June 13, 2011

ECB a slave to passing fads

Posted in Banks · 215 comments ·

The other day, I watched a Few teenage kids knocking around my neck of the woods.

One lad in particular caught my attention.

He walked like a young fella with haemorrhoids, legs far apart as if in total discomfort. I watched him as he hung around with his mates, trousers sagging down so far that every time he walked, he had to spread his legs apart just to keep his jeans up.

Fashion can be a strange thing.

Have you too noticed the fashion over the past few years for young lads’ jeans to be slung lower and lower? It is called ‘‘sagging’’.

The genesis of this particular trend is quite interesting.

Sagging stems from American hip hop culture and originated in the prison system.

Belts are banned in US prisons for obvious reasons and as a result prisoners’ trousers sag. During the early 1990s,black gangster rappers, trying to ape the ‘tough guy’ prison look, first started mimicking this US prison look. It soon became de rigueur for the hip hop movement.

A decade or so later, like all fashion, it morphed out of the original ghetto and found its way into the mainstream.

Today, quite bizarrely, you have extremely white, southside Dublin schoolboys who couldn’t locate Mountjoy without Google Earth, hanging with their homies, trousers somewhere between their rear ends and their knees, a ping US penitentiary chic.

But that’s the way of fashion, how it gets there and where it comes from is sometimes lost on everyone, except for the fact that we end up with classically inappropriate behaviour for apparently no reason at all.

We’ve all seen friends wear the most unsuitable things because of fashion.

But fashion isn’t limited to clothes. Fashion is everywhere, in politics, in ideas and most definitely in economics. In the 1990s for example, it was very much the fashion to demand an independent central bank with no other mandate but to keep inflation low.

For years, economists have been divided Over whether it is better to apply clear rules or human discretion when setting economy policy.

Those in the rules camp have argued that economics is scientific and there are verifiable, immutable rules which should be applied.

Once you apply these rules, these economists contend that there is no need for discretion or judgment on the part of policymakers.

On the other hand, there are those of us who believe that a bit of judgment is necessary. Since the 1990s, the rules guys have been in the ascendency and as a consequence, political interference or judgment was not deemed necessary.

Nowhere has this particular fashion become more evident than in the approach to central banking.

The European Central Bank (ECB) and its ‘narrow-gauge’ concerns with inflation and rules, over and above the more broad concerns about how its policies affect societies is a classic example of this.

This particular fashion – for independent central banks – stems from the idea that the crisis of the 1970s was made worse by central banks printing money, which only led to stagflation, a combination of inflation and stagnation.

So in the 1990s, the central bankers of Europe bullied the politicians to make the ECB not only independent, but limited to a very narrow mandate. In contrast, the Federal Reserve in the US is a much more political institution, with a mandate that covers both inflation and growth.

The ECB rather than being more discretionary like the Federal Reserve is obsessed with rules. In a crisis this inflexibility makes it a poor institution in which to place our trust.

A crisis is by definition unexpected and therefore the rules, which were supposed to protect us from unexpected events, prove to be inadequate.

More than that, an inflexible institution in a crisis is not just inappropriate, it is dangerous.

It might seem strange to you, but the biggest threat to the EU is not the likes of Ireland and Greece, nor vocal Eurosceptics in Britain, nor hedge fund managers who are only too willing to ‘short’ the bond market of the next domino in the tottering European peripheral bond market.

The biggest threat to the European Union and to the concept of a family of Nations moving forward together is the ECB.

It has become a prisoner of the fashion of rules, and this is destroying the credibility of the EU.

Many of us ask ourselves why the ECB is determined to destroy Ireland by, for example, forcing us to pay all the €65 billion of bank bonds when we know that our banks are bust and pretty much useless in the economic sense of the word.

This is particularly unusual When we see that the ECB has injected €100 billion of capital into the Irish banking system’s funding already. The reason it is doing this becomes clear when you read the rules it has set itself.

The most credible Irish source on the ECB is the wonderful blog. Corner turned.com.

Quoting from the ECB’s 2008 annual report, we see that the bank may provide – temporarily and against adequate collateral – emergency liquidity assistance (ELA) to illiquid but solvent credit institutions.

But what happens if these institutions turn out to be insolvent like our banks?

Then, according to the narrow rules, the ECB can’t provide support.

So think about this, if our banks default on their debts they are by definition insolvent, but this means that the ECB can’t support them anymore.

So in order to stay true to its own rules, the ECB will not allow our banks to default because it would then have provided short-term assistance to insolvent banks and thereby change its own charter.

So, rather than kill off bust banks, let them go and welch on the sacred bondholders, the ECB is injecting capital into them, which is just throwing good money after bad.

Politically, Germany has just woken up to this nonsense and is now on a collision course with the ECB because Germany realises that the bondholders have to pay.

Otherwise, taxpayers in the likes of Germany and Finland will pay and they don’t want that. So due to the obsession with fashion and the resulting attachment to rules, the ECB is now both in control and out of control at the same time.

By imposing narrow rules of broad discretion, it is endangering the entire EU. It is making everyone – the debtors and the creditors – Eurosceptic. It is doing this to protect the bondholders and to adhere to its outdated rules.

The great Keynes once said: ‘‘When the facts change, I change my mind. What do you do, sir?”

The facts have changed – and more to the point – fashion is changing.

The idea of an independent central bank will disappear before the end of this crisis. What seemed logical 20 years ago, seems dangerous now.

The ECB is preventing the EU from recovering, it is preventing the EU from acting like a family of nations in the same way as ‘sagging’ is preventing thebe-gelled southside teenager from walking.

Fashions change because their time passes and they are superseded by something else.

The fashion for independent central banks will also fade as this European crisis get more intense.

David McWilliams hosts the Dalkey Book Festival next weekend; www.dalkeybookfestival.org

  1. adamabyss

    Die Stunde der Abrechnung ist da.

    • Dorothy Jones

      Diese Stunde ist schoen vorbei, Goetterdaemmerung folgt….

    • …and Jens Weidmann already publishes in contrast to Bini Smaghi’s FT whimpering as well as Olli Rehn’s apocalypse.

      “This would be Greece’s decision, and the country then would have to bear the surely dramatic economic consequences of a default. I don’t think this would be sensible, and it would surely put partner countries in a difficult situation. But the euro would even in this case remain stable.”

      This is in total contrast to ECB and EU-Commision


    • OT: As you apparently speak/read German as well.

      I am wondering, do we have a microbiologist here on the blog?

      Sueddeutsche Zeitung, Page 12, upper left article


      So, apparently the E.coli chimera carries genetic parts of the bubonic plague. Would love to know how it got there in the first place, but I am no microbiologist, and perhaps there is a very simple explanation possible. However, my suspicion remains that this might have been engineered.

      • P.S. which does not mean it can transmit the black death of course, but I find it remarkable that this chimera is supposed to have evolved without human intervention, particularly in the light of this analysis…. this whole story stinks really bad!

      • Now Georg, a great and intelligent chap you are. A scientist you are not. Human DNA also includes bits of ‘alien’ DNA, incorporated over millions of years of evolution. Also, you would quickly die without the e.coli that resides in your intestines.

        • Well Liam, I am just pointing to the discrepancies in this story. I never claimed to have in depth knowledge in microbiology, chemistry yes. It remains unknown how this particular genetic code ‘happens’ to have found it’s way into this chimera. Of course, various forms of the plague are still recurring,such as in CA, Kern County in 1995 and other places, CDC is your friend, and perhaps it is ‘just’ a evolutionary development However, the quite shocking and sudden multi drug resistance against 12 different penicillin and antibiotic antipathogenics is puzzling to say the least.

          It is known that laboratories still have considerable stockpiles of small pocks as well, and this is not for public health reasons, just for example.

          Further, The activities of certain pharma-industries when the swine flu story unfolded are well documented, they even successfully managed to blackmail the German government into stockpiling vaccines, worth billions.

          To exclude the possibility of a weaponized E.Coli would be naive in my opinion, ymmv.

          • Firstly, its nothing personal Georg. I consider you to be amongst the better informed and more intelligent commenters here!

            My intention was to point out that your hypothesis is not credible, on the basis that the discrepancies you describe can be explained by the gaps in your knowledge, which I think you recognise we all have.

            Its true that there is non-human DNA in all of our DNA, and the level varies. Its true for many species. I’m a physicist, not a microbiologist so I also don’t claim to fully understand the mechanism. My understanding is that its not evolutionary in the sense that we understand genetic evolution. Rather it has more to do with the genetic inheritance process in the presence of non-human genotypes (and your body is full of these, including e.coli) and it may or may not bestow evolutionary advantages.

            Note also that not all of our DNA is involved in the process where the machinery of our bodies, our cells, create products that have some function in control or regulation of our bodies systems (gene expression). None of this alien DNA is thought to be involved in gene expression, nor does it do things like turn our skin blue (no genotype-phenotype relationship) so it comes as a surprise to most people when they learn that they are carriers of non-human DNA.

            Personally I think that this alarm is a consequence of our human-centric view of how the world works, i.e. the fundamental unit is the entire human organism. Most evolutionary biologists operate on the basis of a gene-centric view, where this phenomenon would I imagine be regarded as relatively trivial.

            As someone with a background in physics, I find biology amazing and incredibly complex. Faced with this complexity, it would be a mistake to reach for simplistic conclusions. Resistance of pathogens to antibiotics is a consequence of genetic adaptation. The swine flue outbreak is a direct consequence of the use of antibiotics on an industrial scale which has had the effect of accelerating the genetic adaptation process. The culling of livestock in response to foot and mouth a few years back was completely nonsensical, economically damaging and unnecessary approach to a pathogen that poses no human health risk. However motivations there were to protect an industry governed by arbitrary rules that have their basis in politics not in science (foot and mouth is prevalent in South American herds where the disease is allowed to run its course and where live cattle are much cheaper than in Europe).

            In other words, its a mistake to ascribe conspiracy theories to behaviour that is far more easily explained ultimately by ignorance and stupidity.

            Similarly, I’m sure its possible to “weaponise” any pathogen (select for high infectiousness, high lethality and an extended incubation period) but you could never use such a weapon as it would very quickly cause far more economic and social damage than any short-term benefit from the sale of vaccines. If you take the view that pharma companies are economic parasites, then this is the equivalent to killing the host.

            All things are (within reason) possible but it is also extremely helpful (and in my view more important) to consider what is probable. This requires considerable rigor. I have no doubt your more than capable in that regard.

          • Just one more things on vaccines: in the specific case you mention, I don’t deny the possibility that pharma companies would opportunistically capitalise on the politics of fear, but to go from that to saying that the pharma companies deliberately engineer and release pathogens is absurd, for reasons I mention above.

          • adamabyss

            Thanks for this enlightening explanation.

          • Thank you Liam.

            See, you say but you could never use such a weapon as it would very quickly cause far more economic and social damage

            Bingo! Using such a weapon, theoretically of course, does exactly that, causing massive economic and social damage!

            Again, I am not proposing that it was a weaponized E.Coli, I am simply considering motivations and possibilities.

            Of course, we can see since a while the resistance to antibiotics rapidly increasing, still the fact that this particular one appears to have such a wide spectrum resistance is more than astonishing. Btw. I am not reading conspiracy centric sites, but triggered by your comment I googled on that, and bloody hell, yes, the net is full of it, starting with Mr. Prisonplanet and other obscurities that populate the channels on this subject, I was not aware about it, and find it quite amusing.

            I might have expressed it in a way that could be misunderstood, I don’t think that pharma giants tested a weaponized on purpose to generate revenues.

            I share your views concerning the complexity and our level of basic understanding, dynamic systems and their interdependency in our multitude of biospheres is far more complex than the fraction of our insights in earth sciences allow us to see.

            I said Bingo above, because I think we will probably will live long enough to see some whackjobs using biological warfare as a means to push their political or ideological views, be it state sanctioned or via radicalized terror groups. Some think tank reports on international security warn of that possibility since a few years already.

            Taking further into account that food prices will easily double in the next two decades, I think this danger is not too far fetched. Our knowledge and our means of control of biological weapon development is very limited, the trend was not stopped with the signing of the 1972 convention.

            Last but not least both, entomological as well as biological attacks on agricultural productions did happen in the past and on these grounds, I reserve some skepticism when a sudden and concentrated outbreak with many question marks attached occurs.


          • P.S.

            Theoretically, the food supply chain dominating industry would have far better motivations than the pharmacological industry of course, their goal of total control from the seed to the end product is well documented.

            Unfortunately I lack the qualities to write a good sci-fi thriller, it would be excellent material. ;)

          • Adam, thank you, I’d suggest you investigate the field further if it is of interest, my explanation is I suspect basic at best.

            Georg, Thank you also for reading my rambling response. I think it was a product of a rather pedantic expression of my science background, i.e. the requirement for explicit evidence to back an assertion. I think given the many interesting discussions I have read on these pages that we generally agree that evidence is important, though some may vary in its interpretation.

            I am happy to be in the company of a fellow skeptic, and appreciate the clarification on your part. I also look forward to the novel :) Storytelling is art, and art is also important in giving our lives meaning.

          • btw feel free to get in touch via twitter. clicking on my name will link you to my feed,

          • Thanks Liam,

            no rambling from your side, not at all, and yep, I am the inventor of the skeptic tank. ;)

            I don’t use twitter or facebook at all. But if you provide an email contact on your twitter blog, I gladly share my contact details with you.

            Re Science Si-fi, you might enjoy this novel here: http://en.wikipedia.org/wiki/The_Swarm_(novel)

    • Dorothy Jones

      Quote: ‘Politically, Germany has just woken up to this nonsense and is now on a collision course with the ECB because Germany realises that the bondholders have to pay.’ Endquote
      Not strictly true, the likes of Focus and Handelsblatt have been carrying articles proposing this for some time. Schaeuble’s a very interesting character, not afraid to act on hs beliefs after his own life experience.
      Georg, you might like to pose your question to biochemistry student Petra of Tir na nOg irish dancing troupe in Berlin who took part in Karneval der Kulturen in Berlin this weekend, and is apparently toying with the idea of spending a year in Ireland. [in IT today by Derek Scally: 'Germany's Irish dancers take the next step onto the streets']. Founded by Sandra Kuhnert ‘who was bitten by the bug after seeing Riverdance’!! ‘I know it sounds phoney but it isn’t,….I just want people in Germany to start dancing….I think the ladies had a beer or two to warm up. Thank God for a bit of humour, intended or otherwise, of a Monday……


    Shane Ross has an excellent piece re this weeks BOI AGM.
    2 ex -directors David Kennedy and Ray Mc Sharry have kids seeking election to the board.
    If pious Pat Cox becomes president, the people of Ireland deserve another famine.Time to quit the EU and euro.

    • Deco

      I read that yesterday. The BoI is a bit like Pravda/RTE in that you find that a lot of people are inter-related when it comes to headhunting talent. It is bad enough have a consensus of chancers, but when a lot of them are related you get a massive spagetti junction of backscratching.

      The only obstacle that Cox faces is that the more traditional element in FG, simply does not trust somebody who was previously in FF and the PDs, and is prepared to make noises of disatisfaction. (Well, we can say that based on the experience of recent years, and the damage that has been done, their sense of apprehension would be justified :)))).

      However, in FG HQ, there are those who believe that Cox will eventually become accepted once he gets the right sort of endorsement, and that he representssome sort of Celebrity candidate. It really is unbelievable stuff – from th party who ensured Bertie Ahern had no serious competition or any decent critique during the binge era.

      • Colin

        I remember Cox visiting us at school 20 years ago (his alma mater), a Christian Brothers school (less Christian and more Fascism in reality) and not a private school for the record, and all I could sense from it all was an egocentric self-congratulatory hasn’t-our-boy-done-well vibe from it all. If he was any way inspiring, I’d have remembered a few words of what he said. Sadly for Cox, my memory deemed it unworthy of retention. Sorry about that me aul chum!

        • Pedro Nunez

          Nil aon gombeen mar do gombeen fein!

          mar “Nil aon tintean mar do thintean fein.”
          There’s no fireside like your own fireside.

          Never bolt the door with a boiled carrot.

          Which is exactly what the ECB is rogering us to do.

          • Deco

            “Nil aon gombeen mar do gombeen fein”.

            Classic. It captures the essence of a lot of what goes on. Chasing the perfect work environment as a collection of fools who talk the same rubbish with the same accents, same interests, and have the same level of ability – which is now found out to not be enough. As long as there is consensus, nothing else matters.

  3. Dorothy Jones

    Thanks for not including the image which was in yesterday’s SBP!!!!

  4. wills


    ‘The ECB is preventing the EU from recovering, it is preventing the EU from acting like a family of nations in the same way as ‘sagging’ is preventing thebe-gelled southside teenager from walking.’

    Great stuff. Spot on too. In my opinion, goes without saying.

    Social darwinism is having a say faster than the insider elites can keep up.

    So, they panic, and carry out all sorts to try and hold things together.

    But, this only show’s em all up for their looperness even more.

    The insiders just love been on the inside. They love it. It makes em feel real good on a monday morning. Makes em feel hip and the coolest dudes in the room on a friday night.

    Tis all.

    They don’t want to be out cooled. Like the teenager.

    Droogs are in control and refuse to leave the stage and let someone else have a go at been in the spotlight.

  5. Intriguing to see you weaving gangsta rappers and central bankers into a pattern of a kind!
    Some time ago, Sir Mervyn – knighted recently – entertained a similar association of ‘sagging pants’ with respect to bankers. He said, from then on, bankers should keep up their own pants, and he would see to it that they wore belts as well as breeches.

  6. Colin

    Why didn’t the US Prison system insist on elasticated waists, instead of inflicting the world another fashion fcuk up? Look what happens when common sense goes out the window!

    Maybe the hairshirt will catch on in Frankfurt?

    • Mar

      The look probably didnt originate only from wanting to look gangsta-ish. It’s also a protest against the (more and more often, privatley owned) prison system/government that treats Blacks horrifically in the America. If you are in a situation in which you have no control and take part of that experience and turn it into an international fashion phenomenon–I’d call that smart–really smart and very creative. I’ve heard it said if you’re a Black male in America and make it to the age of 20 you’re doing something right and are intelligent because it’s that hard to make that far. Some would argue Black women have it even worse. I only wish the look drew more attention to the problem than it does.

  7. Deco

    Saying that the ECB is a slave to unpractical fashions is too kind – more a slave to agendas that are prominent in Brussels and the Elysee Palace if you ask me.

    To really see what is controlling the agenda, we would have to peer like Jens Peter Bonde into the lobbying that goes on in Brussels.

  8. Deco

    Well, apparently the Michael Lowry plan to build a Las Vegas in Two Mile Borris has got the official go ahead.

    This really stinks !!! As if Lowry has not done enough damage with the findings of the Tribunal, and the Denis O’Brien “how to become a multimillionaire” path to riches and influence.

    Just when it looked like we might be getting away from superficiality, bullsh1t, speculation, and funny dealings, Michael Lowry puts Ireland back on the path to becomming a sewer intellectual society once again.

    I suppose it goes without saying that all of this will be tax free….

    • Juanjo R


      Gaining planning permission isn’t the same as being built and operational.

      Firstly the project has to be financed ( a supersized high spec casino and 5 star hotel in a field in Tipp – unlikely! ) and is reliant on legistation being passed ( 50-50 chance at best ). I don’t even know if they could find a domestic contractor capable of undertaking it in this day and age. ( a lot have gone under due to debts/spec dev failures etc ).

      Actually the passing of supporting legislation would be a good barometer of the current national sleaziness index I think – it would be Michaels old first love FG that have to put it through not Michaels more recent hot fling – FF and the Greens (not to mention Healy-Rae). Michaels angelic hands would be washed of it – well kind of. We couldn’t in all faith scapegoat him for this one.

      I have a feeling this PP is being gained for jumped up land evaluation for NAMA or similar – though that is informed speculation on my part I would point out.

      Certaintly this PP is BS on the environmental front and it makes a mockery once more of national planning strategies ( really why do we have any? ).
      ABP are a joke with regard to green/sustainable issues. Seriously they are just a bunch of jumped up planners and ex-conservation activists who think Ireland should be phyiscally freeze frozen in a quaint homage to – and only the pretty protestant ascendency part of – the rare old Georgian times and have little in the way of opinions beyond this. Even the most basic science based arguements for sustainability sail way over their heads. Embodied energy – they have never heard of it! I’m not sure if this gross ignorance is deliberate or not though – one thing is for certain this people ought to know.

      I mean – and in all reality – if this site had an old moderately sized georgian house with some set out gardens or even an old fairyring ( rath ) like the thousands of others that dot the countryside on it they would have more likely caused the permission to be refused than any level of national planning sensibility or any ‘green’ arguement. Legislation actually supports this position! Ridiculous!

    • I am getting sick when I hear these two names, Lowry and Healy Rae.

      This casino was part of his VOTE towards the bill that enabled billions to be shoved into Bankster black holes, the other VOTE was Healy Rae.

      Two people who enabled this.

      What a brilliant democracy we have.

    • vincent

      Maybe we can gamble our way out of this mess…

  9. Falls


    oops..an AIB default or rather a restructuring event
    ….looks like its official…from the ISDA determinations committee

    • Deco

      There has been only silence from Ballsbridge since October. A “circle the wagons” and everybody keep the mouth shut type manoevre.

      This crisis will ultimately see the Irish State system getting squeezed by the Ballsbridge Bankcentre….which is sort of interesting from the perspective that they both have very similar ways of getting things done, being overly controlling, erupting into scandals, and then enforcing an elabourate coverup….

  10. John T

    Is Germany now acting the tough guy because it’s bank capital has been topped up by the US Federal Reserve in QE2? Does this mean all PIIGS debts will be restructured with a partial bonfire of bondholders?

    • wills

      QE III will sort that out. On the way. Tried once coupla weeks ago. Will try again, just as with QE 1. The ECB insiders are ahead with this play and are playing pretend on it as they travel into the future and move the furniture around for the rest of us. Dennis the Menace scam artists.

  11. BrianC

    Yes the Eurocrats have no choice now but to throw the rule book out of the window. The ECB as it is today is defunct and their straightjacket thinking does not serve the interests of Europe. The Germans are beginning to smell the coffee and they do not have the stomach to bankroll Europe simple as that. Georg Soros nailed way back and said they would eventually come to their senses and print the money. He estimated that they need to print no less than €1.5trillion.
    But the one thing we should learn from all if this ‘Don’t bother listening to the Economic Experts in Europe and those in Ireland who have been led by the nose they know less than the average layman on the street’. The experts were nothing but a bunch of Tulips now where did that saying come from. And the whole debacle will be repeated again and again. Why? Simple! Fractional Reserve Banking does not work.


    I need to put together a website can anyone who is expert in this area please contact me so I can arrange to meet explain what I am endeavouring to do and give me advice and ideas as to cost. I can be contacted at bccs101@gmail.com

  12. uchrisn

    The ECB has a failed structure. It needs to be changed or countries will have to leave the Euro. I have a feeling that the French and Germans wouldn’t really mind the periphery countries leaving the Euro at this stage despite all their rethoric to the contrary. In fact they might look to throw someone out in the future.
    I had a friend once who wanted to break up with his girlfriend. He thought it was better to treat her badly for a few weeks in the hope that she would leave him. This would save him the embarrasment and awarkness of having to dump her. Of course even though he treated her badly she still clung on. In any case he broke up with her eventually.
    Is this what is happening in Europe?
    So I don’t expect the ECB to change.

  13. patrick74

    Geek protesters chant “we are not Ireland, we will resist” http://www.guardian.co.uk/world/2010/feb/10/athens-greece-protest-strike
    Least they tell it how it is – I look at my children and I wonder what they will think of my lack of action… when they are old enough to realise what we are allowed to happen as a nation of people.
    I admire the Greeks- Ordinary citizens may actually shape ECB policy. They are way ahead of us (well a year anyway :)

  14. Malcolm McClure

    There is an interesting article in Wikipedia on Bankruptcy. I’ve heard that several Irish developers plan to apply for bankruptcy in London, rather than Dublin. The banks have gone to the supreme court to try to prevent this ploy. Does anyone know more about this?

    • Yes Malcolm, it is relatively well known by now. There are even legal services that help you with all the paper work. The background is that legally, a bankruptcy filed in the UL will have to be accepted by the Irish.

      After 12 months their slate is clean!

      • I think you have to be resident there for 3 yrs before you can apply. I believe there are some Irish developers, sad stories, living in bedsits, returning home every 2 weeks for the weekend, having left their families/children, hoping to eventually clean the slate, start again.

  15. coldblow

    Here’s a comment from Colm McCarthy on irisheconomy.ie, scroll down a little bit to June 11, 10.05pm


    “If the ECB screwed the the Irish governtment in November, which is what I understood Patrick Honohan to be saying… If they did what the Governor says they did, they deliberately (nd I must assume consciously) subverted their own declared policy objective (return to the market) in order to avoid facing a resolution of the banking mess up front. All of this presumably at the behest of the French and German governments… This is a shambles. As far as I know, the last European sovereign default was in 1952. All of this is being done to avoid explaining to continental European taxpayers that some of their banks are f***d, were poorly supervised and that the bill is due.”

    David was saying all this, what, 18mths, 2 years ago?
    They are all coming round now. Bl**dy celebrity economists! They’re a joke…

    • Dorothy Jones

      Yep. Mentioned in reply to a post of yours some weeks ago ‘to watch AIB in the coming weeks’. Out of cash then and now.

    • Malcolm McClure

      Georg: Pushed by the inscrutable hand of fate, Enda was trying to boost the perception of the Irish economy today at the British-Irish meeting of leaders. And Noonan was in Washington doing a similar job on Lagarde (hesitate kiss, kiss) and Geithner. Does the right hand know what the left hand is doing? Embarrassing.

      • Precisely this is what I said too NWL in an email, about letf and right hand! I deliberately watched RTE sixone, admittedly only until sport takes over, up to there no mentioning of AIB, not a sausage.

        I was thanking NWL for a really good laugh. :) Frank Daly has to face the very same crowd tomorrow. ROFLMAO!

        If it would not be so bloody serious, you wonder whether the irish political class had a crash course in stand up comedy. The gaffe that Kenny produced on the irish-british meeting was outstanding in deed. Outstandingly stupid!

        • PMC

          There’s not a mention of it anywhere in the Irish media – Saw it on the XE website.

        • Malcolm McClure

          Actually it was referred to obliquely by Murphy on the 6-1 news as “a technical issue with bonds”. Talk about calling a spade ‘an implement used for improving tilth’. Obfuscation; otherwise RTE would need to report: “The natives are getting restless!” in the best tradition of the British Empire.

          The RTE news editor obviously ruled “This is a good news day. Squelch the negg stuff”.

          • Now the media push is on to the most important development in Ireland, not economy, not the fucked up constitution, not the Bankster fraud, no…


            is on the agenda of distraction.

            Peeacock talk…. The referendum for the Irish President is as important as a Mac Donald opening tomorow somewhere on the planet, hold on, I am wrong, this is more important!


  16. CitizenWhy

    We need to return to the study of Political Economy, the interaction of economic policy and political policy, instead of letting economics be taught as a “science” apart from, above, and sovereign over the needs of citizens. Economics is no science, but a form of medieval secular theology used to justify the privileges of some of the elite (not all in the elite are twisted).

    Economics under social democracy is supposed to preserve a “free and fair market system” while providing good social benefits and public services. Instead Europe’s social democrats have allowed a rigged financial market system o develop, where the banks, however incompetently or deceptively run, are to coddled and favored and exempted form their foolish market decisions. This is to be expected in the US, where social democracy is viewed as the work of the devil and money rules, but Europe’s social democrats should know better.

  17. CitizenWhy

    Get ready for a new teen fashion fad: sagging simultaneous with going commando.

    If you’re not familiar with the term going commando, or just want to have some laughs, visit this rapper skit by some talented US teenage satirists. Some of their skits are hilarious.


  18. CitizenWhy

    ECB policies are dictated by Timothy Geithner of the USA. Geithner Message: “Save the bankers. Throw the women and children and a lot of men overboard, but save those bankers. Only the bankers can rebuild the economy they wrecked.”

    • Dorothy Jones

      Mad day for news today alright.
      - Nugget of the day: Ombudsman Emily O’ Reilly specifically suggests that the FOI Freedom of Information Act would extend to NAMA.
      - Namawinelake article above: Enda Kenny infers that original developers are buying back loans BEFORE consulting with the Finance Minister who has an overarching power conferred to him under the Act.
      - Paul Sommerville posts that LCH will add a significant margin to the Irish Govt Bonds tomorrow; iseq Bond stats today make grim reading at COB

      - Implosion in Greece could bring the Euro down with it by DOB in the IT [Greek Revenue collection practices on a par with Dickens' Circumlocution Office?]

      • Oh, I like Emily O’Reilly, I think she is not hesitating to call a spade a spade, remember her rattling cages last year causing the whip a hissy fit.

        S&P hammered Greece down to CCC, again partly based on Schaeuble’s comments of course, all this is really getting a surreal quality.

        Noonan talking up Ireland on Wallstreet. Boy will they have a laugh, 5 extra lines of coke, free for all when Noonan goes to the street, everyone should have a good laugh once on a while.

  19. Dorothy Jones

    Playlist for today Monday 13 June 2011 in Ireland. Only one song: In the Air by Laurie Anderon; excerpt as follows:

    ”Good evening.
    This is your Captain.
    We are about to attempt a crash landing.
    Please extinuish all cigarettes.
    Place your tray tables in their upright, locked position.
    Your Captain says: Put your head on your knees. Your Captain says: Put your head on your hands. Captain says: Put your hands on your head.
    Put your hands on your hips.
    Heh heh.
    This is your Captain-and we are going down.
    We are all going down, together.
    And I said: Uh oh.
    This is gonna be some day.”

  20. paddyjones

    David has said what is wrong with the ECB but hasnt said what the right approach would be. What is wrong with 160 billion of liquidity and 1.25 % interest rates???? The ECB has been nothing but kind to Ireland and David snipes at them.
    Kenny ” We will repay all the debts” has spoken, there will be no default , austerity will be the policy for the next decade no matter what the social cost. in fact allthe parties even Sinn Fein have agreed to us getting our borrowing to 3% of GDP in the coming years. So Davids “default” and “no austerity” theory is false.
    I must say that Davids ideas are poorly thought out and they dont offer an alternative , it reminds me of interviews with Joe Higgins he just spouts the “no auterity” bullshit without saying what the alternative is.
    The ECB is far stonger and more credible than the Fed is , the Fed with its 14 trillion dollar debt is the ultimate FUDGE.

  21. Gilmore was in Tanzania fresh from Wikileaks and had meeting with Hilary Clinton, interviewed, he was asked re Geithner, “Well, did you discuss Timothy Geithner…”?

    Quick as a bell, he replied, “No, the matter was not discussed”

    Do you recall Enda’s similar stock answer when asked if he had raised the matter with Obama.

    Noonan is on a 4 day visit to USA http://www.rte.ie/news/2011/0612/noonanm.html

    I believe they’ve looked at Geithner’s diary, but Noonan is not on it.

    Some things you just don’t want to know about:)

    • Deco

      Gilmore might not have bothered asking the 30 Billion Euro question of Obama, but he was on hand to facilitate Obama’s need for photos to be used for the Tamanny Hall Party back in the States.

      Two fakes facilitating each other’s others need for publicity and managing to create the pretence that they actually care about the common man.

    • I do not think, after the events and facts unfolding in the past 4 years, that there is anything left under the sun that would astonish me when it comes to dishonesty and indecency of the political class.

      As soon as they open their gob nothing but media trained deception and lies are produced.

  22. Juanjo R


    (Apologies to all for this but I wish to go back two articles it has taken a while to get a thorough response together)

    On the subject of your final post about Argentina – after a long chat with some young Argentines here (in Dublin) on Tuesday evening last I didn’t get a picture that things were that good there now, and most certainly for them, some 10 years( and a lot of 30% inflation according to them ) since the last big default there.

    I was there myself in 2007 – I speak some Spanish – and with practically every Argentine being friendly, pretty well educated and up for a chat ( as I’m sure you have found yourself David ) it was easy to get a good impression of what was happening on the ground there. It certainly wasn’t at all rosy then. They were collectively all still in shock to some degree as far I as could see, then, some 5 years or so after their last big default.

    In my experience all you had to do was simply pull out some crisp dollars for payment ( or anywhere else in South America for that matter ) and you could see the power that currency has over locals. I remember when opening my wallet and pulling out money a few times – in small hotels/hostals etc – I would have typically had 200+ euros in visible 50s and a maybe 100 odd dollars in tens,twenties and a fifty – peoples eyes positively bulged at the sight of the dollars even though the euros beside them were actually worth 2-3 times more. Everybody just wanted dollars. As one Argentine said to me the other night default and hyperinflation “is in our blood” ( en nuestra sangre ) and therefore the steady dollar is the only currency to be believed in.

    For me all this – and what else I know – doesn’t point to a confident nation moving on and putting the past behind it. It says to me they believe its only a matter of time until it all to happen again. The dollar is what they believe in. Actually — that leads me to the one thing I really can’t fathom.

    Compared to most of South America the population Argentina is better educated. It is the closest country to a European one outside of Europe. It is in reality the least old country in South America and it doesn’t have the same colonial hangovers as Boliva (indigenous Andeans vs ‘white’ colonial Bolivans) or Brazil (lower class poor mezitos vs oligarchical colonial whites). Most people in Argentina are only a few generations from their mainly Italian or Spanish ( particularly Galician ) forefathers and from Europe. They are often better connected than the Irish to their ancestors. They seemed to me to be on average more clued in and rational ( in discussions ) than us on politics and the economy. Yet despite this, as a population, they seem to be not be able to escape these continuous economic crises. On a personal level they are mentally resigned to it all, and this despite being educated and very largely ‘getting it’ so to speak.

    One other thing – my Argentine aquaintances brought Peron and Peronism into our discussion of economic history very early on. The IMF and ‘La Junta’ figured as well. The mentioning of the Peronistas was very interesting for me as I tend to find Fianna Fail to be very similar to the Peronistas – at least I don’t know of a another party/movement any country which is more similar than them to FF in its most fundamental traits. I had an impression that this was at the heart of what they were saying to me – that Peron’s still dominant shadow over Argentine politics seemed to have led to an odd type of cyclical political/economic stasis – which Argentines in general had no clue how to remove themselves from. Basically it was too intrinsic to their culture ( am I making sense? ) it is that this is all part of their make-up, as Argentines, so to speak.

    I guess it would follow that for Argentina to break from its cycle of economic crises it would need a complete change in culture/mentality?

    So coming back to us – and applying what I saw in relation to Argentina – I’m of the opinion that as part of our post-colonial ( mainly FF authored ) make-up that we have never really grown up as a nation. The civil-war and in particular the shadow of Dev and FF narrow nationalism ( blame the evil brits for your misery and ignore what we, or the church, do to you ) still loom large over our politics and the collective national mentality. The more I see of the new government it strikes me that this whole celtic-tiger / euro property boom thing was mainly a fortuitous occurrence. Most senior politicians in ministerial positions here over the last few years (of any political hue) have been in government both in good and bad times and still none of them have shown themselves to have a clue about what makes an economy go – in any direction. So I wonder did they ever or did things just happen and we rode our luck — good and bad?

    For me politics has really failed us not so much economics.

    Perhaps its us that are the problem – the state we created and are part of. Perhaps this entails that a complete cultural revolution in thinking and acting for us is the only thing which can change our course?

    Personally because of our immature status as a nation ( and as a democracy – I believe because we are paralysed by civil war politics ) I don’t think we can change. The future seems inevitable.

    Perhaps we are the new Argentina ( minus some self awareness ) already? And I don’t mean that in a good way.

    As an addendum I have one other comment to make – enough young Irish adults have spent very long holidays or gap periods in South America in recent years to become well acquainted with it all. Perhaps if we weren’t all so keen on getting pissed so much we would have noticed perhaps taken some heed of what South America very recent and visible experience had to teach us. Perhaps that is another aspect of our collective immaturity — an inability to really learn lessons from visceral experience not to mention the complacent mindset which had us thinking that we don’t need to haven’t we got it made?

    • CitizenWhy

      Argentina’s history is indeed troubled.

      When the Pope ordered slaves emancipated, they were killed in Argetina. Hence the need for immigrants from Europe.

      Up to the 50′s ten families owned all the land. They were British (Protestant) or Irish (Catholic). All members of these families had to marry in the Catholic cathedral, with a Catholic Mass.

      Having been brought up good Catholics, prostitutes did not take money. They were paid in jewelry.

      Workers were terribly underpaid, and treated badly. I have a relative who was sent to run an American consumer products division there. First thing he raised salaries, installed decent facilities (including ventilation), set up work breaks. He was criticized by the local management for doing these things. He was sent there to turn the place into a profitable operation, after years of losing money. With the improvements he made the place was quite profitable within 2 years.

      You can see why Peron rose to power – he sided with the poor, without really constraining the rich, while looting the country and building a powerful military. He was more of a Mussolini (before Hitler) than a Hitler, creating a fascist state with popular support.

      • Deco

        As a politician Peron was a genius.

        As a statesman and a man of historic importance, he was a toxic cancer on Argentine society, which has has still not been eradicated. He combined Keynesian economics, Napoleonic politics, and the Dubya method of taxation, and has ensured that Argentina is incapable of getting itself in order.

        • Praetorian

          Maybe ‘doing well’ should be qualified to ‘doing well for some’, the political and business elite, the so called ‘engines of the neoliberal economies’ who turn to the populace for bailouts when things go inevitably wrong.

          As is often cited and readily applicable:

          The Poor complain
          They always do
          But that be idle chatter
          Our system brings benefits to all
          Well, to all those who matter.

          The citizens are invoked when convenient for politicians and those who seek to speak of Ireland Inc with its ‘head-down workers’ and 12 hour shifts ‘working to get the country back on its feet’, the citizens like extras in a movie, helpfully fill the background for the power elite but remain largely marginalised, excluded and told to vote again until the right result comes out of the hat (Lisbon II).

          • Deco

            If you ever get a chance, I recommend an analysis of how the Patrician class (well connected nobles) shafted the Plebian class (small farmers, and independent men) after the Carthaginian Wars ended in Ancient Rome.

            It left Roman society disfunctional, where innovation consisted of new “Bread and circuses” enactments to control the masses.

            When the Goths invaded, then Goths had several advantages – they knew what they were fighting for, they did not need to consult a gargantuan bureacracy to get things done, and their internal power struggles tend to end quickly, and with only a loss of life amongst the clan leaders.

          • Juanjo R

            there is a good 500 year gap in the events you are talking about there deco!

          • Praetorian

            @ Deco, not sure if your comment in in relation to my username, it refers to the earlier incarnation of the Praetorian guard who literally guarded the interests of the people and had the power to depose unjust Emperors(which they did incidentally), they were also an elite fighting force, with the best men drawn from the legions, the later Guard succumbed to corruption and poor leadership and were eventually disbanded but in the early days they were quite something it seems.

      • Juanjo R

        Looking at the penguin history of Latin America here I’m really finding it hard to back up your historical claims.

        There was no huge slave population there and I can’t find any talk of extermination of slaves due to an order for emancipation. Thats actually a heavy accusation to level at a nation.

        Most immigration and the essential formation of Argentina as we now know it occured between 1870-1914.The immigrants were needed to exploit the pampas for cattle raring. They were to own their own land slavery had nothing to do with it.

        Peron was no more than a charasmatic version of right wing regiemes that existed in most of South America at that time. I see no overriding parallels with Hitler/Mussolini.

        • Praetorian

          @ Juanjo R

          You should acquaint yourself with Eduardo Gaelano’s ‘Open Veins of Latin America (1971)’ or Noam Chomsky’s ’501: The Conquest Continues’ (to name but two excellent pieces of work).

          Native people’s were slaughter (conservatively estimated at between 70-100 million) from the Caribbean islands to the tip of Patagonia and still it goes on, it never stopped. The killing of so many in the mines and plantations in the early years of Latin American colonisation led to the mass transportation of slaves from Africa, again an obscene amount of people hence the mixed populations.

          There was a very interesting documentary on Al Jazeera which revealed that a census was carried out in Argentina by an NGO which directly challenges the standard narrative of denial of the very existence of a black population in Argentina, which was a complete ‘white wash of history’, authorities claimed those that did arrive ‘died out’ over time, this has now been proven untrue in this ground breaking piece of sociological work, and the ‘unpeople’ of the past and present have thankfully been brought back into the discourse of Argentinian life.

          In Argentina, as in other countries of America, racism directed against people of colour/African origin dates back to the days of colonial rule. In the caste system imposed by Spain, the descendants of people from Africa occupied a place lower than the descendants of persons belonging to aboriginal peoples and they were completely written out of the picture. Thankfully with ongoing efforts like ‘Africa Vive’, a new picture is emerging around the African socio-economic contribution to Argentina.

          Indeed, in 2006 there was a pilot census on this issue in the neighborhoods of Montserrat, in Buenos Aires, and in Santa Rosa de Lima, in Santa Fe, revealing that 5% of the Argentine population admits having ancestors of African descent and that an additional 20% believes it could share this ancestry but is not sure. A larger study recently revealed a more extensive connection which was previously thought impossible.

          Other researchers have argued that there was a deliberate policy of genocide against the Afro Argentinian and was probably implemented by using repressive policies during epidemics and wars as a tool of mass destruction.

          All the above should come as no surprise to anyone with any knowledge of imperialism/colonialism.

          • Juanjo R

            Well done Pretorian you can quote unsupported wikipedia entries! So who wrote what you are quoting?

            I have looked about and I see no mention of EVIDENCE of ANY such genocide despite these PUPOPRTED events having occured 150 years ago or so.

            Chomskys book dosen’t mention anything about it and as for Hugo Chavez’s favourite book I have it right here on my desktop ( in Spanish no less ) so why don’t you point me to the bit about genocide? The best I can find is a reference to the (mainly poor) creole population taking a lot of casualities in patriotic wars and being treated badly despite (p.154 of my version) “El criollo bravío, que había servido de carne de cañón en los ejércitos patriotas, quedaba convertido en paria, en peón miserable…” – The brave creole, who had served as cannon fodder in the patriot armies, was turned into a pariah, a miserable pawn…

            On the ACTUAL TOPIC heres a direct quote ( referenced) from a review essay titled AFRO-ARGENTINE HISTORIOGRAPHY by Miss Claire Healy of UCG – p.114;

            “The apparent disappearance of the Afro-Argentines, however, is also related to a high
            level of assimilation and acculturation in the nineteenth century community, a positive
            aspect of Afro-Argentine history which is commonly overlooked. Lewis considers acculturation
            in purely negative terms: ‘‘Aware of their precarious situation in a society that placed
            primarily negative emphasis upon blackness, they sought alternatives to perpetual
            otherness. Acculturation and miscegenation were the options most often pursued.’”20 – 20 Lewis, Afro-Argentine Discourse , 133.

            Actually going into one of the few links I found in the wikipedia pages I found the exact opposite mentioned in the link as opposed to the imnflammatory article – from in an 1970s article purely African American (US) magazine which repeated the above ( as per Miss Healy more recent essay) more or less.

            Also going on to Argentine spanish language academic or similar websites I found no mention of this ‘genocide’ either.

            Can you please stop tarring everybody with the one brush and painting huge sections of history wide broad strokes!

    • PMC

      Absolutely smashing post – fair play.
      CJH set the ball rolling for the Irish economy, the initial IFSC and FDI etc…, which in fairness to him, it was the catalyst for some good foundations. The rest of him though….
      Ignorance, immaturity, and dillusions of grandeur in society ensured however, that a heavy fall was on the way at some point. All the traits of crass nouveau riche were displayed on a national scale.

      As you rightly point out imo, we’ve been cursed with utterly clueless politicos in Ireland.
      Unable to see, or carelessly ignorant more like, that banks were getting endless sums of cash at low interest rates, then offering any amount at all to any punk that darkened their doorway. Most of it going into property here and abroad. Prices going through the absolute roof and still they allowed it to continue (for their own greedy fucking benefit – Gilmore for example)
      Had it continued, young people would have, at some point, had to take a stand. Where was it going to end??? A 300sqft box on the Aran Islands for 750K?
      Government is about providing an environment within which society can grow and thrive; not destroy the whole fucking thing.

      If there’s a positive element to come from all this mess, then perhaps its the noticibly more humble manner of people nowadays – Still a long way to go though.

      Your Argentine pals even have the maturity to discuss the situation! Political conversation for many in Ireland is in the same bracket of revulsion to that of paedophilia it seems. For me, its down to ignorance and the “i’m alright Jack” mentality as regards the lack of protest here.

      • Juanjo R

        Whats also interesting about the argentine lads is that they were from different parts of argentina (but not BA) with different professions/studies all in their mid-twenties just starting out after college and had just met on arriving here but yes they were all tuned into politics/history and capable of discussing it in simple educated and very real terms.

        But its normal there!

    • CitizenWhy

      Peronism has institutionalized a dysfunctional class conflict in Argentina. The classes have no idea how to work toward a common good. Ideological melodrama or nose-to-the-grindstone practicality come and go in turns. This is all complicated by believing that God, or some historic imperative, is on one’s side. The most practical education is provided by the Catholic University, which stresses the professions and technology. In many universities ideology (that is, some form of absolutist theology) prevails.

      Elites, inherited or meritocratic (usually mixed), rule everywhere. The question is whether they rule for the common good and widespread prosperity or only for their own benefit. In the USA the most powerful of the elite have abandoned the idea of a common good, which they once adhered to out of a fear of communism. With communism gone, and the financial institutions unregulated, the elite and elite candidates look upon others, including salaried workers, as parasites. The dreary, intellectually weak, cartoonish Gospel of Ayn Rand is all the rage. At the same time the liberal elites have shifted their focus to social rather than economic issues. But the anti-communist goal of a “consumer democracy,” designed to show that capitalism (called democracy) could deliver the material goods better than communism, has succeeded too well on a cultural and social basis.

      I would recommend the film “Chile” Stubborn Memory” to get a picture of a very European South American country that modeled its government structure after the US, with three separate branches. This system prevailed until President Allende, with one third of the votes, defied a unanimous decision of the Supreme Court that his land distribution scheme was unconstitutional. As a result, at the prodding of the anti-communist USA, the right wing military staged a coup. Totally unnecessary, since he was going to lose the support of the moderates (Christian Democrats) in the legislature and lose the next Presidential election. We know what happened from there under Pinochet. A return to the country’s 150 year old constitutional structure allowed the Socialists to introduce progressive policies (despite a strong, extreme right wing ideology among most of the well off). Unfortunately, Argentina has no strong constitutional tradition. The rule of men generally prevails.

      In the film “Chile, Stubborn Memory,” the director, Patricio Guzman, who was the official videographer for the Allende campaign and who lost his entire family except for his German refugee, highly cultured and stoic grandfather, to Pinochet’s murderous rule, reenacts the presidential campaign of Allende and systematically deconstructs the myths of the left and the right. To Chileans the whole discussion of the Allende-Pinochet years is traumatic, since the government had consistently lied about it all and these lies were taught in the schools. The theme of the movie wis simply “Tell the Truth.” The phrase “Tell the Truth,” ironically, was the slogan of the right wing in promoting their lies. But the left also lied to itself. Guzman deconstructs both sets of lies. One subtle scene especially struck me. It consisted of an interview/monologue from a left wing professor talking about the “gran aventura” of the Allende years in a very self-satisfied manner. The knowing viewer realizes that he would not be in his position had he not cooperated with the Pinochet regime.

      By the way, there was only one copy of Guzman’s original footage that survived, along with Guzman, under the protection of the Swedish Embassy. Guzman eventually smuggled the footage out of the country and then, with Pinochet gone, Guzman returned to film a reenactment of Allende’s campaign and use this film as the basis for young people to discuss the Allende-Pinochet years, with powerful emotional effects.

      Perhaps someone should be planning to film about Ireland for about 5 years from now. The theme could simply be: “Tell the truth.”

      • Praetorian

        Interesting post, will have to seek out this film.

      • coldblow

        Some excellent posts here from all concerned, especially this last one. I’ll read it again later on.

        Just a couple of things you might clarify:

        1. The sentence beginning “At the same time the liberal elites have shifted their focus…”

        2. “The rule of men generally prevails.” -?

        3. ideology (that is, some form of absolutist theology) – do you mean theology in the literal sense?

        Your post reminds me of that fine film with Jack Lemmon “Missing” – there’s a good scene near the end where he voices his disbelief that Americans could behave like that.

        I posted this link before a good while back but doubt if anyone read it:


        I wonder who wrote the piece? (Is the author still alive?) It’s funny in its deadpan way – not really what you’d expect on Wiki. This is how it ends:

        “At the end of the novel Howard and Barbara [Kirk] are still together, and all their friends admire their stable yet “advanced” marriage. Howard has even further metamorphosed into “the radical hero” who is “generating the onward march of mind, the onward process of history”. According to his philosophy, things, especially those he likes, are bound to happen: this is called “historical inevitability”. The trajectory of the Kirks’ life together ends when Barbara attempts suicide during a party.”

    • coldblow

      An interesting post. I don’t know much about Peron but I could see the resemblance to FF and made a reference along those lines in a post here some time ago.

      It is interesting how you see parallels between Ireland and S. America. Crotty made that connection (Ireland in Crisis etc) and saw our lack of development as stemming from the grafting of capitalist institutions in inappropriate contexts, in particular property in land. I agree with you also about our postcolonial makeup but disagree that it was mainly FF authored. FF was the party of the poor originally, well at least compared to FG, but quickly collapsed into a semi-corrupt tribalism (broad brushstrokes here) whereas FG have always been more honest (or blatant) about what they stand for, as we are now seeing.

      It’s impressionistic. There was a Spanish-language short story (in fact a chapter from a novel) I read once which was revealing about the interaction of the privileged children of the elite with their less fortunate fellow citizens (servants), set in Mexico. Gege here once mentioned his unpleasant experience of being stuck in a hotel one evening in the company of the local elite somewhere in S. America. I also once referred here to an old tv column by Declan Lynch where he described the frosty reception Bernard Manning got trying out his brand of comedy in Bombay (“The Savage Silence of a Pampered Elite”). I have also quoted from VS Naipaul’s observations about the economic helplessness of the post-colonial Caribbean (To which a poster described his prose as ‘turgid’ although it is universally recognized for its clarity. And mention of Naipaul reminds me of Theroux’s experience as he travelled south from Buenos Aires after meeting Borges (who had I think the biggest library of Anglo Saxon literature in the continent) when he was stopped by traffic police who extorted a ‘fine’ out of him.) While some may find it far-fetched, I think that, in short, our problems largely stem from the fact that we are a postcolonial nation governed (as all are) in the interests of its elite.

      I read somewhere recently about somebody dining in style at a place called the Bolivar Grill. In Lima? Perhaps it was a novel by the Peruvian writer Llosa. It just sounds funny. But then again, their elite probably live in roads named after patriots and revolutions. Ours live in streets whose names are taken from the leafier parts of England. However there appears to be this mob element to both our popular culture and our ‘national conversation’ that is reminiscent of S. America.

      I don’t think the FF/ church explanation gets you very far as it has become a cliche (at least the ‘explanation’ I keep hearing). Nor is collective immaturity any better as an explanation, again being more symptom than cause (what does ‘collective’ mean anyway in a postcolonial setting where the public purse is only there for plunder by vested interests?). A study of economic history is, I think, more fruitful.

      Excellent post.

      • coldblow

        For those interested in trivia, I checked the chapter of the book I referred to and it turned out to be an early work by Llhosa. Good writing sticks in the memory.

  23. Malcolm McClure

    There is controversial article in the FT today by Nouriel Roubini about the breakup of the Eurozone. http://blogs.ft.com/the-a-list/2011/06/13/the-eurozone-heads-for-break-up/
    This is followed by a rejoinder by Sony Kapoor and dozens of well-informed speculation pieces about what happens next. Notable amongst these is one by john.turner:
    “The big flaw in Mr Roubini’s argument is that the Euro was designed like a Pharaoh’s tomb – there is no exit. Under the terms of the Accession Treaty if a country were to leave, the debts of its citizens i.e. mortgages, loans etc would stay denominated in Euro, as would of course the debt of the Sovereign. Thus on reverting back to a national currency on a devalued basis citizens and State alike would become bankrupt overnight because their debts in real terms would increase by the amount of the devaluation, circa 30 to 50%? Moreover, the interest rate of the exiting country would have to be a multiple of the ECB rate, say 10%+ in order to protect its banking system and maintain an inward funds flow, given that all the peripheral countries currently experience a very negative deposit to loan ratio i.e. a massive funding gap. With such a double whammy of further increased debt and higher rates, it would be suicidal for any peripheral government to countenance such a situation, so I respectfully suggest Mr Roubini goes back to the drawing board.

    The only possible alternatives I can envisage is for Germany with perhaps the Netherlands and Luxembourg to leave by revaluing upwards, thus creating a two tier zone with the periphery operating perhaps within an ERM type mechanism whereby they might float downwards by a greater degree than others such as France, Spain and Italy, nonetheless incurring a devaluation but at least a less painful one. Importantly, this will restore competiveness of the peripherary and allow debts within the peripheral member States and those of the States themselves to still be Euro denominated and avail of interest rates near to core Euro levels. One alternative for Ireland is to go back to its historical roots by restoring the fixed link with Sterling. This would provide Ireland an anchor within a low coupon currency and where its main trading links lie. Equally, it would help the UK to protect its very large investment in the Irish economy which is worth more to the UK in terms of exports than all the BRIC countries combined. Nonetheless, this could presumably only be achieved with the agreement of all Euro States and the UK, at an acceptable exchange rate that would not do lasting damage to the Irish economy.”

    • coldblow

      “Under the terms of the Accession Treaty…”

      As Uchrisn (and me) pointed out to Manofiona in an earlier thread, the letter of the law would not count for all that much and is indeed already being flouted left, right and centre.

  24. CitizenWhy

    This a really important article from the Sunday New York Times (June 12) on the head of Deutsche Bank and his control of EU policy and Madame Merkel. After reading this you will discover another reason that Ireland will never be allowed to defy the ECB (although it could, without permission).


    This article, plus others and comments here, give us good reason to rename the EU Bankistan.

    • Excellent article,

      Ackerman Deutsche Bank fighting to gain time to build reserves against inevitable losses from PIGS?

      Crunch question of pouring good money after bad?

      Kick the can long enough for PIGS to turn into Swans, only problem is PIGS seem more alike the children of Liars, rather than the children of Lir?

    • CW,

      yeah Mr 25%,!

      We have nothing left but shadow governments that are controlled by the neo liberal occupation forces. Enda Kenny preaches his export mantra, two faced Gilmore jabbers about Hunger in Tanzani while Noonan amuses Wallstreet.

      The phasing in of a new political reality is in full swing, democracy is constantly undermined and abused to benefit a system that will be repressive and designed for one purpose only, cut wages, minimise workers rights, implement a slave labor market that can hire and fire without contracts between employers and employees, and shape the social structures for the next decades.

      Hawkish forces dictate austerity to nations, nations have no say on the matter, they are dictated policies, whether Ireland or Greece, it is always the same menu that is served.

      As long as the docile Irish public swallows the pill that it is force fed by the EU/ECB/IMG compliance managers of FG/LP nothing will change.

      The tragedy is pretty obvious, and the game plan as well, it is all about timing, and one of these days the Irish public will wake up and realise that they missed the train, realise that they are back in the modern ‘workhouse’ version of neo liberal Gombeens who will treat them and the generations to come in the same way their great-great grandparents were treated.

      The submissive behavior of the public towards the occupational forces that strip the country of assets and impose a terror regime of demands is the real destructive force of any democratic foundation, and as a result, a totalitarian regime rules by means of taxation, wage slaughter and a policy of dancing batons if the public does oppose.

      This submissive and ignorant behavior is the true enemy of democracy, and it enables these hawks to implement a new political reality for the coming decades, they are the social engineers of this totalitarian federal wet dream where the enemy number one is….. the citizen!

      • adamabyss

        Georg, serious question; do you think your countrymen in Germany would suffer this sort of treatment at the hands of the elites if they were in a similar situation to the Irish people?

        If not, what would they do?



        • Your teachers should be proud having students like you.

          In an attempt to expand the spectrum to the EU I would ask the questions why are there no significant demonstrations organised amongst the GIPSY countries that address the real culprits in Brussels?

          Of course, there are variances in the ingredients that make up the cultural hegemony in EU member states, on top, the threshold, or critical mass, that needs to be reached before people express their discontent varies as well just in line with economic satisfaction and stability.

          This economic satisfaction for the majority of workers in the EU was achieved to no small degree by the South-North discrepancy, the productive class was able to buy cheap food and other consumer goods in a great variety, but at a price. The boomerang effect of such post colonial attitudes and policies, they never really de colonialised to begin with, is now knocking at the doors in Italy and Europe, refugees.

          The price was paid in the Southern hemisphere. I said that before, Hunger is political and has inherent reasons. African countries could not compete anymore with the prices that were dictated to the markets by flooding them with goods, a direct result of World Bank and IMF policies, force-frackingwide open these markets to exporters by imposing conditions to their so called aid.

          At some stage, spanish tomatoes triggered bankruptcies for example, tomatoes are a staple diet for many families in Kenya and as a result of forcing spanish tomatoes into Kenya, local producers of tomatoes went belly up.

          Such knowledge was not common in the early 90s golden age of capitalism, on the contrary, when people bought beans from Kenya, they were convinced that this is a good thing. Fair trade movements only started to gain ground and highlighted the true relationship of the North-South capital movements and policies applied.

          The industry, not being a slouch, picked that up quickly and before you knew it the big shots like Nestle started to apply little green labels and other indicators to their products, the halo of fair trade and ethical relationship with producers was applied to products, anticipating the richer countries to slowly wake up to this reality. The fact that they still support child slave labor on cocoa plants is a clear expression of their true motivators, quarterly profits, shareholder meetings.

          This age of cheap food is coming to an end. You can expect prices to easily double in the next decade or two.

          x x x x

          Irish politicians brown nosed transnational companies with their incentives to come to ireland. The story on the 12.5 % is only a fraction of the truth behind. It is part of a concept that allows Multinationals to engage in their global tax avoidance schemes, Dr. Sheila Killian / Univeristy of Limmerick is an expert in these matters and outspoken on the North-South discussion and Irelands role in this scam.


          The hawkish austerity priests, from EU/IMF and Irish compliance politicians are simply applying very old structures, the same that IMF and World Bank has forced onto low income countries all over the globe, by attaching conditionality that benefits not the country but exporting countries, this way they also forced american exports.

          The tendency that food and energy prices will inevitably raise, and at the same time wages will be slashed further together with social services increases the critical mass of people that are unwilling to play along.

          In Germany you already have a system in place that is exercising power over the citizens with brute force, the equivalent of the DOF in Germany has troops and enforcers running around 24/7 to press compound interest rates, as if they were a bank, onto debtors that are behind in paying taxes. Germany has established a second labor market that allows them to falsify their unemployment statistics, low income, no rights, and often insane demands on workers are the result. The amount of people in Germany that works a full days job and still has to apply for social well fare because they can not make ends meet with the low wages paid is steadily increasing since years

          This contributes further to the critical mass.

          Whatever way you look at it, cultural variances are of lesser importance when it comes to the threshold where people are raising up against what is blatantly unjust and ultimately demand rapid change.

          Of much greater importance are factors such as economical satisfaction, perceived perspectives and stability.

          This does not mean that surprises are impossible, the Stuttgart 21 demonstrations were such a surprise to the incumbents, they did not see it coming. transferring this to Ireland, would literally mean that people from all counties start to meet in Tipperary to show Lowry and the authorities the middle finger, set up tents, organise themselves and oppose against this plan to build a mega casino.

          Such was the case with Stuttgart, and people came from all counties in Germany to show solidarity with the protestors, and after a short while, it was not alone about the project anymore, but addressed all levels of discontent with the ruling political class that acts self righteous and abuses democratic legal gaps and deficits to suit themselves.

          x x x x

          If we can come to some common ground of understanding that it matters what the EU and IMF and corrupted government do to the people in Greece, if we empathize, and show solidarity, we would achieve a major step towards a true Europe as it was envisioned.

          Yes, of course they would suffer the same treatment in Germany, they already do.


    • Malcolm McClure

      Apropos to nothing much, but I find it interesting that Herr Ackermann. (‘the most powerful banker in Europe’) apparently succeeded in ‘steering’ Germany though the post Lehmans crisis.– Must be in his genes.

  25. Malcolm,

    Good to see support growing for the option of a link to Sterling, see earlier posts. This would help our relationship with NI also. I believe John Turner’s critique of Roubini is incorrect.

    Debts would not increase by amount of devaluation. On devaluation one Irish Punt would be equal to One Euro and debt would be converted at this value into debt denominated in Irish Punt.

    As I understand this, this concept would be similar to money being exchanged into a different currency and redenominated at that new value in the new currency at one point in time.

    What happens next is the currency floats on the markets and would float down 30 – 50% and debt with it. But I’m open to correction, so if there is another technical understanding of this issue other than mine, I would like to hear it.

    Meanwhile shortly ago VB ran his interview of last week with Honahan. Its quite astonishing. The DOF worked out the 4 year plan in the knowledge the deficit needed to be brought down and sold to the Troika. The Troika came in and had nothing to do, they signed up to it.

    The Irish negotiators at this point expected a good deal on the €12 bn unsecured bonds. The Irish team felt they had a strong position with six months of credit available to them to withstand a long drawn out negotiation on bailout interest rate and the unsecured bonds and possibly a haircut on further debt. This was November, just before the budget.

    The Troika then pulled their joker card to trump the Irish team. They used the strength of the Irish team against them in a pronged attack. On one side, tere was the imminent budget and fear of ATM failure; on the other side, there was the ‘strength’ of the Irish altar boys falling over themselves to please the Troika a la the 4 year austerity plan they had even drawn up themselves. In the end it was like picking goldfish out of a pond.

    The troika announced the interest rate was not in their remit to negotiate, it was available from IMF website and based on a universal fixed calculation. The haircut and unsecured debt at €12 bn, up to this point trading at 30p on the markets in expectation of a haircut – couldn’t believe their luck – was to be paid back in full.

    The trap was sprung fed by the Irish desire to appease ECB at any cost!!!

    The Troika must have had a good laugh, thank you guys!

    The fear of the Irish their 4 year plan would be scuppered, they might have to leave the EMU, all worked a treat for the Troika.

    Time to take the €160 bn provided by the ECB as a debt to Irish banks and return it to the ECB. We don’t want it!

    Sooner we learn the lesson, putting taxpayers on the hook for billions of private banking debt is not an act of kindness, the better; for useless Irish negotiators missing their scalps!

    Facts are important. What is more important is how they are used, the morality or other perceptions given to them, the patterns into which they are placed:)

    • Deco

      The cartoon with the IMF/EU and ECB pointing guns at the Irish government and saying “take the money or else” captures the absurdity of it all.

      The whole deal was designed to be
      a) a bailout for the bondholders (Google “anglo bondholders revealed” to see the likely influences in this matter)
      b) stick the bill to either taxpayers in Ireland or taxpayers in other parts of the EU
      c) allow the ECB to print money and thereby stabilize the Euro against other central banks who are persistently trying to devalue their currencies.
      d) maintain the pretence that all is well.

      Those who speculated got an excellent deal.
      Those who worked got shafted (again).

      Even that bastion of capitalism, the good ol’ USA had far far more dissenting voices about bailing out banks than in so called left leaning Europe. In Europe across the political spectrum, there was consensus amongst anybody who wanted to be described as respectable and responsible by the media, to endorse the sham, or at the very least not oppose it.

      • Deco, there’s another rather odd angle on this due to the peculiar makeup since realised as kernel of the Pigis disaster. Unlike the Fed system where the Fed looks over the shoulder at its equivalent of our ICB’s and looks at the books, the ECB system of national CB’s means ICB’s are much less transparent in their operations. So ICB could turn a blind eye to Anglo and never had to account to ECB or do a quantitive book keeping on Central issues eg Anglo. Probably this was due to sensitivity over independence and sovereignty. The Pigis left to their own devices went on a spending spree:)

        Secondly, “take the money or else” in the Irish case is an overstatement.

        I believe a better analogy is MAx’s ‘Stockholm Syndrome’; the Irish gombeens bent over backwards and would have done anything asked of them by the Troika, to get back their ‘good altar boy’ status.

        That’s how the worst Finance dept in the history of Europe and the universe got the worst deal possible for Ireland.

        It was a case rather than standing up for Ireland, bowing down for Ireland:)

        • Deco

          The worst Finance Dept. in history never seen this coming either….and now that I think of it….the ESRI which is supposed to also know where the economic trends are heading never seen this coming either.

          Too busy peddling “Soft Landing Theory” on the citizenry.

          “Soft Landing Theory” has been completely debunked.

          • Malcolm McClure

            Deco: The “Soft Landing” was last year. We are now at the end of the “Dead Cat Bounce” that was cushioned by printing money all the world over. The EC and the ECB are in the ring now for the final round, fighting bare-knuckles for survival. It is not now just a matter of which will win,but whether they will kill each other before the fight is over.

            Prudent people are taking precautions: buying portable assets like gold, silver, stamps, jewelry for the rich; useful machines like tractors, diggers, combine harvesters and fuel storage tanks etc for the middle class; power tools, drills, routers, saws etc for the working man; tins of food, baby formulae, washable nappies for the home maker and guns for crooks. Anything that will get them through a year or two of financial chaos.

            It is probably safe to assume that some means will be found, through community action, to ensure that water supply and electricity will be available for a few hours each day. Don’t count on rubbish collection or open filling stations.

  26. CitizenWhy

    I am all for an Irish link to Sterling. And both my parents were deeply involved in the Irish War of Independence (but no relatives ever supported FF, voting FG or Labour or getting out of Ireland). The future is more important than the past.

  27. flowerofthemountain

    ECB-a-slave:prison bitch

    hey,David. ‘yo!’ etc

    ‘sagging pants is WAAAAY more complicated than you think! Jean Genet/Qeurelle: those pseudo-gurriers are signifying something that would both repel and entrance them, true rebel chic:


    of course, when the bloated corpse of boutique fashion lays its’ fangs on the ultimate fashion ‘punk’ rock rebellion of the last 35 years: expect confusion and mixed signifiers. LOL!

    It’s a bit like the ‘hanky-code’ that was so popular back in the day before the great clueless copped on……(giggles)

    Obama utterly ‘dorked out’ on this sartorial middle-finger from the racial incarceration gulag to middle-America, what with him being an uber-bourgeoise frat boy:


    So, listen up: Trichet, Merkel & Sarkosy. You think you have the little prison PIGIS, prison-whipped bitches lined up for major financial buggery? Well, you need to get real, get with reality. Prison rebellions tend to be pretty nasty and clearing up costs a lot more than avoiding melt-down/lock-down in the first place.

    If the GIPSI nations bend over and clasp their ankles for Angela’s strap-on, their subject populations will rise up from the humiliation and emasculation demanding mass castration. So think carefully, Axel and Olli, you might be dealing with more than baggy trousers as a consequence of your overweening arrogance.

    fondly yours
    Molly Bloom

    “…I was a Flower of the mountain yes when I put the rose in my hair like the Andalusian girls used or shall I wear a red yes and how he kissed me under the Moorish wall “

    • Tull McAdoo

      Welcome back..we was missing our brother from brum….

    • Fashionista Economics

      ‘Sagging pants walking’ is an economic term for an ‘incontinent family at the casino’.They loose everything to shore up the loss making banks .Whenever spotted it confirms austerity in the family.

      ‘Slut Walking ‘ is an economic term that invites the customer inside the bank to view Sopranos and how to gamble their silver.This is a rare spotted animal nowadays .

      There is a difference between the two .In the former you cannot run away fast ( pants too low ) and in the latter , you can and get away with it .Unfortunately fewer are now seen doing the latter and this has been replaced by a talibanistic mindset that teaches that you wear appropriately in the cold weather we have in this State.

  28. Deco

    Roubini is making a public pronouncement concerning China’s real estate construction build out.


    A giant stimulus plan that stimulated Australia, more than anywhere else on the planet – and now Australia is about to get caught out rightly.

    • Yep, kicking the can down the road will yield a more disorderly collapse in the future for EU zone plus current policy is money after bad.

      When the China bubble pops, there could be huge problems due to the huge dependence on the construction industry and the vast army of poorly paid construction workers who follow projects from place to place.

      Irish construction workers emigrated in droves, but the revolutionary might of poorly paid now unemployed construction workers in vast numbers, should be of concern.

      I wonder will we have the equivalent of the Roman Punic Wars, who will be Carthage, who will be Rome? Wars engineered to keep populations busy, only this time modern weaponry could wipe us all out.

  29. News again this morning of increasing fears more NAMA developers, after offloading to NAMA, are running either themselves, spouses or other close relatives to other banks and being given the funding to repurchase their properties from NAMA at NAMA discount prices.

    Unfortunately due to lack of transparency and cover-up in the NAMA legislation, we can’t follow an audit trail in NAMA to see where NAMA is scamming taxpayers in this way.

    • John Allen angle on this urgently required, is this a true moon wobble?

    • Tull McAdoo

      This shit is all put together by the Department of Finance. They are the real enemy from within…..There needs to be a massive clearout of that rotten institution…..everything above middle management… just look at there trackrecord…just look at the cheques that they have signed off on….clear that place out and real recovery can begin…….David you need to look closer to home at the DoF and change there fads and more importantly there sense of overlording that they have maintained…

      People need to realise that the DoF policies,that they inherited from the Brits, to control a colonised people are failed.

      They have been found out. The old mantra of the Rothschilds of “giving them the control of the issuing of the currency and they cared not who made the laws”. They had there people everywhere before the bust….the DoF..the Central Bank Governor…the Financial Regulator…the NTMA…

      I heard all about their antics during my visits to Frankfurt…Any cheque for the buddies…credit cards for the expences…best restruants (close to Kildare St.???) First class travel….Jonh “the bull” Donoghue was only in the halpenny place compared to these people….

      • “There needs to be a massive clearout of that rotten institution”

        GOMBEEN Zombies eating taxpayers and Irish citizens have sold us to the Troika and Dof led by Custer(D)Honahan,

        These Suits should wear Charge of the Light Brigade Cardigan(s) to help their budget preps…

        Ní Féidir Libh.

      • Deco

        Can we remove the DoF for doing a lousy job on behalf of the Irish taxpayers ? And maybe start hiring again, this time in the hope of getting people on the basis of merit and ability, and not on the basis of being well connected ?

        We have to start somewhere with a more honest, and less disingenious Ireland, one that is better and more meritocratic than the nonsensical one that has got us into this mess !!!!

    • DavidIreland

      Holy Jesus, do FG and Labour want a revolution?

      If they don’t, they’d better get off their ar**s and stop any further shenanigans but any of these chancers, gombeens and shysters.

      I thought these idiot scammers were still liable for the original debt?

      Are we going to be screwed on the double by this class of stupid greedy b*****ds?

      God help Ireland.

    • Dorothy Jones

      Ombudsman Emily O’ Reilly specifically wants NAMA to be included within the scope of the Freedom of Information Act. NAMA salaries are a good place to start.

      For all the taxpayers’ money being spent on these salaries, the person who does the most service to the public is certainly Namawinelake with his forensic and insightful reporting.

      And the Government should also consider reading his comments on possible courses of action open to them. It would possibly save some advisors fees…..

      • She’ll be a long time waiting for that one to come around! Too much schenanigans already under the bridge.

      • +1

        and it is a tiny seed of hope to see people like emily speaking up! I have an ongoing email exchange with Prof. H.W. Sinn at the moment, and I asked him specifically on his views concerning debt forgiveness in a somewhat longer context. Will be interesting to see what he has to say, although I am not holding my breath either that he might share my views in principal. In a nutshell I propose that considering the deliberate and decades lasting political neglect of the structural deficit problems in peripheral EU countries, a model of debt forgiveness needs should be taken much more more serious.

        • uchrisn

          Yes Georg the debts will have to be forgiven, most probably in exchange for much stricter central controls on fiscal policy in those countries.
          I was always curious what would happen if you put a German/Danish cabinet in to run a South-American country.
          You would imagine they would do a better and fairer job and improve the country.
          The elite in that country would certainly not want them standing on their toes and getting in their way. They would do everything they could to throw them out. Remeber the elite in those countries usually control the Media, the justice system and the banks. Countries like Greece and Portugal and may I venture Italy have a history of EU grants lining the pockets of the elites and nothing to show for it.
          So the elites would battle tooth and nail to avoid central control over fiscal policy. So they are not implementing the reforms (still not collecting taxes from their mates etc) and on the other hand not crying for restructuring.
          The other issue here is that the Germans and French are hardly impartial. Their banks are heavily invested in Greece debt so they are not crying for restructuring either, especially the French. The Germans seem to have turned a corner a little recently.
          So you can understand why despite the obviuos need for restructuring – pointed out by everyone under the sun who knows about economics, it is still has not been done.
          My idea is that people need to stop wearing their nationalistic hats.
          The working/middle class Greeks and Portugeues need to see that they are better off in the long term with central fiscal policy control than a group of ‘elites’ who refuse to collect taxes from their mates and pocket EU grants. They have a cultural problem of corruption in their countries which needs to be addressed.
          The French working/middle class needs to see that its not ‘French’ banks that will lose with Greek restructuring, Europe has well integrated wholesale financial markets, so we should see banks in Europe as just ‘banks’.

          • uchrisn

            The EU has an integrated wholesale finacial market. The retail markets are not well integrated due to language cultural and local regulation barriers.
            This is of major importance for Ireland. Bank of Ireland and AIB lent greatly from the wholesale EU financial market by bonds etc due to this integration. So in fact they are European Banks not Irish banks. All banks based in the EU are european banks and can set up in any country. However because of the challenges to retail, not many set up in Ireland.
            There is no reason why Ireland alone should have to bail out the integrated wholesale financial market. Perhaps the reasons is that theses 2 Eu banks, BOI and AIB are the main reatail banks providing loans and mortages in Ireland.

  30. Tull McAdoo

    For those not familiar with the ECB’s thinking on monetary and fiscal policy, here is a link to what David calls their “fads”…..P.S. you will note that they also refer to their “two -pillar” approach…..I have to say that FG/ FF or DOF have’nt come uop with an original idea ever ever ever….Two-pillar me bloody arse……


  31. manofiona

    DWM’s article is pure nonsense. Of course the ECB follows rules, that is what Europe’s politicians set it up to do. All you have to do is to read the relevant provisions of the Treaties and the Statute of the ECB to see that the ECB was given a very restricted mandate by the politicians (and indeed by the people of Ireland, who voted to ratify the Treaty of Maastricht).

    The ECB had no power to regulate financial institutions and its mandate was to act as a lender of last resort to the financial system within the bounds of its legal task of maintaining price stability.

    It provided liquidity to the system in August 2007, when the derivatives market came unstuck (and the Bank of England, by its own later admission, had the opposite and inappropriate response). As an alternative to the infamous bank guarantee of September 2008, the ECB would, if asked, have provided the necessary liquidity to the Irish banks to keep them open while decisions were being made on their future: and that it what it in fact did.

    It is no use asking the ECB to stray from its mandate. Decisions to default (however described) on senior debt should be taken, and should only be taken, by Europe’s politicians acting together – and accepting the consequences of their decisions. Perhaps that is what is going to happen.

    • paddyjones

      Well said , the ECB is not the bad guy it just follows its mandate . The question is “Would you rather be a European or an American?” America is the ultimate competitive society , Europe is the Ultimate co operative society. Deutsche says “a cooperative group outperforms a competitive group”

    • The ECB was never envisioned or designed to purchase government bonds, on the contrary, and Trichet stepped over that line on May 10th, 2010, and enforced this nuclear option.

      A week earlier Trichet denied that this option would even be discussed.

      It was a deal done between EU-Commission, IMF and Trichet.

      Get your facts straight!

      • manofiona

        Since we are, rightly, being legalistic about this, you will note that the ECB’s bond buying ptogramme only extends to purchases on the secondary market ie, purchases from banks which themselves had purchased the government bonds. The prohibition in the Treaty on the ECB purchasing government bonds (Article 123) extends only to direct purchases from governments.


          4 June 2009 – Purchase programme for covered bonds

          Following-up on its decision of 7 May 2009 to purchase euro-denominated covered bonds issued in the euro area, the Governing Council of the European Central Bank (ECB) decided upon the technical modalities today.

          The purchases will be conducted in both the primary and the secondary markets….

          ….have, as a rule, been given a minimum rating of AA or equivalent

          European Central Bank
          Directorate Communications
          Press and Information Division


          10 May 2010 – ECB decides on measures to address severe tensions in financial markets

          The Governing Council of the European Central Bank (ECB) decided on several measures to address the severe tensions in certain market segments which are hampering the monetary policy transmission mechanism and thereby the effective conduct of monetary policy oriented towards price stability in the medium term. The measures will not affect the stance of monetary policy.

          In view of the current exceptional circumstances prevailing in the market, the Governing Council decided:

          To conduct interventions in the euro area public and private debt securities markets (Securities Markets Programme) to ensure depth and liquidity in those market segments which are dysfunctional. The objective of this programme is to address the malfunctioning of securities markets and restore an appropriate monetary policy transmission mechanism. The scope of the interventions will be determined by the Governing Council. In making this decision we have taken note of the statement of the euro area governments that they “will take all measures needed to meet [their] fiscal targets this year and the years ahead in line with excessive deficit procedures” and of the precise additional commitments taken by some euro area governments to accelerate fiscal consolidation and ensure the sustainability of their public finances.
          In order to sterilise the impact of the above interventions, specific operations will be conducted to re-absorb the liquidity injected through the Securities Markets Programme. This will ensure that the monetary policy stance will not be affected.

          To adopt a fixed-rate tender procedure with full allotment in the regular 3-month longer-term refinancing operations (LTROs) to be allotted on 26 May and on 30 June 2010.

          To conduct a 6-month LTRO with full allotment on 12 May 2010, at a rate which will be fixed at the average minimum bid rate of the main refinancing operations (MROs) over the life of this operation.

          To reactivate, in coordination with other central banks, the temporary liquidity swap lines with the Federal Reserve, and resume US dollar liquidity-providing operations at terms of 7 and 84 days. These operations will take the form of repurchase operations against ECB-eligible collateral and will be carried out as fixed rate tenders with full allotment. The first operation will be carried out on 11 May 2010.

          • manofiona

            This programme does not involve the ECB purchasing government debt directly – which it is forbidden to do.


          10 May 2010 – ECB announces details regarding the reactivation of the US dollar liquidity-providing operations

          Following the decision of the Governing Council to reactivate the temporary swap line with the Federal Reserve, the European Central Bank (ECB) today announces the operational details for its US dollar liquidity-providing operations.

          The operations will be carried out as fixed rate tenders with full allotment and will take the form of repurchase operations against ECB-eligible collateral.

          The ECB has decided to conduct:

          7-day operations on a weekly basis. The first operation will be held on 11 May 2010, with settlement on 12 May 2010 and maturity until 20 May 2010. Subsequent operations will as a rule be conducted and allotted on Wednesdays, for settlement on the following business day.

          An 84-day operation to be held on Tuesday, 18 May 2010, with settlement on 20 May 2010 and maturity until 12 August 2010.

          Further information on tender procedures can be found on the ECB’s website.

        • Well, you know… I shall just leave this nonsense with a quote:

          Mr. Trichet can consider himself to be lucky if he is not being dragged to a European court on his self righteous and illegal activities.

          Muenich Round 14.6.2010


    • uchrisn

      The EU ans ECB broke a few provisions the treaty of Masstircht and Nice during the crisis.
      The treaty of Nice clearly said that there was to be no bailout of states by other members.
      This was broken when Greece was bailed out the first time. This is the main reason why Axel Weber does not want the ECB job.
      Everyone involved accepted they broke the terms of these treaties.
      Geog also mentions the ECB buying government bonds which it also was forbidden to do.

      • manofiona

        Article 125 of the Treaty prohibits Member States from becoming liable for the debts of other states. So it would have been illegal for Germany to have guaranteed Greek (or Irish) debt.

        However, there is no prohibition on governments lending each other money. The mechanism now in place exists in fact outside the scope of the Treaties.

        I believe Mr Weber’s problem is not with any alleged illegality on the part of the ECB but simply because he disagrees with the idea of Eurozone countries being committed to helping out the wayward prodigals – even for the sake of the long-term stability of the Euro. If that is the case, he is probably the wrong person for the job of ECB president.

        • uchrisn

          I suppose only Mr. Weber can answer exactly why he did not want the job, he made public statements against the ECB buying government bonds which basically ruled him out.
          I am not a lawyer, however when people like the future head of the IMF Christine Lagarde admit that they knowingly broke the rules of the treaties, I tend to accept their confession.
          “We have violated all rules of law because we agreed that we really wanted to save the euro zone.” – In the wall street journal no less.
          So rules of law can be violated in exceptinal circumstances then.

  32. paulmcd

    6-minute INTERVIEW with Michael NOONAN, today on CNBC


    Quote from NOONAN: “in general terms, we believe that the burden should be shared by the irish taxpayer, european taxpayers and private sector creditors. only with the consent of the european central bank.”

    European taxpayers?

    • Deco

      The Irish taxpayers know that the Irish taxpayers are being scelped. It is always assumed. It is the purpose of the Irish state, to make sure that it is always in progress. After all how else can Ivor the Connivorer be subsidized ???

      But…do the EU taxpayers know yet that they are being lined up for a monumental rip – off ??

      • Deco

        Just wait until EU taxpayers find out about Cowen’s pension, Rody Molloy’s severance package, the salary of McUseless, the DoSocWelfare paying 30M a year to a company that pays Tubridy and chums.. half a million a year for talk, plus the national conference centre, Terminal 2, etc…

        It will get very interesting when a contintental TV crew sends over a crew to investigate the proligacy of the Irish state, to find out what happens to money that is given by EU taxpayers.

        Of course we could REFORM the state system, we could introduce transparency, we could reduce the quantity of quangoes, we could eliminate a lot of the waste, and the loopholes.

        But every step of the way, the various snouts in the trough will arrange opposition to this….

  33. Commodities: Update

    If you wonder what these ministers are reading before they come together for their FIRST EVER meeting in Paris next week:


    wonder no longer:


  34. @ Manofiona:)

    I’ve heard this argument put over and over. Its part of the cretinous mentality put out by Honan and the DOF larkers. It requires a new word: GLOTCH

    GLOTCH refers to the ECB vassal mindset that is populated and self replicated by eg phrases ” a very restricted mandate by the politicians ” or “The ECB had no power to regulate financial institutions” or “provided the necessary liquidity to the Irish banks” and the particularly craven “It is no use asking the ECB to stray from its mandate”

    re “The ECB had no power to regulate financial institutions” OOh La La…..that was a big mistake wasn’t it, Irish taxpayers are to pay for that?

    re “A very restricted mandate by the politicians


    Here’s the broken mandate of the Stability and Growth Pact


    The Pact has been criticised by some as being insufficiently flexible and needing to be applied over the economic cycle rather than in any one year.[5] They fear that by limiting governments’ abilities to spend during economic slumps it may hamper growth. On the contrary, other critics think that the Pact is too flexible; the Cato Institute writes: “The fiscal constraints introduced with the new currency must be criticized not because they are undesirable–in my view they are a necessary component of a liberal order–but because they are ineffective. This is amply evidenced by the “creative accounting” gimmickry used by many countries to achieve the required deficit to GDP ratio of 3 percent, and by the immediate abandonment of fiscal prudence by some countries as soon as they were included in the euro club. Also, the Stability Pact has been watered down at the request of Germany and France.”[6]
    Some remark that it has been applied inconsistently, after the Council of Ministers failed to apply sanctions against France and Germany, despite punitive proceedings being started when dealing with Portugal (2002) and Greece (2005), though fines were never applied. In 2002 the European Commission President (1999—2004)[7] Romano Prodi described it as “stupid”,[8] but was still required by the Treaty to seek to apply its provisions.
    The pact has proved not to be enforceable against big countries such as France and Germany, which were the biggest promoters of it when it was created. These countries have run “excessive” deficits under the pact definition for some years. The reasons that larger countries have not been punished include their influence and large number of votes on the Council of Ministers, which must approve sanctions; their greater resistance to “naming and shaming” tactics, since their electorates tend to be less concerned by their perceptions in the European Union; their comparatively weak commitment to the euro as compared to smaller states; the relatively greater role of government spending in their larger and more enclosed economies.”

    And the “It is no use asking the ECB to stray from its mandate.” What vassal egghead, living in an ostriche egg nonsense is this?

    If the ECB was doing it’s job of regulation they way it should have, not erroneously following a disastrous neo liberal no regulation, abandonment of its own regulatory norms, we wouldn’t in Ireland, be in the mess we are in.

    Please don’t write nonsense that got us into the mess and will sink us further into it.

    We need a proactive mindset that will put the interests of this country first, not as gombeens wear the coat of arms of Don Quixote Trichet with one set of rules of abandonment for France and Germany, another for gombeen Ireland.


    • above Honahan not Honan, but maybe finding ‘anyone’ with the name Honan and putting him in Honahan’s job would
      improve our prospects:)

    • manofiona

      The ECB is a creature of the EU treaties. It only has the powers which EU governments consent to give it. For a body like the ECB to go beyond its legal powers would be dangerous – and such excess would in any case be sanctioned by the European Court.

      You have problems with the way the Eurozone works – so do I. But the proper people to blame are the governments of the member states. They are the people who created the Euro and established its rules and they are the only people who can adapt or change them.

      Only after the crises in the PIIGS have Eurozone governments realised that there should be European regulation of banking and not simply national regulation. The new European regulator, which wants to make the latest stress tests on Eurozone banks more credible, has already clashed with the German regluator over capital requirements for German banks to pass the tests and that is a good sign.

      • The rules were made to be broken and were broken.

        I believe a strong hint is being given to us by the members of the ECB, that we should leave the EMU.

        They cannot cure our level of debt under their rules.

        So, simply, let’s leave under our own rules.

  35. If you have a rule book that leads to disaster, you tear up the rule book and write a new one.

    It might also be helpful if you fired those who made up and carried out ‘their’ mandate in that first rule book:)



      You can imagine the sleeveens from DoF with Tricky Don Quixote Trichet asking to renegotiate bailout terms for Ireland. They aim to please because of the false information they provided on the state of Irish banks in previous meetings

      Keidel, Yodel, Krips..==..Noonan, Enda, Honahan ?


      They really do want to protect all those Frankfurt perks, salaries, their power base at home:)

  36. Tull McAdoo

    Calling John Allen, Calling John Allen.

    All flights out of Perth have been cancelled due to Chilean Volcanic eruption.

    Ireland to experience blood red moon tonight…….

    No mention of these events from your “dispatches” from Limerick.

    I detect a level of complacency has set in Mr.Allen,you dont want us to bring back Willie O Dea do you ???? LOL

    • Apologies to Mr Allen please?

      • Praetorian

        Yes, Athens erupting while solitary man in Dublin throws eggs at banking officials and misses.

        • Dorothy Jones

          While Michael Noonan is missing at 2 x no. EU meetings May 6th [secret meeting Luxembourg], and June 14th [Brussels] while the ‘Eurogroup is of course confronting probably the most serious crisis to date in the euro area with Greeceon the verge of default’ [NWL], others are prepared to go to extraordinary lengths to illustrate their interests.
          Take the curious case of the ‘Auctioneer [who] assaulted man in row over way he sold sheep’ IT 14 June:
          An auctioneer has been ordered to do 80 hours of community service and pay €500 in compensation after he beat up a man who accused him of bringing down the hammer on a sheep auction too quickly. A man accused his attacker of bringing down his auctioneer’s hammer on the sale of three sheep before he could bid on them. The hammer had been snatched out of Robinson’s hand during another auction.Said auctioneer had never been in trouble before and that he had done extensive work for charity. On one occasion the auctioneer had raised €60,000 for charity during a “crazy auction”…..on the night in question,there was a lot of drink taken….
          So, at COB today 15 June 2011 our 5 year bond spread is at 11.94 [ISEQ], and this is where we’re at….

        • Deco

          That says a lot about us.

          Pravda/RTE regards the egg-thrower are representative of outrage people out there. But the Truck-off protest was too extreme….

          The taxpayers should be demanding that they incompetent clowns get thrown out.

      • Dorothy Jones

        That’s ok cb, John’s well over that!! He’s busy with other stuff just now.

    • coldblow

      Hudson’s latest (don’t know if anyone has linked this already). Haven’t read it all yet but is excellent.


      • Great link, thx. The financial war is described very well. Putting this at its bluntest it involves the hoovering up of government resources, eg public service spending, the resources of the private sector particularly that of the middle class through tax ligature, in a tornado vortex upward to foreign bondholders. But Hudson puts this better:)

        • “When a nation is directed to replace its mixed economy by transferring ownership of public infrastructure and enterprises to a financial class (mainly foreign), this is not merely “restoring solvency” by using long-term assets to pay short-term debts to maintain its balance-sheet net worth. It is a radical transformation to a centrally planned economy, shifting control out of the hands of elected representatives to those of financial managers whose time frame is short-term and extractive, not long-term and protective of social equity and basic needs.

          And to cap matters it now demands that democratic society yield to centralized authoritarian financial rule.”

      • adamabyss

        Yep, it was a very good read, thanks. Have forwarded it on to others. Adam.

  37. Financial ‘melt through’ – Blankfein as the ET in Alien spewing toxic derivatives – ‘the elite contract’ as opposed to ‘the social contract’ – Geithner head of the global economy funding Greek bailout?


  38. [...] Foreign banks soaking up deposits 80 credit unions face collapse Emigration to Britain up 25% to almost 14,000, Allied Irish Banks Has Officially Defaulted Lenders warned to have new arrears code Rise in residential mortgage arrears Homeowners? debts still growing Builders trying to buy their NAMA properties EU split over plan for second bailout of Greece Greece is now lowest rated state Iceland makes successful return to bond markets Greek debt costs spike as strikers encircle parliament Demand slowing in China, says Glencore ECB a slave to passing fads [...]

  39. Has Noonan finally begun to waken up:

    News just in, Noonan’s meeting with Geithner, because Noonan regards Anglo now as a warehouse of debt, he’s targeting ‘senior bondholder’ debt of €3.5 bn that shouldn’t be repaid.

    Geithner’s reply was that they will work through a resolution of this….

    Has the penny dropped finally for Noonan. Has he seen the iceberg?

    • Deco

      Noonan has finally stood up to the mark.

      But, I expect the media here to shaft him at some stage in the next six months at the behest of some very powerful interests, both high profile, and low profile…..

      “support our advertising sponsors…”

      • Malcolm McClure

        Deco: The nay-sayers have already started casting doubts. Newstalk this morning was saying that Noonan’s timing for this pronouncement was very unhelpful, coming on top of the Greek crisis, and that he should have gone to berlin instead of washinton to announce his proposal. The Germans don’t appreciate megaphone financial diplomacy.
        Of course Noonan is just trying to mop up the milk spilled by Brian Lenihan. There was a very incisive comment by Karen Slevin of DVU about 5 mins into the Dunphy show on Sunday morning.
        She said Lenihan should have locked the doors in Merrion Street and not let the ECB hatchetmen enter. In response to a previous comment by Lenihan that he was just trying to save the Euro, Slevin said: “Why save the euro? What about the Irish taxpayer? That’s not your job.”
        I hope we hear more from Dr Slevin.

        • Colin

          Yes, totally agree with you here Malcolm. I listened to that programme last Sunday too, and was impressed with Karen on that matter.

          Lenihan was not doing his job. His judgement throughout was dreadful.

  40. Rodent Economics

    Today hundreds of rats have been discovered in an area of the inner central city of Limerick where building developments have stopped and their breeding has led to the closure of nearby businesses due to these rats walking around with .


  41. Rodent Economics

    Today hundreds of rats have been discovered in an area of the inner central city of Limerick where building developments have stopped and their breeding has led to the closure of nearby businesses due to these rats walking around with impunity.


    • Its nothing to do with building developments.

      But please answer the question, is the blood red moon signifying disaster, perhaps an omen of doom upsetting all the rats? Is this the beginning of the wobble?

      Its overcast in Dublin, looking forward to see the boys in the space station passing on front of the eclipse approx 10pm this evening, hope the weather allows the view:)

    • @cweb

      Look Above U ….above url.

    • Colin

      Sure John, we’ll be fine, your pal President Wannabee Cox will ride into town to take care of the dirty rats. If not, then we can release the cats from the city animal rescue centre to take care of the rats, and failing that, we can get in Rentokil.

      What do you want Noonan to do, legislate against rodents? You do know that the Opera centre plan was hatched in the FF era, so its Willie O’Dea and Peter Power you should be haranguing and looking for answers. You know damn well it was the Galway Races Tent Brigade who caused this mess this country is in, rats n all.

      I have noticed you’ve got personal over Noonan, what’s the matter John, he didn’t do you a good turn? you don’t like his accent? did he teach one of your family and give them too much homework that they couldn’t go to piano lessons anymore due to time constraints?

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