigs are experiencing now they should cut taxes and print more money!!

    This sovereign debt crises is a scam. A scam being inflicted on weak countries to cover the exposer to EU debt of big banks. If you follow the money trail you will find it goes all the way (via the federal reserve) to Wall Street!. Its Wall Street which bailed out Europe during the financial crises in 2008, it is Wall St. which controls the Fed.,and controls Obama, and it is Wall St. that has the most to loose if any EU Country defaults.

    Its time to tell them **** off!!

  5. ( Resplashed Again from last page )

    Listowel Races

    The Battle of Waterloo was won by the herocism of the Duke of Wellington , an Irish Man whoes blood lines hailed from Kerry.However it was the Rothscilds who made all the money because they financed the war on both sides.

    I remember going to the Listowel Races years ago and on entering the course one goes across a bridge over a river where young boys/ men stand in the water waiting for the punters to throw them coins .Some would fall into the water but wherever the coins went the ‘money changers found it’.

    Both before and after the impending Irish national default there will be a ‘money changer’ who will do his homework and will replicate what the Rothschilds have done in our history books.We can only guess who might that be .He could even be a foreigner and more likely to be or at least resident outside the State.

    Who this ‘money changer’ might finance is also an interesting question and what is the motive of this or these borrowers and of course how much do the taxpayers have to pay .

    For the money changer to do all he wants to do he must be in-situ in the capital Dublin in an Ivory Tower maybe a captive private bank sold to him for €1 by the Irish Government.

    Irish Banks have printed money before and are doing so again as we speak so that they can lay claim to the monopoly to print new Irish Dollars and lend them to the State and enslave their own people from the enslavement from the EU.

    • I’d posted this in reply:

      Regarded as British, the ‘Iron Duke’ he was born in Dublin and had a lifelong relationship with family and friends in Ireland, rose to be head of the British army, famous in the French wars and served in India and Russia, led victory in Battle of Waterloo


      The Iron Dukes speech on Catholic Emancipation


      Britain’s most famous general, twice British Prime minister, was Irish:)

      Let’s say goodbye to frogs
      Eating our slugs and snails!

      Let’s go
      Before we’re


      • Who will be the Irish Rothschilds and money changers after Default ?

        This is a very Big Question we need to find out .We have moved on from default now and we do not want an Irish Government borrowing Irish Dollars from new money changers who issue them at enormous expense to the taxpayer.

        • The Deputy School Master Aould Fogey Noonan

          He does not know the nuances of basic finance and only book quotes his paragraphs like a Shannon Otter that preys on the salmon nearby.His rustic charm is pure ignorance in France and Germany and his body language is an embarrassment and he refuses to acknowledge it .He is easy game to the EU politicians and they know it and they like to see him pupetteering their mantra back in Dublin.He is guligible to the EU figures he is given and forgets to think and shows no attachment to his electorate where it matters.

          Noonan be Honest please STOP Your Prancing and give this serious responsible post to a younger and better qualified person .

        • paddythepig

          If you have a few pound stashed abroad yourself, why not step up to the plate John, and set up a business post-default lending much needed cash to the Irish people?

          You could then either charge no interest rate at all, or if the borrower never paid you back a red cent, you could clap him on the back, and congratulate him for standing up for himself.

          • Colin


            There’s lots of Irish people (Jagger generation mostly) who have assets and savings safely tied up abroad who are doing a good impression of the ‘poor mouth’. These folks’ children (Juggler generation) are hoping to inherit their parents’ assets and savings tied up abroad. This is why there is no marching on the streets by the jugglers. A lot of them have a vested interest in not upsetting the ‘apple tart’ as Bertie described it.

          • @paddythepig

            You never fail to demonstrate that logic is finite.

          • paddythepig

            A lecture in logic from John Allen, thats a good one.

            You’d make a fine Irish politician John, you have the hot air in spades.

          • @paddythepig
            I take that as a compliment .I am a farmer too I am glad you spotted it.

  6. Dorothy Jones

    Quote from above: ‘Now, before you think I am suggesting that we use Argentina as an economic model, snap out of it — Argentina is corrupt and it is extremely difficult to do business in’
    So why the title???? That’s similar to using the title ‘Ten things I would do as Taoiseach’ and then referring to the urgings of those to go stand for election as being like a thousand Mrs. Doyle’s…
    John, I agree with the travel magazine comment. In yesterday’s SBP travel article in Agenda [Nicola Cooke], it is noted that the Peron museum omitted negative publicity during the reign of power. This artcle seems to adopt the same approach. I don’t think any of us [my gender especially!!] will be experiencing a feelgood moment in the barbers after a night on the tiles in the aftermath of a default in any shape or form.

    • Praetorian

      You should see the Nixon presidential library in Yorba Linda, he comes across as the Pope mixed with John Lennon.

      The comment in the article about Argentina being corrupt was unfortunate, it is the kind of sweeping comment that can get writers in trouble, for me it stuck out like a sore thumb. Argentina has come a long way since the brutal Western backed dictatorship and they had the courage to tell the IMF to get stuffed, and yes, the economic crisis caused immense hardship for people and the story is far from over.

      With regards, headings of articles, I have noticed a lot of them in Irish newspapers bear little resemblence to the content or tone of an article. I never allow sub-editors dictate to me the heading of an article I have written, it is one of the reasons why I don’t publish in the main stream media (MSM) and also why I don’t get paid :-), but I think the message is more important than the cheque. If you do opt with the MSM, then it is worth having a word with the managing editor so to see if he/she can have a word with the subeditor, because it can be very damaging to a reputation when they get it so wrong.

      Horses for courses.

  7. Dorothy,

    Just so you know, I never write the titles, the subeditors in the paper do that. The rest of the article is all mine…for good or ill! The same goes for “the if I was Taoiseach” headline which pissed me off enormously. I had nothing to do with it.

    Best, David

    • Dorothy Jones

      Thank you David; that explains it!

    • real terms

      Now now, is that really a fair dismissal of ordinary subbies, David? Your article does wish for a new start and looks to Argentina as a pointer. I would say Ireland has far more potential than Argentina, much that we all admire the spectacular country of Admiral Brown. Maybe the headline is a bit dramatic but a person of your standing and influence should know better than to drub the sub. ;o) Rory

  8. Malcolm McClure

    DJ pointed out in the previous blog:

    The article fails to mention that argentina would have been screwed only for one thing. The price of agri goods such as Soya and beef which the argies are no1 exporters have absolutely boomed in the last 10yrs. So the argies can export those goods in dollars and exchange for cartloads of pesos. The timing was one massive stroke of luck. Ireland size, position, resources and trading partners make their case extremely different and would make it much harder for them to default

    Besides that very pertinent point, the Argies were able to depend on a strong external currency in which to price their goods. Where do we look to find an equally strong currency? Who knows what the dollar, sterling, euro or even yuan will be worth in three months time?

    The Germans loved the euro for precisely that reason. They could price their goods in Euros and know that the cash received in due course would be in euros and not in devalued drachma, punts, pesos etc. That is why they will bend over backwards to try to preserve the euro zone. It is in their essential self-interest, and is even more important to their long-term strategy than devaluation of the euro.
    Return to the mark would be commercial suicide for Germany as nobody outside Germany could afford to buy their products.

    • Good points Malcolm (and DJ). Argentina was definitely assisted by the boom in agricultural commodities that has been taking place and looks set to continue for another while at least. Even if we don’t have an Argentinian-style recovery, I think that a default would help Ireland to reset its economy and become uber-competitive again. For the Germans, they have a dilemma, are they willing to pay price of periodically forgiving debt accumulated by peripheral countries in order to save the Euro so that their companies can maintain their strong export performance of recent years? If they’re not willing to do this, Ireland is better-off out of the Euro in the long-term and leave the single-currency to the continental economies which are more closely aligned with each other. It will probably make for a difficult year or so, but at least there would be light at the end of the tunnel in terms of growth and some semblance of economic stability returning.

  9. The Dork of Cork

    Looking at the CIA factbook figures for crude oil consumption – the drop in Irish consumption is slightly more then the Argentina default period on a % metric and slightly less then when the Cuban economy collapsed after the USSR left the building.
    But these are 2009 – 2010 figures – the continued GNP drop will put us in Cuban territory and beyond.

    We seemed to have moved from a peak of 200+ thousand barrels in 2006 to a estimated 160 ~ thousand barrels for this year putting us back to 1998 – 1999
    Are these figures correct more or less ?
    Will we move to the 80s low of 83 thousand barrels back in 1983 again ?
    That would be interesting.

  10. Deco

    Now, before you think I am suggesting that we use Argentina as an economic model, snap out of it — Argentina is corrupt and it is extremely difficult to do business in.

    Oh yeah, and like….Ireland is not ?

    Tribunals, Brown envelopes, Pravda, The Financial Regulator playing golf with the bankers, etc…..

    We should investigate “best practices” from countries that are better at producing success with finite resources. Denmark, Israel, Finland, Taiwan, The Netherlands, Korea, Singapore. And all of these societies have an intolerance for corruption that does not compare to the widespread tolerance of funny business. And they are more meritocratic, and less obsessed by the golf club cliqueishness.

    To be honest, while we probably can learn something from Argentina, we would not want to copy them too much because we will then end up a serial basketcase every fifteen years.

    Here is a prediction – young Spaniards will be queueing up outside the Argentine embassies in Madrid to get visas to work there within 24 months. And I am confident that young Protugues are probably queueing up to get employment in Brazil, at the moment.

    • Emperorsgotnoclothes

      Precisely the point that occurred to me Deco in relation to corruption etc. I don’t think it’s an exaggeration to suggest that the shakers and movers in this country could dispense much wisdom in the art of the stroke and sleeveenery to the Argentineans!
      To a degree I feel that DMcW has the ear of the insiders in this country. We ought to remember that these people, by and large, are incapable of an original thought or genuine intelligence. It has occurred to me on more than one occasion that his articles are indirectly speaking to these elites, trying to prompt/advise them. While we rage at their incompetence, corruption, and disregard for the pain being inflicted by “austerity”, I just wonder, and hope, that they might listen and act. Naive I know but, given the extent of disenfranchisement and democratic deficit we exist under, it may be a small source of hope for us.

      • Deco

        Just wondering are the Argentines as “advanced” as we are in connection with bankers playing golf with IFRSA directors, and allowing IFRSA directors to win on purpose as a means of being nice to them ?

        It is like something on a comedy show.
        But it is detailed in “The Bankers” by Shane Ross.

        • Emperorsgotnoclothes

          I imagine their kickbacks would also include a big juicy steak washed down with nice a Malbec!

          Speaking of comedy(and you’re right of course….what’s happening is utterly surreal), where is the cutting satire, the scintillating comedic dissection of the main players in all that’s happened over the past three years? Much easier of course to lampoon Morgan Kelly than focus that talent on more deserving targets.

        • Emperorsgotnoclothes


          Thanks for link Adam…..I stand corrected! Will check it out later.

  11. Deco

    Here is something worth investigating, if you have time. People from the PIGS block who moved their businesses to Argentina, since the crisis first broke, on the basis that success is more of a possibility in South America. Yes, there are cliques and elites in South America, but there are some cities between the Buenos Aires and Sao Paulo where there is entreprenuerial development in recent years. Argentina is not a business freindly country – at least not for small business. Peronism which still exists in it’s institutions is proof of that.

    I do not think that we are hopeless as Argentina. I reckon that Kenny’s fears that he is losing the support of the people, and that elements that FG and IBEC absolutely loathes (SF, Joe Higgins, RBB, Ganley, various other malcontents outside the mainstream) are there to exploit the situation because FF/GP have disintegrated. Basically Kenny will be less reluctant to ignore the people than Cowen, Lenihan, Gormley, etc..

  12. Sensible article, according to wikileaks of last week, it appears the ‘troika’ may not be the ‘troika’ after all, but the ‘gang of four’, our ‘wreckedAngle’, IMF, EU and ECB AND NOW, the American embassy.

    Apparently Mary Hanafin and Eamon Gilmore and a host of Irish politicians have been holding up queues trying to get into the embassy:) So Gilmore was telling us he was against Lisbon 11 and telling the embassy he was in favour of Lisbon 11.

    No, before you ask,a uaisle, Enda didn’t ask Obama about Geithner, or if Obama could ask Geithner to uturn on burning senior bondholders in Irish banks? Actually, I don’t know if he asked him anything:)

    Who knows what Hanafin was being told, or telling; oh yeah, it was a blow by blow account of how the negotiations were going on between the Greens and FF as they happened, or before they happened during those fun days of the FF/Grinnings coalition ?

    Combine the above with the revelations from Morgan Kelly re Geithner’s opposition to burning bondholders. Combine this with Merrill Lynch and other American advisors to Irish banks and the notion GSucks would get burned?

    Re “The failed IMF blueprint from Argentina is being deployed again here by the so-called ‘troika’ of the IMF, EU and ECB. And it will end in the same mess.” It’s already a mess, but its growing fast.

    Anyone see this?::


    “Deposits introduced through Anglo branches in Vienna, Dusseldorf and Jersey remain unaffected by the Transfer Order and as such have not been transferred.”

    Jeez, the last days of the Anglo before it went officially bust, there was a helicopter lift out of deposits from Anglo to Vienna.

    I’m sure it comes as a relief to all that all those deposits are safely hidden away in Dusseldorf, Jersey and Vienna safe from scrutiny by CAB?

    It would come as a relief given the uncertainty raised by the above information, if President Obama would make a statement of discovery on any involvement/position of US government in regard to Ireland’s default.

    It’s bad enough having to deal with GSucks, but if GSucks is now official US policy on Ireland’s default option, that troika has suddenly got more problematic.

    Anyways, let’s get default over with and out of the way asap!

  13. Deco

    Here is an article on the crisis, by an American, who quite obviously has a lot of scepticism of both Wall Street and Washington.

    Anyway the interesting refers to the situation on the ground in Greece.

    Late developments from our contacts in Greece tell us the bankers, EU and IMF had best forget about collateralizing debt (Mnemonic). The entire country is now aware of what the bankers are up too. What put the frosting on the cake was that a publication in the Netherlands said as a result of the secret deal, the Turks would get a Greek Island and raise their flag over it. That has really enraged the Greeks. PM Papandreou told 30 of his party legislators (Voulefles) that if they didn’t vote for collateralization he will fire them and replace them with people off the street. He obviously thinks he is a dictator because that is beyond his legal authority. Each day 150,000 people are surrounding the Vouli, the Parliament and the members are growing. PM Papandreou now only moves by helicopter, obviously fearful of assassination. One thing is for certain he will have difficulty ever living in Greece again. A woman professor said on TV that a Patriotic resistance has already started in Crete and in many smaller cities; people are signing up in the new movement. The police cannot handle the massive crowds and the military is securely behind the people. The bankers had best give it up and walk away. They are going to lose this one and it means the end of the euro zone and the EU.


    Not sure if Mr. Chapman is trying to overhype matters – but evidently, in the heat of the summer, and amidst rising tensions and a fair bit of denial about the way that everybody rode the system to some degree, the Greek situations seems to be getting worse and worse.

    • Emperorsgotnoclothes

      Thanks for the link to that article Deco. I don’t believe that the author is over-hyping the situation in Greece. What is particularly interesting, from an Irish mainstream media perspective, is the almost total blackout as regards the extent of popular protest and opposition to the “medicine” being administered by the troika and its accomplice the Greek government. Maybe they don’t want us native Paddies getting any funny notions ;o)

      • @Deco

        Re “A woman professor said on TV that a Patriotic resistance has already started in Crete and in many smaller cities; people are signing up in the new movement. The police cannot handle the massive crowds and the military is securely behind the people. ”

        Apparently this is a non partisan, non party, non ideological movement which has named itself ‘Indignant Citizens’ or ‘IC’. They are motivated by revolt against the sectional interests that have pillaged, mismanaged the country, made a mess, run up the debts, for which IC say emphatically, they won’t be forced to pay up for them.

        Does the above remind you of anywhere else?

        Only 20 people turned up to support DOFlynn march to the Dáil motivated to similar principles?

  14. John T

    Geithner is just another puppet like Obama is. He banned the bonfire of the bondholders because that’s what their master in Wall St. IMHO I now believe that in Countries where the US has a debt exposure will not be allowed to default! Greece seemed to be doing everything wrong and yet in-spite of them the ECB is coming to the rescue.

  15. wills


    The AIB n BoI n Anglo debts ought to be honored by those banks. And if they cannot fully repay the debts they and their creditors come to an arrangement.

    Which is what has happened.

    The debts transferred over to the Irish people.

    Thus the banks debts are no longer the banks.

    So the banks will never pay their debts, so the article’s conclusion holds to the Irish banks.

    They cant pay their debts so they didn’t pay their debts, their debts were transferred over to the Irish State.

  16. Praetorian

    Michael Hudson has the lead article on Counterpunch today on the Greek crisis

    Will Greece Let EU Central Bankers Destroy Democracy?

    • Great article,I agree with Hudson, we need along with Greece to adopt a capacity-to-pay approach along the Icelandic model:

      “As an alternative is to such financial demands, Iceland has provided a model for what Greece may do. Responding to British and Dutch demands that its government guarantee payment of the Icesave bailout, the Althing recently asserted the principle of sovereign debt:

      “The preconditions for the extension of government guarantee according to this Act are:

      1. That … account shall be taken of the difficult and unprecedented circumstances with which Iceland is faced with and the necessity of deciding on measures which enable it to reconstruct its financial and economic system.

      This implies among other things that the contracting parties will agree to a reasoned and objective request by Iceland for a review of the agreements in accordance with their provisions.

      2. That Iceland’s position as a sovereign state precludes legal process against its assets which are necessary for it to discharge in an acceptable manner its functions as a sovereign state.”

      Instead of imposing the kind of austerity programs that devastated Third World countries from the 1970s to the 1990s and led them to avoid the IMF like a plague, the Althing is changing the rules of the financial system. It is subordinating Iceland’s reimbursement of Britain and Holland to the ability of Iceland’s economy to pay:

      “In evaluating the preconditions for a review of the agreements, account shall also be taken to the position of the national economy and government finances at any given time and the prospects in this respect, with special attention being given to foreign exchange issues, exchange rate developments and the balance on current account, economic growth and changes in gross domestic product as well as developments with respect to the size of the population and job market participation.”

      This is the Althing proposal to settle its Icesave bank claims that Britain and the Netherlands rejected so passionately as “unthinkable.” So Iceland said, “No, take us to court.” And that is where matters stand right now.”

      Basically our economy is bankrupt and we need debt forbearance ‘burning bondholders’ ‘restructuring’ whatever you want to call it.

      The slate needs to be cleaned, otherwise the financial industry FIRE of the ECB and bondholder banks is taking this country through deflation/austerity to financial ruin of our economy.

      If we do not step back from the brink, it may be a case of Humpty Dumpty.

  17. uchrisn

    Assets are the key in Ireland. Irish people traditionally have an extremely strong attraction to property.
    Why then do the majority of Irish people not want to follow Icelands example or stand up to the ECB?
    Fear of losing their property value. The majority of people in Ireland are concerned about the country and the 15% unemployed. Just they are clearly much more concerned about the value of their property.
    Edward Kennedy in 2008 said that Ireland should be able to get out of trouble quickly due to being a samll country and solidarity etc. It seems that he didn’t visit Ireland since 2001 and he was worng.
    As his brother famously said ‘think not what your country can do for you..’
    Ireland needs a lead who can restore solidarity and help people to get away from selfish lust for high property values.

    • Deco

      Is property an asset ? I think that people are entitled to provide a property for themselves, but the taxes, rates, inspections etc.. that exist discourage people from investing in property – at exactly the time when the oversized Irish state system has decided to go into the property business.

      It is a major flaw in the colletive mindset that “the state must” do certain things.

      If the people did their own thing more often they might learn more from their mistakes, and start doing the right thing.

      The state never seems to learn from it’s mistakes. Just look at the myriad of steps involved in the M50 build out. A litany of disasters.

      • uchrisn

        Property is classed as an asset, although the family home in my opinion should be seperated from the speculators ‘asset’ as shelter is a basic human right like clothes and food.
        Interestingly the CEO of PIMCO, Mohammed El Erian believes that the main purpose of the ‘QE’ or money printing in the States is to boost asset prices. He is mainly talking about house prices and in a lesser way stocks.
        If you look at it there is a high number or perhaps majority of voters who are home owners in Ireland or the States.
        So they want their asset/house price to be high. That is why the housing boom wasn’t stopped and now everyone in the country is paying to try and maintain and re-increase the prices. In Ireland through NAMA and bank bailouts. In the States through bank bailouts and inflation of prices of food, gas etc.

        This is democracy, anything approaching a majority in company with the realestate and financial lobby in tow is going to write the laws.

        It is not a good strategy. Mr. El Erian expects growth to be much higher in the emerging economies and stalled in Ireland over the next few years.
        Look if real estate prices were much cheaper people would need to be paid less, and our economy would be more competitive. More people would invest in Ireland as the lady did in Aregentina, creating more jobs.
        On the other hand people whose home equity is falling would be inclined to save more and spend less.

  18. uchrisn

    Here is the thing. If Ireland lets real estate prices and rents fall, it is obviuos that people are going to come and set up homes and businesses and create jobs. You can also do this without devaluation.
    Make legislation, 1 person max 2 properties and make very clear and transparent sales price information rules to prevent price fixing.
    The Irish governement now has massive control over realesate prices simply through NAMA. They can start selling properties at low prices with these resrtictions in place.
    Alternitivly we need to start talking about leaving the Euro. The ECB is so obvioulsy undemocratic and biased towards, Spain, Italy, France and Germany.
    Whatever about mortage interest relief or restructuring a devaluation would really help people with mortages.

  19. uchrisn

    If I am to predict what would happen, I would tend to agree with Simon Johnston ex-chief economist IMF http://www.baselinescenario.com when he said in early 2009 that the home Irish real estate lobby, ECB and IMF together really are too powerful for the right and fair decisions to be taken in Ireland. He also predicted that the youth would just emigrate instead of fighting.
    So the Irish real esate lobby (incl on a small scale all real estate owners) needs to be convinced to think of Irelands future instead of their own short term profit. This could change the balance.

    • Your analysis imho is correct though I believe a tad naive. The rentier system in Ireland doesn’t need convincing, it’s already convinced NAMA and bailouts, are in their best interest regarding short, medium and long term profit. They milked it during the Celtic tiger years, gains they made must be protected even at the loss of economic sovereignty, emigration, unemployment and whatever social deprivations lie ahead for taxpayers. During the Celtic Tiger years their bankers in Ireland were funded by bondholders who ‘showed them the money’. The rentier based economy
      also supped at the paper finance FIRE economy head quartered in IFSC to provide a scissor sisters service to the Irish economy fed by Corporate tax scams, ‘Dutch Sandwich’, ‘Double Irish’ and speculation in the global casino based scam of fiat money manipulation that also packed Wall St and London with traders. An alliance or scissors of rentier and finance casino pyramid scamming drove the property boom in Ireland; its remains have cornered the bailout game with the sole purpose of furthering the scam and limiting the damage they have taken onboard since 2008. Part of the fix is to lay the bill and any future bills they will have to pay, or have paid, onto the shoulders of Irish citizens. So far they’ve largely succeeded, no bankers in jail, living it up in the US, more bonuses, developers through NAMA pouring their losses onto taxpayers, loans/bailouts that are money making rackets for bondholders, etc, etc……
      We need an ICI, Indignant Citizens of Ireland. Let me declare myself a member:) Indignant Citizens of Greece will not take their medicine and neither should we!

      • uchrisn

        Actually its been said that one of the risks on the horizon for the expanded EU is that the Eastern European countries start to copy western europes ‘rentier’ economies. They would be stall and not provide the impetus required to develop..

  20. StephenKenny

    An interesting, if somewhat extravagantly expressed, view, from Howard Kuntsler


    • Deco

      Kunstler, as always manages to excellently capture the absurdity of the situation. He literally sees things beyond the stupidity of what is put in front of us on Pravda-RTE, CNN, SkyNews, I-TV(3), BBC, etc…

      He captures the essence of our predicament very well.

      And here we go again, with regard to the internet.

      another account of a massive crowd surrounding the Greek Parlaiment in Athens, and of politicians in meltdown.

      Not a word from the Irish media about the whole thing. You are likely to get more coverage of Cheryl Cole or some non-entity getting “the call” from the overpaid manager of the Irish soccer team, like as if it was some sort of solemn religious moment.

      No mention at all from the Irish media- except that the EU commission and Finance Ministers are “working on finding a solution to a difficult problem. BS. All they are doing is finding a way to shaft taxpayers everywhere with the bill for a fraud that started with the previous employer of both Suds and the next ECB head. The whole thing is becomming a scam. And the main movers in this one are presented to the Irish audience as the heroes of the hour.

      I will apply a healthy dose of scepticism on the “official” news coverage of this event…

    • Emperorsgotnoclothes

      Thanks for the link to that article Stephen. I like his turn of phrase, although his assessment of our likely course of action vis-á-vis our predicament seems to assume a degree of democratic involvement and choice that simply doesn’t exist among the people.

      “The Irish gaze longingly at little Iceland, out there in the North Atlantic now free of debt obligations from the simple act of raising the middle finger in the direction of the London banks. Ireland is sore tempted to do likewise, and the act would have an appealing historical symmetry to it. They may toss out their parliament to get to it. Staying sober is another matter.”

      No doubt the majority of citizens would relish the opportunity to follow Iceland’s example but how likely is it that we’ll be given the chance to voice our opinion as the folk from Iceland were? Not very likely with the president we have occupying the “palace” in the park! And the notion that we might “toss out the parliament” to do it is pretty fanciful. I think he overestimates the extent of democracy, the awareness of people regarding what’s really happening, and the likelihood that we might become as angry and inclined to action as the Greek people appear to be right now.

      He doesn’t mince his words though and his forthright style is very refreshing – in stark contrast to the empty utterances and neo-liberal/bankster propaganda emanating from IT/Indo/RTE.

      • uchrisn

        The funny thing about Iceland is that one of the main reasons Britian were treating them so unfairly and threatening them was to make an example for Ireland. They were very frightened that if Ireland saw Iceland doing the right thing and copied them they would have a much bigger loss in their banks.
        However Ireland did see that Iceland did the right thing and benefited for it. However they proceded to vote for candidates intent on doing nothing. So they needn’t have worried. Good old Paddy Irishman.

        • uchrisn

          Incidently Iceland gets ridiculously low covergae in the Irish media. You’d almost have forgotten its existence.

        • Emperorsgotnoclothes

          The level of coverage (none) afforded to economic developments in Iceland in the Irish mainstream media is inversely proportional to the level of fear the elites would feel at the prospect of presenting this alternative course of action to the average Paddy/Patricia!

          You must remember, as they reiterated endlessly…..there is no alternative, there is no alternative, there is no alternative! Repeat ad nauseum to achieve the desired level of indoctrination ;o)

          • Emperorsgotnoclothes

            Of course I ought to have said “directly proportional to”! With a maths background you’d think I’d have known better!

  21. manofiona

    Not sure what the point of this article is – or indeed any of the fantasies which litter the comments.

    Of course there is life in Argentina after the last default – and until the next default. There was life in Japan after the atomic bomb. None of this is relevant to Ireland, which is a member of the Eurozone.

    All major decisions concerning Ireland which could be considered to affect the stability of the Euro will be made necessarily and exclusively at European level. That is the lesson the new Irish government was forced to learn very quickly. There will therefore be no Irish default unless such a move is acceptable to Europe. There is absolutely no point in fantasising about anything else.

    Ireland cannot leave the Euro without also leaving the European Union: that is the clear legal position. Any hint of Ireland leaving the EU would devastate the foreign investment sector as well as the comatose banks. End of story.

    Also DMW might like to ask his Argentine friends two questions: i) what portion of their financial assets do they hold outside Argentina? and ii) how long do they think Argentina will avoid its next default if the incompetent and corrupt Cristina is re-elected?

    • John T

      I totality agree. Greece will not default because the IMF/ECB will not allow them. The same applies to all the bailout countries. There is too many “interests” at stake.

    • Re “Ireland cannot leave the Euro without also leaving the European Union” Not true, this is obviously in the mind of Sarkozy and Merkel as Plan B if Greece won’t take its medicine. The clear legal position can be updated to provide for this contingency. If the EMU is allowed to break the EU like this, so be it, we would leave the EU. Other alliances such as a British Commonwealth of Nations and rejoining sterling are options as well.

      Re: “All major decisions concerning Ireland which could be considered to affect the stability of the Euro will be made necessarily and exclusively at European level” Perhaps you should take out your copy of the Irish Constitution and read it and let us know the article in the Constitution to which you refer:)If it isn’t there, perhaps the point you make is false propaganda designed to take away the will of Irish people as regards their destiny.

      As regards the scaremongering re FDI, I think countries such as the Asian tiger economies of Hong Kong, Singapore, South Korea and Taiwan provide lessons we can learn from.

      We have to get out from under this vassal state, begging bowl, slave mentality that is scaremongering skies will fall in following default.

      Fact is, the skies will fall in if we don’t default.

      After all, default is inevitable.

      It’s how we manage it that counts.

      Beginning of story or end of the constitutional fantasies of men of 1916.


      • manofiona

        Pursuant to the Eleventh Amendment of the Constitution Act 1992, as approved by the people of Ireland in a referendum and now included as Article 29. 4. 4° of Bunreacht na h’Eireann, Ireland became a party to the Treaty of Maastricht and pursuant to that treaty assumed its obligation to join the Euro (the British negotiated an opt-out to that provision: Ireland did not). Ireland therefore assumed a legal obligation to join the Euro and neither the Treaty of Maastricht, nor any other legal instrument, permits a member state of the Eurozone to leave the zone. A member state can leave the EU (the Treaty of Lisbon provides for a procedure for leaving the EU) but there is no procedure for leaving the Eurozone except as part of leaving the EU entirely.

        That is the legal position in both European and Irish law.

        Your other comments are even more divorced from reality than those of DMW and the other groupies.

        Ireland shares a currency whose value is determined by the economic efforts of people in all member states of the Eurozone. It is not only a matter of law, it is also a matter of economic justice that decisions which could affect the stability of that currency should be made by agreement among all the states of the zone.

        • Emperorsgotnoclothes

          I think it would be fair to suggest that most workers/taxpayers/citizens in Ireland would share an affinity with their EMU counterparts in the sense that we have all been oppressed, marginalised, disenfranchised, and rendered servile to the whims and demands of the financial system. You speak of economic justice and were the game unbiased and unrigged then I would completely agree with you. However, where is the justice in demanding (without offering the choice) that taxpayers shoulder the debt responsibility for the transgressions and recklessness of the financial speculators/gamblers that have caused this crisis? In a fairly operated capitalist system this wouldn’t happen – positive reinforcement would occur, and the irresponsible entities would either learn their lesson, absorb their losses, or go under.
          The stability has not been undermined by the ordinary workers. It has been undermined by the financial system, by unbridled greed, and by woefully inadequate regulation, both nationally and at ECB level, of same. As has been reiterated again and again – default is inevitable. The question for us, and other distressed states, is do we choose to default on bank debt now(as distinct from sovereign debt) or do we allow our masters to administer ever increasing doses of “austerity”, decimating the will, hope, and lives of ordinary citizens in the process as we slowly head for default a year or two from now?
          We have been utterly excluded from the profound decisions made on our behalf, without our say, up to this point. From a moral perspective, we have a right to voice our opinions on matters of such national importance. While you invoke the argument of economic justice to defend the stability of the EMU, what is your view as to the economic injustice inflicted on the citizens of this state without our agreement? There is also the issue of democracy and the fact that we are presented with the illusion of democracy -a parody of what democracy truly means.

          • manofiona

            I did not comment on the issue of how the problems caused by the prodigal peripheral countries should be dealt with. I only make the point that in the context of the possible unstabilising consequences of those problems for the zone as a whole, it is proper, as well as legally required, that they should be addressed by all the member states. Individual states should not be able to take unilateral action which could destabilise the zone as a whole. The unilateral Irish government bank guarantee of September 2008 (which DMW urged on the Irish government and supported as a great wheeze)was probably the last such folly. A further folly, such as a unilateral Irish default, is out of the question.

        • it is also a matter of economic justice that decisions which could affect the stability of that currency should be made by agreement among all the states of the zone.

          Only by asking the people of these countries, as Iceland did, this can be legitimised. The political class is captured and does not represent the people by any standard.

          To leave such decisions up to this established political class is prohibitive to economic justice.

        • Emperorsgotnoclothes

          The primary concern for the Irish government ought to be, in principle at least, the welfare and interests of its citizens – they are obliged to act in our best interests. Up to now it’s highly questionable whether that has been the case. Monetary union was always an experiment and, as any scientist will tell you, not all experiments produce predictable/expected results. By maintaining our current course of action and persisting with membership of the euro (by, in effect, not defaulting unilaterally) we are likely to be acting against the better interests of Irish citizens. I take your point that membership of the club carries with it certain obligations towards our fellow member states in terms of conduct etc. However, when the rules of the game are rigged in favour of one sector (financial) of the broader economy over most others, then it’s asking a bit much to expect everyone else to play by the rules and indulge in mass economic/social self-immolation to protect the greater good. When the price of continuing with “austerity” (and membership of the club) outweighs the cost of acting, unilaterally if necessary, in its citizens’ interests, then the choice should be clear to the government. As you rightly assert, the blanket bank guarantee was a supreme folly. The fact that they acted so swiftly to protect those particular interests shows that they can act unilaterally if the circumstances warrant it. Although, expecting this lot to protect Irish workers/families from further savage “austerity” would be the ultimate act of delusion.

        • coldblow


          I’m certainly no expert but, focussing narrowly on your argument that we won’t be legally able to leave the euro without leaving the Euro, I don’t find that convincing. I don’t have a ‘handle’ on this, but I seem to recall various instances of EU rules being bent or broken in recent times, even before the crisis erupted. Is the so-called bailout legal? Well, whether it is or isn’t, it’s there anywat because the foreign banks need to be repaid. So I wouldn’t pay too much to the legalities – I’m sure a suitable form of words can be found for any eventuality.

          • coldblow

            Oops, posted that before reading Uchrisn’s post further down.

          • manofiona

            Unchrisn’s post is incorrect. Sweden negotiated the right to choose the moment of its accession to the Euro when it joined the EU. Ireland did not negotiate any derogation from its obligations under the Treaty of Maastricht. For Ireland to leave the Euro, it would have to negotiate an amendment to the Treaty of Maastricht (now the Treaty on the European Union) with all 26 other members of the EU. Even a hint of that happening would cause a run on the Irish banks and panic among the multinationals.

            Also Christine Lagarde’s remarks, even if they were accurately reported, can only be read figuratively and not literally. Any breach of the member states of the Treaties would be sanctioned by the European Court. There is, I believe, a case going through the German courts challenging the legality of what has been done in the “bail-outs”. Since such a challenge was expected, I would be surprised if some legal advice had not been sought by the governments or the Commission that the bail-out in its current state was OK as a matter of EU law.

    • doflynn

      One question manofiona – do you think that transferring the full bank/bondholder debt to the Irish people was right?

      • manofiona

        The full bank debt has not been transferred to the Irish people – at least not by the EU/ECB. Some of that debt has been unilaterally guaranteed by the Irish government, without consulting its EU partners (who would probably have opposed it). Under the agreement with the troika, the Irish government has agreed to capitalise the Irish banks (which it now effectively owns) in a sufficient amount so that they can (it is hoped) come off artificial life support and then, as going concerns, be able themselves to pay their senior debts as and when they become due. In the meantime, the ECB is providing the life support to Irish banks at practically zero interest.

        It is an open question whether this plan can work and it is the case that part at least of the money used to capitalise the banks will also serve to ensure that they do not default on their senior loans as those loans become due.

        However, it is not the case that the Irish government has been required, as part of the package agreed with the troika, to pay off all the senior lenders to the banks.

        • It is ECB’s policy to transfer nearly all private banking debts onto the Taxpayer, they lowered their Investment grade requirements BEFORE Greece went belly up, well knowing that, Bank of Piraeus and EFG issued bonds to themselves, hence they were NOT sold to Investors as was always the case.

          ECB willingly took on these fraudulent papers which are absolutely worthless. Then on March 25th, EU-Parliament, agreed to accept Gold as collateral.

          ECB is exposed to a shit load of PIGS bonds that are totally worthless, of course, you will know that they will not take the hit, but will redistribute it to the Central banks, ECB is in it for 6% only.

          Don’t talk to me about EU partners, there are no partners. The punitive rate they applied is a clear indicator for their understanding of partnership.

          That is all I have to say to your propaganda.

        • doflynn

          Thank you for that, but it didn’t answer the question – straight yes or no please, was the transference right? I agree that the Irish government should NEVER have issued that blanket bank guarantee, but then again they were operating on false information, so surely that guarantee could be rescinded, even at this remove. The primary question remains, however – was it right to interfere with the natural order of things in the murky world of the international money markets, and transfer these private bonds to a sovereign people, thus bailing out the bondholders?

          • manofiona

            The only “transference” of bank debt to the taxpayer was done under the unilateral Irish guarantee, with which I disagree. The ECB position is that senior lenders to sovereigns and banks in the Eurozone should be paid without any default which could be harmful to the Euro as a currency. I do not know whether the ECB’s fears are exaggerated or not. Since the salaries and pensions of everybody in Ireland (Republic of) are paid in Euros, I think it is preferable not to find out by experience whether the ECB is right or wrong on this.

      • paddythepig

        Did any of the Ballyhea crew or their many sympathisers around the country, ever work on a project that was funded by this same bank debt? And take home the money week after week from that project, and spend it in local businesses.

        Bank debt is virtually indistiguishable from sovereign debt in the way it filters through the economy.

        No wonder the debtors want their money back, and it’s not surprising that from their point of view, they don’t share the distinction you are making.

        • doflynn

          ‘Bank debt is virtually indistiguishable from sovereign debt in the way it filters through the economy.’ Pigshit Paddy, pure pigshit, utter gobblydegook. Debt is debt, a loan is a loan; there is a responsibility on both the borrower AND the lender before the money changes hands to ensure that it can be repaid. I borrow from you, I repay you; I can’t repay you – for whatever reason – and you take a hit. You DON’T transfer that debt, in full (including the original built-in profit) and with additional penal interest, to someone else, even if some of those to whom it’s transferred may have gained a little when that loan was further loaned out.
          If you’re happy to have that debt transferred to your account, you’re an idiot, pure and very simple.

          • paddythepig

            Looks like you can’t handle the truth Diarmuid. I never said I was happy to have any debt transferred to my account, don’t put words in my mouth please.

            Answer the question I posed truthfully. Did any of your protesters ever – either directly or indirectly – get a wage from the bank debt issued to Irish citizens during the boom? Yes or no.

            You might want to cut out the namecalling as well. I don’t care what you call me, it’s water off a ducks back to me. It’s an obstacle to intelligent discussion.

        • uchrisn

          Paddy, Many people did not work on a project funded by the bank debt. On top of this they had to live in a country where price of housing was a rip-off along with many other things beacause of the bank debt. The bank debt was bad, it benefited a few a the top greatly anybody in the middle has any advatage more than off-set by the increased cost of living. You are now telling them that this bank debt which caused them hardship is theirs to repay?

          • paddythepig

            I fully agree with you uchrisn. The debt incurred during the Celtic Tiger was very bad ; it was never a good thing to borrow so much money.

            And you are right that many did not work in projects that emanated from the debt. But many did. And as that money recycled through the economy, many more people’s coffers were tickled by the money coming into the country.

            But it was a significant amount of Irish people who borrowed the money (not all of course), and huge amounts of Irish people either directly or indirectly received a portion of this money through wages, or downstream purchases of goods and services.

            Unfortunately, the prudent are now stuck with the folly of those who made these decisions. But it’s no different really to being stuck with the folly of public debt, a decision made by someone you may not have voted for, or totally disagree with.

            The point I am making is that from the point of view of external creditors, there is very little difference between the two types of debt. One is imposed by a government which only receives support from a subset of the population, the other emanates directly from the population itself from the bottom up.

        • doflynn

          I repeat, Paddy, in answer to your repeated question, pigshit. So, if my neighbour borrows a massive wedge of cash, goes on a spending spree, part of which might have included buying some goods off me, it’s okay for the guy from whom he borrowed to land me and all his other neighbours – even those who derived no benefit whatever from his reckless spending – with the entire loan, including interest, and with a little added interest on top just for spice?
          Because I speak and write in colloquialism (I don’t use ‘if one…’) I’ll repeat what I said – if you’re prepared to accept that, you’re an idiot.

          • paddythepig

            Let’s take a very extreme example – newspapers.

            Lots of people bought newspapers during the boom with the tributaries of money that were originally borrowed from the banks. Newspapers made a lot of money advertising property financed by the banks. People have cut back now, seeing as a newspaper is not an essential. But everyone who worked in the newspaper benefited at the time by having a job they might not now have, at a salary they might not now have.

            That is an example of indirect or downstream benefit.

            Is there anyone in the Ballyhea Dad’s Army who might have benefited in this way?

            Or maybe even more directly?

          • doflynn

            And I’ll say again Paddy, pigshit. Newspapers definitely contributed to the boom/bust, made millions from it. You’re referring to myself of course, with the Examiner, but believe me, I’d have made a hell of a lot more if I’d stayed in construction.
            NONE of that matters, however; I ask you again – if my neighbour borrows a massive wedge of cash, goes on a spending spree, part of which might have included buying some goods off me, it’s okay for the guy from whom he borrowed to land me and all his other neighbours — even those who derived no benefit whatever from his reckless spending — with the entire loan, including interest, and with a little added interest on top just for spice?
            I’ll repeat again — if you’re prepared to accept that, you’re an idiot.

          • paddythepig

            You sad individual.

            Don’t you know that it was your Government who socialised the debts, not the lenders.

            Did you vote, or any of the Ballyhea crew, for Bertie Ahern?

            I notice you keep avoiding the original question, so I can only conclude that some of the Ballyhea & Fermoy crew did make their living from the proceeds of bank debt, but you won’t confront them. They’re the people you should air your grievance to.

            The lender just wants his money back, that’s his right. If he can use influence to get it, that’s hardly surprising is it.

        • doflynn

          ‘You sad individual.’ – finally, Paddy, we can agree on something. I am indeed a sad individual, sad that there are those like you out there propagating that line of pigshit. YOU are the one evading the question, the question I’ve asked twice already, won’t bother to ask again.
          ‘The lender just wants his money back, that’s his right. If he can use influence to get it, that’s hardly surprising is it.’ Well fair dues to you Paddy, you’re doing your bit on his behalf – Sarkozy couldn’t tell us off any better.
          Of course the creditors want their money back, but off us? ‘That’s his right’ you say; so, if I stop paying my car-loan the AIB can go to my local mechanic, to my local petrol-station, my insurance company, to all those who have benefited from me having a car, and demand payment of my loan, in full? The Paddythepig school of economics – you have to be a banker, right? Bad debt? To hell with the debtor, let’s go to where the money was spent and get them and anyone associated with them – even if they derived no benefit from it – to assume the loan. Ah yes Paddy, I think you’re on to something here, there’s a job waiting for you in Frankfurt. If you’re not already there – an Irishman who would assume the moniker of ‘Paddythepig’? I wonder.
          Yes, I know only too well that our own government was complicit in ‘socialising’ (lovely word, isn’t it, for such a deed?) the debt, and I was engaged in an e-mail campaign to those same politicians for several months before finally taking to the streets, all confidence in our politicians – of all parties – lost.
          Give it a rest Paddy, I’m not for digesting your pigshit. Dad’s Army we may be, but we have principles, we have balls, we have independence in our thinking.

          • paddythepig

            Where was the Ballyhea division of Dad’s Army during the boom? Well, their ringleader was working for one of the chief exponents of property porn, and happily played along. There was not a word out of him when the seeds of the crisis were being sown, but now that the shit has hit the fan, he’s all mouth. The Bally Boys were all creaming off their own little bit of the cake, like half the country, and voting for the slieveen Ahern, and now what are they doing? They’re taking to the streets blaming everyone for their problems but who they should be blaming. Themselves.

            It’s a funny old country.

          • @DOFLynn

            Congratulations on reaching Dublin and Kildare St and for handing in your petition. It was a pleasure to march with you to the Dail. You represent the Irish version of the Greek ‘Indignant Citizens’.

            I’ve read the exchange there between you and Paddythepig.

            I’m sorry that Paddythepig clearly has not made the distinction made by ‘Indignant Citizens’ like yourself and myself between voting for a government and its policies; and the government betraying the electorate and it’s mandate from voters to prudent governance, correct management of the public debt, stamping out corruption, regulating the banks.

            In a rather blunt and blindfolded way if you voted for Bertie, you voted for the mess above.

            I didn’t, voters didn’t, voters didn’t realise the mess that was being made of the economy and the banks. Voters appealed for a referendum on how to deal with the banks?

            They were/are denied this. Government disenfranchised the electorate and so Government got booted out last election. This will happen to the current crew follow a similar path to the last as we move into the inevitable default phase.

            Paddythepig in being unable to make the distinction between voters voting for Government and voters being betrayed by Government through corruption and ‘socialisation of banking debt’ is plain stupid.

            I find his stupidity refreshing. I like reading his posts. It perfectly illustrates Government thinking that is not amenable to any higher form of logic. With logic out of the way, you have to investigate other interests that may be shenanigans and darker interests that motivate.

            If these cunning interests do not inform judgment, then you are left with the Forrest Gump scenario, ‘Stupid Is As Stupid Does’ to explain the views of paddythepig and government policy over the past number of decades:)

          • paddythepig

            DOFlynn and cbweb are well met.

            Captain Manwaring & Jonesey come to mind.

        • doflynn

          ‘their ringleader was working for one of the chief exponents of property porn, and happily played along. There was not a word out of him when the seeds of the crisis were being sown’ – Jaysus PtPig, I’m a sports journo! ‘happily played along… not a word out of him…’ – you think I had any notion of what was going down? As with every argument you’ve made so far, this is nonsense, more nonsense.
          Like most people in this country I was going about my business, trusting that those who held the reins of government knew what they were doing; it wasn’t til the ‘shit hit the fan’ that I started to read into the crisis and now I know, the level of incompetence at every level of government was – is – frightening.
          None of that, however, changes my original point, nor have you even made a pretense of answering my questions; using your ‘logic’, if I can’t pay my car-loan to the AIB, they are then entitled to go to my mechanic, my petrol-station, my insurer, all of those who have gained from the fact that I had this car, and claim the loan, in full and with additional interest, from them. Is that not EXACTLY the ‘logic’ you are applying to the bondholder situation? Their bonds are with the banks, but because of your ‘trickle-down’ argument, all of us – even those of us who DIDN’T take out a bank-loan during those mad years (I didn’t) – should now be made to pay, and should do so without complaint.
          As I said, a job waiting for you in Frankfurt, if you’re not there already. You’d have made a great ould Lieutenant for Trevelyan, bless you.

          • paddythepig

            As I thought. Just like the hurler who does nothing on the pitch, but once the team loses, he’s all talk in the dressing room afterwards. I know the sort.

            You should go back and read my orignal post, you might learn something. It is demonstrably true that bank debt and sovereign debt filter through the economy in virtually identical ways. If you don’t see this, you’re not seeing the wood from the trees.

            It’s interesting that all your bile is directed towards the debts incurred by the banks. There’s not a word out of you about the day-to-day debts being incurred by the country. Why aren’t you as vocal about dole fraud for example ; you have to pay for other people who are cheating the system. But no, there’s not a word out of you there. Why aren’t you as vocal about the over-staffed, over-paid public service; what about the debt being incurred to sustain them? Do any of the Ballyhea mafia fall under that category?

            Instead, you choose not to tackle these questions, and call anyone who does an idiot.

            The joke is on you.

        • doflynn

          ‘the hurler who does nothing on the pitch, but once the team loses, he’s all talk in the dressing room afterwards’ – I wasn’t playing in that game; while the banksters and hucksters were doing what they did with our economy, I was on a different pitch. We did quite well there too, our team, and the Examiner sport section is widely admired. Now though, I AM in this game, only a novice hurler but learning quickly.

          ‘It is demonstrably true that bank debt and sovereign debt filter through the economy in virtually identical ways’ – so what? MY question to you, the question YOU’VE ignored right through this conversation, still stands – in your economic world, if I can no longer pay my car-loan to AIB, is it okay for them to go after my mechanic, my local petrol-station, my insurer, anyone who may have benefited from my use of that car, who may have gained from the subsequent ‘filtering’ through the local economy, and land my full loan, with penalty interest, on them? That is YOUR logic; if a debtor can’t pay, then go after those who may have benefited from the ‘trickle-down’ effect, and include anyone they might know, even if they gained no benefit whatsoever.

          ‘It’s interesting that all your bile is directed towards the debts incurred by the banks. There’s not a word out of you about the day-to-day debts being incurred by the country’ – you obviously haven’t read into our campaign, so, a brief synopsis: It is a single-issue campaign, aimed solely at either a) undoing the deal that was done last November or b) at the very least giving us – the people landed with this private debt – a referendum on the terms of that deal. That’s it.

          Yes there are multiple questions on multiple levels to be answered on how we arrived at this stage, there are multiple problems with fraud across the board, and all of those questions and problems will have to be addressed. But those ARE our problems, we – as a people – got ourselves into that particular mess, we – as a people – must get ourselves out of it, however painful that will prove to be.

          The bank/bondholder debt, however, was a private debt, private loans taken out by reckless individuals at the top of our six major banks, private loans given to those banks by bigger but equally reckless banks/financial houses in Germany, France, Britain, the USA, etc., lending institutions whose judgement was impaired by the sniff of easy money.

          Bondholders are gamblers; immutable law of gambling, you place a losing bet, you pay the price. Just as we’re already paying a price, as a nation, for our own mistakes, THEY SHOULD PAY FOR THEIRS.

          • paddythepig

            You have my logic wrong. From the point of view of an external debtor, there is shag all difference between lending to the Irish Government, and lending to an Irish bank. Both monies end up in the Irish economy. In fact, private debt emanates from across a wide section of the population – those who take out mortgages, start up businesses etc ; it is not the sole preserve of those at the top of banks, that is a misrepresentation. Public debt is also initiated by forces generally beyond your control, and even worse, comes from the top down (unlike the more bottom-up model of private debt) ; if Enda Kenny decided to borrow 20 billion to pay day-to-day bills, there is very little any individual can do to stop it.

            Public debt, private debt, it’s all the one to an external investor. If they can couple the two to get their money back, they will.

            Indeed, bondholders are gamblers, but the biggest gamblers of all are the Irish people. They’re the ones who borrowed hand over fist in the boom ; they’re the ones who won’t cut public spending (look at the behaviour of our unions). Bottom line is that we are more dependent on them, than they are on us. In the Russian Roulette that has played out over the past 2 years, it’s pretty clear who has the upper hand.

            BTW … don’t make excuses .. you were not on a different pitch. You were on the same pitch as everyone else, and you were asleep.

            Bottom line, if the Irish people and Irish Government hadn’t been asleep at the wheel, and so dependent on debt, we would have had a much stronger position regarding bond haircuts when the crisis hit.

            The people you should really be protesting against are living in your community. Start with anyone who voted for Ahern in 2002 and 2007, and ask ‘WTF were you doing’. And while you’re at it, have a chat with the Fermoy branch, and ask ‘WTF were they doing’. A chap living in Fermoy told me all the locals were buying property in Rathcormac in the boom and renting it to the Polish ; and what were the Polish doing? They were working on building more houses. Take a visit to Rathcormac now, and see the results of the Fermoy peoples stupidity. Round up the culprits, and call them idiots if you have the balls.

        • doflynn

          ‘From the point of view of an external debtor, there is shag all difference between lending to the Irish Government, and lending to an Irish bank.’

          After that Paddy, there isn’t anything I can say. My father – a wise man – always said, a) you can’t teach intelligence, b) you can’t educate a fool. You might need to change your moniker, the pig is actually a very intelligent animal.

          Won’t be bothering to reply to your gibberish again so the field is yours – I’m sure you’ll want the last word, so make it a good one!

          • paddythepig

            You were clueless during the boom, and you’re still clueless. Your mob in Ballyhea are a joke, a shower of complete losers. You should walk down Ballyhea main street with a placard saying ‘I haven’t a clue’ … or ‘I trusted Bertie’.

            Stay with talking about stickfighting, because you are a class A idiot when it comes to finance.

            What a moron you are.

    • uchrisn

      I think I replied with a quote from Chritine Lagarde before that they broke all of the rules to ‘save’ the Euro. The rules can be changed, the Irish constitution can be changed etc etc.
      Also there is nothing in the Masstrict treaty about taking a break from the Euro. So Ireland could be like Sweden, they are supposed to join at some stage in the future. Ireland could take a break to rejoin ‘at some stage in the future’. This ‘break’ is suggested by a professor of economics at Harvard.

  22. “When that happened, people who had savings in the weaker currency, the punt — which had devalued five times in its existence — suddenly got these savings revalued into a much harder currency, the euro. So savers in Ireland got a huge subsidy by joining the euro, while debtors got hammered.
    David are sure this bit is correct?, I seem to remember my new exchanged Euros had feck all buying power!

    • I vaguely recollect it was 60pence to the euro, but I agree one euro didn’t get you a punt’s worth:) We would have to devalue to become more competitive and deal with our debt levels. There are no easy options, only options that are much better than others.

      • John T

        78pence to 1 euro

        • coldblow

          Bloody hell, cbweb, I know you said you don’t have much interest in history, but that’s only a few years ago! I keep going on about memory here. In order to make reasoned judgements, people need to learn to retain a few key facts in their heads (and here’s the thing) simultaneously.

          I used to have it to 3 decimal places. Lots of prices went up overnight because people had trouble doing the mental arithmetic. Taxi fares notably – a fare for £11 mutated into €16 (or so I’m told as I rearely use them). I am sure this played its part in the subsequent developments where people appeared to forget how to look for value for money.

          I remember a Yorkshire friend telling me once that they opened a tearoom at the Bronte house/ museum at Haworth (‘Aworth) but it failed as the locals refused to cough up 15p or whatever for a cup of tea. “That’s extortionate. Folk won’t pay that round ‘ere.” W. Yorkshire was always one of the cheapest areas in England.

  23. Can you make a prediction,
    Will there be an Irish Default?
    When will this be most likely to happen?

    • In my opinion, Ireland is an occupied territory with a captured government that was manhandled, a country where apathy dominates the public and atlantic boot licking the political sphere. On a default probability scale from 0-100 – Before 2013 of course – I position Ireland around 10.

      Greece is the the only country where a revolution against the occupiers is a possibility. At the moment I would think a 60% chance of default before 2013 is reasonable, assuming the pressure of the public sphere increases, it could happen.

      However, things are happening fast, on a daily basis now, and this World War of currencies is far from over.

      People are not waking up to the facts, they are still happily in denial.

    • uchrisn

      The CEO of PIMCO, the major buyer of EU soverign debt has said with certainty there will be at least 1 EU soverign default.

  24. DC

    We must try not to be so insular in our views with regards to the economic future(s)that await us.
    In truth the Greek, Irish and Portugeese debt problems are mere minnows on the EU fiscal stage.
    Italy, Spain, Belgium, and even France are deeply indebted and have serious fiscal/economic structural weaknesses.

    The real war going on here is between the markets and the politicos. If the markets win, then the future of the Euro is doomed. If the politicians win then national sovereignty will be ceeded to a finance/banking backed political stage show.

    The same war is being waged in the US with the ordinary person cuaght in the middle.

    There can be no reform of the system unless the system is seen by all to be rigged and the full force of the justice system is seen to act in accordance with the will of the people.

    In my view talk of default wheter by default or by choice is irrelavant, the real key to securing a fair future for the people is handcuffs for the corrupt and legislation that is enforced – government of the people, by the people, for the people.

    • The problem is the timing factor, and they know and use this very well!

      See Noonans/DOF U-turn on Anglo senior haircuts, none were applied. Every day that passes, the gamblers are being paid more from the taxpayers purse, which is empty of course, but forced into more debts to pay, and then the assets are confiscated.

      In war, the timing of your movements is the determining factor of win or loose, and the high finance is so much more advanced in these strategies than any of the political numb nuts in power.

    • Emperorsgotnoclothes

      I doubt that you’ll get much disagreement here with your sentiments regarding the implementation and administration of justice in accordance with the will of the people. I do think though that it’s pretty clear that is very unlikely to happen. Look at the way the investigation into Anglo, for example, has “progressed” over the past few years. It took the Gardai almost six months just to enter the premises in the first place. The recent condemnation from Justice Kelly regarding the pace at which the investigation is proceeding wouldn’t inspire confidence that justice will be done. There are far too many skeletons in that particular closet and the vested interests will never allow them to see the light of day, beyond some superficial theatrics I imagine. Sad to say, but it’s very unlikely that we’ll ever see justice in relation to the heist of taxpayers’ money that has occurred here. Ask yourself how many convictions have there been for white-collar crime in this country, particularly at the top of the ladder, and you’ll get an idea of how likely it is that we’ll see real justice. It’s a cynical view I know but realistic given the society we live in.

    • uchrisn

      The markets have fewer leaders with more in common than the people. The people can’t seem to co-ordinate themselves stand up to multinationals and global banks/investment funds in particular.
      Look just at Europe, the people in France want something different than Ireland.
      It goes back to the old divide and conquer, the people/countries are being pushed against each other.
      Makes a good argunment for a global government to regulate the fincial industry/multinationals. Unfortuatly both the US and China are playing the rougue at the G20.


    Nepotism @ it’s best !

  26. Colin

    David, I found evidence of prices falling over the weekend. Had a pint of Guinness in west Clare on Sunday for €3.55. This is the lowest price I’ve paid for a pint in well over a decade. This is good news.

    By the way, I’ll never drink Bulmers. Don’t like cider at all, and anyway, it was the drink of choice of the sheeple during the celtic tiger era.

    For the record, that pint I had was the nicest in a very long time. I would have liked to have had more than one, but I wasn’t able to.

    • coldblow

      Bulmers is, I think, bland, too gassy and too sweet. A typical mass produced product. I saw a man on the telly passing off Babycham served out of a keg under a fancy name as a kind of ‘real ale’ quality product and he fooled everyone. Still and all, I don’t think Bulmers would ever fool me in a blind tasting (I hope).

  27. Deco

    Just wondering would it not be cheaper for Merkel to instruct the ECB to issue a law suit against all the parties involved in fabricating Greek macroeconomic statistics to allow Greece into the EU.

    I am surprised that none of the taxpayers of DE/NL/FI/FR/LUX/AT have not decided upon this route yet.

    We badly need a class action suit against the directors of Anglo Banglo in this country, for fudging the final accounts of anglo as a private sector entity that famous September week when Permo loaned anglo 8 billion plus.

  28. On David’s article…

    The crisis comes suddenly, it passes, there are winners and losers, and we start again.

    I would dispute your last sentence because this multilevel crisis is of a different kind and goes much deeper.

    Perhaps, the choice of words, winners and losers, and the conclusion, we start again, is the reflection of your deep rooted Keynesian conviction?

    The geo political implications of this currency war are enormous and hardly predictable. One aspect is what I call the ‘Dragon Osmosis’ and try to bring to paper at the moment.

    The failure of the political sphere to stop this Bankster occupation will prove to be fatal for democracy. In fact, democracy is not what the USA can allow to be established from the Maghreb to the southern end of Saudi Arabia.

    They remain by far the most powerful military force on the planet, and the future will not be decided by politics, but brute force.

    • My favorite country is the US and it’s personally treated me very well on the many short and extended stays I’ve had the great opportunity to spend there.

      As stated earlier by another poster, the challenges in this global bankocracy crisis are shared also by US citizens.

      I believe these challenges to democracy will be overcome not by ignorant brute force, but by smart people both within and outside the USA.

      The old order of deregulation and FIRE must give way to a new, fairer way of doing business that will have the support of emerging democracies and super powers.

      Otherwise, we won’t be able to create the conditions required for shiny new sports cars that run on water.

      Meanwhile we’re saddled with the leadership of vassals such as Enda hell bent on taking Ireland’s economy to Davy Jones’ locker:)

  29. I see a lot of very learned comments. However We read this Blog became we believe that David is right and that the Judgement day (Default) is coming.
    I have got out, earning a good salary in the sun and I will be back after the default. I just couldn’t sit around and get into more debt while the politicians dithered.
    For all of you do something about it or get out too.
    For David it is a nice little earner.
    Good Luck to Him.

    • Josey

      Hi Patrick, nice to here someone is doing well. Out of curiosity roughly where have you moved to and is there much work there?

      Many thanks,

      Josey :-)

    • Colin

      Hi Patrick,

      Glad to hear about your successful move.

      “For all of you do something about it or get out too”. Any chance you could point us in the right direction?

  30. paddyjones

    David has changed his stance saying now that we must default on bank debt while paying the sovereign.
    I say its too late for that the banks have been financed by the ECB and the Irish government. If he means not paying senior bondholders the remaining 35 billion that is up to the ECB/EU/IMF not us. In any case the bank debt is now the same as sovereign thefre is no difference.
    With our sovereign debt likely to be 220 billion by 2013 the 35 billion of senior bonds is neither here nor there.
    Austerity is our future, if we continue on the present course austerity is a reality. If we default then we would have to balance the budget immediately => thus more austerity.
    In my opinion we will have to balance the budget by 2014 and stop borrowing, or the other alternative to to default and thus we will be forced to stop borrowing, no one will lend to us in that scenario.
    David is living in a fantasy world , austerity is here to stay.

    • StephenKenny

      In my view this is not the whole story, when it comes to a default. After a default, borrowing is possible, if the lender believes that they will get their money back. This would require a plan of action by the government, prior to default, that would be sold to investors after the default was announced.

      It comes back to what we’ve been saying for quite a while: What is going to happen ‘afterwards’. Maybe, like Patrick, everyone just leaves, and Ireland becomes a Uruguay, rather than an Argentina.

      • paddyjones

        hang on a second , I lend you money which you dont pay back and then I lend you more ? No thats not how it works.
        Has everyone on this site not noticed that the government the IMF/EU and the ECB are talking austerity. Borrowing will be a thing of the past in a few years for Ireland, Morgan Kelly reckons we need to balance the budget within one year, I agree with him . I have cut my spending by 40% over the last year , it can be done.

      • coldblow

        Or as Desmond Fennell saw it in the late 80s: Luxembourg. Small but comfortable population, drip feed from EU, pristine countryside for a better class of foreign tourist.

    • Leaving fantasy to the thieves and their political fixers who got us into the mess,who are making it worse, who gave us Nama and the IMF and brought us on course for default, the only question is not when we default, but how do we default.

      Moving on from the approach taken by the Icelandic althing method above, the following is in line with this approach.

      The banks were used against the citizens of Ireland, so here’s the method to use them as part of our defence and recovery a la Morgan Kelly whose approach I advocated earlier:

      “First the banks. While the ECB does not want to rescue the Irish banks, it cannot let them collapse either and start a wave of panic that sweeps across Europe. So, every time one of you expresses your approval of the Irish banks by moving your savings to a foreign-owned bank, the Irish bank goes and replaces your money with emergency borrowing from the ECB or the Irish Central Bank. Their current borrowings are €160 billion.

      The original bailout plan was that the loan portfolios of Irish banks would be sold off to repay these borrowings. However, foreign banks know that many of these loans, mortgages especially, will eventually default, and were not interested. As a result, the ECB finds itself with the Irish banks wedged uncomfortably far up its fundament, and no way of dislodging them.

      This allows Ireland to walk away from the banking system by returning the Nama assets to the banks, and withdrawing its promissory notes in the banks. The ECB can then learn the basic economic truth that if you lend €160 billion to insolvent banks backed by an insolvent state, you are no longer a creditor: you are the owner. At some stage the ECB can take out an eraser and, where “Emergency Loan” is written in the accounts of Irish banks, write “Capital” instead. When it chooses to do so is its problem, not ours.

      At a stroke, the Irish Government can halve its debt to a survivable €110 billion. The ECB can do nothing to the Irish banks in retaliation without triggering a catastrophic panic in Spain and across the rest of Europe. The only way Europe can respond is by cutting off funding to the Irish Government.

      So the second strand of national survival is to bring the Government budget immediately into balance. The reason for governments to run deficits in recessions is to smooth out temporary dips in economic activity. However, our current slump is not temporary: Ireland bet everything that house prices would rise forever, and lost. To borrow so that senior civil servants like me can continue to enjoy salaries twice as much as our European counterparts makes no sense, macroeconomic or otherwise.”

      Only the above method can save us from the “thieves and their political fixers” who got us into this mess.


  31. Default is like a Divorce and Austerity is when one partner denies the other a normal conjugal right to the partnersip.There is a point when the abused partner who is denied their benefits finds another opportunity and a new relationship begins .

    Default and austerity only breed another breeding ground for the inflicted to move to have fun .So it is inevitable .Only for now there is a choice .Exercising that choice properly is when the original partners may part amicably or otherwise.

    Thus a planned Default by consensus and agreement and signed is the best result. After that welcome to the Commonwealth .

  32. Colin

    This is not only Off Topic, but its very Tangential also, but I believe this TV programme shown recently is fascinating.

    “At the heart of the film is one of the most famous scientists in the world – Bill Hamilton. He argued that human behaviour is really guided by codes buried deep within us. It was later popularised by Richard Dawkins as ‘the selfish gene’. It said that individual human beings are really just machines whose only job is to make sure the codes are passed on for eternity.”


  33. Alan42

    I have a friend who is from Argentina and who was there when it defaulted . He remembers it as a bad time . When I asked him about it he said that ‘ You have to underatand that people there get paid by the month . For one week after you get paid the shops are full and everybody does there shopping in this one week . The other three weeks the shops are empty ‘

    They defaulted just before everybody was paid which led to panic and people storming banks and what not . People were not just storming the banks because of default , they had no no food !

  34. Gilmore is nothing but a traitor himself

    A political opportunist, not just by his political history, but what a joke when you remember him calling Biffo a traitor.


    The entire established political class in Ireland is infested by Liars.

    No surprise really, this is what politics has turned into once captured by Lobbies and their power, they groom two faced people like Gilmore and the rest of this despicable bunch of traitors who sell all of us out to Banksters in a heart beat.

    • Deco


      Gilmore is a fake. As big a fake as the Drumcondra Ditherer.

      Eamon the Socialist. Bertie the Socialist. etc…

      Con-artists looking to buy votes off people with the money that the people provided by means of PAYE.

  35. BEWARE




  36. Deco

    A humourous view on the recession from the US. You can print it off and stick it to the outside of the Dundrum Centre or Liffey Valley….it will probably be quickly taken down.


    • adamabyss

      Hahaha, funny but true – and pathetic.

    • Thanks Deco!
      I really loved this!
      Reminded me of the article I read lately where one commentator noted that one in three Americans weighed as much as the other two put together!

      As for pointless crap…..anyone remember “Clackers”? Yep two heavy plastic balls at either end of about 16 inches of cord. Centre ways there was a plastic tab. Swift up and down movements of the tab caused the over and under collision of the balls. – Clack! Clack! Clack! Clack! – Literally miliseconds of fun and satisfaction until they ended their natural lives wrapped around some ESB cables on your street. People fell over one another for these.

      They were peddled drug like by the oul’ones around Moore St. “Clackers love….do you want some clackers?”
      These same oul’ones would tempt us every October with an almost lecherous “Bangers love?”

      Ah pointless crap …the stuff of happy memories!

      Sorry Georg – You may not understand a word of the above!
      But then again when it comes to my posts maybe lots of you think the same thing? …That’s it I’m off back to me box!

      • Deco

        The whole world is gone “clackers”….

      • adamabyss

        Milliseconds, haha, that’s about right. On a more serious note though, when you consider the amount of resources and energy that go into making this stuff, it’s a shocking waste.

        What’s more, I used to work in storage and noted that most American families had a rented storage unit where they kept all the useless stuff they could not fit in their already stuffed houses. 95% of it never ever got used.

        Of course it’s was all a con to divert the energies and finances of the riff raff into pointless activity. If they can’t see through the con then maybe they are in a place they deserve to be.

        I live a minimalist lifestyle – sometimes, admittedly to an extreme. I used to pride myself on the fact that I could fit everything into one suitcase and one rucksack. It came in handy when in some hairy situations in various countries. Once or twice I was packed and ready to go.

        Who needs all this crap? You can get all your books free from the library too.

        • I tried getting all that’s precious to me in a suitcase once – but the wife and kids objected on the second push!

          Anyway have you seen the thickness of an Argos Catalogue?
          Well thankfully it represents thousands of the things I neither want nor need.
          However a few years back I attended the funeral of a young man in his late twenties who died tragically in an accident.
          In a moment of poignant reflection his widow sighed “Ah the Argos Catalogue….that was —–n’s bible!”

          Eh…Not the epitaph I’d yearn for?

          • adamabyss

            Bloody hell.

          • doflynn

            Headed in the same direction myself Paul, downsize, downsize, downsize. Designed and built this house here as my pension, friends can’t believe I’d sell it – in a heartbeat. Property, how much do you need?

      • coldblow

        We had them in England in 1970.

  37. Here is another suggestion for the US boot licking idiots in Government to reduce expenditure by reducing the amount of people with a right to social wellfare.

    Florida department of children and families pays currently 100,000 families wellfare.

    Gouverneur Scott signed a new law, which will be enforced from July 1st.

    All well fare recipients who take back their application for state assistance, will NOT be required to agree to blood urine and hair samples.

    You require social well fare? You will be tested for drugs, mandatory. Had a joint? You will be cut of well fare for 6 months. Had a joint again? You will be exempt for 3 years.

    How about it Ireland? Sound good doesn’t it?

    • Deco

      The problem is that if they go off drugs, it will take them a very long time spent eating healthy foods and taking regular exercise, before they will be detoxed to the point that they will be able to claim welfare.

      In Ireland, we give social welfare recipients TV licences, so that they can watch Pravda and the rest of them, in case anything might stop them from becoming mind numbed and daft. The money given to Pravda is essential to making sure that dolers get appropriate television. Talent contests like X-Factor, Fair City, and spectator sports coverage.

      The welfare recipient can feel as if there is something in their life, with a regular TV schedule, and such hard thinking tasks as who to vote off celebrity island.

    • coldblow

      How often have we seen tv debates on drugs, say on the Late Late, where the audience nod their heads solemly in agreement. Yes, it is a Serious Problem. How many of them actually take drugs themselves in private but won’t admit it in public? Hypocrisy has become the insult du jour in recent years. Well, there’s one example.

      I don’t agree with the Florida approach though however, for various reasons. For starters, what number of the testers themselves indulge? But it’s just an excuse of course.

      I notice in Phoenix’s Bog Cuttings that a man got a €300 fine for having no seat belt (he was eating chips from his lap) while a disorderly drunk got only half that. A lot of these rules and regulations are just nannying nonsense really.

  38. irishminx

    David the dogs on every boreen in Ireland know what you say to be true. But the Gobeens in Leinster House still have cap in hand to Wall Street, IMF, ECB & EU!

    They are still sitting in the posh room, pretending they know best and have notions of grandeur above their ego & brain cell status!

    I wonder what the catalyst will be when it finally comes to wake them up!

    I hope you are enjoying the sun too?

    • Emperorsgotnoclothes

      Don’t count on them actually waking up at all Irishminx. The only thing that might spur them to act in our interests is if their interests are sufficiently threatened to warrant acting. Protecting the interests of ordinary citizens is an incidental consideration, if at all.

      • irishminx

        That’s the sadest part Emperor, I realise folk may not be in a place to Wake Up! But trust me, there will be a catylist! There always is!

    • irishminx

      CBweb I am sorry I don’t have the time to find your post, (I am making dinner!) You are wise and you see reality.

      It is what I like in you.

      Keep the faith boy, as we’d say in Cork!


      You also David.

    • irishminx

      Jeez guys can I say as an outsider, in that I haven’t been on David’s blog for a while, your anger guys is rising!


      Please may I make a request, use your anger to do good. Do not hurt those who are innocent. Use to your anger to move you towards the common good. That is why you have anger, it is a gift.

      Go wisely ……………….

  39. SeanL

    David writes a pretty picture again of his exotic travels and makes us dim witted paddies yearn for the entrepreneurial drive of the ‘real people’ of Argentinian. However David McWilliams is to economics as Dan Brown is to history. Take a hint of truth and wrap it up in intrigue and throw in some beautiful scenery and hey presto you have a great read. Even better, you have a great read that people buy by the bucket load!
    But reality is absent from Davids musings. Default and devaluation is not a better option for three reasons.
    1. Yes, devaluation does make your exports more competitive on world markets but it also makes your imports more expensive. Ireland’s industry is almost wholly dependent on imported energy (i.e. oil) so any extra profits gained from increased sales may be eaten up by increased energy costs. But Ireland’s exports are booming so why the need to further inflate them by devaluing the currency?
    2. I’m not sure whether David was tongue in cheek when he used the Hotel example to typify Argentina’s ‘get up and go’. I think the last thing Ireland needs now is inward investment to build more hotels! But his notion of cash flooding into our economy on devaluation is wishful thinking. Yes, more tourists may come bringing their cash but is regaining a few thousand hotel and restaurant jobs where we want the economy to be in 3 years time? Devaluation will not bring a flood of investors wanting to set up businesses here in Ireland as David alludes but rather make Allsop property auctions a weekly occurrence with visitors picking up ‘cheap’ Irish properties that the locals can no longer afford.
    3. Finally, David peddles the most frequent misconception about our bank debt, that it is already a mountain! This is the fallacy of inferring a possible future state as being our current state. McWilliams and his ilk already talk as if we are already paying the interest on €100 billion of bank debt and we must offload this debt immediately if we are to survive as a country. The hard fact for most of the celebrity economists to accept is that they don’t have the gift of seeing the future, they can at best only shed some insight on what happened in the past. While the amount of interest is still small on what bank debt we have to repay we should be doing everything to get our economy firing on all cylinders again generating high value jobs and good incomes,not devaluing ourselves.

    • uchrisn

      1. Ireland portugal and Greece need devaluation to help them with their massive public debts. This would also help their citizens repay their private debts. Short term devaluation has historically been a tried and tested method to help struggling countires out of a crisis and create employmeny. Think the U.K leaving the European Exchange Rate Mechanism in 92 to devalue which was frowned on in Europe but really helped their unemployment situation. If Irelands exports are booming why are there 15% unemployed and counting? Could it be because you are measuring exports against those of 2010 or against shruken imports? Ireland does not have amassive manufacturing industry so the point on Oil is not that important.

      2. Investment does not have to be in hotels. We can attract more start up businesses in anything such as renewable energy or cloud computing due to lower fixed costs.
      3. It is true that Italy and Japan are surviving even though they have to pay the interest on large debts. They havent been growing hardly at all though for the last decade, have they? Ireland debt/GDP has shot from 40% to 97% and rising in the space of a few years.
      I suggest you google ‘Britain, exchange rate mechanism ’92 to see the benefits of devaluation.

      • SeanL

        I disagree on your contention that oil is not important. A recent Ernst & Young report forecasts that the high price of oil (@ $120/barrel)will drive down GDP in 2011 by 3%, the equivalent of taking €4 billion out of the economy. The interest on our bank debt loans this year will amount to less than €400 million. So I can’t agree that further increasing the cost of energy imports (mainly oil & gas) by 20-30% through devaluation can have anything but a negative effect on the economy, i.e. GDP.

        I disagree also on your examples of businesses being attracted due to ‘lower fixed costs’. If the web server farms are to be located in Ireland for the ‘cloud’ they consume massive amounts of electricity (for cooling etc.) so if energy costs have gone up, their operating costs go up. If it is only the ‘brain power’ for cloud development we want to attract we are doing it already without devaluation(ref: recent IDA announcement). Ireland recently lost a significant investment in off shore renewable energy by Vattenfall to Scotland. This was not because Scotland offered ‘lower fixed costs’ but because the bureaucracy was less and Government was more facilitating re: exploration licensing and power interconnections.

        • uchrisn

          Sean we will have to agree to disagree. I would dispute the figure of 400million interest payments for the banks more like at least 2 billion and rising. For example 20% of our 32% deficit last year, was for the banks. All economists say optimal debt for a country is between 30-60% of GDP. Which is why the EU guideline is below 60%. Ours is 97% and rising. Why didn’t you answer my question about the growth of Italy and Japan countries with debts of over 100%? Also we are not talking just interest the loans are real money that should be repaid.
          Of coure Oil is important to everyone. What I said was is that devaluation of a currecny in Ireland making oil a higher percentage of costs is not that important for irelands exports. Ireland is not a manufacturing country. Ernst and Young are talking about an increase in the price of oil in dollars and total GDP. That is a different point.
          The main reason Businesses are attracted to Ireland is the human resources. However lower fixed costs is of course another factor. Did you know that China are offering free premises to top 500 listed companies outside Shangai? Its working well.
          Overall most top acadmics and professionals say that Ireland Greece and Portugal are suffering more than nessecary because they cannot depreciate their currencies. It is generally accepted as a fact.

          • uchrisn

            So I gave you the example of the U.K. and the ERM, U.K mired in recession and unemplyment in early 90s. They were trapped in the ERM which gave a 10% band for devaluation. They dropped out of the ERM. Exports boomed due to the weaker currency and unemployment dropped in the following years. Any example of a country with massive unemployment and debts getting out of problems with no devaluation and austerity?

          • SeanL

            I believe my interest figure is correct as it is sourced from the NTMA. This is how it is estimated:
            As of the end of 2010 our national debt was 93 billion on which we paid 3.5 billion in interest (source: NTMA). Since the bank guarantee scheme was announced in Sept 2008 we added about 45 billion to the the national debt (end 2010). Of this 45 billion over 80% was due to budget deficits of 2009/2010 with the balance only being injected into the banks. So the NTMA is paying interest on a ‘bank’ related debt of less than 10 billion, hence my estimate of 400 million approx. This year the NTMA will pay approx. 5 billion in interest.
            Yet, your belief that we are paying ‘at least’ 2 billion in interest due to bank debt is widely held but wholly inaccurate. The problem being is that we are constantly being told about the tens of billions been ‘given’ to the banks. The reality is you don’t have to pay interest on a ‘promise’ but only on money that you have actually borrowed.

            Being involved in the manufacturing sector I reject your contention that Ireland is not a manufacturing country. We may not manufacture machinery like cars, but we are one of Europe’s largest manufacturers of pharmaceuticals, infant formula, micro processors, and medical devices. And what of beef and other food products? Would you say the the United states was a manufacturing country? In the US approx. 8% (12 million) of workforce is engaged in manufacturing, in Ireland 15% (270,000) of the workforce are in manufacturing!

            You are right the loans are real money and they must be repaid but what loans are you referring to? Do we default on just the 100 billion of potential bank debt or the 100 billion of current sovereign debt?

          • uchrisn

            Sean I think I see the issue in calculation. In 2007 we had a gross public debt of 47b, according to the NTMA, now its 107b so up 60b in 3.5 years. How much of this 60b is attributed to the banks? I say 40b, you say less than 10b.
            Heres the difference you said that banking debt is outside of irelands budjet deficits. The EU ruled that we have to include those debts in our budget deficit. Budjet deficit for last year was about 30b. about 20b of that due to the banks. The interst payments on last years public funded bank debts alone is 1 billion ata 5% rate.

    • @SeanL

      Your response is liken to that of the RC Church to Divorce .

    • Sean I must reall reply to this assertion ” the hard fact is that celebrity economists don’t have gift of seeing the future”.

      First, I assume the celebrity moniker is meant as a put down to those of us who understand economist enough that we can make it popular. Popularising a subject comes from having deep knowledge. The people who really do not understand seek to make things difficult in every area.

      Second, if you can give me the public evidence of an Irish economist who has a better forecasting record on the big events since way back in 2000 than me, I will accept that you are right. There is no point in telling people what they already know. Some economists warned of bank lending and the housing bubble but did so only in 2007 when the bubble was actually over. Similarly, the time to talk about and forecast default was in 2009 when we were in the market not 2011 when we are ejected from the market already, I await your evidence.

      As for knowledge of emerging markets- kind of important when talking devalutions/defaults etc – give me the name of one public Irish economist who has actually worked professionally in the area other than me?

      If you can answer any of these, I will buy you dinner. If not, maybe your apprecieation of “hard fact” is more fungiable than you think.

      All the best,


      • ‘fungiable’ will be my favorite word of the day! lol

      • Malcolm McClure

        David: regular readers of your columns and books appreciate your efforts to help us understand the unprecedented mess the country has been left in by the previous administration. Foresight in economics is a rare talent, but not impossible, that is why some people become wealthy by honest effort and others bankrupted by equally honest endeavour. The difference is not luck, it is judgement. Your good judgement was impressed on me when a few years back, I heard your debate with Dan McLaughlin. In it you offered the assembled bankers the opportunity to ‘put their money where their mouth is’, and buy your house for x millions. There were no takers. That proved that privately they knew you were right, even as they berated you publicly for upsetting the applecart.
        That was your finest hour.
        Having said that, we all occasionally are tempted to stray in the wrong direction, or give advice insufficiently couched in alternative caveats. Although SeanL spoils his counter-argument with ‘celebrity’ pejoratives, some of the points he raises deserve consideration. If you are the ‘sexiest nun in the convent’ you can’t afford to be too thin skinned.

      • real terms

        David, I remember your public speaking not that long back, just before the crisis finally broke: you were sure there’d be a reckoning for all the private Irish debt v German savings, you sensed there was trouble ahead, but you were unsure about when. Others had similar fears, you voiced yours clearly, but it was not a forecast as such, and you occasionally expressed doubt, given what seemed like gravity-defying property prices. Your fears were based on something more sophisticated than “what goes up must come down”, though not sure if you saw the tsunami building in the US. Maybe you did. If so, so did one Australian former banker-now-economist I know. Still, remember the analysis then and on this you were far from being alone: Ireland had built up an awful lot of private debt and this exposure had made it vulnerable for some time. It is unclear to me if not repaying the part we are not responsible for (and defining that amount is not easy) would really make a huge difference. It is not all someone else’s fault. As for role models, if the system is bust, let’s try forging a new one, with less-leveraged borrowing and more domestic investment in social and business capital. The idea is to “emerge” from the crisis in a better place. Default may be one way, and Ireland could well move on. But there may also be other ways. Nor is blaming Europe the answer, for Europe has also lost the plot, been ripped off and needs to be reshaped. The debate should be taken Europe-wide. cheers, Rory

      • SeanL

        David, I don’t argue your track record in this area and yes you were one of the few who spoke about the approaching tsunami while others were still seeing only ripples on the pond. However it is your very track record that curtails analysis of your arguments. Much of the comment on your blog praises you for being right in the past and accepts that you must be right now. It is your popularising of this aspect of economics that has created your followers, they believe in you and accept your prognosis without accessing the facts.
        However I don’t accept your prognosis, not because I am indifferent to your record but because my assessment of the facts about the Irish economy today differs from yours. The facts remain the same just our view on how they will play out differs.


        • uchrisn

          Au contraire, it seems to me that the people who agree with David are the ones who are assesing the facts, especially from neutral international sources. The ones who dismiss David are the ones who use mainstream national media as their primary source of info.

          • real terms

            Neutral international sources? Any examples?

          • SeanL

            My facts are taken from the NTMA, not national newspapers.

          • uchrisn

            Examples of international sources, project-syndicate.org, voxeu.org, academicearth.org, the Financial Times, Der Spiegal online, csmonitor.com, elpais.com, baselinescenario.com

    • Wow, there appears to be a concerted attack on DmcW and others of us who speak of our inevitable default we must prepare for. Manofiona wrote earlier, ” Not sure what the point of this article is — or indeed any of the fantasies which litter the comments. ”

      These ostriches with their heads in the sand will be overtaken by events ridiculing their fast running, flightless African bird mentality. Pretty soon their views will be as scarce as the ostrich is in Ireland. Already reading their views is like a visit to the zoo.

      We heard the same chorus before the IMF arrived. Go to Greece and listen to the protests of ‘Indignant Citizens’ and their calls for a referendum on the bailout. Already this morning news is just in of a letter from Merkel to Christine Lagarde opening up the default can for Greece.

      Listening to Varadkar, always great fun listening to his faux pas, didn’t disappoint this am with the canard ‘the truth hasn’t happened’ I’m wondering is this a FG coordinated attack on the increasing numbers of FG/LB critics, see from SeanL “The hard fact for most of the celebrity economists to accept is that they don’t have the gift of seeing the future, they can at best only shed some insight on what happened in the past.”

      I’m sure there are many this morning sitting for their LC exam who used their gift of seeing the future and studied hard for their examinations. They will answer the questions today they were gifted with the foresight to prepare for.

      The numb nuts will be those who like Enda The Blind hope the inevitable will be avoided and those who
      jump our economy off a cliff hit the ground laughing:)

      • Honestly? I doubt it is a concerted attack.

        I am all for diversity of opinion and public discussion, but I am equally capable to distinguish between a personal opinion and parroting propaganda.

        I find the term celebrity economists really funny btw. What it really describes in my understanding is only the level of frustration of a certain type of journal publishing economist, secretly longing for a publicity they never gained.

        David can only be congratulated for his ongoing efforts to bring economy into the public sphere, it is long overdue and important to increase knowledge in this often murky area, really!

      • Deco

        The great thing about Varadhkar is that he because of his age, he seems a real amatuer at the art of double-speak that we see from FF/GP, and the straight lying that we get from FG/ILP – especially ILP ministers.

        Here we have Varadhkar trying to dodge the issue. He should just do like Gilmore – disappear for a few days, and get somebody on D’Oliers Street to write up white wash articles in his favour.

    • Colin

      It seems to me that the people who attack McWilliams have the most to lose from any change in the status quo at the moment. People who have next to nothing have the most to gain from a default. What’s at stake here is Official Ireland, and Official Ireland will do all it can to prevent its own demise.

      • Colin, thx again for link to http://expatshield.com/ and excellent Hamilton documentary. However, re “What’s at stake here is Official Ireland, and Official Ireland will do all it can to prevent its own demise.”

        I don’t think its quite as simple as that. Official Ireland present course will replicate the course of FF in the recent past. Maybe for Official Ireland its more a case of apparent short term gain at expense of long term loss, which is about as unenlightened a policy as decision making that brought about the mess:)

  40. vincent

    Thomas Woods speaks on Nullification at Nullify Now Los Angeles http://www.youtube.com/watch?v=qp5hMiTS2dg

  41. stiofanc02

    You wont be buying this guy dinner as you win. End of story.
    On a different note did anyone see the sluts learning how to give head on TV 3 last night? No wonder Vincent Browne looked flushed. Did any woman, or man for tht matter sit around and have someone teach them oral sex? This is a new low for Irish television. And would any normal i.e. 99% of Irish women, even want anal sex? Hetro guys want it more than women. hetro guys even want their women to do it to them more thatn women. Total sophoric bullshit this show. This was about the most stupid uniformed so called “20th century sex” programme ever. And one more thing, women are hairy not some napalm devestated plucked clean chicken. Sickening. Just my opinon.Oh and those unclean looking whores masturbating? Man if I were 21 and drunk maybe, but they looked pretty nasty and sounded stupid! WTF?

    • Deco

      ITV3 used to restrain themselves to property porn.

      The geniuses there must have discovered that property is a no go area, and decided to simplify it to just porn.

      TV3 = TV Drivel. A mish-mash of stuff from ITV, and local cheap rubbish. The television equivalent of the (Oirish) Daily Mail or the (Oirish) Daily Star – to the point of being worse than the original.

      • adamabyss

        Yeah that show was ridiculous. I couldn’t believe what I was seeing just as I was putting my three year old to bed and settling down to see what was on Vincent Browne. Mind you, you didn’t need to go into such detail yourself either stiofanc02.

        • stiofanc02

          Well that is a matter of opinion and I am no prude, by any stretch, its just the reality,..what we saw on the show, that isnt really how sex is. Its a messy business when its done right but why do I, or you for that matter, have to have it shoved down your throats by a bunch of psuedo “acedemics” in the media. Please. Imagine the impressionable kids who accidently turned on the tube or the 3 and 4 year olds having trouble going to bed flipping around with dad or mom or my 88 year old Mother in law. Its the perverts who cant wait to show you a cucumber or dildo with a condom on it, and trust me they want this to be your dinner discussion with your teenage daughter. Its the sluts who want your daughters to become like them. The men who run that station should have said NO. NO, because my mom may be watching .NO, My young son may be watching.NO, My sister in law may be watching, and god forbid my daughter may be watching. This isnt appropriate leading into Vincent Browne. They want your nieces turned into nephews and your nephews into nieces. What will be next full anal homosexual penetration before Vincent Browne? ….just remember to wipe the tip of the penis clean after penetration…Trust me, they see no difference these frustrated weirdos. You will be subjected to this unless you go into detail as I do as to what you dont approve of on TV3. I have viewed plenty of pornography privately in my day, but you dont have to worry that when you turn on TV3 you will see what I am viewing. It is none of your business. It becomes your business and mine when they put a camera in a nymphs vagina and show a large penis shooting jizz inside her before I watch Vincent Browne. Now you may be uncomfortable with my descriptoions but THAT IS WHAT I SAW LAST NIGHT. Alternatively we can just change the channel. Personally Id rather fight this one, and shame on them. To end I will quote adamabyss and say, “Yeah that show was ridiulous.”

          • adamabyss

            Hahaha! Ok stiofanc02, very ‘vividly’ put. I’m no prude myself but let’s just leave it at that!

  42. Rep Dennis Kucinick….and so say all of we… now that the Irish Republic has been doled out to the ECB/IMF and the Irish banxter thieves and their politico fixers


    • Deco

      Dennis Kucinch made a very defiant and consistent stand against military misadventure in recent years.

      But the US media, while paying homage to “our advertising sponsors” left him completely out of the picture.

      then you get fakes like John Edwards telling everybody how he came around to being against the Iraq invasion, after her previously rushed into it.

      Kucincich has the one criteria that differentiates him from dishonest politicians – he hold consistent views.

  43. Commodity Scam update: AMIS

    AMIS, Agriculture Market Information System, is the latest buzz coming from the G-20 club.

    More than four years after the food price shock, they now came together to jabber about food security as a priority. Right, someone woke up I guess. We have many MIS, and this will be another one, but firstly, it will take a long time before this is established and working as desired, if at all, and secondly, they miss the point.

    To deal with the real problem in this sector you have to brake up the power of the cartels that are dominating supply chain and trade, and most of all, if you look into the history of attempts to regulate the commodity markets to avoid artificially induced volatility, you will find that all attempts to date failed, or were seen as risible.

    I can see some of the main players just laughing out loud, again!….’Sure, let them have their market information system! Har har har…!’

    As FT pointed out, it is a mirror of the 2002 introduced Joint Oil Data project, and just loot at it up close. Still countries are deliberately over estimating their reserves, and play with data as they see fit.

    Waste of space, as nearly everything coming from this useless G-20 club to date!

    • To close the circle….

      World food prices have hit new records and oil price spikes could push them even higher, the UN food agency warned on Thursday, as unrest in the Middle East and North Africa hits markets.The Food Price Index, which monitors average monthly price changes for a variety of key staples, rose to 236 points in February from 231 points in January, the UN’s Food and Agriculture Organisation (FAO) said.It was the highest level since FAO began monitoring prices in 1990

      QE Rounds 1+2 are directly related to the CBR index. As food prices were rising, the ‘Arabian Spring’ – What Idiot came up with this term! – and social unrest were the result.

      Agriculture ETF vultures and their investors capitalize on the rising food prices as the world population grows and demand for basic foods increase.

      Not a word is coming out of the G-20 on that point, of course not!

      • Deco

        Very simple way to make food cheap.

        Separate the Bernanke from the Printing press. The more Bernanke prints money from nothing, the higher food prices go.

        The official explanation is also Breshnev-esque – it is the fault of the weather..

        • But Deco, how can you ask for this, when the printing press enables them to destabilize entire regions, and substitute old dictatorships for new ones, calling it Arabian Spring, and the rising of democracy.

          There will be no true democracy in this region of the world as long as US foreign politics has it’s grip on it and the Do-Gooders like Britain and France are following through.

    • 7 June 2011, Rome – High and volatile agricultural commodity prices are likely to prevail for the rest of this year and into 2012 according to the latest analysis published today in FAO’s biannual Food Outlook.

      Well…shut the fucking futures down temporarily and modify as it is urgently required since many years, or introduce a different system! Don’t tell me this can not be done, of course it is possible!

      Leaving this market to the ETF vultures is plain and simple crazy!

  44. Deco

    Ah yes, some much of this all leads us back to Olli Rehn….

    I just wonder in five years time, will Olli still be lecturing people on the need for taxpayers to absorb the losses of the banking sector ? Will Olli blame the people for the property binge, and call for the bankers to bailed out ?

    Why five years time ?

    Well, it seems that in Finland, thanks to the pro-banker interest rated (money for nothing)…there is a housing boom.

    In a country with a declining population, harsh miserable weather, lots of space and Mother Russia for a neighbour.


    What is Suomi for “I have changed by tune” or “on mature reflection” ?

    • Deco

      This is the quote from the Finnish commentator
      These clowns are actually trying to sell reverse mortgages for mostly elderly customers. And they are promoting them with the classic ATM-in-da-house bubble-pictures! The captions are something like “Going traveling again?!” and “Yeah since I have this home-made cash.”

      Above the pic it says something with a meaning of: “When you save equity by paying a mortgage, you can later utilize the equity once you retire”.

      Now we had that here in Ireland. We had an actor from a RTE Soap telling senior citizens how they could become rich at the height of the boom by using their houses as ATMs.

      I believe it was called “Seniors Money”.

      In all likelihood it was another binge era con job !!!

      Just wondering now, if I can find a way to short the Finnish equivalent of Washington Mutual, or Permo ?

      • Seniors Money International Limited, 87 Hurstmere Road, Takapuna, Auckland, New Zealand, located in:

        New Zeeland
        South Africa


        • Deco

          Unbelievable. This goes on a lot. Chasing old people and trying to con them into complex finance deals. To be honest I am really sceptical of this sort of nonsense. Somehow or other, I imagine that the margins that are being made are large enough to cover events like property price crashes and the like.

          I reckon that this is worthy of investigation.

          • Warning: The cost of monthly [fucking compound interest] interest added to your loan may [ will beyond the slightest shadow of a doubt ] increase. Your home is at risk if you do not repay a mortgage or any other loan secured on it.

            Warning: Purchasing this product may [ will beyond the slightest shadow of a doubt ] negatively impact on your ability to fund future needs.

            Really…. bloodsucking bastards

          • Mr. Stephen Gunning
            Group Chief Executive Officer

            Stephen Gunning, B Comm, FCA (Ireland) serves as Group Chief Executive Officer at Seniors Money International Limited. Mr. Gunning serves as Member of the Group Executive Team for Seniors Money International (also known as Seniors Money International Ltd), and served as its Group Chief Operating Officer. Mr. Gunning joined Seniors Money International in August 2005 to found and head up its European operations. He served as the Chief Financial Officer, Managing Director and Treasurer of publicly listed and privately held corporations in Europe and the United States and these include serving as Chief Operating Officer of the Americas division of Hagemeyer NV and Vice President of Finance & Treasurer of The Huber Corporation. Mr. Gunning has been involved in a range of start up businesses in the financial and technology based services sectors and has sat on the boards of various companies including regulated finance and reinsurance companies. He serves as Director of Seniors Money International Limited. He is a Fellow of Irish Institute of Chartered Accountants.

          • Deco

            I reckon a dig into this outfit’s customers, and poring through the accounts of customers, might possibly be “interesting”…..

  45. Gege Le Beau

    Ireland regrettably struggles to be itself not to mind something else.

  46. My favorite quote of the week:

    ….Economics is not a science, it is a fundamentalist religion with equations, which make it sound scientific. As Joan Robinson used to say, ‘those who understand economics are very dangerous because by embellishing all their lies with equations they make sure that nobody can challenge them’. So the only reason for studying economics is to stop economists from deceiving us….

    Yanis Varoufakis, November 15th, 2010 in The Vibe

    Yanis Varoufakis is Professor of Economic Theory in the Faculty of Economic Sciences of the University of Athens. He has taught at several British universities, including the University of Glasgow and Cambridge University. His latest book, The Global Minotaur: The True Origins of the Financial Crisis and the Future of the World Economy, is published in September (2011) by Zed Books.

  47. Praetorian

    Interesting article yet again from Noam Chomsky.

    The ‘Great Moderation’ and the International Assault on Labor.

    A decade ago, a useful word was coined in honor of May Day by radical Italian labor activists: “precarity.” It referred at first to the increasingly precarious existence of working people “at the margins” — women, youth, migrants. Then it expanded to apply to the growing “precariat” of the core labor force, the “precarious proletariat” suffering from the programs of deunionization, flexibilization and deregulation that are part of the assault on labor throughout the world.

    By that time, even in Europe there was mounting concern about what labor historian Ronaldo Munck, citing Ulrich Beck, calls the “Brazilianization of the West — the spread of temporary and insecure employment, discontinuity and loose informality into Western societies that have hitherto been the bastions of full employment.”

    In 2004, the ILO reported that “economic and social insecurities were multiplying with globalization and the policies associated with it, as the global economic system has become more volatile and workers were increasingly shouldering the burden of risk, for instance, though pension and health care reforms.”

    This was what economists call the period of the Great Moderation, hailed as “one of the great transformations of modern history,” led by the United States and based on “liberation of markets” and particularly “deregulation of financial markets.”

    • You can actually pinpoint the date upon which the middle class, social services, came under attack, an attack under the FIRE economy that has being growing in momentum since then.

      It’s present phase is the dismantling of social services in Europe and the manufacturing of debtor economies such as Ireland.

      “Deregulation 1970-2000
      Deregulation gained momentum in the 1970s, influenced by research at the University of Chicago and the theories of Ludwig von Mises, Friedrich von Hayek, and Milton Friedman, among others. Two leading ‘think tanks’ in Washington, the Brookings Institution and the American Enterprise Institute, were active in holding seminars and publishing studies advocating deregulatory initiatives throughout the 1970s and 1980s. Alfred E. Kahn played an unusual role in both publishing as an academic and participating in the Carter Administration’s efforts to deregulate transportation.”


      • Praetorian

        Will David McWilliams venture into an analysis of neoliberalism and the over-financialisation of Western economies?

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