June 20, 2011

We must act while Greece is hot

Posted in Sunday Business Post · 142 comments ·
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As per usual in summer, the temperature difference between Dublin and London last Tuesday was significant. Strolling up Park Lane towards the Dorchester Hotel, past the swanky car showrooms selling all sorts of expensive stuff for lads in the bulge bracket banks, London felt more continental than British.

At Grosvenor Square, the heavy security outside the US embassy seemed over the top, as the sun blistered down on the lazy sunbathers sprawled out on the grass.

The Marriott hotel on the corner, bedecked with flags, had the air of a self-important hotel doing brisk business.

I was at the Marriott to give a keynote address at the annual BCA research conference. BCA is the world’s oldest financial research company, and its client list accounts for the vast majority of the significant fund managers in the world.

This is the market.

These fund managers are the people who invest in countries and companies, and these are the people who will decide whether Ireland can access funds in the future. In a word, this is where it’s ‘at’.

The packed hall of a few hundred of London’s top fund managers had just heard views on Greece, commodities and geopolitics, and they were as interested in Ireland as they were in all the above. I opened with the Varadkar test; asking for a show f hands on who thought Ireland would access the bond market again in the next two years.

Not one hand shot up. In fact, every single fund manager thought that there was no way that Ireland could go near the market – or, more to the point, the market would go near us.

However, as we began discussing the issues, a familiar conclusion was arrived at.

The consensus was that Ireland should renegotiate all the bank debt with he ECB, if we were to avoid a sovereign default. The market players suggested that the meltdown in Greece gave us a golden opportunity to put everything on the table.

They agreed that there was no way the ECB would cut off funding to Ireland in the event of a ‘burning of the bondholders’, because the ECB couldn’t afford another credibility disaster in peripheral Europe. Significantly, the consensus was that, after a bank default, the Irish balance sheet would be immeasurably stronger and the re-entry to the market much more likely.

This accords with my own view, which is that we are being excluded from the bond market not because we might default on bank debt but because we won’t! The more we pretend to have the money when everyone knows we don’t, the higher the risk premium and the more we are shut out. So we have a choice: do we want to be shut out from the world for the foreseeable future or not? It really is that simple.

Given that this is a political process, why doesn’t the government, which already has a weakness for referendums, bolster our negotiating position by having a referendum on the bank debt? This is a far more important referendum than something on judges’ pay. As for the judges, just don’t pay them. We are in a recession, so tough luck, my bewigged friend – get over it.

We could also begin a process of dealing with the debts democratically.

The way to do this is via what is termed a debt audit. This is a well-known process where debts of a country are split between ‘odious’ debts – the debts incurred by a government that the public should have to pay – and ‘sovereign’ debts, the normally understood concept of sovereign debt.

The debt audit would allow us to appeal to the market’s understanding of what should and shouldn’t be paid.

Once the government gets the people’s backing for a debt audit via a referendum, the process of easing the debt burden begins.

People always say: but what will happen to our so-called credibility?

In this case creditors will split between ‘normal’ creditors, who will do a deal, and ‘rogue’ creditors – normally hedge funds and other financial bottom-fishers – who will try to get all their money back.

We should treat the rogue creditors as we would rogue countries, like pariahs.

Years ago I worked in what were called distressed debt markets, and this split between reasonable creditors and rogue creditors always occurred.

Once the debt audit is done, the credit rating of Ireland will rise because we will be better able to afford the debts that we chose to pay – the debts we always expected to pay.

The banks’ debt of close to €64 billion can be dealt with by picking off the various different creditors at rates that we decide.

After all, there is no other buyer in town bar us, so getting 2 cent on the euro will be value to them.

In tandem with this move, we issue new licences for new banks.

New capital will come in, and who wouldn’t move their depositors into these new banks? In so doing we re-order our banking system and wind down the old names such as AIB and Bank of Ireland, and move on.

In fact we can protect taxpayers’ interests by stipulating that the money we put into the banks in the last two years as capital might be treated as discounted equity in the new banks.

This might make the banks slightly less attractive to new capital but given that the prize is owning a new banking system in Europe in an economy with a significant post-default growth potential, many investors would find this attractive.

At least that is what they told me at the Marriott last Tuesday.

We now have a chance, with Greece in such a mess and the ECB in such disarray, to make the next political moves on the banking industry.

A referendum would immeasurably strengthen the hand of our politicians, while the ‘debt audit’ would allow economic justice to be done.

Any policy that financially strengthens the balance sheet, while morally siding with the people and the average guy, is much more robust than something that is increasingly seen as a diktat from unelected central bankers in Frankfurt.

Interestingly, this is not the view of the left, but the view articulated by the capitalist right on a sunny afternoon in Grosvenor Square last Tuesday.


  1. Pareto Inefficiency, or the ‘Witness of Jehovah’ ECB politics

    A common view in cost benefit analysis is that we are morally justified to be less concerned about effects in the further future, it is called the Social Discount Rate.

    Suppose we are considering how to dispose safely of the nuclear waste. If we believe in the Social Discount Rate, we shall be concerned with safety only on the nearer future. We shall not be troubled by the fact that some nuclear waster will be radio active for thousands of years. At a discount rate of five per cent, one death next year counts for more than a billion deaths in 500 years. On this view, catastrophes in the further future can now be regarded as morally trivial.

    - Derek Parfit, Reasons and Persons, How Important Are The Interests of Future people?page 357 following -

    I intend to think, perhaps there is a case to be made. In my own words:

    The market failure lead to government failure. The ECB/EU/IMF conditionality’s attached to imposed debts are unconcerned of negative public near future effects, even on entire nations, but more concerned with the private now conditions of a minority of vested interests, this is a case of Pareto inefficiencies because of:

    a) The deep structural flaws in the banking system that were never addressed 
    b) Information asymmetries and incomplete markets [Greenwald-Stiglitz] 
    c} A monopolised market power, Parasite economies destroy productive economies
    ECB and Central Bank policies

    Hence what we witness is the stubbornness of a ‘cast’ [ECB and Central Bankers] that is incapable of admitting inherent systemic flaws as the main cause for inequality and global income disparity, as we know, they no longer are independent Institutions, hence impose policies, and at the top level, a unaccountable and undemocratic force that is acting exclusively on behalf of private minority interests.

    Further, national CB policies contributed to the disaster by looking the other way or even worse, pouring oil into the fire. The quasi religious beliefs of the EPP, the overwhelming political force in Europe’s Consilium, Commission, and Parliament is one main reason for the disastrous EU policies and headless chicken activities of the past four years.

    The ECB reminds me to the case of Parents who refuse a life saving blood transfusion to their own child because their religious dogma forbids them to do so. The ECB’s ‘No Default‘ policy is their religious dogma.

    I have no direct answers to solve this conundrum. It is evident that the current trajectory points towards much greater international instabilities and without inclusive policies that acknowledge the declining importance of a cultural western dominance in the grand scheme of things, we are acting like Nero, fiddling while the Earth is burning.

    x x x x

    Social discount rates have universally been taken to be positive, on grounds that the rate of return on investment is positive. But if consumption and production activities give rise to environmental pollution as a by-product, the social rate of return on investment could be zero even when the private rate is positive; at the very least, the social rate would be lower than the private rate.

    http://www.econ.cam.ac.uk/faculty/dasgupta/pub07/climate.pdf

    In my opinion we have captured governments that fail to act on behalf of the people and their children’s future, with the exemption of Iceland perhaps.

    It is this interconnectedness of the multi level crisis points, declining recourses, greater social political instabilities, a global refugee crisis, and the unpredictable quantitative impact that climate change will have on global food security. Energy, Water and Food are the main ingredients of social stability. Take one of these away, and you have a major problem at hand.

    Angela Merkel made a statement last year that triggered an outrage when she said, Multi-Culti has failed.

    She missed the point, Globalisation has failed.

    It has a created a monster of global corporatism that captured entire governments and Nations, enabled a clan of “Doing God’s work” fatalistic and self righteous extremists to take over global recourses and supply chains, demanding a totalitarian implementation of policies that benefit their own interests.

    The neo liberal fatalists are the architects of the social genocides we witness in Greece, Ireland and more countries to come. Their tools are the modern ways of finance, algo trading, derivatives, inventing and implementing more financial vehicles on purpose to create parasite economies that create profits from nothing, a debt driven slavery that is lead by the financial Pol Pots of our time.

    Politicians are the eunuch servants to these new Pol Pots. Elections turned into a farce when you realise that all major political forces have already been castrated, but they continue to whimper for your vote and insist on the importance of your vote.

    Best
    Georg

  2. Deco

    Surprisingly enough, I reckon that the IBEC/ICTU model of running the country, makes this completely impossible.

    Therefore the first step is to kick the unelected element of the political establishment (the lobbyists) out of the government process.

    Then we have the media – whose primary function is to supercede the interests of “our advertising sponsors” (including Anglo Bondholders) above the interests of the people.

    Our political establishment never calls referenda to find out what we think, but to instruct us to act in such a manner as to line up with their thinking – even if they are not doing any thinking at all…

    I reckon our opportunity is more likely to happen when the chaos gets even worse – when it the real story in Espana becomes apparent…..

  3. Deco

    Here is a prediction.

    In the end, the ECB will do pursue a policy of “print-baby-print”.

  4. Deco

    So Varadkar was telling us the truth about the second bailout.

    I find the fact that Noonan is missing from a lot of EU ministerial meetings an indication that Ireland simply knows where it is not wanted.

    The part where Ireland borrows from the IMF, to fund the second big fat Greek Bailout, is instructive of the folly that we are embarking upon. But for the sake of maintaining the veneer, of playing the national game of pretence we will dip in and contribute. It would look shameful if we did not. Even if countries that can afford it like the Netherlands and Finland are indicating that they will not pay a penny.

    We will feel proud over the fact that we could not afford it, and still be bought it. That is binge era thinking.

  5. Dorothy Jones

    That’s a good article, opportunity identified; research required clarified and plan of action clearly set out. This momentary glimmer of hope was dampened after reading Namawinelake’s ‘Noddy and Big Ears and the First 100 Days of Governing Toytown’: a withering [my own opinion only, NWL is always objective] account of the risible performance or lack thereof of our new political leaders. It seems that they will never have the ability to instigate intelligent change requiring courage and action. It’s all over and Paul Sommerville sums it [Greek situation] up best with: ‘The wheel may be still turning but the hamster is dead!’
    If judges’ salary is to be reduced, Justice Peter Kelly should be given a pay rise…..

  6. bankstershill

    David,

    This is all well and good. But do you not think that in the event of us restructuring our banks through receivership ect, that the same thing would have to happen across the entire EU banking system in a coordinated and synchronized fashion in order to avoid a domino style collapse.

  7. Deco

    I just have realise the PIGIS have put the entire Eurozone project in the PIGS***.

    In Ireland nobody has been jailed. In fact, I don’t think anybody anywhere in the PIGIS – has yet been jailed.

    If I were a responsible citizen of Germany, France, The Netherlands, Austria, Finland or Luxemburg – then I would be demanding that my politicians strung up the Irish political class, and that none of my representattives ever gave another penny of tax money until the Irish, Greeks and Spaniards reformed their corrupt, inefficient, inept state systems.

    Just think for a minute of the perspective of the honest, hardworking people of these countries who are being asked to pay for such shameful episodes as Rody Molloy’s pension, the 400 Irish quangoes, Bertie’s mates running semi-state companies, the salaries earned by the multimillionaires that are RTE’s “stars” who also happen to talk to the people about “yehr recession”, etc…

    Our state is responsible for a scam, because of the behaviour and the selfishness of the people who run it at it’s many various levels of entitlement and management.

    • Colin

      I agree, it time Europe knew the truth about our Gombeen classes and Cronies. RTE Pravda aren’t gonna rock the boat, we know that, so how can we get the message across? I know, lets take to the streets……. wait, eh, can’t see much of a crowd coming along.

      This passivity is wrecking my head.

      • we could just email them.. tell them things, wikileaks style.

      • madman

        no crowd at all ! ! nothing no one and don’t expect any. The Irish are a thick race it is that simple, roll over there Paddy and tug your forelock to the Eurocrats and the Queen of England.

      • Deco

        Pravda have their primary objective as institutional survival. Therefore they will modify their tune, according to the one who pays the tune.

        And ultimately, the IMF and ECB are paying for Pravda, and have the authority to require the government to sell Pravda.

        Therefore Pravda will press the patriotism button over young McElroy winning the US Open, “wearing the green jersey” etc…

        Then Pravda will shaft the country’s interest in respect of the bondholders, and will protect bondholders who buy advertising from them.

        Pravda operate on the principle of playing the tune to suit he who pays – and Pravda always assume that the license fee is a given and should result in nothing in return.

      • coldblow

        This is my guess.

        Unless the public mood has changed since the Gen. Election then a referendum won’t be held. If it were people would be forced to reveal that they are concerned solely with their own perceived interests and not what they’d have you believe, and we can’t have that as the people are sovereign and always right.

        The govt were elected on the pretence that they were committed to change. The electorate are playing along with this.

        An immediate election would at least reveal the charade. Oh, let’s use one of their own favourite words: hypocrisy.

        I think people still think on balance that they are better off with what they have than what they’d be left with after a shakeup.

        Firstly the PS are paid in a hard currency (Euro) and much of the private sector feed off this.

        Secondly, and more importantly, savings held in Irish banks are in Euro. The problem is how to offshore your money safely, where you can get it back out again quickly if required or where there is no risk of pesky German regulators confiscating your money because you don’t meet residence requirements, or whatever. I’m just guessing here. Apart from a few muffled noises behind the curtain which sound like scenery being shifted, who knows what is happening?

        Once a critial mass is achieved among the People Who Matter then the way is clear for a referendum as they would have less to lose with their money safely out of the country. This would not be a majority in a naive arithmetical sense, but rather appropriately weighted. Let’s call it ‘realissm’.

        As Maeve Sheehan’s article in the recent Sindo reminds us, the prof. classes are drowning in property debt. How much longer can they hold out? So a default with a re-denomination of the debt into punt nua would be attractive.

        It has been remarked upon by a couple of observers (eg MHFinfacts) that the unemployed don’t figure at all in this except, I suppose, in so far as they are a cost to the exchequer. (How would Mary-Ellen Synon phrase it? A burden on the state’s treasure.) After all, emigration has always been the mainstay of the economy. Although the usual concern will be voiced.

        Any referendum would be accompanied by the standard sanctimony. (SSS – Statement of Standard Sanctimony) If it failed expect a re-run (with or without rewording) as in the case of divorce, abortion and Lisbon. Yes, by that stage govt and people will have seen the light.

        Anyone objecting will be told: It’s time to move on. Embrace change. Get over it.

        • coldblow

          Of course, in this situation there wouldn’t need to be a referendum, the govt would just enact it. A referendum would never be called unless it was required by the constitution.

  8. Malcolm McClure

    David: The closest parallel to the present international economic situation, (in that it appears to defy rational discourse and has become totally intractable) is the Northern ireland situation during the 1980s.
    I racked my limited intelligence to try to conceive of an equitable solution, without success.
    Then John Hume came along, working behind the scenes, he shepherded the warring parties into talks that led to a solution.

    There seem to be parallels between Hume’s efforts and yours in the service of Ireland. Your discussion above articulates a practical consensus that seems to be emerging. Colm McCarthy said something similar this morning.

    There is still a vacancy for another speaker at the wrap-up session of the MacGill Summer school on July 29th. Please call Joe Mulholland and offer your services.

    The session is about TRANSFORMING IRELAND 2011- 2016

    (Enda Kenny is giving the John Hume Lecture on Sunday 24th July).

    • Good intentions, no doubt Malcolm, but may I ask…. why the Hell do you think David would 1. be invited and 2. be interested to talk on this Insider circle of castrated politicos and quango representatives reading of prefab scripts?

      It is usually drowned in politeness and not inspired by open and honest debate!

      I guess the picture here unintentionally hit the nail. Lenihan in front of a post stating ‘The European Commission Representation In Ireland’. Now exchanger his picture for Enda Kenny, and you have the 2011 McGill school.

      http://www.macgillsummerschool.com/news/

      • Malcolm McClure

        Georg: David has been invited in previous years but declined because, unlike other participants, he makes his living by talking about his economics to interested parties, and Dr. Mulholland was unable to meet his fees.

        When we discussed the School last year you similarly expressed total indifference, so I assume you have gathered your impressions from the Donegal CoCo narrowcasts. Consider for a moment that you might be mistaken.

        The MacGill SS has always attracted top quality speakers over the 15 years i have been attending. Its subjects range from the arts to politics to religion but has concentrated on economics for the past couple of years for obvious reasons. However there is always a leavening of other material.

        You say drowned in politeness; I prefer well-mannered, which makes for a positive atmosphere enjoyed by all, in contrast to the usual cut and thrust of Dublin media occasions.

        For me the main attraction of the event is the opportunity to assess the character of these people close-up and live, both formally and informally. They are not all the devils you broadly assume them to be. Indeed many of them are quite personable and intelligent people. That is useful background when you are anticipating the possible outcome of various economic alternatives. The results are invariably a product of the character of the person in the driving seat.

        • Sorry, I am not suffering from Stockholm syndrom, and I have no interest in exchanging pleasantries with the very people who supported and caused the tragedy that now has become a reality for Ireland.

          Whether they are ‘personable and intelligent’ people depends entirely on your position.

          The rub-shoulder-with-celebrities and VIP’s platform where mostly people past their 50s listen to explanations in a room full of very comfortable middle class and retired people what the mistakes of the past were does not really appeal to me, but I suppose this gabfest is a convenient start into the many months long lasting summer holidays of Irish politicos.

          Reverend Fathers, elected representatives, director Joe Mulholland and those involved …..distinguished guests, ladies and gentlemen. Thank you for affording me the opportunity…. blah blah blah…

          Those changes became manifest in the so-called “celtic tiger” years. During that time we had a dramatic expansion in domestic demand, which fuelled particular sectors of the economy, including construction. That has now fallen back to more normal levels but our economy continues to be strong and dynamic. We have a very low level of public debt. – Address by Tánaiste Mary Coughlan at the opening of the McGill Summer School 13 July 2008 -

          • Malcolm McClure

            Gosh, Georg, you sometimes make yourself out to be even badder than meinhof, but I can’t believe that of you. Empty invective never solves problems. –One has to make some attempt to understand the other person’s point of view.

            I agree with you about Coughlan and Cowen and many others in the rank and file of politics, but to make an informed choice about who is worth supporting in elections and otherwise, it pays to evaluate their character close up, regardless of party allegiance. MacGill provides a rare opportunity to do that, –even regarding priests and bishops.

            The formal intro to a speech is only there to settle the nerves of the speaker and to allow that audience to settle down to listen. Civilization depends ultimately on a modicum of courtesy, and the forms you seem to despise have been handed down for generations untold. Are you advocating that we replace them with a rabble? A rumbustious rendering of ‘The sash”? “Sean van vogt”? – or what?

            “O the French are on the sea…..??”

            Joe Mulholland always allows five minutes at the end of a speech for members of the audience to ask questions. Formal. Polite, but there’s your chance.

          • Malcolm ;)

            Of course I reject the link to RAF, but funny you mention it, my neighbor, RIP, was the one, who btw was as well known as a colorful parrot in the Glenties establishment of choice, that called the cops on Ulrike Meinhof which lead to her arrest.

            He and his wife were involved in a anonymous ring that helped american soldiers who defected? the army and fled to Europe with a new name and identity. As a result they got a call one day, another over night stay, a anonymous american visitor was announced. Turned out it was Meinhof and her bag was full with lists of people they targeted, a couple of hand grenades and lipstick I assume.

            He was offered the highest medal in Germany, Bundesverdienstkreuz, which he declined. When the british snitch was shot a few years ago in Donegal County, he came over for a chat, in fact he was still paranoid that ex RAF forces are still looking for him.

            It was a pure coincidence that Meinhof chose his flat, and he had no links whatsoever to terrorists. That he called the cops on her changed his life forever.

            Elections Malcolm. have turned into a farce, as I expressed many times, I find it even constitutionally questionable when politicos agree to a stitch up as was the case with Lisbon, and was the case with IMF.

            Has the rip off, unjust austerity, and undemocratic execution also been handed down? You betcha!

            Disclaimer:
            I am all for persistent and peaceful non violent protest against the eunuch politicos and EU/ECB/IMF occupation forces that have Ireland in it’s grip.

          • coldblow

            Malcolm

            The formal intro is to give people a chance to make a run for it while they can.

          • Deco

            The fact is that these Summer Schools for the most part are talking shops of the powerful and influential. They are places where the position holders release their agendas to the public, as if they were somehow or other likely to fix some serious problem.

            Do not expect anything even remotely useful to come from them.

            In my mind the most high profile versions tend to become “BullSh1tFests” !!!! – especially those that feature politicians, or representatives of IBEC/ICTU and the mainstream media.

        • Colin

          I agree with Georg. David is an outsider, and has built up a profile identified as this. He even wrote a play and performed in it, called Outsiders. Magill Summer School is an Insider’s wet dream. I’m sure its audience is stuffed with DoF staffers and pensioners, who congratulate each other on how well they run the country, and isn’t it a great wee country all the same. Yeah, Magill Summer School where waffle and the chatterring classes meets, and Pravda report from, and its all good fun for the bourgouise with fine whiskeys and smoked salmon on standby.

          • Praetorian

            Social change rarely comes from seminars. It comes from the pressure on the streets, it comes from a national strike, it comes from people who never attend seminars, they don’t need to because they know exactly what is going on and yet are never consulted.

            As has been pointed out, seminars and workshops suit the presenters who get well paid and the class that likes to talk about itself.

            “I sincerely believe that banking establishments are more dangerous than standing armies” ~ Thomas Jefferson, 1816

            “Property monopolized or in the possession of a few is a curse to mankind” ~ John Adams, 1765

            “No man ought to own more property than needed for his livelihood, the rest, by right, belonged to the state” ~ Benjamin Franklin

            “It’s class warfare and my class is winning but they shouldn’t be” ~ Warren Buffet

            Tony Babino – L’Internationale
            http://www.youtube.com/watch?v=QP4l_PeBMyk

      • real terms

        The BCA gathering in the Dorchester is hardly what one could call a gathering of neutral “outsiders”. Quite the contrary, fairly much insiders, and to judge by previous posts, part of the problem. Yet the blog writer above seems to admire them, and I see this has some readers confused. Hard to blame them.

    • Juanjo R

      From Malcom MccClure opening statement;

      “I racked my limited intelligence to try to conceive of an equitable solution, without success.”

      An oxymoron which feigns humility! If you are willing to admit you are of ‘limited intelligence’ why don’t you take a step back do the dignified thing and keep your opinions to yourself? You can’t?

      By Malcom Macclure above in reply to Georg R.;

      “Empty invective never solves problems. –One has to make some attempt to understand the other person’s point of view.”

      By Malcom Macclure less than 24 hours ago;

      “@Juanjo R: You fondly seem to think that you can teach your granny how to suck eggs. I’d suggest that you go away and learn some relevant science and economics; then perhaps then we can have a constructive discussion about how exploration and development decisions are made in the real world.”
      ( from the comments section in the prior ‘Arab Spring’ article ) No comments were made by myself at any point on the subject of grannies and eggs.

      That JUST THERE was an example of an insulting, unwarranted and bullying piece of invective from one Malcolm MacClure, a hypocrite. Needless to say he had no right to make such comments even if he did ever work for the petroleum industry in the 1960s (50 years ago)- that polluting politically interfering and profiteering industry ( and to me thinks he still works there and is a bigwig perhaps?).

      An ego running wild in need of attention I’d say.

      Do we have a moderator around here?

      • Malcolm McClure

        Juanjo R: Thank you for the compliment about my intelligence, which i shall accept in lieu of your apology.

        • Juanjo R

          Compliment?

          Theres no apology to offer to you – it you that should be apologising to me.

          Your comments and very undignified behaviour speak for themself.

          You are seventy years old are you not? You are ridculous.

          • Malcolm McClure

            Juanjo R: Your informant must be mistaking my son Malcolm Jr, who is seventy years old for my good self. We McClures are a hardy breed.

          • Julia

            Boys, boys, play the ball, not the man. I’m beginning to suspect neither of you is older than 11. Let’s get back to discussion.

          • Juanjo R

            Julia.

            Can I say for me there can be no real discussion here without some respect being shown by posters to each other – its a requirement of any real communication.

            What I have done here orginially – which is I volunteered information ( supported by links ) as best I can and in good faith and without insult to any party only to be badgered and repeatly insulted by this person (and others here). He is even trying to goad me in spanish about my spanish on another thread at the moment.

            Last week when I posted a considerable piece that i took care and a period of time to write, ( again in good faith ) on contrasts beween Argentina vs. Ireland I had two other regular contributors here badgering me and attempting to discredit me out of the blue talking about a racial genocide of black people that had occured in Argentina 150 years ago even though no evidence exists for such a claim – a horrible claim too.

            I have problems with this type disengeniuous behaviour which is a deliberate type of negation of me and of discussion generally here. I’m unwilling to take it lying down.

            It is off-putting behaviour and what will happen in this forum is that there are 4/5 contributors who will dominate as everybody else who was interested in contributing gets jumped on and edged out one way or another by that negative behaviour.

            Frankly this forum needs some community guidelines/moderation if it wants GENUINE real discussion and sharing of information to thrive.

          • Malcolm McClure

            Banjo R: This is just a sandbox blog. If you don’t quit yer moanin’, I’ll tell my daddy on you.

          • Waitress!

            Can I please have a round of Guiness for everyone here, but…. before you fill the pints, add 2.5 cl of Graham’s Vintage Port 1970.

            Thanks! ;-)

          • Juanjo R

            It is YOUR sandbox blog then to treat those who comment as you will?

            If you are so interesting why don’t go and start your own instead of trying to hogg the limelight on this one! See who cares…

            Go see a therapist while you are at it…they might be able to shed light on why you have no life and spend all your time hogging little internet sandbox blogs making pompous pronouncments and insulting people you don’t know from adam.

            Sure you are a class act Malcolm. What a man!

          • WAITRESS!

            Double measure of Port for my friend Juanjo please!…

            …sneaking to the bar, dripping 60 drops St.John’s wort into Juanjos Pint…

            ;-)

          • Malcolm McClure

            Georg: re. your Guinness and port pick-me-up. If I remember correctly, it’s what we used to call a “Storm” because ‘Any old port will do in a storm’.

          • You mean you are buying now?

            Screw the black stuff… WAITRESS!

            Three bottles Quinta do Noval Port 1966 NACIONAL (Phylloxera grapes!!) and a couple of glasses.

            …What’s wrong Malcolm? Awww come on, you live only once! Whats all that money good for if you don’t buy the good stuff. Cheers! ;-)

            Best Port I ever had! Superb!

  9. Colin

    Bring on the referendum! We can email our TDs and let them know how we feel about it now. We can post their replies here. If the referendum isn’t passed for some reason, then Ireland really can go to hell.

    David, any chance you can set out a brief referendum so the TDs know what you’re talking about?

  10. EvertB

    David,

    I don’t agree that Ireland should default. However we should threaten to default in order to force a restructuring of the so-called “bail-out” loans. The only way this is going to work is if we stepped out of the EU. However our current and previous governments are more concerned with their credibility towards the paymasters in Brussels. The FG/Labour coalition do not have the balls to take the bold steps needed to rescue Ireland from total bankruptcy. The current EU/ECB/IMF policies are set on wholesale asset stripping with no consideration of what is, in their eyes, the health of the redhaired step-child on the periphery of Europe.
    More on that topic here: http://evertb.wordpress.com/2011/06/19/musical-chairs-eu-style-greece-ireland-portugal-spain-and-again/

  11. John T

    When you suggest a referendum on the bank bailout what is the alternative?
    If the Country says no to the bank bailout does that mean we have to immediately balance the budget? That will mean a correction of over €18 billion in one year. That is an awful lot of tax increases and spending cuts. I don’t think its possible to implement while holding society together. If there is a referendum the exact scale of tax increases and spending cuts should be offered to our citizens.

  12. paddyjones

    David this is dreadful stuff, the only default on bondholders the government are talking about is Anglo and INBS this amounts to 2 billion. What on earth is David going on about?????
    We have established that the sovereign must be paid, what is left is bondholders in AIB and BOI these too will be paid because they need to access the market at some stage.
    Then there is the ECB 156 billion , is David proposing that this is not repaid?? He doesnt spell it out.
    The Icelanders had a referendum but the debts are still owing , this is a red herring.
    David called the “bubble” right and he is living off it ever since.
    The only way we are to correct this is to impose severe austerity and balance our budget, this means increasing tax and cutting social welfare along with large scale redundancies in the public service.
    The 4 year plan is not severe enough.
    I say
    austerity=> balance budget => stop borrowing => repay debts……problem solved.
    Just wait and see next years budget will involve 5 or 6 billion in taxes and cuts.

  13. BrianC

    The article makes a lot of sense it is kinda like ‘this is where we are and this is what we need to move on’. There is one major problem. The Irish Government no longers administers the true state of affairs for Ireland that is run by the ECB and the FED. The ECB is dead set against default believing in austerity and the powers that be in the US don’t want to pick up the tab for the default. So they intend sweating this asset. We have new landlords Kenney Gilmore et al are just the rent collectors simple as that.

    The only route out is for the Greeks to default and the ECB will eventually turn on the printing presses to avoid that. But the Greeks should stick it to the ECB and default and everyone will flock to Greece for cheap holidays. But the ruling class in Greece intend being well paid rent collectors like our lot in Ireland and will sweat the asset and extort the ordinary citizen.

  14. CitizenWhy

    The following item appeared on Barry Ritholtz’s blog on June 19, 2011. Ritholtz is a New York based investment manager who has maintained all along that the so-called “bailout” for Ireland was unjust, simply a device for making Ireland bail out the European banks, and imposing terms that are impossible to make work (unless the Irish meekly accept the destruction of their economy).

    Posted: 19 Jun 2011 06:14 AM PDT
    Kiron Sarkar lives in London and Ireland where he works as a money manager. He occasionally attends the Scarsdales Equity idea lunches when he comes to New York, which is where I met him.

    The main point: bank insolvency is the underlying proble, and the EU has no solution for this problem, and thus lurches around with unworkable moves.

    Kiron Sarker writes:

    What a week. At the end of the previous week, the Germans signalled that they would take a tough stance on Greece, only for Mrs Merkel to completely cave in this week. Trichet and Sarkozy must have the biggest smiles on their faces — for how long though — never underestimate the Germans.

    The Greek PM, reshuffled his cabinet, appointing a political opponent as Finance Minister. A confidence vote is to be called. This coming week, the Euro Zone Finance ministers meet — presumably they will agree (with the IMF) to transferring the next trance (E12 bn) of aid to Greece, which will need approval by the Euro Zone Heads of State, at a follow up meeting. This and any subsequent transfers of money are going to be a complete waste of money, though in the circumstances is the right thing to do, as the Euro Zone does not have a plan to deal with the consequences of a Greek default and, in particular, the contagion effects that will follow — essentially a number of European banks will be bust.

    This is not yet a done deal. The biggest threats. Well, the Euro Zone Finance Minsters/Euro Zone Heads of State may not agree on a bail out package (unlikely), the German Parliament could vote against (a more serious issue, but on balance, also unlikely), the Greeks could reject the additional austerity measures (unlikely, as they need the money to pay their bills), the Greek Parliament could vote against the PM (less certain, but, following the cabinet reshuffle,unlikely) and the German Constitutional Court could well consider the further tranche of aid illegal, as its a fiscal transfer, which is specifically prohibited by the Euro Zone treaties (a real threat) and/or certain countries (such as Finland) may not approve a further aid package to Greece (all Euro Zone countries have to approve the additional aid package).

    The biggest issue remains — the lack of capital of a number of European banks, which as we all know, is really the reason for all of this nonsense. Since the 2008 crisis, the Europeans have singularly failed to address this issue. Indeed, the Germans and the French have resisted moves to increase core Tier 1 capital ratios (last week, a number of the major French banks were downgraded). They will be paying far more attention to it now, as unless achieved, this very sorry state of affairs will continue.

    What next. Well, the Europeans have to address the real issue ie the under capitalised banks. Basically, Governments have to provide the funds and/or act as a backstop, if the market cannot (as is likely) — not that easy to do at present, as their financial positions of a number of Euro Zone countries are stretched, but they will have to.

    There is also the issue of bank bail outs being politically difficult.

    The European Bank Stress Tests, due out in July, will be a complete waste of time, as they do not address the issue of haircuts (which are clearly necessary) on Sovereign bonds held by European banks on their banking books. The market will not be fooled this time — indeed, I was totally amazed it was, last time around.

    There is a “sell by date” involved in all of this — in my opinion no later than the end of this year, but certainly not 2013, as the Euro Zone believes. The current situation is unsustainable.

    No matter what measures the Greeks promise to abide by, they will not deliver, though from now on it gets tougher, as they will have the EU/ECB/IMF in Athens, verifying the numbers — the most recent data clearly shows that Greece has (once again) failed to deliver. The rest of Europe could not care a damn about Greece, I assure you. Indeed, my suggestion of handing over the country to the Turks is, quite frankly, the mildest suggestion around.

    As a result, this crisis will pop up again. Moody’s, followed S&P, by placing Italy on review for a possible downgrade. Given the political situation in Italy (Berlusconi is coming under additional pressure — he lost a referendum recently — but there are few, if any, others who can take over as PM), the country is likely to be downgraded. Ireland is threatening to extend haircuts on senior bank bondholders — inevitable, in my view. Portugal cannot survive with its present debt load, given its anemic growth, but the population is not as vocal as the Greeks and the new Government will be given some time.

    The biggest threat remains Spain. As you know, I believe that stories of “black holes” in provincial debt will emerge in coming weeks, following the recent elections, which resulted in a change in administration in most of the regions/municipalities. Spanish banks have not made adequate provisions and will come under pressure.

    With a common currency and the freedom to move your money around, why would depositors not withdraw their funds from the banks of the peripheral countries and move them to “safer” banks in core Euro Zone counties. Off course they will. How do the banks in these peripheral countries survive — well they have to borrow more from the ECB, who are trying to stop reduce emergency short term financing to “addicted banks”. As a result, the ECB just takes on more and more risk and which, inevitably, will result ion greater and greater losses. Indeed, I would argue that the ECB is bust, if their assets and collateral is marked to market.

    I simply cannot believe that this situation can last much longer.

    One solution could be for the EFSF to buy peripheral country bonds at a massive discount (in Greece’s case 70%+) and, in effect, allow the peripheral Euro Zone countries to reduce their overall debt burden. In this way, at least, you are not throwing good money after bad — Euro Zone Governments a chance of getting their money back. OK, the ratings agencies may well call such a scheme a default, but at least the markets will understand that there is a comprehensive plan to deal with this mess — in any event, the market knows that there will be a default. A scheme of this kind, or something similar, will in my humble opinion, result is a major relief rally indeed. In addition, facilities will need to be put in place to recapitalise European banks, as a scheme of this kind will result in Greek banks going bust

    - most likely a number of banks in other peripheral countries. The cost will be enormous, but what the alternative.

    The simple issue is that further austerity measures will result in the economies in these countries continuing to decline, which will make the existing debt burden greater. These countries need positive economic growth. “Hair shirt” type measures are a complete nonsense — the Germans are disciplined enough to accept them — other Euro Zone countries are not — just watch your TV and you will see the riots in Athens.

    The Europeans were stupid enough to agree to a currency/monetary union (without a political/fiscal union, including a transfer system + verification), which was fundamentally flawed right at the outset — there is no easy way out. They now have to take the necessary medicine and hopefully, not be quite so stupid again (some hope).

    A number of people are questioning whether the current Euro Zone can survive. Clearly it is more than a little shaky — but how can you kick out Greece. If there is to be a restructuring, Germany + a few others will have to leave the Euro Zone and set up Euro2, rather than Greece and quite possibly others leaving, to avoid the scenario of the Euro denominated debts in these peripheral countries, becoming a much larger burden.

    The ECB signalled a rise in interest rates in July — pure madness in my view, given the current situation. However, the ECB is more concerned about its image rather than economic/financial reality (as a recent Economist article pointed out). As a result, a rate rise in July is near certain (I still think there is a small chance there will not be a rate rise — however, the ECB has to come to its senses).

    However, forget any further rate rises — which are still being priced in by the markets — it just will not happen. The Euro, well its bounced a bit this week, but in my view, has significant downside risk from now on. The prospect of wider interest rate differentials will no longer support it. Indeed, even if the ECB hikes rates in July, I think there is a fair chance that rates will be reduced in due course, quite possibly this year.

    A number of you think I’m being a bit harsh on the Euro Zone — well, I have banged on, for a very long time, as to the impossibility of the Euro Zone currency union, as currently constituted. This crisis was inevitable. Basically, I’m just sticking to my original and long held views.

    Best

    Kiron

    PS For full disclosure purposes, I’m short the European banks — Santander, BBVA, Credit Agricole and Societe Generale and the IBEX.

  15. John T

    I think we should handover the running of the Country back to the UK. Clearly we are not capable of governing ourselves. We need to move fast as this window of opportunity will close within weeks.

  16. Re David’s article

    I keep saying this since a few months, audit Ireland, establish odious debts, tell the fuckers to get lost with their demands and start from scratch.

    Instead, we pumped over 23 billion in to Anglo Irish bank, as his parting gift from Government, Ireland paid bondholders who got their bonds in 2006 the equivalent of an entire year of Irish social well fare requirements at current rates, in January 2011, close to 800 million if memory serves.

    In May this group here launched their campaign:

    http://www.debtireland.org/news/2011/05/04/citizens-debt-audit-for-ireland-launched/

    As David said, there are good examples where countries got rid of odious debts, which are in deed hostile debts, hostile against the people of a Nation.

    Punitive rates on the imposed debts come on top of this insanity, and they are not renegotiating an interest rate cut back dated! Why not?

    Ireland is being kept busy with the important votes on the salaries for the bewigged class and a new president.

    A Iceland style referendum on the bailouts and banking debts is over due since more than two years now.

    Chances that this will happen? The Muasher doctrine applies!

    Best
    Georg

  17. wills

    David – A question.

    The *fund managers* are the very same lads who are the private bondholders demanding their risk investment back from the taxpayers in the PIIGS?

    Is that correct?

    Cos how laughable is it that the very same lads in the room decrying no access to funding on the markets are the very same gang of mugs who drowned Ireland in debt and then coerced governments to pay for their crooked lending.

    ??

    I’m confused, please clarify, when available.

    • coldblow

      Wills, I was thinking the same thing. The distinction between the good guys and the bottom feeders seems a bit unlikely.

  18. wills

    BTW David, isn’t an odious debt a debt the government are legally non-obliged to pay???

  19. wills

    David.

    Unless the *private banking system* is held to account and reformed we are all doomed to another *financial instrument pOnzi scam*.

    • CitizenWhy

      In effect the financial system has been exempted from market discipline, that is, neither the managers and owners of banks nor governments believe that banks can operate successfully in a free market system. They have declared that the free market system does not work in regard to financial services. Therefore these financial corporations should not be publicly traded. Instead they should operate as non-profits, mutually held corporations, private partnerships, or government banks, all safe and honest ways to shield companies from market distortions and discipline and at the same time instilling a great sense of prudence, completely missing from how publicly traded banks are run.

      Financial capitalism is a failure, a rotting system that needs to be revolutionized. And the new aristocrats running them need to be stripped of their oligarchic and unproductive privileges.

      • concannon

        The solution to this problem is a Eurobond. The euro currency is a joke where every country borrows at different rates even though they all use the same currency.If the EuroBond does not come about the currency will collapse. The Euro was based on political ideology, but the devil in the detail was ignored and was basically kicked down the road. The ECB are in denial and austerity will squeeze the life out of Ireland and will probably destroy the euro. The people that think the Irish can pay off the banks bad bets don’t realize its a theoretical impossibility which means its definitely a physical impossibility. Generally when something does not work in theory it certainly wont work in practice. Like politicians giving a 500 billion guarantee or 500k per family. This was like throwing petrol on a fire. This is why these Hedgies in London are betting against Ireland. The numbers just don’t add up and I would have agree with them. Our politicians are hoping for 8 % GDP going forward just to turn over the bank debt. They are deluding them selves and are irrational and their advisers the ESRI are a total disaster and should be shut down. They are nearly always wrong and use because we are the experts to justify their arguments.

        • Deco

          There is no market for a Eurobond. Basically it is an issue of credibility.

          The political establishments of the PIGS have no credibility.

  20. adamabyss

    The Walking Dead.

  21. kennedyl

    I wish Michael Noonan would read this, take note and ACT.

  22. [...] We must act while Greece is hot (David McWilliams) [...]

  23. mcsean2163

    “As for the judges, just don’t pay them. We are in a recession, so tough luck, my bewigged friend — get over it.”

    Dead right, who cares about the constitution, it’s stupid! And why bother with elections, lets have one big fella in charge, like David McWilliam’s or Sauron!

    • craxihuber

      Does the constitution say: “Whenever wages go up, so must judges’ wages, but when wages go down, judges’ wages will not be touched.”?
      Well if it does, fine, but if it doesn’t, then a mechanism must be found that links judges’ wages to civil servants’ or public servants’ wages. Upwards only negotiable is simply not acceptable, in my view.
      David, Sauron?
      Bertie “my only regret was we never built the Bertie Bowl” was bad enough really…

  24. Praetorian

    I’m afraid it seems like a growing effort to be all things to all people.

    Such approaches end in disaster because they have no core, ‘values’ come to be superceded by ‘price’. Conversely, the person not bending at every turn to price but holds as much as possible to principle commands respect, something far more valuable than price.

    In the coming struggle, one must chose a side. A person certainly cannot be on all sides, because that is dust and people tend to turn away from dust.

  25. Just a thought…

    In Greece you need to exchange the political class, all of them, with new blood, honest and competent people who wish to make a difference, you have to get rid of this generation old family business that runs Greece.

    In Ireland it is much more complicated. You have to exchange the entire public.

    ;)

    • Deco

      Correct about all of the PIGIS. In each case a local establishment has been in the business of “providing something for nothing” which has been paid for by the EU (taxpayers in DE, UK, NL, SE, DK, etc..).

      And the local establishment has been avidly pro-EU (because that is where the swill in front of their snouts comes from), and corrupt.

      In the Lisbon 2.0 debacle, we seen that the establishment will declare the public invalid, when the public decides that it is a scam.

  26. paddythepig

    If the country wasn’t spending like a drunk teenager with Daddy’s credit card, it wouldn’t need to borrow so much money.

    All this talk about a punitive interest rate is irrelevant, if we get a handle on our spending.

    The audit can start with the documents contained here – http://www.budget.gov.ie. Go through it line by line, and see what your taxes are being spent on. How come we could live with 33 billion expenditure in 2003, was the country so bad then?

    In a way, the so-called punitive interest rate is a good thing, because if it was too lenient the politicians would sit on their hands ad infinitum, and would never rid the place of all the waste.

    If they do succeed in getting a reduction in the rate, they will blow it all on extending the term ; which really is an excuse for introducing reform quickly enough. Ultimately, politicians – like 99% of people – care most about themselves and don’t want to look bad, so they will happily postpone reform to ensure their own survival.

    • paddythepig

      correction … I should say in the last paragraph … ‘NOT introducing reform quickly enough’.

    • Deco

      correct. Ireland is living beyond it’s means – still.

      There has been no auterity package. Taxes and levies have increased. And public sector workers have been forced to contribute directly to their pension schemes.

      Other than that, the state system is still woefully organized, overmanned, undermanned, and ineffective. It is also good at outsourcing work and getting overcharged, and failing to outsource work for which it would reduce it’s cost base (like centralized purchasing).

      The state is still extremely badly organized and a complete mess. And on top of the state sits a professional sector who are extorting ridiculous amounts of money for services. These professions have already been identified by the IMF as being involved in market rigging, and the government is dithering.

    • Colin

      “In a way, the so-called punitive interest rate is a good thing, because if it was too lenient the politicians would sit on their hands ad infinitum, and would never rid the place of all the waste.”
      - That’s what I call the Christian Brothers Psychology, why give a schoolboy a slap on the wrists for not having his homework done when you can leather the sh1t out of him instead, and he won’t forget to have his homework done again. On a side note, the % rate is a red herring in reality, we’re gonna end up defaulting regardless of the rate because the debt is unsustainable.

      What I do agree with you on is in the area of Rent Supplements. See, there’s good spending and there’s bad spending. Good spending gets sick people treated and looked after in hospitals by medical staff. Bad spending gets too many administrators farting around hospitals getting in the way of medical staff.

      I’d like to see Rent Supplements scrapped, its handing taxpayers money to landlords via tenants. The taxpayer can’t get good value. Landlords will not lower the rents because the taxpayer goose is still laying them golden eggs, so why should they? Pull the Rent Supplements and immediately Landlords face a stark choice, keep tenant but at a much lower rent, or have no tenant at all with no rent coming in. That would really concentrate the minds of the landlord classes.

  27. David says: “… we are being excluded from the bond market not because we might default on bank debt but because we won’t!”

    That’s incredible, isn’t it?

    When will the big boys learn that for Ireland and Greece to succeed financially, they must select the route chosen by Iceland.

    For the sake of the world financial collapses we are about to experience (yes, including the so-called “strong” Australian economy) the term “the Icelandic option” should immediately graduate into common usage.

  28. Great, the german banker association insists on incentives for a Greek rollover, essentially asking for government guarantees so that in case of – the inevitable -Greek default they can book it onto the taxpayer.

    Send an anti terror squad team into these Bankster and Insurance temples, arrest all of them and put in a temporary management forced by emergency legislation.

    What the Hell more do people need to know? Politicos are laughed at, the example of Lenihan and the monkey noises shouting at him was no exception, it is the rule. Banksters rule Europe, and the castrated politicos can say whatever the Hell they want, it does not matter a sausage.

    “Politicians now walk around with bodyguards,” says Aris Chatzistefanou, the co-director of Debtocracy, a film about the Greek crisis that has become a sensation.

  29. Morning,

    things are getting pretty messy!

    The hatred Anti Greece league of German Bildzeitung level, the lowest possible tabloid level, is now joined by the French press as well, pretending them to have wasted 30 years of EU subsidies.

    This is not the way this ‘UNION’ will be able to survive. Spear headed by a bickering and heel dragging Merkel who has not displayed any solidarity from day one, other than with german Banksters, both politicians, Sarkozy and Merkel are extremely polarising in the EU on this debt subject.

    Getting my daily ‘first coffee fix’ of international press, btw i use this service here:

    http://www.presseurop.eu/en/content/article/725271-imperial-germany-eager-bury-euro

    and reading the Greece, German and French articles, it is pretty evident how this polarisation is working, it is destroying Europe from the inside out.

    It also shows what level of politicos we really have at work here, embarrassing, and I have no doubts that, regardless of party affiliation, it will trigger the old guard, like Helmut Schmidt or Helmut Kohl to shake their heads in utter disbelief.

    This is the main reason that four years now into this crisis the captured governments, consisting at best of mediocre civil servant administrative level, have failed to come up with a credible plan, to allow countries to default where required on their private banking debts, let the banks go bust, establish new banks and help these countries back on their feet, to restart economy and strengthen the Eurozone by addressing deep structural flaws at the same time, flaws that were neglected since day one.

    To restart a Versailles contract discussion and WWII reparation payments discussion is not useful either, however, I can understand the sentiments in context.

    Germany’s schoolmaster behavior is a joke and should be rejected by all means. Sarkozy well…. don’t get me started!

    The title picture in Der Spiegel depicts a condolence situation, with the headline, ‘Suddenly And Unexpected’, with the EURO inside a coffin that is covered with a Greece flag.

    • Praetorian

      Paris and Berlin are as much to blame, if not more so, than Athens. My contacts in Greece indicated that German companies in particular did very well from large State contracts like the airport, transport system, computerised State systems and the new museum of antiquities in Athens.

      Greece is merely the product of scandalous banking/lending practices at the rotten heart of Europe, while the latent racism being directed at Greeks, repeated I have to say in the Irish media, is quite scandalous. The caricature of lazy, indolent, tax avoiding Greeks with their over-charging restaurants that don’t give receipts as one commentator on over €300,000 said at the weekend. Doesn’t take long for such statements to appear, bit like ‘paddy and his pig’ in the 19th century, or ‘Paddy and his shovel’ in the 20th.

      These are the same Greeks who valiantly held out against Mussolini’s forces, took on the power of the German army, fought a courageous resistance, with hundreds of thousands of Greeks perishing, especially in the famine like conditions in Athens. In the post-war period, they suffered Western military interventions in an effort to block the rise of the Left and a bitter civil war which divided Greek society, right down to today. They had military dictatorships and repression, and have only enjoyed democracy for a couple of decades, all of this is missing from the rather disgraceful commentary that one is subjected to. The Greeks I have had the pleasure of knowing, are honest, hard working, decent people who are now carrying a most awful burden, hope has been sucked from their lives, some see no future at all, no assistance from anyone, just debt being layered on debt. I wonder if the ‘traders’ mentioned in the article above know any of this context or quite frankly, give a shit. Somehow I doubt it.

      In a broader sense, where is our so called solidarity? Our understanding? Instead all we hear is ‘we are not Greece’, ‘we are not that bad’, ‘we pay our way’. Ironically the protestors in Athens chant ‘we are not Ireland, we will not be rolled over’ meanwhile our overpaid commentators, mouthpieces of propaganda know nothing of the reality on the ground and continue to spout their nonsense and weasel words!

      Spain and Italy are hanging on by the skin of their teeth, once Greece is somehow bandaged up so it can go on fighting a pointless fight then the markets will move on for their next victim, hard to see how the domino effect or ‘contagion’ and a ‘credit event’ can be avoided.

      In essence, the battle of democracy v the markets has finally begun and in a European sense, it is 2-0 to the markets, which is possibly the most undemocratic of forces on the face of the planet.

      • Colin

        Athens still refuses to allow planning permission for a single mosque in the entire Metropolitan Athens Area, whereas France and Germany have more mosques than you can shake a stick at. The Greeks are under huge pressure from the Powerful Liberal Lefties in France, Germany and UK and Euroweenies to build it for years now, but the Greeks aren’t on for caving in. So, it just goes to show, the Greeks know how to tell foreigners where to go when they can.

        • Praetorian

          There is the Greek elite and there is the Greek population, they are very different entities, but nuance and context are nowhere to be found in the majority of articles that passes as informed commentary.

      • craxihuber

        I rely on the information of a friend of mine who is half Greek and lives in Athens. He told me that state bus drivers earn as much as doctors in hospitals, many people have a side ‘state’ job that they devote less than half a day to. Ihe motivation is to get a pension. His uncle worked in a water plant/station. Roughly enough work for one. After every election the winning party got one of theirs another job in that plant. They started taking turns sleeping.

        Many state services are only provided with connections, pull. That friend of mine needed a sick note for back home. He queued endlessly, having a high temperature. After 3-4 hours, somebody recognised his name, his Grandfather was the local dentist, and bang he had his note. The note took 2 minutes by the way. I witnessed the incident myself.

        The difference of pay in the public and the private sector are staggering. Particularly state-owned companies dish out relatively high wages, not only at the very top, like in Ireland, but throughout. The lower-earning half of the private sector is badly-payed, and not much tax could be gotten from them.

        Greek people are either playing the system, or are totally honest and disillusioned. My Greek friends put it as follows: “Greece is peculiar, 50% are really decent and nice, the rest are assholes”. The reply: “No, it’s more like 30% and 70%”. I guess it must have been the former group who fought Mussolini and Hitler…
        In short: In Ireland you can still live honest and make a decent living (if you have a job), in Greece this is much harder. Having been ‘colonized’ by Turkey still impacts on the way things are done in Greece, similarly as the British way still has effect here. Bribes were part of the Ottoman culture, so the practice is still more prevalent than in the Northern countries of the EU.
        I feel sorry for my Greek friends, they are proud people and they are disgusted, and they are not only blaming the ‘Euro Nazis’ (and their misguided policies), but also see the contribution of some of their own countrymen.

        • Deco

          BAsically, there needs to be a people’s revolution of some sort, that is completely non-ideological, and which dismantles the state system, and builds it again in a extremely transparent way.

          The Greeks need to build a state system that is more like that of The Netherlands or Singapore, with rigours accountability, and which is far more meritocratic.

          Same as here really – except Greece is worse, and it is more in your face. Superficiality here pervades.

          Your commentary proves that how a country is organized is highly influential on it’s credit rating, it’s economic performance and it’s fairness.

          It is a classic Insider vs. Outsider society.

          • BAsically, there needs to be a people’s revolution of some sort, that is completely non-ideological, and which dismantles the state system, and builds it again in a extremely transparent way.

            +1

            Fucking YES!

            See how iceland manages their discussion on a new constitution. Everyone is involved and now look at where we are? We are getting prepared to have a referendum on the bewigged class and vote a new galleons figure instead.

            This is Bullshit.

          • paddythepig

            The state system contains thousands of people of all levels, who have become used to the state’s protection. To dismantle the state, and re-assemble it, you have to dislodge the expectations of these people.

            People don’t like having their ‘baba’ taken from them.

            The revolution you speak about can only take place, if the majority of the population want the reform, and are willing to face down the other section of the population who don’t.

    • Julia

      presseurop.eu – very good. Thanks, will check this out more often.

      • You’re welcome. Difficult enough to stay on the ball these days isn’t it?

        Reading the international press is a must for anyone who want’s to get a better feel for the dynamics involved and the manufactured consent that is being pushed into the public sphere.

        Another source that is part of my regular info fix since many years is le monde diplomatique.

        http://mondediplo.com/

        2.5 million people worldwide read Le Monde diplomatique
        there are 72 different editions (print and internet)
        published in 26 languages

        English edition
        “Unique, invaluable, reliable, the English edition is wonderful news for those who hope to understand the world or change it for the better”
        Noam Chomsky

  30. The direct results of a EU/ECB/IMF neoliberal driven austerity Pol Pot dictate:

    http://upload.wikimedia.org/wikipedia/commons/9/9c/Choeungek2.JPG

  31. Deco

    There will be massive privatization as a result of the Greek bailout.

    The practical point of the privatization is to presumably rebalance the balance sheets of the ECB, which is not in a vulnerable state.

    The hidden objective is slightly more sinister.

    I am still wondering why some taxpayers union in DE, NL, FL, does not decide to sue GSucks over their part in facilitating Greek entry into the Euro.

    If the ECB is appointing a former GSucks employee as it’s next head – then we can assume that the ECB will not do it.

    For real fun, Ireland should threaten to do it, on the basis that the carry on of GSucks has cost us money via ratings downgrades.

    • Praetorian

      There IS massive privatisation going on in Greece. It is well underway and has been for some time. Only a full scale social revolt will prevent it (an act which carries massive socio-economic consequences). They are in a hell of a bind, and we are not too far behind, but circumstances had to come to a head sooner or later. It has been a long, quite unnecessary 3 year road to this point, but politicians opted to put themselves first, but now they have a much bigger problem right on the cusp of the French and German elections, I hope Sarkozy and Merkel get the punishment they deserve, we need new faces not just at the corporate and banking board tables but at EU level as well, who are more sympathetic (not that this is guaranteed).

  32. finbarr

    When Noonan spoke to investors in New York last week would he not have been given this very same feed back. He came out saying the message was ‘stick with the programme’
    All vestive interests should not have say, this is why not only a referendum but a cerfully worded referendum should be held.
    Dont forget the trade unions have mud on their hands also and to hear them put their own survival and self interests before that of the country is wrenching! Bertie is not on the speed dial anymore, and you dont get your own key to policy room at the Dail, this signal should be sent loud and clear.

  33. thirdeye

    The old boys and girls network of elites throughout europe and the world knew this would happen but came up with new or rigged financial structures to hide the debt if any and promote the massive profits turned out to be a massive financial book cooking exercise.Light touch thatcherite,reganomics of the 1980′s was held up as the model the world should follow.The promoters of this appraoach from USA,EU and other locations ignored historical precedents of the past believing that there new financial models they espoused broke away with the bust cycels forever.Boom profits and hihger saleries would be the norm.History has been pointed out that if you ignore history it has a way of repeating itself which has happened.We havein Ireland the main politicial so called parties of FG,FF,LABOR,GREENS the EU representatives in Ireland doing their bidding whatever the cost.We need a referendum for this imf/eu bailout.Greek people are laughing at us in Ireland are who taking the crap is giving more creedence that the failed policies persued by the EU,IMF,ECB bailout is the only show in town.Bailout is a smokescreen to take national resources away from the citizens of various countries and keep people in permanent poverty trap.We need to WAKE UP.National Resources of Irish People is OUR NATIONAL PROPERTY not EU elites or political bully groups of FF,FG,LABOR,GREENS, who have the tip the forlock appraoch of a bunch of EUNUCHS in dealing with outside forces.We need NEW REPRESENTATIVES who has the full male anothomy set to stand up with real Iirish women not the apologists of FG,FF,LABOR,GREEN ensamble we currently have.Mrakets dont believe Ireland will be back in the markets I say for another 5 years at least with the EU can kicking to protect the Frence and German exposure to Greek debts and others to protect THEIR MONETARY UNION PROJECT.
    Greek Drachma appearing in newsand printed media discussions appears more than just wishful thinking or a plan by the Franco German alliance to make EURO CURRENCY appear stronger and protect French and German banks balance sheets to creata a 2 SPEED EUROPE.Maybe France,Ger,many may want the PIGS to LEAVE THE EURO.Newspaper reportsthat the Uk government giving no more money to EU may be a start of a serious EU wide discussion of the future of the EU worthwhile or maybe back to the old trading relationship like Norway,Switzerland has witht he EU more to Irelands liking.

  34. wills

    David.

    I am still confused on article.

    Are the fund managers the same group of boyos who are the private banking bondholders?????????

  35. Yes Wills

    Many of these guys who still hold Irish debt want to see a big event – a default – and then we move on. It is incredible really. As I have always said, there is always new money. Its just waiting for the event and then we move on the losers lose and the winners reinvest! In fact the losers reinvest too. For example, I’d wager that many of the people trying to buy Bank of Irland shares at low levels are the same people who lost hugely having bought BoI when the sahres were in the late teens.

    Best David

    • wills

      David,

      Thanks for clarifying that David, appreciate it.

      I am mulling here thinking if these guys really want a *big event* why don’t they just accept their own losses, cash in their CDS / insurance, and cease pressure on govt’s to fleece taxpayers to pay back the bondholders??

    • Deco

      There is a phrase that is something to the effect

      “every gambler deep down wants to lose”…(it is just that they do not know it).

      I am waiting for Dithering Bertie to buy AIB/BoI shares meself – because when he gambles, he somehow or other never shows this streak – he manages to win big time – even to the point that he has to be reminded of it many years afterwards….”I wun dat monney on de hohrses”.

  36. Praetorian

    We seem to be well on our way to emulating this. Closer to Boston, or so the failed mantra goes.

    US man stages $1 bank robbery to get state healthcareUnemployed and without health insurance, man in North Carolina has himself arrested in order to receive treatment
    http://www.guardian.co.uk/world/2011/jun/21/verone-one-dollar-robbery-healthcare

  37. Tull McAdoo

    I am sure you all remember “Comical Ally” from the Iraq War, telling us all how the Iraq Army was having great success , how it’s strategy was working and basically how victory was just around the corner………meanwhile in the background the TV cameras were picking up the American Tanks as they rolled past and down the main road of Baghdad……

    So Tull what has all this to do with Irelands plight I hear you ask, well it seems that we have a new Comical Ally here in Ireland…..except he might be better called Comical Ronan.

    Ronan Hickey “Economist” as he titles himself has decided to lend his name to the Department of Finances latest version of “Comical predictions” “Comical whitewash” “Comical revisionism” or what we in the trade might call “Comical bollixology”…

    I will tell you what! Here is a link to the latest publication from Ronan and pals, have a read of it, its pretty simple stuff, form a few opinions and when ye are ready let me know and we can discuss just how much ye Taxpayers are paying these people and lets see if we can find anybody who thinks that this whole Department should not have a lock placed on its door……..

    http://www.finance.gov.ie/documents/publications/economicstatsetc/irisheconomyjune2011.pdf

    • Deco

      Amazing how these comics always provide us with the official viewpoint.

      It reminds me of the phrase the Russians used to describe the official version of events during the soviet era.

      “when you hear the official denial, then you know, you really know with certainty, that the rumours of the event are true”….

      As a taxpayer – I would like to see the CBoI, ESRI and DoF economic forecasting divisions all sold off. And then outsource the job of economic forecasting to any firm or group of individuals who can provide the taxpayer with value for money.

      At this point the comics are not even entertaining anymore. Besides we can get the same drivel from Dan McLaughlin (soon to be a semi-state sector employee) and Austin Hughes for SFA. (I don’t know if they still write the same rubbish every Friday from their position of privelege in the official comic of record ?)

      • Deco

        We are selling ourselves as a technological hub.

        Presumably this has nothing to do with CIE, or the Luas with all those faults.

        Also mention is made of LinkedIn. I reckon that LinkedIn will crash and burn. The IDA has gone to great trouble to get the new IT social networking sector here – but these companies are extremely similar to the companies that collapsed in the DotCom bust ten years ago. Give it 12 months and there will be a very different perpsective on the tech sector.

        also we give ourselves far too much credit with the “well educated workforce” remark – does this included the muppets that we see every weekend vomitting all over our cities and towns, the fools who queued up all night to buy shoeboxes in estates with names like “Waterfields” ?

        The Irish need to be honest about the education levels in this country, and even more critically, far more honest about the lack of “applied intelligence”…

        • I was involved in that discussion more than 10 years ago in Ireland. They missed the train, Ireland had a chance to become one of the major european digital hubs.

          As a side effect by now a large part of the population would have 100mbit lines at their disposal, the rest would have a minimum of 20 mbit, in every household!

          Ah well, don’t remind me… Procrastinators and Bullshitters.

          You know, they were/are too busy offering the global corporatism a lovely spot for their global tax evasion schemes. Thats the real foundation of the IFSC, nuttin else.

    • coldblow

      Tull

      “the debt is sustainable”, “robust policy initiatives”, “strong growth” forecast.

      There’s a little flow diagram, using attractive bubbles, showing how one gets from economic collapse back to prosperity in about five steps. (For those who didn’t know this stuff already.)

      Review:
      “I thought it was quite good – the best thing was the colours.” (Jonathan, age 8)

      Get a couple of young EOs to put the tables and pie charts together. Add a little bit of waffle from yours truly, submit it up the line, discussion with the relevant committee (resulting in the correction of 2 definite grammatical errors, and 4 possibles (including 1 split infinitive)), just get the Sec Gen to sign off (just there, Kevin) and now the Minister’s monicker (right here, Minister). Bob’s your uncle, Sec Gen to send round an internal email congratulating those who were involved, post onto the Dept, website, seek quotes for design and printing, send a few copies to the Dáil Library. No speech, no official launch with tea and sangwhiches as we need to set a good example . Arrange delivery of 10,000 copies to Govt Stationery Office (Juvenile Section).

      I’d be interested to know where DoF staff have put their savings.

      By the way, the Brother is looking at Norwegian kronor.

      • coldblow

        A handy trick to see if they’ve done a good job is to look at the alignment. A good Finance dept will check that the indentation and line justification is consistent throughout the document. You see, a scissors and paste job will often result in small irregularities which can be missed in a single proof reading.

        • coldblow

          These irregularities may not be apparent to the naked eye. That’s why they have a quality-assured procedures in place. It’s in the Customer Charter.

  38. Land n Gold

    Why Greece matters-If Greece Defaults, What Happens to Portugal and Ireland–and Spain?

    http://gonzalolira.blogspot.com/2011/06/if-greece-defaults-what-happens-to.html

    • Deco

      A fairly precise definition of the Greek crisis.

      Tax collection is a complete joke, making our efforts to get money out of Bono and Denis O’Brien look draconian.

      And the state is overly generous with money that it simply has not got. The political establishment is in the “something for nothing” business.

      The gap between state receipts and expenditure is met by continual borrowing.

      And the author is correct concerning Ireland.

      Ireland is half as bad, and will get in the same place eventually.

      The Irish political establishment are very good at taxation, though lots of exemptions exist that should be closed – property, “art”, sports income, horsey-business, gambling, etc.. I am saying “art” because a lot of it is nonsensical, like Bertie Ahern’s autobiography !!!

      Simply put, these various exemptions should be closed off. They are nonsensical, and a lot of them come from the “Haughey/Ahern theory of taxation”.

      The second part of the problem – by far the biggest part – is the waste in the state sector. There is a litany of projects that are farcical – take your pick really. Plus hundreds of useless quangoes. Plus all the various processes by which something (and often nothing) gets done in the public sector.

      Without the banking crisis, Ireland is Greece in slow motion…..

      • Malcolm McClure

        Deco: “lots of exemptions exist that should be closed — property, “art”, sports income, horsey-business, gambling, etc..” I entirely agree with you, we should put an end to people using smart-alec accountants to escape taxation entirely. The privilege of carrying an Irish passport should be restricted to people who can produce a current tax clearance certificate at the post office to get their passport stamped and embossed annually, just like documents required for motor tax.

        Art, artists should be subject to VAT and income tax and race horses should be taxed on their winnings. 2-mile Borris turnover should be taxed at 20% (but not a word until they’ve finished building it). Supermarkets should be taxed on imported goods by 20% of the difference between nominal wholesale costs delivered to shops in Ireland and the same goods current sale price in country of origin. That would prevent their pushing taxable costs back up the chain.
        We have all these clever public servants. Do they never sit down and try to outsmart the accountants. And don’t get me started on auditors.

        • Deco

          Two Mile Borris is a pile of steaming horse manure.

          At this stage, we should have gotten to the point that people would have realised that gambling and speculating as economic activities cause more damage than they are worth. A case of short term gain, long term pain.

          Unfortunately there is no debate on the issue – our advertising sponsors would not like a public debate on gambling.

          Can you imagine how the largest “Financial” stock on the ISEQ, “Paddy Power” would react if there was a public debate on Gambling – they would be screaming blue murder – afterall while it might make the proles more solvent and give them more freedom, it would hurt their bottom line. And news coverage and public debate in this country is completely compromised by some collection of vested interests who are concerned about their profits. We even have Paddy Power sponsored charity bets ? What next ? Benson & Hedges sponsoring a cancer unit in Beaumont ? Diageo sending money to victims of “hit & run” accidents ?

          “Please support our advertising sponsors”….that is the end of civilization…..compromising one aspect after another until you live in a completely dishonest system, with dishonest debates (like WMD, etc..) and our advertising sponsors, or investment funds that control key advertising companies exercising their power and getting the news that they want and that will rob the citizenry of their freedom.

  39. Deco

    This morning’s poll result have indicated that Enda Kenny has an extremely good rating.

    http://www.breakingnews.ie/ireland/satisfaction-rating-soars-for-taoiseach-509891.html

    What did Kenny do to deserve this ?

    Answer : nothing.

    This is how bad things were under BIFFO and the “drinks cabinet”. Basically, a government that does nothing is seen as an improvement on a government that could do nothing right.

    Kenny – wake up. Nothing has been solved yet. And the PR stunts that Gilmore is posturing could result in an almighty fall if there is no give on the interest rate.

    • Praetorian

      I would question these polls and the motiviations behind them, anyone I have spoken to has expressed their disappointment, while Labour supporters feel they are headed to the same place as the Green Party.

      The penny may not have dropped yet. It will.

      • Deco

        Given what Joan Burton did to the PAYE workers in her Pensions Bill last week, it is highly deserving to see the ILP go into the same sewer as the GP. There is a streak of contempt in both parties for working people.

        Comrade Joe, RBB, and Stephen Donnelly (Independent TD, Wicklow) all got annoyed over the hamfisted atempt to shove retirement age to 68. The debate was cut using the guilotine method – because Burton and her mates did not want the bad publicity that might come from being sussed out.

        Given the pace of the workplace, how many 67 year olds to you know who relish the chance of a 38 hour working week ?

        In any case, I recommend Stephen Donnelly’s analysis.

        By the way, the 68 year retirement age will not affect politicians. They will still “reach retirement age” at 50 !!!

        The whole thing is just one giant scam.

        • Praetorian

          Valid points indeed. Wage Slave States serving the Imperial centres of Brussels, London, Paris, Berlin and Washington.

          • Deco

            The best bit is the 67 year old will be able to pay 52% or more marginal taxation to help bail out the Anglo bondholders.

            And Seanie Fitz still gets free flights from Aer Lingus for the job he did as director of Aer Lingus.

            It is an absolute disgrace.

          • Praetorian

            Shop till drop as a young consumer, work till drop as a pensioner.

            They’ll probably scrap free travel for pensioners and slowly wind-down medical cards after FF’s hamfisted neoliberal efforts.

    • Beyond standard demographics, there is a further, and arguably much more powerful dimension that conditions an individual’s responses and behavioural patterns

      I am with pretorian on the relevance of these propaganda marketing tools of manipulation.

      Global TGI is owned by Millward Brown’s sister company KMR

      http://globaltgi.com/whatis/coverage.aspx

      • btw. the quote above…. makes me throw up!

        ….conditions and individual’s responses and behavioural patterns….

        The mathematized cancer of a consumer driven society, add to that the media training bitches and you have a lovely mixture.

        Sickening.

      • Deco

        Unbelievable.
        {
        Each country’s TGI survey can provide you with information on all the following aspects of people’s lives:
        }

        Where is George Orwell ?

        This is sinister and sickening.

    • As for Gilmore, he meets with Westerwelle… how exciting! LOL

  40. craxihuber

    Interesting article in the English Version of ‘Der Spiegel’:

    http://www.spiegel.de/international/germany/0,1518,769703,00.html

    Claims that Germany was the biggest debt sinner of the 20th century, experienced debt forgiveness by the US twice and is not really in a position to take the moral high ground with regards to Greece.

    • Malcolm McClure

      +1

    • -1

      http://ideas.repec.org/e/pri57.html

      His entire perspective is agenda driven.

      http://www.guardian.co.uk/commentisfree/2011/jun/21/germany-greece-greek-debt-crisis

      Why they dig him up now, someone who wrote extensively on reparations, deficit spending in the ‘Nazi Recovery’ etc. I leave to your own imagination.

      • Malcolm McClure

        Hang on, Georg: This was in Der Speigel, bible of the German middle classes.
        granted a lot of LSE people are very left wing, but it is a point of view that cannot be ignored. Even germans i consider to be close friends, who love ireland for the same reasons that I do, have, I suspect, a deepdown feeling of Hang on, Georg: This was in Der Speigel, bible of the German middle classes.Hang on, Georg: This was in Der Speigel, bible of the German middle classes.
        Even my German friends, who love Ieland for the same reasons that I do, have, I suspect, a deep-down feeling of übermensche about themselves. In fact, against my better judgement, I am inclined to think sometimes that it may be justified.
        That having been said, I was brought up to believe that in a crisis the strong should help the weak. Reparations has nothing to do with it. Compassion is the highest moral achievement we can ever aspire to.

        • Malcolm McClure

          Sorry ’bout the screwed up C&P everyone. Hope its still legible.

        • Even my German friends, who love Ieland for the same reasons that I do, have, I suspect, a deep-down feeling of übermensche about themselves.

          Well, all I can say is that you must have some strange friends then! ;-)

          Look, I am 50, my generation and the following have ZERO to do with the crimes committed by the generation before us. Agreed?

          I was subjected on a yearly basis with the films and picture from Auschwitz etc. in school, EVERY single year. I would think I have a good understanding on the historical events that allowed the Nazis to take over, and on these grounds I warn since many years on the re emergence of fascism in Europe. It has gone from strength to strength.

          If we let the discussion about BANKSTERS and their global financial coup d’etat
          slip down observations and opinions about THE GERMANS, THE GREEKS, THE IRISH, we lost the fight already.

          I was born in germany, and I reject the notion that Germans per se have a inclination to feel as UEBERMENSCH this is bullshit. it is the same simplification as to make statements about lazy Mediterranean’s but seems to become the common tone in the discussions these days, sadly.

          • coldblow

            As a Germanophile member of the language class I used to attend at the Goethe Insitute once said: in a thousand years time Germany’s WW2 crimes will still neither be forgiven or forgotten. It must be galling.

            The article mentioned Germany’s collapse following reparations after WW1 and subsequent American generosity. What it didn’t mention was the fact that the main reason (according to Hudson at least) that GB and France turned the screw on Germany for reparations was because the US had taken a position that the war loans made to its allies before 1917 were to be treated as normal commercial loans and had to be paid back in full. With interest. This also had the handy side effect (also acc. to Hudson) that the US could completely remove Briain from the scene as a future trading competitor. Are similar geopolitical games being played now? I think they’re really just trying to find a way to solve the mess.

          • Malcolm McClure

            My sincere apologies to Georg and any others who may have read my above comment about German ‘supermen’ in a pejorative sense. It was intended as a compliment but my choice of expression was obviously considered insensitive and unfortunate. And editing my comment was confounded by WordPress problems.

    • What is valid however, is that Germany’s representatives exercise a certain schoolmaster arrogance and try to tell other countries how to manage their affairs, but such is the tendency in the wet dreams of a centralized Europe which they try to force now.

  41. Commodity Scam update: Worldbank pushes Food for CDS hedging

    http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22945434~pagePK:34370~piPK:34424~theSitePK:4607,00.html

    Comment?

    Fucking Hell!

  42. wills

    David, Georg.

    David mentioned on NEWSTALK the AIB default story, c here http://businessetc.thejournal.ie/aib-has-defaulted-the-official-verdict-of-a-global-banking-group-154911-Jun2011/

    This means AIB have actually triggered for themselves losses as far as I can make out. This is precisely my point up above.

  43. gizzy

    It is clear we are crap at government and referenda won’t change that. We substituted for government and democracy since independence a mix of cronyism to advance selected people and bureaucracy to control others. Surprise it does not work. So when it messes up can we fall back on government and democracy. No we replace some and only some of the cronies and increase the bureauracy.

  44. Just back from France and we’re not in the news over there, Greece is.

    On CNN the arguments are familiar, why should we pay a penal coupon on our ‘bailout billions’, sell of billions of state assets at distressed prices, run the austerity gauntlet to cripple our economy more?

    I agree with DmcW view the reason we’re kept out of the markets is because we are not burning bondholders, not because we are burning bondholders.

    I disagree with the presumption that we need to renegotiate our bank debt with Frankfurt along the lines of debt audit to distinguish between odious debt and ‘bank’ debt that is in breach of moral hazard.

    This is something we need to do ‘without consulting with our partners’ who are terrified we will take this course. Noonan recently ventured the possibility of burning unsecured, unguaranteed, senior debt. Immediately ECB was on our doorstep, Van Rompuy et al from ECB lecturing the Irish it was difficult to help us because of the ‘guarantee’ we concocted last time we went on our own.

    ECB are terrified they will be on the hook for a contagion to race across Europe from Greece, through Spain, Italy, Portugal that will close down these economies and lead to the closure of credit from the major banks of France and Germany as they battle the storm.

    ECB policy at the moment is to follow the traditional Hoover line between 1929-1933 in the US which saw the disastrous policy response of austerity/taxation allow the bushfire of 1929 burn out of control. Similarly, Europe is seeing these bush fires grow. It will take 4 to 5 yrs since 2008 for the disastrous policy response of the ECB and Ireland’s policy response to fully burn out our economy and that of Greece and perhaps the euro project itself.

    We should do as DmcW says, but unilaterally with the view to leaving the EMU.

    Will that happen? No. Do we have a Roosevelt to lead us out of the fire, no! So the hope is the Tuatha De Danann or the Milesians who take over the remains of this island such as they find it in 2012+, having seen the back of Enda the Titanic, will govern it a tad better than it is being currently governed:)

    Happy hols:)

  45. The presidential race is a bit of a farce.

    Failure of the presidency was particularly poignant during these McUseless years when opportunity to defend taxpayers against government bailout of the banks and subsequent legislation on the banks was silently forfeit.

    Surely it is time to take the presidency away from political hacks like McUseless and give it to the judiciary where it should belong?

    Perhaps an election with candidates from a judicial non political background alone should go before the people.

    Citizens could rely more on people of the calibre of Justice Kelly or similar to protect them against the moral hazard we have been the victim of in the recent past.

  46. “A nod is as good as a wink to a blind horse”, phrase used by Noonan on News At One. Ireland had not been threatened by ECB re his recent statement on unsecured, unguaranteed, senior debt intention to burn.

    But Greece was recently threatened with having some of its bond paper burned if it adopted similar course! His approach is to await the Autumn when he will then open it as a subject for discussion with ECB.

    Also, correct this if wrong as there may have been an update to this, his position on renegotiation of the interest rate on the bailout is now to threaten to stop negotiations on a reduction of the interest if this means he will be forced to up the Corporation Tax rate for Ireland.

    He’s a tough negotiator, Not!

    Seems to me you would get better negotiations of Ireland’s reduction on its bailout rate from a blind horse.

    Given these are delicate negotiations from Noonan, perhaps he’s from the Reductio ad absurdum school of negotiation?

  47. uchrisn

    It is interesting that the bondholders/fund managers have now jumped on board in calling for a credit event. Perhaps they have seen that losses are being imposed on bondholders of Greek debt very carefully without triggering a credit event.
    In the case of a credit event bondholders insurance payout is triggered. So the CDS seller, AIG, PIMCO, Bank of America, etc has to pay the bondholder back their money. I expect at this stage most bondolders of Irish bank debt have covered their position somehow and have already shipped losses.
    In any case the most interesting thing here is that the bondholders themselves are finally saying that they shouldn’t be paid back by random people with nothing to do with the whole thing. They should be getting paid back by the insurance company who were paid a premium for insuring the bonds.
    Really it was mainly up to the CDS seller to figure out the risk in the Irish banks as they were the main people responsible for that debt.
    Unfortuanlty the CDS sellers seem to be mainly massive global banks who are quite powerful.

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