July 25, 2011

This dressed-up deal is no victory for Europe or Ireland

Posted in Irish Economy · 152 comments ·

Ireland asked for nothing from the EU last week – and, make no mistake, that’s just what we got

Let’s be clear. The European deal announced last Thursday night is designed to do one thing and one thing only. It is designed to persuade investors to buy Italian and Spanish government bonds. And as an exercise in how the EU works, it was quite a piece of coalition building, buying off here and there, holding hands when necessary and hoping for the best always.

But, just before you get any notions, Thursday had nothing to do with Ireland and while Greece was the proximate reason for the summit, the real action was in Italy and Spain, whose difficulties were heightened by the global background of a debt crisis simmering in the US.

If the ‘troika’ — the EU, ECB and IMF – at the core of euro policy making could persuade investors to buy Italian bonds, they could avert – for now anyway – a continued European debt crisis.

So there were a lot of balls in the air. Obviously, the first crucial aspect of the deal was to quarantine Greece under the tagline that ‘‘Greece is different’’. They needed to ring-fence Greece and declare that any U-turn on previous policy was specific to Greece and Greece alone.

The U-turn on Greece has been spectacular. Having spent the past two years beating the ‘‘default in the euro would be unthinkable’’ drum (and creating much of the crisis), the troika on Thursday sanctioned a massive €37 billion default on Greek bonds.

But this is only a haircut of about 20 per cent on all Greek debt, and Greece probably needs a haircut of 80 per cent on debt to be able to pay back the money sustainably. It is another fudge.

But for now, if you had bought Greek short-term bonds based on the troika’s promises at the time of the original Greek bailout in April 2010, you have now been shafted. All Greek short-term debt will be converted into long-term IOUs. Those who bought last year’s guff were sold this year’s pup.

Why should Thursday’s promises have any more credibility in a year or two? Fancy a wager?

In essence, what we saw on Thursday was a Brady Bond plan for one country. This column has been arguing that the Latin American debt crisis resolution in the 1980s, known as the Brady Bond plan might be the blueprint for all of Europe. I still believe that this will happen, and that Thursday’s effort to limit default to Greece is ‘finger in the dyke’ stuff.

The original Brady Plan was based on allowing countries to buy their old debts back at deep discounts with new money.

That ‘new’ money was lent to the defaulting governments but guaranteed by the US Treasury so that the countries could reduce their debt/GDP ratios buying back all their debts at a fraction of face value. Once they serviced these ‘new’ old debts, they could borrow again.

To a cynic, this constitutes just a new Ponzi scheme under a new name, but the Latin countries accepted it rather than have to run their countries with zero budget deficits indefinitely, or at least run their countries without borrowing from foreigners.

This is what the Greeks have agreed to, in return for more promises of austerity. But why should such a deal be limited to Greece and not extended to Ireland? After all, the EU sanctioned ‘‘burning the bondholders’’ – is this not the very pledge this new Irish government fought the election on?

Obviously, there is no moral reason why the Irish shouldn’t look for the same treatment as Greece, particularly if the treatment makes Greece’s debt profile more sustainable. If I were an investor, I’d be thinking to myself – ‘‘hold on, the Irish and Portuguese need this type of deal too, so why shouldn’t they get it in the future’’?

But how did the troika fob off a potential ‘me too’ bid from Ireland, given that Ireland’s debt dynamics are so diabolical? Well they banked on playing on the old Irish insecurity of always trying to be one of the goody-goodies in the EU class – the teacher’s pet of negotiators, never causing a scene.

To the extent that when the continentals thought about Ireland, they had to gamble on the assumption that the Irish authorities are so cravenly unable to stand up for their citizens’ interests that they would never cause an embarrassing scene at the summit by forcing bank bondholders to take a bath. The troika wagered that the Irish would sit there and say nothing because by saying something, it might draw attention to us, and we couldn’t have that. We’d deploy the Seamus Heaney line – ‘‘whatever you say, say nothing’’.

We’d side with the big boys, the respectable ones. The troika could buy off Ireland cheaply by conferring on Ireland the best of the worst accolade. That they did, by praising the Irish, patting us on the head.

But egregiously when you look at the detail, it seems that we committed to talks about corporate tax harmonisation. In return for what? In return for the troika stopping their present policy of loan sharking – charging us extortionate interest on the loan and dressing it up as a friendly ‘bailout’. Friends don’t involve themselves in loan sharking.

So now we have no deal on the banks, no debt forgiveness, ‘normal’ official interest rates for an official loan and a threat to our corporate tax rate. This is now being dressed up as a victory for Ireland.

Having bought the Irish off cheaply as an afterthought, the troika had to deal with another more pressing constituency – the investment banks that held Greek bonds.

If they were to prevent a complete collapse of Greek asset prices, the leaders had to come up with more money from somewhere else to make sure that the share prices of the bank that owned the Greek crud, didn’t tank further. So they turned to who? How do I put this nicely. . .you.

The summit decided to expand the slush fund known as the ESFS with taxpayers’ money that can be used to prop up the assets of countries like Greece to make sure the private banks don’t take a bath. Is it any wonder bank shares rallied on the news?

All this is hoped to encourage investors to buy Italian bonds. Let’s see what happens – but I wouldn’t be too confident.

It is easy to see why the Triumvirate behaved as they did. They have so many conflicting constituencies to hold together. They need to keep the Germans on-side and also the Finns, who want no part of taxpayer bailouts.

The French need to protect their overexposed banks that are up to their necks in Greek debt and thus need a taxpayer bailout. The Italians and Spanish need to stop a run on their bond markets, so they need a deal that quarantines Greece. The ECB need a deal which makes its previous promises credible and prevents everyone jumping on the emerging European Brady Bond bandwagon. So they drew a line at Ireland.

And we did what? We opened up negotiations on our corporate tax rate in return for a commitment from our so-called friends to desist from loan sharking.

In the end, we have just experienced a shift in language that would make Orwell’s Big Brother blush. Think about it, we have ended up with an explicit selective default in the euro.

This is now being signalled as a triumph. Yet up until last Thursday the official line was that such a default in the euro would constitute a calamitous defeat. Crisis over? I wouldn’t bank on it because the stated universal agreement for everyone to cut spending now and go for zero or close to zero deficits will cause growth to falter, generating the expectations for the next bailout.

  1. Fudge Party & Co welcome all of You to another Noonanesque Burlesque Show ‘ La Noonan Rouge ‘ .

    • stiofanc02

      Actually John its more like ‘La Noonan Ruse’

    • molly66

      ireland is gone over the cliff,they have turned off the life support kenny and co are puppets who’s pulling the strings.i can see whats coming down the tracks as our so called leaders bring in the next budget. when we needed the proper back bone it was no where in sight.in stead lets make the irish suffer even more we have to take to the streets and protest.the time for lying down must be over no more teachers pets.

  2. Malcolm McClure

    The troika needs to take one step at a time. I agree that their priority was to dampen speculation about Spain and Italy but Thursday’s measures made some inroads on the greece problem and provided some crumbs of comfort to Ireland and Portugal. Significantly that was followed almost instantly by a comparable reduction in the interest rates due for UK loans to Ireland.
    Enda Kenny entered the MacGill Summer School last night to a standing ovation– the first ever for a visiting speaker. He was at pains to emphasize his friendly links with Britain, whose ambassador opened the event with a thoughtful speech. Kenny said that he was confident that the diaspora was keen to support ireland through its difficulties and they would gather here again in October to discuss this.

    He said that critical and difficult decisions have to be made in October and November leading to the December budget, but reassured his audience that he is an optimist.

    Perhaps he needs to be as he has a difficult job

    • CitizenWhy

      I am glad Kenny recognizes that Ireland’s future lies with the UK. This is simple reality.

    • CitizenWhy

      I like your comment: observing specific behaviors/actions, avoiding cultural or psychological analysis.

      But cultural and psychoanalytic comments are fun, so I do enjoy them. And I do believe that ireland, like the Catholic Church, needs to change its culture. The need is there, even if the likelihood is small. Nonetheless keeping one’s eye on specific behaviors and actions is the most useful approach in understanding what is going on in “that most distressful nation.”

  3. wills


    If the solution employed rebalances the power back toward the non rigged markets then the corpocracy / insiders will surely be reticent to use it.

    Hence in my opinion why the brady bonds, for the moment, is on ice for ireland.

  4. piombo

    This morning, the markets are letting the Troika know what they think of the last weeks events. There is blood all over the place. Italy has a bond auction this Thursday and already commentators are getting nervous. Coupled with the US debt standoff, it looks like a repeat of August 2007, general meltdown!
    David has finally returned to his best idea, Brady-type bond repo’s as the most efficient mode of getting Ireland debt to manageable levels. However, he is still leaving out the public spending reform which is essential to execute this strategy. Unless the Irish state returns to at least Primary Budget surpluses, we won’t have seriously funded counter parties on the other side to purchase the bonds.
    This is Ireland’s political challenge which the FG,ILP and FF needs to embrace pretty quickly otherwise we will have the Troika do it for us.
    Finally, let us remember that the German constitutional court has to be pronounce in September on funding of the Super-fund and from the sentiment of friends and business associates there, it would seem the Germans have had enough and are ready to bite the bullet and leave the Euro, even if that means a hit on exports. The politicians in Germany tend to listen to their Deusche Volk, not like our ladies and gentlemen.

    • Deco

      Correct. The state is living beyond it’s financial capacity. The state is also hopelessly inefficient as an organization for getting things done. It must either default or reform in the long run. Denial is not a strategy.

      If the German constitutional court decides that this latest fudge is a breach of the rights of the taxpayer in Germany, then the house of cards will collapse overnight. If it doesn’t the rot will continue.

      • EMMETTOR

        This is not Greece, where the State was living beyond it’s financial capacity. This is Ireland where, despite the spendthrift attitude FF adopted, in what I hope is their last-ever government, the real financial crisis was caused by Private Enterprise, you know, rampant, unregulated, privately owned financial institutions. Has any recession ever sprung from any other source? I
        think not.

    • CitizenWhy

      Good, sensible comment.

    • CitizenWhy

      Now the talking point for the irish government must be an EU wide system of Brady bonds. The EU will probably create Brady bonds country by country, with Ireland last. Italy and Spain, as they say in the financial press, are too big to be allowed to fail.

      The context for the Brady bonds in the US was the huge exposure (loans) of big US banks to Latin America. The Brady bonds were a way to bail out the US banks. But they also helped Latin America. One bank, refusing to bow to the pressure by the government to make Latin American loans, simply dissolved its international Division. So it was not hurt by the troubles in Latin America. That bank was Fleet, merged into the Bank of Boston, which merged into Bank of America.

      They are also one of the most effective ways for the EU to bail out the ECB and the German, British and French banks that made huge loans to the peripheral countries, plus Italy (it’s not officially a peripheral yet, is it?)

      By the way, a recent audit by the GAO (General Administration Office of the US Government) of the US central bank, the Fed, showed that in the last two years the Fed has used $16 trillion in bailing out US and European banks. Yes, $16 trillion.

  5. Colin

    Teacher’s Pet Mentality in Ireland

    As we all know, Ireland was and is a crony republic. To succeed and indeed survive here, Irish Middle Class Mammies have told their darling boys and girls to study hard at school and behave well for the teacher, otherwise a life of hard labour and poor conditions would be their future. They were sent to Irish College in Gaeltachts, given private one to one supplementary tuition, to get the points to get the university place to make Mammy proud. So, learning for the love of learning does not exist here, its more like learning for the love of surviving.

    We have Teachers in the highest offices in our government, Taoiseach Kenny and Finance Minister Noonan. They are products of the Teacher’s pet mentality, and emulated their beloved teachers by becoming teachers themselves.

    So, is it any wonder we are being represented at the most important meetings this country has ever had since Michael Collins went to Downing Street by sycophantic Europhiles who wouldn’t know the best interests of the Irish people if it hit them on their knuckles like a rod of blackthorn?

    Great article David, keep up the great work.

    • Noonan is a self egoist to that end at all costs no matter what the sarcrificial lamb on the alter is only his self interests comes first and last and nothing else in between.

    • Malcolm McClure

      Colin: Last year, I too was doubtful about teacher Kenny’s ability to lead a government. My doubts have been dispelled by:
      Enda’s ability to quickly see off R Bruton’s challenge.
      His confrontation with the Vatican.
      His efforts to restore the economy from a total capsize during his first 100 days.
      Last night at MacGill he addressed the crowd in Fluent Irish, English and French, speaking for half an hour with only occasional glances at his notes.

      Kenny is not a weak leader he is smart, well presented, and has the steel to make things happen. He quoted a sign he’d seen at HP labs to the effect that ‘We need Thinkers but Do-ers make things happen’. In my estimate Kenny is a doer, as we shall find out come December’s budget.

      • coldblow

        But then again, Malcolm, we saw what the doers did during the bubble years where anyone who had ‘doing’ inclinations could get funding. Crotty once saw a tethered horse get tangled in its reins and harness and the more it struggled to free itself the tighter the knots it tied for itself. He saw that as a metaphor for ‘undeveloping’ nations.

      • Colin


        A challenge from Richard Bruton is like being ravaged by a dead sheep. A very poor litmus test indeed.

        Vatican confrontation was total popularism. He can talk the talk, so what, and what has it achieved?

        100 days bailout survival? The IMF agreed to provide funding in a deal made with FF/Green Government in November 2010, so capsizing was never on the table.

        So he can speak Irish? Great, but Germans can’t speak Irish and it doesn’t stop their companies being world class. I hope Enda doesn’t start showing off his French to Christine Lagarde like Lenny used to, because she speaks impeccable English, and will not give us a better deal by acting the sycophant.

        I don’t think Enda is stupid, I think he’s cute and shrewd, almost in a Haughey-like way (didn’t his missus learn a few tricks along the way), but I can guarantee you that if we had McWilliams / Sommerville / Ross / Matthews running the country, then we’d be in a much better place.

        We have an unemployment crisis, what’s Enda gonna DO about it?

        • Deco

          Ah yes, Baby Brute. A masters in Economics from Oxbridge. But, critically, what did he do with his own money – he bought shares in Irish banks, and in Irish construction companies.

          Proof that the economics that he learned was pretty much the wrong stuff, or else he was enjoying himself when he should have been scouring the books.

      • Deco

        I don’t think Constantin can speak Irish or French. He makes the odd grammatical mistake in English.

        But he speaks a ton more common sense than Kennylite or anybody in the government at the moment. Yes, they are trying their best – and they are more sober than the last crowd, but this crisis is serious and it is going to get even more serious.

      • piombo

        Mr Kenny is neither the solution nor the problem in himself. I don’t believe anyone reasonably falls for the strong and steely leader he is seeking to portray in recent weeks.
        No, tragically, his government and ultimately he as a political leader, have backed down from seeking access to the Super Fund, and thus consigned Ireland to mind-numbing indebtedness for at least another decade.
        In addition, the government only last week reiterated it’s commitment to the Croke Park Agreement. This signifies simply that they expect to be back at the polls within the next 12 months and cannot afford to alienate the Public sector.
        The cynicism and shrewdness is noteworthy.
        A cursory analysis of government cash flows over the next five years would demonstrate even to the most loyal of this government that insolvency is about 18 months away( even with an additional €4 billion from the December budget to come).
        No, I am convinced that a secular sale of assets is being lined up for early next year and that Mr Kenny will deliver this in return for the financing of the Ireland he sees each morning.

        • Malcolm McClure

          piombo: David McW and Enda K see eye to eye about the role of the diaspora in curing our chronic financial ailment. First we have to help ourselves by taking some unpleasant medicine.
          As someone mentioned here recently, Kenny seems fairly blase about temporary emigration of well educated and energetic young people, saying that he hoped the emigrants would make their millions and would find Ireland a much improved place with a stable economy if and when they wanted to return.
          Cynical and shrewd? Certainly, but realistic in the light of Irish experience over the past 150 years. The difference is that it is now much easier to stay in touch with the folks at home with video phone links, internet editions of local papers and cheap flights. It has always been a feature of the human condition that enterprising people move on in search of better opportunities.
          As Einstein said “Life is like riding a bicycle
          To keep your balance you must keep moving”

          • piombo

            I am one of the Irish disapora having left Ireland with an honours degree and chartered accountancy qualification in 1991, so permit me to give some insights into what one of the diaspora sees. BTW, I have a successful mid-sized company and have also some business in Ireland, but mostly in Italy, Germany and the UK. I live in Italy.
            Now, here are a few of the observations:
            1) I used to be immensely proud of Ireland’s achievements, even though I didn’t benefit from them;

            2) I feel very sad for the many people caught in debt on both sides, both house-owners and developers. Both sides are victims and in general, I believe acted without malice (maybe some greed, but so what….. as a Catholic I believe in original sin and redemption);

            3) Debt and penury will accompany the disapora this time around to the Airport. People will be ashamed that they have to leave just to escape. And we expect these people to somehow return…….The bankruptcy laws will prevent them, even after the announced reforms.

            4) The political parties have circled the wagons and will defend themselves and their
            closest constituencies casting aside all others.

            So this is the Ireland, we the disapora will yearn to return to bringing our children with us convincing them that Ireland is indeed a better place than Continental Europe, UK or the US…….Lol
            Ireland is wonderful because of the Irish people in everyday life and not for the thieves and cowards which populate our governing classes who do not even have the courage nor honesty to stand up for Irish legitimate interests

          • Malcolm McClure

            piombo: I understand from my own experience your reservations about the character of Ireland and the Irish, viewed from a successful career abroad in a profession that had few openings in Ireland. Your formative years were the 1980s when the country really was going to the dogs, so your decision to emigrate was well taken.

            Responding to your observations:
            1) I have vivid memories of hardships endued by inhabitants of picturesque thatched cottage Ireland, offset by their friendly community spirit. These are are now replaced by pride in well furnished dwellings with every modern convenience, seen everywhere, and community spirit that has survived intact, at least in rural areas.
            2) Excessive debt is destructive of self-esteem. Good public education had polished that self esteem and opened the eyes of the young generation to the attractions of the consumer society. Unfortunately that education looked towards a gilded future rather than a penurious past and failed to demonstrate the connection between the economic productivity of adjacent assets and the wealth that those assets could realistically support. Thus we saw a site at the back of a mountain offered for sale at €60,000.
            3) Kenny said he’d spoken to some emigrants to Australia at the airport, wished them success and hoped that Ireland would be fit to attract them back one day.
            4) I spoke to an old retired FF supporter last night who said that FG supporters were very clannish and stuck together. Pot callin kettle black.

            My impression is that Kenny is an honest man; and in a world of snakes and vultures an honest man can look weak. I think Europeans have seen through the snakes and vultures and are prepared to support Kenny so long as he remains evenhanded and honest.

            Let’s give him time to deliver some useful results.

        • CitizenWhy

          Yes, a sale of Irish assets is the next step. Will the Irish people put up with that, or will they finally say “Enough’?

      • gizzy

        Malcolm surely the jury is still out and in a big way.
        To see off Bruton he needed the help of big Phil who is no rocket scientist. The attack on the Vatican is after the fact and deflects from the role the state and its politicians played in the institutions.Let’s not mistake an orator for a doer but then we have always been good talkers.

        • EMMETTOR

          True, attacking the church at this stage is like denigrating Hitler. The Irish, for various historical reasons, including the above-mentioned “teachers pet” attitude, look to “leaders” to deliver our redemption. Personally, I have big difficulties with the whole leader myth. Churchill did not win WW2, the Russians did. On the other hand, imagine if Biffo was still our PM! Also, if something is written on a wall in HP, then it’s clearly bullshit.

    • coldblow

      I was a compliant pupil but if I had to do it all over again I’d be the biggest pup on the planet.

      However I don’t think it’s the sycophantic leanings per se, as David argues, that’s at the bottom of it, but rather who the govt, and politicians of other stripe, actually see themselves as serving. That would be their own kind, their ilk, their (if you like) class. It’s like everything, under the moralizing there’s the economic reality.

      When push comes to shove they do not look to the people as a whole, that was never the case. Look at the emigration stats for the last 90 years, and 90 before that for that matter, in case anyone thinks that playing Her Majesty’s Most Loyal Subjects card will get them anywhere. My guess is that in their hearts, even if they don’t consciously acknowledge it, they calculate that if they keep their Euro masters happy they know they will be allowed to secure their own futures and those of their friends and connections. The ranks of the insiders may need to shrink a long way but our politicians will be able to deliver for them. A population the size of Luxemburg should live reasonably well here. The rest may add colour but are no more important than the Indians of the Andes are to the elites of Lima, Quito and La Paz.

      Is there a better explanation?

  6. Deco

    Probably the best article on last events that can be seen anywhere. Definitely better than the rest of the Irish media coverage. Well done David – perfect 10 score.

    The EU is fudging (as John Allen is implying) and they are basically pulling off a masterstroke – for which they have no money to back it up. This is reminiscent of the time in the build up to the EMU crisis in the early 1990s – except now everybody is in a worse position.

    Within two months this article will appear prescient and of remarkable relevance.

    Fudge, Baby, Fudge.

  7. uchrisn


    This letter form the editors of VOX Eu sums up exactly what David is saying.
    Just look at the list of Itlain academics who signed it along with Richard Baldwin who wrote the main Uni textbook on European Integration and founder of voxeu.
    The letter is paniky and the gist of it is – please help Italy.
    The deal was all about Italy. It just goes to show that Irleand is marginalised and a pawn ready to be sacrificed. Italy is a Rook and will not be sacrificed so easily.

    • piombo

      Actually if you disregard the country of origin of the contributors and reflect upon what they proposed, you would see that the strengthening of the superfund (as a backdoor way of creating Eurobonds) is rather similar to David’s Brady-bond scenario. The only real difference being who acts as counter party.
      While it is true that the real show in town is Italy, the corrollory is also true, ie., Ireland does not represent a threat to the Euro.
      Why do you think that is the case?
      Simple, every government(including our own) in the room last week was aware that the Irish Public sector needs the €15 billion to fund itself coupled with the fact that, unlike the Italians, the Irish are unwilling to purchase Irish government debt.
      These two simple realities allowed everyone in the room to “take Ireland’s measure” and as we all do in negotiations, allowed the others to concentrate on the more important issues at hand and allow Mr Kenny brush up on his French in preparation for Donegal.
      Our government, could have obtained a significant inroad but backed down.
      It was a matter of moral and political courage, and they blew it.
      Very sad but very simple.

      • uchrisn

        Yes the strengthening of the superfund is in a way similar to brady bonds, however crucially the haircuts are too small and have not been accompanied by monetary easing.
        Ireland do not have much leverage or bargaining power and even with what little they have, they have been out negotiated.
        I agree with your comment on the negotiations. A basic premise of negotiation is always ask for more than you actually want. Then when you climb down later it seems like you are conceding or offering a good deal. So offer Ireland a terrible deal first and then graciuosly change it to a really bad deal and suddendly the really bad deal looks ok.

  8. uchrisn

    By the way please note the deal ended up quite similar to what was called for in this letter.

  9. uchrisn

    I think the figures for the reduction in Greek debt for 2012 is from 150% of GDP to 130% of GDP. Go figure.

  10. paddyjones

    Very begrudging DMcW , the EU gave us a hand and David clobbers them.
    Basically what happened is that the EU gave us a lower interest rate and a longer payback period , that is it , thats all that happened.
    The reason for all this financial trouble is that governments throughout Europe are over spending and the only thing to combat this is …..AUSTERITY. We must cut spending and get back to 3% borrowing of GDP as quick as possible.
    This year according to Gurdgiev we will spend the same as last year so after a buget of 6 billion in cuts we are still the same as last year…go figure.
    Just wait and see the adjustment next budget will be over 6 billion , how they will achieve this is anyones guess.

    • Deco

      Spending is out of control.

      And anybody who says this has committed heresy against the Irish concept of lifestyle.

      We are also seeing people at the margins getting shafted – with Joan Burton making an effort to get young people off the dole, when there is no work. Another politician in another generation trying to shove the young outsiders out of the country. She would rather take a few quid off the people on the dole, than get rid of the waste in the quangoes. Absolutely disgraceful.

      Here we go again – Insiders shoving the outsiders back from access to opportunity, so that it is cornered. Stephen Donnelly was correct in what he termed “system capture” whereby the vested interests have the pie divided, and those not represented get the cold shoulder. Burton does not want annoyed, impovrished young men hanging around and possibly voting ULa or SF. Better to shove them out of the country. She is a disgrace.

  11. adamabyss


  12. Nina Ogden

    David, every economist worth his salt knows that there is tremendous momentum in the US for a return to the Glass-Steagall Act. Marcy Kaptur’s bill, HR1489, Return to Prodent Banking Act, calls for a return to Franklin Roosevelt’s Glass Steagall, which has an evergrowing list of 30 cosponsors, will, when passed, protect the commercial banks and hand the toxic investment junk back to Wall Street and tell them to sort out their own gambling debts with no bailouts. Even the British, after all their fancy ring fencing clap trap are now calling for a Glass-Steagall model of total seperation of the commercial and speculative investment banks.
    You should yourself drop the misleading monetarist suggestions of Brady Bonds and similar dead end schemes. Take your own advice! Be a man! Back HR 1489- the Glass-Steagall Act for the U.S. as a model for every other looted country. Stop”siding with the big boys” yourself!

    • The sooner Glass – Steagal ala Marcy Kaptur’s bill or similar comes about the better. We need to negotiate a fixed exchange rate mechanism between states. There is too much investment finance pirate money flowing along the economic arteries. Apparently last week there was a huge 7bps short attack on Italy leading to its crisis. European politicians should be preparing to tackle the fiscal problems of member states as well as tackling the fiscal problems behind the world’s fiat monetary system evident since 2008.

    • CitizenWhy

      The Wall Street banks will not allow a return to Glass-Steagall, and they have the power to enforce their wishes. Remember, the Republicans consider the New York Stock Exchange to be “holy ground,” representing what they call “liberty,” that is, laissez-faire capitalism, no government regulation of business at all, no labor rights at all.

      • Deco

        Actually I think, based on the way the Democrats have behaved since Obama got elected, that the Democrats are as bad, and in many ways worse. Promising to clean it up, and then producing a clean up bill that effectively makes matters even less transparent takes some neck.

  13. gizzy

    What is happeneing here is not a European Problem. It is the breakdown of the current form of capitalism we now have. The balance has swung way too much from the citizens of the world to the markets and funds etc. The speed information now flows gives the players an even bigger advantage now than owning the money did alone in the past. They now have the buying power and the control of info and the ability to move faster than governments. But the current model always needed the ordinary consumer to be active at the bottom of the food chain. Have they now been too greedy and taken too much out that the consumer or citizen is now hurting too much to play their role? The government here mentions the markets more than the citizens. No matter what ism you associate with that is wrong.


      This is true. The deregulation of financial institutions, has allowed them to become creators of fake “money”, usurping the State, which was at least nominally under the control of it’s citizens and represents a far-right extremist U.S. political agenda ruling the world. Anyone who expects markets to act rationally, to do anything other than create bubbles, trouser the profits and leave behind recessions, is living in a fantasy world. The idea that I learned in economics class, that a large group of individuals, making rational decisions on their own behalf, would add up to a rational sum, now seems insane.

  14. DmcW is certainly on the ball and in top form here:)

    Enda The Titanic is no Icelandic Geir Haarde or Swedish Bo Lundgren.

    At the moment, he’s playing seagull with the troika and hoping to be thrown fish overboard as he follows faithfully along in his trawler:-)

    Its rather embarrassing and sad to hear Gilmore implore us to don the green jersey and step up to austerity.

    He’s closer to the Greens than he realises having dumped the green jersey in favour of wearing a crisp banker’s suit for quite some time now.

    The embarrassment doesn’t end there with Gilmore or Enda. It extends to the call to have confidence in the corralito approach FG/ILP are taking.


    “In 2001, Argentina was in the midst of a crisis: heavily indebted, with an economy in complete stagnation (an almost three-year-long recession), and the exchange rate was fixed at one U. S. dollar per Argentine peso by law, which made exports uncompetitive and effectively deprived the state of having an independent monetary policy.”

    “Many Argentines, but most especially companies, fearing an economic crash and possibly a devaluation, were transforming pesos to dollars and withdrawing them from the banks in large amounts, usually transferring them to foreign accounts (capital flight).[1]”

    We’ve similar conditions and we’re choking on the euro.

    Enda doesn’t get it that EMU is over, too much EFSF funding is required to save all the PIIGS, not enough in there to save Greece.

    Where Enda and Gilmore are most vulnerable and most undone is under the heading of ‘growth’. We need growth in the economy for the bailout to succeed, for NAMA to succeed, for the domestic economy to recover. The troika have doomed the economy to deflation, austerity, so to compensate and ensure our debtors get paid we require more bailout, its just a matter of time before even Enda realises bailout is a fail.

    So assume Enda The Titanic has thought this true and is smarter than DmcW:) Perhaps he even holds the view that “‘‘hold on, the Irish and Portuguese need this type of deal too, so why shouldn’t they get it in the future’’?” Come September, Enda The Titanic thinks, the logic of the Irish position requiring perhaps in unison with Greece, Portugal, Spain, a bailout along the lines of Brady bonds as DmcW advocates, will become clearly obvious.

    The problem is there are not enough Brady bonds to go around. The problems of the PIIGS dwarf that of Argentina in 2001.

    That’s why we need to get out now, seek an alliance with sterling and NI, deflate our currency, tell bank bondholders, taxpayers will not pay their debts! Why remain and create further damage to our economy, rather than leaving a failed EMU project with the hyperinflation this will bring about anyway, with expansion of the EFSF or a Brady/Euro Bonds programme with selective default:)

    But I doubt our Government team have the capacity to think through any of this. Better to keep the head in the sand and let the troika do the thinking for them:)

    • piombo

      No need to panic and going defaulting. Just announce a budget whereby our pbr is zeroed out in favour of just 1.5% primary surpluses (inflation will do the rest) and Ireland’s national debt would morph down to 60% in a few years. We would have the world and his sister lining up to purchase our bonds. Which leads me to the following question.

      Has anyone noticed that the EFSF is a Luxembourg-based SA? It is the equivalent of an SPV for the ECB? This will allow it to dive feet first into the repo Market and bring down the nominal value of Greek debt vs GNP.
      Where were our muppets when this very elegant arrangement was being constructed?

      @ David,

      • coldblow

        I’m not sure I understand your point about the EFSF. I understood that it was set up under Luxemburg private law because the Germans were concerned about a constitutional challenge if it were done as part of the formal EU machinery. It seems so dodgy. Anway, why would the Germans be so keen to set it up one way or another in the first place unless their banks stood to lose out? What’s this other angle?

      • Malcolm McClure

        Stratfor explains:
        The EFSF is a bailout mechanism whose bonds enjoyed full government guarantees from the healthy eurozone states, most notably Germany. Because of those guarantees, the EFSF was able to raise funds on the bond market and then funnel that capital to the distressed states in exchange for austerity programs. Unlike previous EU institutions (which the Germans strongly influence), the EFSF takes its orders from the Germans. The mechanism is not enshrined in EU treaties; it is instead a private bank, the director of which is German. (It may have been established in Luxembourg to be beyond the strictures of German law.)

        The EFSF worked as a patch but eventually proved insufficient. The result was an EFSF redesign. Under the new system distressed states can now access – with German permission – all the capital they need from the fund without having to go back repeatedly to the EU Council of Ministers. The maturity on all such EFSF credit has been increased from 7.5 years to as much as 40 years, while the cost of that credit has been slashed to whatever the market charges the EFSF itself to raise it (right now that’s about 3.5 percent, far lower than what the peripheral – and even some not-so-peripheral – countries could access on the international bond markets). All outstanding debts, including the previous EFSF programs, can be reworked under the new rules. The EFSF has been granted the ability to participate directly in the bond market by buying the government debt of states that cannot find anyone else interested.

        Faced in Greece last week with the futility of yet another stopgap solution to the eurozone’s financial woes, the Germans finally made a tough decision. The result was an EFSF redesign. Under the new system the distressed states can now access – with German permission – all the capital they need from the fund without having to go back repeatedly to the EU Council of Ministers. The maturity on all such EFSF credit has been increased from 7.5 years to as much as 40 years, while the cost of that credit has been slashed to whatever the market charges the EFSF itself to raise it (right now that’s about 3.5 percent, far lower than what the peripheral – and even some not-so-peripheral – countries could access on the international bond markets). All outstanding debts, including the previous EFSF programs, can be reworked under the new rules. The EFSF has been granted the ability to participate directly in the bond market by buying the government debt of states that cannot find anyone else interested.

        Personal thoughts: Forget the ideals of being European. The EFSF is a mechanism that makes us all subjects of a new German Empire.

        • @Malcolm

          Have a look at http://www.efsf.europa.eu/attachment/faq_en.pdf

          The real question is, who funds the EFSF?

          The answer is European taxpayers. Its not a QE financial instrument. So here’s another question, look at the proportion of EFSF funding guarantees supplied by Italy, Spain and Portugal?

          Can their guarantees really be taken seriously when they are heading towards needing bailout themselves?

          • Malcolm McClure

            cbweb: Thank you for the link. That’s useful information. I was speaking to a well informed German couple this afternoon and they are very skeptical that Germany can afford many more bailouts for others, as finances are getting tighter at home. They point to East Germany as a success story that shows that bailouts can indeed make a big difference if people work hard and have sensible policies.
            By the way Spain’s interest rate is back up to 6% today after a short-lived dip on Friday that responded to the Greece bailout.
            Colm McCarthy thinks there will be many further heads of states meetings following Brussels, each presumably digging Europe deeper and deeper into the mess.

      • @piombo,

        Your solution reminds me of the Morgan Kelly argument similar to yours, but instead of carrying the national debt MK I believe is in favour of burning bondholders. He’s in favour as I am of giving the ‘pillar banks’ back to the troika and saying ‘no thanks’, you have them, we don’t want their debt.

        The problem with your solution is that Irish taxpayers end up paying for the mess not of their doing. Why should Irish taxpayers clean up the mess of others, politicians and bankers and developers et al. The troika would not support such a move as yours.

        Simple, we need to leave the EMU and return the debt to where it belongs, the Troika. The burden of returning to pbr of 1.5% would be extreme, but we would free ourselves of odious debt and immoral government exploiting moral hazard for their own craven ends!

  15. antoin

    A large fraction of our debt has effectively been written off. A lengthened term and a reduced interest rate is for all intents and purposes the same thing as a debt write-off.

    The amount effectively written off is in the same order as the bank debt we have assumed.

    You yourself advocated the idea of a bad bank where bad debt would be segregated. What you said we needed is exactly what we now have – the Resolution Bank and AIB. If the bad banks now don’t pay back their senior debt, they will spread contagion to the whole of Europe. The whole point of having a bad bank is to control and limit the contagion. If the bad bank defaults on its responsibility then it will cause the very contagion it was supposed to suppress.

    I am not faulting your moral argument. It is flawless. Private debts are private debts. However morality is a balance not an absolute, and the balance is against spreading Irish contagion to the whole of Europe.

    Should the Irish economy (between its banks and government) get another write-off (which is essentially what you are asking for)? Sure, if it is merited. But what is the point in getting banks to default if this is a feasible alternative.

    • @antoin,

      Re “Irish contagion to the whole of Europe.” Unfortunately you are the victim of those who’ve misappropriated the term ‘contagion’.

      ‘Contagion’ for me is ‘not defaulting’ on odious debt. Stringing up taxpayers with odious private sector debt is the contagion of moral hazard spreading across Europe.

      We’ve spread that contagion already through Europe and beyond.

      If it means bringing down the house built on moral hazard and odious private debt, that is dismantling public welfare programs and democracy itself, then, bring it on!

      If its a cover for the largest transfer of public wealth in the history of this country from the poor to the private sector domain of the rich, bring it on:)

  16. CliveG

    Let’s be clear. The European deal announced last Thursday night is designed to do one thing and one thing only. It is designed to persuade investors to buy Italian and Spanish government bonds

    David your assessment is absolutely correct …
    I would go one cynical step more and call it the “Beach time Deal”. In September when Europe returns from its holidays the euro turmoil will casting its Ebenezer Scrooge shadow on the little taxpayers of Europe once again.

    Really enjoy these phrases calling them eejita and fools is actually praising them…
    ‘a good economy, hijacked by eejits and financed by fools’

    • Only after the holidays at end of august will everyone start to touch reality and that will begin in early september and this is when you know something is going very very wrong : The Big Panic will have arrived when it lifts its head on Sept 5th and the PANIC strikes on Sept 11th 2011 ; what a coincidence ?

      11 11 we heard all that before and instead of twin towers we will have Federal Reserves & ECB

  17. Lets get the short term party started before the long term pain will be suffered by our kids and younger kin. This is the start of the biggest can kicking excersise since the bailout of AIB in the 1980s.
    There should be looking at the markets around Ireland a short term cash bubble around September. Pints on me. I am not joking.

  18. bara

    Yes i agree with you David i also agree with what Piombo says about our bankruptcy laws god knows why the Goverment has not acted on it yet.I also agree with what you say on homeowers, investors, and developers they all got trapped in debt some through greed,but they did create employment,they did pay a lot of tax to the goverment who job acting through the Regulator was to regulate the banks and there lending.It was not the homeower or the investor or the developers job.The problem here is the old irish begrudgery a “well it is good enough of him” “he deserved what he got” or the modern version which is “morale hazard” he would rather die in begrudgery
    then think about debt fodgivness.

  19. Avoiding the fundamental issue is historically par for the course, David. Though kleptocrats have been warned and provided with the only workable solution before revolutions, they preferred to lose their lives than to employ it. That’s some commitment to the status quo! See “The Plutocrats’ Suckers” at http://thedepression.org.au/?p=6848

    • coldblow

      That’s an interesting speech by Cobden. I thought the author of the article had forgotten the speech marks and that the historical review was by him not Cobden. Imagine one of our shower trying to compose something like that. Raymond Crotty also advocated land tax (as well as of bank interest). Ditto Hudson, who argues that the whole Neoliberal movement has been to overthrow the progress made in the 19th century and the restoration of the privileges of economic rent.

      • coldblow

        From Hudson’ pov, land and property become financialized (in that prices rise to the level that credit is made available) and thus feed the bank monster. Tax of land and property, and the removal of loopholes (such as the ridiculous American (and elsewhere?) practice whereby depreciation is charged as an expense of holding them (whereas they have historically appreciated, vastly, in terms of value) would rectify this, apparently.

        Crotty saw the institution of wealth in property as being inappropriate (in the appropriate sense of the word, not as a description of serious crime) for post-capitalist colonialized states. It ends up skewing the balance between the factors of production (most notably labour and land) leading to ineffecient land use and economic underdevelopment – he sees it as actively regressive ‘undevelopment’ and pointed to the record of ex-colonies around the world, starting with Latin America who gained their independence nearly 2 centuries ago. Of course Ireland was capitalist-colonized far longer and mor intensively than any of them and this might be plausibly used to explain some of the peculiarities of the place.

        Then again I could be wrong.

        I can’t remember the critique of Henry George except that he seemed to be, as they say, ‘good in parts’. But he’s not to be confused with Boy George. I think Tull knows more about this.

        • coldblow

          doh! that should be “property in land”

        • Not just “in parts”, Coldblow. The Irish once took Henry George to their hearts, and he wrote “The (Irish) Land Question” about them. I only came across Raymond Crotty’s work a year or two ago, and he seems a most solid citizen, writing against going into the EU.

          I look forward to the day Michael Hudson and David McWilliams speak from the same platform.

  20. Tull McAdoo

    Italy’s 10 year bonds are heading for 6%. Now there are a lot of things you could say about that but maybe it’s better if I cut straight to the chase…. If them bonds, go to 6% then my advice (returning to my favourite aeronautical analogies) is to …..

    1. Move your seats to an upright position
    2. Brace for impact.

    In the meantime let me tell you that I love you, kiss me goodnight……..take it away Louis prima………


  21. Tull McAdoo

    So ye reckon Kenny speaks English, Irish and French.I think he should take a crash course in Italiano,have a few words with his Euro pal Angela Merkel, or should we call her Angelina….


    • Nina Ogden

      Let’s return to the real Glass-Steagall solution both myself and cbweb endorsed about a dozen comments back. Today HR 1489 Return to Glass Steagall bill in the US Congress has 32 co sponsors. Just 3 days ago when the following video was posted there were 26 bi partisan supporters. So support is growing and we will ram it through. This video “Glass-Steagall and Beyond” shows not only how the Act would affect the U.S., but also how it will stop the financial rape of Ireland and other euro land nations.

      • uchrisn

        Nina I support a return to glass seagul. Timothy Geither has said that the reason the U.S. aren’t sticter is because countires like Singapore will still have lax regulation and banks will move there instead. Its kind of a lame excuse. Really the whole G20 needs to come up with co-ordinated legisilation like glass seagull.

  22. We have seen the lives and families in Norway decimated by an imbicile and now he is jailed .

    We have also seen the lives and families in Ireland decimated by dangerous people and no politician , banker or regulator jailed .

    The State is in no ‘state’ to remain a sovereign entity anymore and we must dissolve it immediately.

    Give us just one LEADER .

  23. EOC

    Not sure if I am missing something here but my calculations show that borrowing at 5.8% over 7.5 years is much cheaper than borrowing at 4% over 15 years….I haven’t heard anybody say this so I’m not sure whether I have missed something but my calculations show the new deal will cost us 29% MORE than the old deal!! How is that a good deal for us?

    • Deco

      Yes, true indeed.

      An admission that the state has no intention of paying back the money within 8 years. Or else has no ability to pay back the money within the 8 years.

      A commitment to keeping up level of commitment of the Irish state.

      Forget about recovery, this is a plan to perpetuate the illusion that all is well.

    • Malcolm McClure

      EOC: Good point. Listening to Colm McCarthy and Philip Lane at MacGill this morning, talking about bailout rates being reduced and terms extended, I was surprised that neither pointed to the discounted cost to borrowers over the period.

      I wonder sometimes whether any of these macro-economists even know how to calculate an NPV.

      • Tull McAdoo

        Rt divided by (1+i) to the power of t
        t = time of the cash flow.

        i = discount rate or rate of return that could be earned on an investment in the financial markets with similar risk.); the opportunity cost of capital

        Rt= the net cash flow (the amount of cash, inflow minus outflow) at time t.
        na na na na na and thumbs nose ha ha .

      • Tim

        Hi Malcolm. Watch McCarthy carefully. He has opened his eyes and is now closer to the position of David and Constantin. The rate reduction is no gift, as FG/LAB still fully intend on continuing to implement the FF/GP cuts regardless and, especially, since the extended repayment period will cost IRL in the region of an extra €7 billion. McCarthy knows this. He also appears to have finally realised that austerity hasn’t worked. The deficit remains the same, despite removing over €20bn from the economy; more true to say “because of removing”, due to the austerity impact on domestic spending dropping dramatically, causing further retail/services job-losses, with attendant increases in social welfare requirements, among other factors.

        The tune is all wrong, as many have been saying here for years now, and it is time to stop the music.

        • Tull McAdoo

          +1 Tim.(welcome back).

        • paddythepig

          That’s right Tim. We need more public servants, we need to pay them even higher wages, and have them all go on a shopping spree. Then the magic multiplier will take effect, and everything will be hunky-dory, right?

          • Tim

            Paddy, That’s not what I said. The drum you’ve been beating in favour of austerity hasn’t worked in three years, though. Time for a new tactic?

          • paddythepig

            We haven’t had serious austerity yet Tim.

            If it does eventually arrive, all aspects of public spending will be hit, including public sector numbers, pay, pensions. All spending will be hit.

            It will be rough in the short term, but better in the long run. Our children will thank us. They will have less debt to bear.

            The discretionary retail economy is largely based on imports ; if it shrinks further, it’s not the end of the world.

            Are you willing to take the hit Tim, for the children?

          • Colin


            Are you happy with Eddie Hobbs’ explanation that your pension costs the guts of €1m to fund? I didn’t see you in the twittersphere accepting his calculations, more like sheepishly walking away and hoping no one notices how well insulated you lot are.

            Hobbs was excellent last night on Tonight with VB, I think Colleran is doing a great job hosting it, and his choice of guests this week is very refreshing.

        • Malcolm McClure

          Hi Tim: McCarthy showed a couple of alarming slides yesterday.
          This shows long term public debt maturities 2011 – 2020. Although this slide doesn’t take account of the Brussels term extension, even removing EC and IMF repayments still leaves us with a serious problem.
          This shows funding requirements over the next five years. McCarthy took it from Seumas Coffey’s http://economic-incentives.blogspot.com/ which contains a lot of useful analysis.

    • coldblow

      For what it’s worth, here’s a recent post from irisheconomy.ie:


      July 22 12.24pm

      “@ colm

    • coldblow

      For what it’s worth here’s a recent post from irisheconomy.ie


      July 22 12.24 pm

      “@ Colm

      you seem to think government debt is like a mortgage. It’s not. In nominal terms, almost no government has ever managed to meaningfully reduce down their debt. They have simply held it steady, rolled over debt and let inflation and economic growht increase the denominator in the debt/GDP equation. Basically we’re getting the option to take ultra long term funding at under 4%. You’d have to have a strange logic to think thats either a bad thing or expensive.”

      • coldblow

        Of course, if we get that rate and it’s a good deal this will be reflected in the morket reaction. Won’t it?

        • coldblow, I’ve answered that one with further exchanges between Eoin and myself, look to later exchanges on link. Basically the austerity model is fundamentally flawed because all its arguments are contingent on one important variable ie GROWTH. Look at the troika programme proposed for Ireland, it speculates growth rates of approx 3% to 4% between now and 2014. Before we get out of the starting blocks we need growth of approx 3% even to fund our debt and remain at 0%. So we’re looking at required growth rates of 6% plus to achieve the desired result Eoin has been sold a pup about. The so-called bailout sold erroneously as such to the Irish people is nothing but a black hole sucking us deeper into the quick sand quagmire. Markets know this is not a good deal for Ireland as DmcW eloquently implies above.

  24. paddythepig

    EOC, I was wondering the same thing. I would like to be wrong, but I have a nasty suspicion you are right.

    • Hi Paddy et al,

      We had a discussion about this over at http://www.irisheconomy.ie/index.php/2011/07/22/eu-interest-rate-calculations/#comments

      I was in the thick of it for a while:)

      • The cost of borrowing for Greece and the rest of us PIIGS is conceived in terms of the cost of servicing the loans, rather than the total cost of the loans over the contract period….

        • EOC

          Maybe that’s how they work it out but if so, its a falsehood. As the people who will be paying for this, numbers games are not exactly funny. I’m no mathematician and it is Primary School maths that the bottom line is that we will be paying more Universal Social Charge each year for the next 15 years because of it.

          • Of course its a falsehood, just the same falsehood as a household charge of €100 on a poor person with eg earnings of €100/wk is 2% approx of their income, while the same charge on a household with an income of €5,000/wk is approx .0004 of their income.

      • paddythepig

        I still think EOC has a point. What is being said is that the principal of the loan will be rolled over, and the servicing costs (which I assume is the interest) only has to be paid.

        If you open a compound interest calculator, and put in say 20 billion as the principal, enter 4% as the rate, and enter firstly a duration of 7 years, and then a duration of 14 years, have a look at the interest accrued in both cases. For 7 years, the interest is just over six billion ; for 14, it’s 14 billion.

        In a deflationary environment, the debt would grow in real terms.

        There is also an assumption you will successfully roll over the principal at the same rate as before ; who is to say whether that will be achievable? Is there also an assumption we will borrow to cover the accrued interest? These types of assumptions are highly risky.

        The best thing to assume is that, minimum, the interest will have to be re-paid in hard cash, so the less cash you have to hand over the better. Hence my preference for an even lower rate, with tighter maturity dates.

        This reeks of kicking the can down the road to me, and I hate that attitude.

        • paddythepig

          Also, if you enter a principal of 20 billion, a rate of 6%, and a maturity of 7 years, you end up with 10 billion interest to service the loan over 7 years.

          So, if you were to take a sample of borrowing 20 billion, the real difference with the new deal would be between having to pay 10 billion in 7 years time (at nearly 6%), and 14 billion in 15 years time (at 4%) .. and in both cases, still owe the full principal.

          You then need to refinance the principal at the maturity date.

          • @paddythepig

            You math is good, but still incorrect. Government bonds are not calculated similar to a mortgage using the method of compound interest. Instead, interest is an annual agreed charge that is paid at agreed coupon to the bondholder on the setting of the bond contract. At the end of the agreed period, the principal is returned. But I could be wrong:)Effectively, this means the interest rate over eg five years remains the same over the five years. That’s why the interest on bonds is more expensive over longer periods, which is why EOC has a point. I’ve asked for spreadsheet data on these points to clarify these matters, but it seems government doesn’t even know the exact discount on loans it will get, never mind the calculation based on new funding terms extending loan repayment ceilings:-(

  25. Malcolm McClure

    Red or Blue Bonds anyone?
    Politicians who back measures such as common bonds “will prove to be the euro’s gravediggers,” Otmar Issing, the European Central Bank’s former chief economist, said in a July 19 interview in the Frankfurter Allgemeine Zeitung newspaper. “The consequences of this policy will strangle Germany.”

    A compromise proposed by the Brussels-based research group Bruegel would see countries fold debts up to 60 percent of gross domestic product into a joint “blue” bond. That would likely enjoy relative lower interest rates than even low-deficit governments now pay, in part because of the more liquid market.

    Any excess debt would then be sold on a national basis as a “red” bond with a higher yield.

    “I’m growing more sympathetic to the red-blue bond approach,” said Gilles Moec, co-chief European economist at Deutsche Bank AG in London. “You want a combination of accommodation and incentives for fiscal discipline.”


    • piombo

      @Malcolm, cdweb,
      The EFSF will act as the repo originator to the Irish, UK, German, French and US banks holding the Irish, Portuguese, Greek bonds both 2 years and 10 year ones. I haven’t quite gotten to the bottom of it yet, but if the mechanism works like other repo deals, the intrinsic profit booked on purchase (discount to the nominal value) will allow the EFSF to leverage up to perhaps another 500 billion or thereabouts. These proceeds will be used to drain the secondary market of a significant tranche of these “troublesome” bonds.
      The EFSF will then sell back to the various domestic banking/pension funds/insurance entities of the originating countries the repo’s at their nominal value discounted back using whatever IRR the EFSF needs to break even. The repo’s will then be redeemed at par whenever, thus allowing parity for the banks directly involved.
      The key element is not a nominal debt reduction, but the device which allows German, French, UK, US and IRISH banks to release all of those provisions unofficially built up in their balance sheets over the last four years and thus get through Basel III and provide liquidity for all of the Public Private Initatives which will start being announced for infrastructure (primarily Broadband and sustainable energy) projects which will be earmarked to drive “growth” over the next two/three years.

      • Only way that could happen is if EFSF was replaced with another instrument giving it the power to print money as the Fed did with QE1 and QE11. It doesn’t have the collective resources to cover all the bills of the PIIGS or enough to do the repo deals.

        EFSF is a collaborative underwriting slush fund and not allowed to print money out of thin air, see link above. If it did do this, this would diminish the euro in a currency war against the dollar beginning a race to the bottom. It could also set off hyperinflation.

        The problem is how do countries under austerity trade back to growth and service their debt at the same time?

        The only answer is through capitalism’s way of doing this, ‘default’. The method of socialism for the banks is doomed to fail. The method of kicking the can over to others for them to work at a solution, is doomed to fail as well.

        These problems are worth thinking about. Lets know if you get to the bottom of it. I wonder what Kenny will make of it all as he searches for NAMA gold:)


        • piombo

          The ECB already prints money out of thin air just like all central banks have done for the past 250 years. Gold used to back up the perceived value in currencies which has been supplanted by perceived credit-worthiness of States.
          Empirical proof of money creation can be evidenced from, inetr alia, the growth in M1 and M3 in the Euro zone.
          Anyway, back to the ECB/EFSF repo. As mentioned yesterday evening, through the repo facility, sovreign debt default risks for now neutralised to zero (Italy, Spain, Belgium and France excluded).
          What I described is a plain vanilla repo with only the banks/pension funds/insurance companies component being sui generis.
          This solution will serve both the banks etc to manage provisions and the governments of those States involved to sustain to their citzens that they need to maintain the budgetary measures in place etc in order to maintain market confidence.
          While I adovocate that the Public Sector pay & conditions in Ireland need be aligned with the Irish private sector as well that the entire State apparatus be shrank to an affordable level, and yes, that the average tax take be increased to the 34% EU average (mainly by taxing those currently not taxed….), I also strongly believe that Corporate and Personal Bankruptcy law be modernised and made best-in-class. A prime example would be legislating Chapter 11 & Chapter 7 type provisions from the US Bankruptcy code into Irish Law.
          Another major reform, that would help people and not cost anything to the State, would be to ensure that debt attachs to goods and revenues (eg rents or royalties) but not to people.
          It truely amazes me that these reforms are not being pushed both by David and by the people. These alone would allow people to resturcture their legacy issues in an orderly manner, thus freeing them and their families and businesses to rebuild their futures.

          • @piombo,

            If you look back at previous articles, I recall DmcW focus on and support reform of the bankruptcy laws along the lines you mention.

            Re “The ECB already prints money out of thin air just like all central banks have done for the past 250 years!”

            That is indeed the case. However since 1971 and the demise of Glass Steagal flagging the ending of the dollar/gold relationship and onset of deregulation, the dollar has been allowed to float their exchange rates.

            The problem is, as I draw emphasis to in the post above, EMU cannot print its way out of its problems. Firstly, EMU QE would have a negative effect on the exchange rate of the euro; secondly, the stability of the euro would be put at risk and destroy confidence; thirdly, the risk of hyperinflation; fourthly, making matters worse by pouring fuel on the flames.

            We need to default and end the connection with the EMU mess that is getting worse by the minute. John Osborne, has plotted a decent course for sterling, according to reports is on a course to bring back Glass Steagal and has realised the threat posed by banking to the British economy.


            Our futile politicos are digging a bigger hole for us!

    • CitizenWhy

      Malcolm, Thanks for the MacGill talks link.

      I am watching on my Mac, having downloaded the Silver something link provided on the site you posted. This software works on both PCs and Macs. But maybe not MacBooks. My Mac is a desktop, purchased in fall of 2009.

      • Malcolm McClure

        CitizenWhy: ‘Fraid I’m using a reliable old PowerPC G5 here and Silverlight needs its version 1 which I don’t have. I also tried using Safari on an iPhone but Silverlight doesn’t work on iOS yet either.

  26. Deco

    Here is an interesting slideshow in the context of the article, the bailout, Ireland, and Irish media coverage of the event.


    One bank gets absolutely no media coverage in Ireland concerning how it is doing. But it still buys advertising. It buys silence.

    And the government is trying to sell the other one before the skeletons pop out and land on the floor.

    • Deco

      We have two pillar banks, a junk rating, and a large portions of the media that are totally compromised and that tell us everything when it is too late.

  27. Tull McAdoo

    Diagnosis is very important. Take for example this notion doing the rounds that Ireland is in a downward spiral or tailspin if you will.

    Now an old friend of mine who passed away some time ago flew planes during the Second World War and he once told me that when you are in a dogfight, you sometimes found yourself in a tailspin and heading for the ground or deck as he called it. What you need to do he said was the opposite to what you think you should do and that was to push down hard on the controls, making you fly faster and increasing your speed as you get nearer and nearer to the ground.

    The pilot has to trust the laws of aerodynamics he told me, as the increased airflow over the main wings became the dominant force and the force of the spin from the tail became weaker, the plane would gradually straighten out and with one massive pull up on the controls, you could then climb back away from the deck. However in his case as he joking put it, it meant back into the fight, where there’s life there’s hope and all that……

    To draw from the above and put it into an Economic context, well the thinking in Ireland seems to suggest that we are in a tailspin and that by imposing austerity and cutbacks we will drive the economy down from its unsustainable heights, to a level or floor from which we can re-establish growth to move us back up again.

    I disagree with that diagnosis and I believe that Ireland is in a nosedive and not a tailspin, just like what was used ala the “twin towers” but in our case it is the “twin pillars”. Pushing down hard on the controls in this case will only get you to the ground quicker and result in a total wipe out when the crash finally comes.

    Ireland is the fighter plane who wants to be in the fight or free market but who is being dragged to the ground by the weight of un-sustainable debt thanks to all those who loaded it and loaded it while it was starting to fly along back in the ninty’s.

    David McWilliams is correct and I think the rest of Academia is finally coming to the realisation that Ireland needs to offload some of this dead weight debt. If it doesn’t then crash it will, the losses will be horrific in terms of emigration, lost development etc. etc.

    What will be left is a hollowed out shell or one big can, that is too big to kick any further………Tull McAdoo.

  28. Tim

    Folks, look-ye here: http://businessetc.thejournal.ie/bailed-out-ireland-could-stump-up-e11-1bn-to-pay-for-new-bailout-fund-187551-Jul2011/?utm_source=shortlink

    On top of the estimated extra €7bn the term-extension will cost IRL, the new ESM is to cost IRL a further €11.1bn.

    Good deal negotiated?

  29. Praetorian

    One business party running the country. Just look at poverty statistics, look at illiteracy levels, look at unemployment, look at the drop in consumption, gap between rich and poor, remuneration for bankers v teachers, nurses and police, look at hike in insurance premiums, mortgage interest rates, utilities rise and wages decline. Government has access to banking information, has convinced itself people are saving huge sums, so it is going after that via stealth taxes, water charges and property tax, the elite are once again getting the people to bail them out.

  30. Tim

    Colin, I replied to Eddie on twitter that 910k at 30kpa pension would fund my retirement til I am 95 yrs old. His figures are incorrect and I am not the one who “sheepishly walked away”; indeed I have continued to call on him to retract his lie of last Friday on Newstalk that “No public servant has lost their job involuntarily”.

    Paddy, we’ve had no real austerity yet? Check again. The figures are available at trueeconomics.com by Constantin. Argue with his maths if you like, but you will be wrong.

    Try paying/coping with loss of job or pay cuts/extra taxes/levies in the amount of your actual mortgage being stolen from you every month by govt and given to banks. Maybe you are not suffering “austerity yet” to quote you above, but hundreds of thousands of the rest of us citizens are. It is clearly making matters worse, not better. You don’t have to take my word for it, just look around you and read.

    • paddythepig

      Clearly Tim is not contemplating sacrificing his benefits. If he has his way, the children will pay, God love em.

      Tell us Tim, how many permanent public servants have been let go?

      Constantin’s website is many things ; a commentary on real austerity it is not.

      Amongst other things, the taxes and levies are being imposed to pay you.

    • Colin


      Yeah, please tell us who are the poor misfortunates from the public sector who have lost their job involuntarily?

      So how long do you expect to live? A great aunt of mine just passed away this week at the ripe old age of 97, she lived through WW2 delivering babies in London during the blitz, where polution and stress and all that had to be contended with, far from the luxury of peacetime Celtic Tiger Ireland with modern medicine and advanced healthcare and less hardship and a shorter working week and more holidays for the teaching profession.

      If, and its a mighty big if since Eddie’s more qualified than you when it comes to finance, Eddie’s figure are wrong, please tell us what your pension will cost if you live till a) 75, b)80, c)85 and d)90.

      Are you including your tax free lump sum in your calculations, or do you see that as an automatic entitlement which shouldn’t be considered even though private sector and self employed and unemployed people don’t enjoy such a generous gift?

      • Tim

        Colin, I assume you’re not asking me for the names and addresses of the thousands who’ve lost their jobs?

        I can tell you that the current running figure for secondary teachers is somewhere over 2000 (7 from my own workplace). I am told that similar numbers apply in primary schools. Third level non-permanent people have also lost jobs, but I don’t have the figures to hand. Maybe you will find them on the TUI and INTO websites?

        As for nurses/doctors etc on temporary contracts, you will find their job-loss figures on the INO/IMD websites. There is no website that I am aware of for all the public sector SNAs who have lost their jobs, but, again, I know of three in my own workplace and the media stories abound of hundreds more.

        “How long do I expect to live?” Not as long as the average male life-expectancy age at the moment, which I think is 73 years, because male teachers stistically die younger. (I only know two over the age of 70 – most are dead before that).

        Eddie calculated the lump-sum at €90k; that’s about right, which is why I subtracted it from his figure of 1 million, to get the 910k which is 30k pa, for 30 yrs, which is the correct pension amount, but not the correct number of years one can expect to live and draw pension for.

        I have calculated, with the rep who sold me the pension scheme a few years ago, that the contributions that I pay into the scheme will provide 14 years of pension at 30k pa (but only IF I have paid into it for the full 40 years; if not, I can only get X yrs/80 of final salary) If I live beyond 14 years post-retirement, then the employer’s contribution will pay my pension. Up until then, my pension will cost my employer nothing. So up to a)75, my pension will cost my employer nothing; b) 80, my pension will cost my employer 30,000 less taxes; and so-on every year, through c)85 and d)90.

        I hope this adequately answers your questions.

        • Colin


          Thanks for the answers but they are not entirely adequately answered.

          Maybe my questions lacked some clarity, so I’ll try to improve on that here.

          Please tell us how many permanent employees from the public sector who have lost their job involuntarily? A link to back up your claim would be wonderful. I’m not talking about staff on contracts, they are heroically uninvolved in screwing the state in the years ahead.

          Its funny, I left school almost 20 years ago, and many of my teachers (all male) were in there late 50s / early 60s, all but one of them is still alive, the deceased was a 60 fags a day man until his early 50s and he’d let every little thing stress him out, and he’d take it out on the 1st years, God love them. So, unless you’re determined to smoke your way to an early grave, the prognosis is quite good for the teachers I know, and bad for the young people who have to support these pensioners so generously. Look at yer man Michael Moriarty, RTE GAA Commentator, well into his 80s, as fit as a fiddle, not falling by the wayside like the people you know.

          Why didn’t you go on strike in solidarity with the dismissal of the SNAs? Did they not matter to you? Did they enjoy the exact same conditions as you?

          I’ll have to ask Eddie how much a private sector fellow would have to put aside for your pension and lump sum, working as long as you have. Would you care to hazard a guess if it would be exactly the same as yours, or maybe a little bit higher, or a lot higher? My gut feeling is that it’ll cost a lot lot more than what it costs you. I’ll email Eddie and see what he says, and post the reply here.

          • Tim

            Colin, I think I said I cannot tell you how many permanent public servants have lost jobs. I think I said I don’t have access to that information, as I am neither their employer or paymaster.

            About how long your teachers from 20 yrs ago live, I also cannot comment.

            Regarding going on strike to protect SNAs, all I can say is that teachers wanted to, but the union bosses argued against it and swung a majority vote against industrial action on the grounds that it would breach the Croke Park Agreement and “pay would no longer be protected”; I personally argued that it doesn’t protect pay anyway, so that is not a valid reason to abandon our SNAs, but I failed to get a majority. Do they matter to me? Of course they do; they are friends and work colleagues for a number of years and they are the only ones who make it possible to work in a classroom where some students have special needs. Do they have the same conditions of work as me? No, they don’t, because it is a totally different job to mine. They have conditions that I do not have and vice-versa, though the physical environment we work in is nearly the same.

            The latest pensions board report will answer your questions about private sector pensions in detail, here:


            You may note that there are as many defined benefit pension scheme members from the private sector as there are from the public sector.

          • Colin

            So, the truth is you don’t know how many permanent public servants have lost their jobs. That’s fine, that’s cleared it up for me.

            Sounds like Union HQ saved yourself from an awkward situation, and now you’re hiding behind their decision. So, you had to take orders? You couldn’t have gone on an unofficial strike and embarrassed the Union leaders? Did you and your fellow teachers explore taking a 10% reduction to pool together to keep on the SNAs showing true solidarity?

            So, the SNAs who were let go didn’t have the same T & Cs as you, well surprise surprise, all employees are permanent but some are more permanent than others.

  31. The destruction of the Irish economy is being hidden and masked by the multinationals:

    Look at the following report:


    “Figures released by the Irish Exporters’ Association show that multi-national companies account for more than 75% of Irish exports.

    Launching a report on the top 250 exporting companies in Ireland, the association said the top 20 firms accounted for 44% of total exports.

    Johnson & Johnson is Ireland’s number one exporter, according to today’s report, with the firm’s most recent figures showing exports worth €8.5 billion. It is closely followed by Microsoft, whose exports hit €8 billion last year.

    Next comes Google, and other newcomers to the top 50 are Adobe, Yahoo, Ebay and Payzone.”

    Apart from the fact some of the above companies do not have a real footprint in Ireland making their contribution to Ireland’s GDP a bit of reflux financial wizardry or financial trickery, they conceal the loss to the economy measured in real GNP terms.

    The real economy is taking the hit while the multinationals, ‘accounting for 75% of exports’ are insulated against losses on every front.

    The ILP ( reincarnation of The Greens in their green jersies ) as well as promoting cutbacks in social services which will impact the poorest the most; also have adopted a ‘no increase in taxation’ platform for the next budget.

    Those on high salaries working for the multinationals will be protected from tax increases.

    Expect a slash and burn Sheriff of Nottingham budget targeting the old, the sick, the infirm, attacks on health and education, to protect cronies and high income earners, forcing emigration on the young as they are deprived of free education and social services arising from unemployment.

    Meanwhile http://www.rte.ie/news/2011/0726/aib-business.html Hodgkinson’s request for end to €500,000 salary cap for new chief executive for zombie AIB should be treated with hilarious contempt.

    Clearly Hodgkinson doesn’t understand the people own AIB and can’t afford the €500,000, never mind the € 2ml he’s probably looking for. Can I be the first to ask for Hodgkinson’s resignation.

    Clearly we need someone in there who gets the message, not that we want the zombie AIB at all at all:)

  32. Tim

    Paddythepig, as usual, it seems you still do not read posts that people write here, even in direct reply to you. “Sacrificing my benefits”?

    I have explained that the EXTRA monies taken from me every month for the last 3 years amounts to more than my monthly mortgage was when the austerity measures began.

    Has your employer taken the EXTRA equivalent of a second mortgage from you every month for the last three – four years? If so, my sympathies to you; if not, I suggest you refrain from asking me, or any other equal fellow-citizens of yours, to make any further sacrifice until you have at least made the same sacrifice yourself.

    In the meantime, you might explain why you believe ordinary working people SHOULD sacrifice the income they earn in order for the govt to pay the bad gambling bets of the banks and bondholders?

    What have you sacrificed? I don’t recall you telling us, though you demand (again and again, ignoring all answers) to know of me.

    If you consider that an employer, who is already stealing so much extra of their employees’ earned income to give it to errant private sector bankers, should now take even MORE from those employees, then there is no point in trying to communicate with you further.

    “for the children”? Paddy, please open your eyes and look around you; it is the children that were first hit by austerity measures and continue so. Their schools, their teachers, their SNAs, their health entitlements; their parents’ pay cuts, taxes, levies, USC, etc., ALL hurt children on a daily basis.

    If you want to get personal about it and play the man rather than the ball (as is your wont), I can tell you that my own children are suffering from the cuts and levies on my income to an extent that I expect you will refuse to understand. Before a person arrives at the point where they can no longer pay all their bills, their family is suffering; beyond that point, the suffering gets worse.

    Like I said, look around you; and read more.

    • paddythepig

      How ironic. The man who campaigned for Bertie is dishing out lectures on human suffering. What a joke.

      Tim, you and your cronies caused the suffering. To see you now masquerading as champion of the little guy … ah, makes me want to regurgitate my food ..

      Now Tim, answer the question. How many permanent public servants have been let go? Could the answer be …


      Tell us the answer to that question, Tim.

      Have you been unemployed in the past 5, 10 years? I have. Do you really know what it’s like? Or do you just read and talk about it?

      You claim to favour the downtrodden, and to be downtrodden, but you refuse to budge an inch in bringing the public overspending into line. Some of this overspending is being directed straight into your pocket. It is this overspending that will hurt our kids the most.

      I’m all for good services, within budget. We could have more SNA’s if the remainder of the staff took a cut. But no .. not an inch Tim .. correct?

      • Tim

        Paddythepig you appear to have a sever reading-comprehension difficulty;

        “Campaigned for Bertie”? I never did. What post have you been reading?

        I caused no suffering to anyone; and I have no “cronies”;

        “How many permanent public servants have been let go?” I cannot answer that, as I am neither their employer, nor their paymaster; I have heard anecdotally that many have.

        I know for a FACT that thousands of non-permanent public servants have been let go, though; many of my own friends and colleagues. I know this from my voluntary work for ten years on the central executive of my association on behalf of colleagues.

        Have I been unemployed in the last 5-10 years? No, Paddy. I have never been unemployed in my life. I have worked for 40 years now, 22 of them in the public sector. I have never claimed the dole. You are correct, therefore, in assuming that I do not know what being unemployed is like first-hand.

        I certainly do “favour the downtrodden”, or at least I have always tried to.

        As for your repeated accusation (despite repeated explanations) that overspending is my fault, that I “refuse to budge an inch in bringing public overspending down”, that I haven’t taken a pay cut, I really do not know what to say, since you have not read what I wrote above about the extreme cuts that I am currently living with for nearly 4 years now.

        So, you are incorrect.

        Now, I have answered your repeated questions and ad hominem attacks repeatedly.

        Do you intend to read the answers this time?

        Do you intend to courteously answer the questions I have asked you, in return?

      • piombo

        I enjoy this forum and admire David McWilliams for his ideas which are clearly insightful and stimulating as is evidenced by the breath of commentary generated.
        I don’t always agree with him, though, but I am learning a huge amount both from him and most of the contributors here.
        This forum is also a morally courageous one given the contrarian views espoused toward government policy.
        I am Irish, but I live in Italy (as I’ve written here before). Whilst I owe Italy a lot for the opportunities in life granted to me, permit me to suggest to you that you consider the leadership of public commentators of the calibre of David and the INTEGRITY of the Irish Civil Service in which I believe Tim works. The Irish Civil servant has suffered, contributed and will continue to suffer and contribute.
        Paradoxically, we Irish will need the finest in our Civil Service more than ever going foward as we affront the coming months and years.
        We all have differing views on differing solutions, but is humilating Civil Servants in the manner you adopted with Tim the way to go?
        Final thought, try to live in a country where there is almost complete uniformity of public debate (no David McWilliams here I can assure you), public servants who are actively hostile to the citizens, where corruption is rife and where public probity is the exception rather than the rule.

        • Tim

          piombo, Thank you for measured comment, but I am in now way humiliated by comments. I am annoyed at answering the same questions for years for the same people and by their refusal to read those answers and answer questions themselves in order to arrive at some level of mutual comprehension.

          But I’ll keep at it……

    • Colin


      Were you or were you not a member of FF?
      Did you or did you not canvass for your local FF TD?
      Did you or did you not meet Bertie one to one while he was Taoiseach?
      Did you or did you not moan about Teacher’s pay when you had your moment in the spotlight with Bertie, in other words, you failed to ask him when you had the chance, about the Ponzi Republic, the cost of housing, the 100% mortgages his government permitted etc…..?

      • piombo

        Tim can defend himself, but why the attacks on the Civil Service?
        The casus belli is not the Civil Service per se, everyone in Ireland reaped the harvest, even you perhaps in the private sector (I am also in the private sector and have no connections with the Civil Service).
        This sort of internicene sniping is not the stuff of we 21th century Irish.
        Be really courageous and treat others with the intellectual and moral respect that also you deserve.

        • Colin

          Hi piombo,

          There has been little or no austerity for the Civil Service. I’ve taken a 75% cut in my income, that’s real austerity. My career prospects have been decimated. I don’t blame the Civil Service for this, its clearly not their fault I’ve taken that cut. Taking a 15% cut is completely manageable, you eat out less, you get rid of the second car. 75% is a different kettle of fish altogether. Furthermore, a permanent job is a great safety net, its guaranteed future income. People like me have no such hope of ever enjoying such secure terms and conditions in the future. Tim and his pals are looking after Numero Uno when the country clearly cannot afford to pay them what they earn.

          I’m not sure what you mean by everyone reaping the harvest. I was offered cheap credit for a mortgage but I declined it. I did earn money, but after paying college fees, rent, electricity, food, a few weekend drinks, motor tax, motor fuel, motor insurance, and the odd cheap offer with Ryanair here and there and even less frequent cheap accomodation abroad when not staying with family or friends, I had zero left over for savings or pension funds.

          Maybe I should have lived beyond my means in hindsight? like everyone else? and slag off McWilliams as a crank like the majority of people did?

          Tim is not suffering. He’s had a minor adjustment to his income. He does not deserve any sympathy. I didn’t support the politicians who got us in this mess, he did. He’s got some neck to be claiming to be on the side of the hard done by.

          I’m off looking through the archives now to find Tim posting that he moaned to Bertie about his teacher’s pay.

          • Tim

            Colin, search-away; you wont find that, nor any of the false assertions you have just made there. Clearly, despite my politeness in answering your questions, you either have no clue about a public servant’s earnings and don’t believe a word I’ve typed over the years, or you have some other agenda.

            For the record, in reply to your Ryanair, second car, etc above, I have never had a holiday since my honeymoon. But you already know that because you read it before. Why you and Paddythepig keep asking the same questions over and over is beyond me.

            “He’s had a minor adjustment to his income”. I am very happy for you, Colin, that you think cuts in the amount of a second mortgage constitute a “minor adjustment” to income. It is positively DEVASTATING to mine, but if “minor” to you, congratulations.

            As I told you before, I supported Joe Behan in the 2007 election. He did not cause any of this. He was a school principal in Bray, who ran for office to try and make a difference to what was going on up until then.

            Please don’t misrepresent me again.

          • piombo

            Hi Colin,
            You have being hit hard, very hard by this crisis. 75% reduction in income is horrible and you are to be commended for still standing.
            I have very close family members in Ireland who bought the dream, became millionaires and only to plough it all into, wait for it, yes, property.
            They are my age (early forties) with families of young children, saddled with millions of debt. They, like you, see very frugle future prospects and also like you, very very angry. Rightly so.
            You know what their greatest burden is, aside from the pure mechanics of the bank statement?
            It is shame and fear.
            Shame and fear that they are going to have to bear a burden for the rest of their lives without any culpability due to malfeasance nor fraud nor bad faith.
            Shame that their childrens’ youth and adolescence will be stalked by the ever-present “beast in the background”.
            Simple gullability and simple greed drove them to their present fate which they admit without any reticence.
            It would appear that you did not engage in the property game, nor did you enjoy the civil service pay increases, all the same, you are paying a very high price.
            Maybe, however, without sounding blasè, your “righteous indignation” is part of the solution. From your account above, you seem to be a responsabile, prudent and yet passionate person. You would also seem to possess a strong instinct for survival. All qualities needed to get Ireland out of the mess we are in.
            Look about you and ask yourself how many of the politicians, either local or national would seem to possess which you would seem to have? Not many, I would guess.
            Then look around and reflect on how many people share your point of view and are experiencing more or less your situation, but maybe because of the sense of shame or fear, choose to clam up? A lot, I’m sure.
            Now consider whether you have a role in encouraging and enabling people to confront their situations and admit that they want their state to help them.
            Be it from an equitable reform of bankruptcy laws to mandating the banks to return to SME and mortgage lending to ensure the domestic economy revives to ensuring all productive parts of the economy contribute to the Exchequer.
            If Irish people like you don’t step up to the plate, who will?

          • Colin

            Very kind words piombo, thank you.

            I’m a survivor. I can think for myself, thank God. I’ve also overcome an illness which could have been devastating, but I’m fully recovered now, and feel really good. I’ve made plenty of sacrifices in life, and I’m not bitter about my situation. When faced with a crisis, some people crib and moan and ask “why me?”. I ask “why not me? what’s so special about me that I should sail through life without any crisis”.

          • Colin

            I’ll find it Tim, don’t you worry your wee head now, it might take some time but I’ll find it.

            You haven’t flown Ryanair? Gee Tim, you missed out on some great bargains, I had a week in Spain once, and had change of €100 left from the total cost, that’s about 2.5 hrs of teachers pay to you.

            2nd Mortgage, what was wrong with the 1st one then? If you consider yourself unlucky, then how would you categorise someone who has no job, no home, no career, no future? Maybe you could reconsider your position on the scale of luckiness from 1 to 10.

        • Tim

          piembo, the “internicene sniping” that they do is because that is precisely what the govt and media have been brainwashing them to do for years, now.

          “Divide and conquer” works so well, that even intelligent people who recognise spin in political matters will swallow the same spin without question when the politicians apply it to other matters, like the pay and conditions of ordinary frontline public sector workers or the unemployed or the old/disabled. Hell, people even believe the govt cares about abused children, when the politicians spin the right speeches.

          Sad. Very sad.

          • Colin

            Wrong Tim. I’m trying to be civil here. You haven’t suffered and you are insulated from future suffering.

            We have employment apartheid. You are in one camp, you have suffered very lightly but enjoy wonderful employment priviledges. I’m in the other camp, with none of that. We are already completely divided, so no one can pursue a divide and conquer approach because we are at completely different ends of the spectrum, do you understand that?

          • Tim

            Colin, what’s your @?

          • Tim

            Colin, I didn’t say anything about “lucky or unluckiness”.

            I don’t know where you get your figures on teaching salaries from, but as a man with a family of four, teaching gives me a lower net income than social welfare gives to a family of four.

            The reason you wont find that thing you said about Bertie is that I never asked him that; I asked him to “promote edication”, if memory serves.

            Again, I have never had a holiday; though how I could have a family holiday on €100 as you claim is utterly beyond my comprehension.

            Where do you get this stuff from?

          • Colin


            You are correct, you didn’t mention lucky or unlucky.

            You did say you felt “It is positively DEVASTATING to mine [income]”

            So on a scale of devastation, ok, devastation not luckiness/unluckiness, on a scale from 1 to 10, consdiering you have a house, an income, a career and a guaranteed future income, where are you on the scale, and where is someone who has no house, no income, no career prospects and no guaranteed future income? I thought an English Teacher would have interpreted my language that way, but apparently not.

            Say what you have to say here to me in public. I’m fascinated how someone as priveledged as you has the nerve to cloak themselves publicly in the persona of a victim.

      • Tim

        Colin, “Yes” is the answer to the first three questions there. “No” is the answer to the rest. What is your twitter @, by the way?

  33. Afternoon,

    Thanks for the comments on this piece, the quality of the info in the posts is truly excellent. Thanks for all the detailed stuff on the EFSF and how the revolving credit system works.

    That said, as you know I never censor any one on this site nor close down discussions when the tone becomes critical of me – criticism is part of the game and I make mistakes every day, but let’s not get too abusive to each other either.

    All the best,


  34. Tim

    Malcolm McClure Thanks for posting the MacGill link, but I’ve been watching it already.

    • @Paddy

      Re “Now Tim, answer the question. How many permanent public servants have been let go? Could the answer be …


      Paddy always asks good questions. That’s an excellent one. Its important to understand the following:

      In education, nobody gets replaced. Here’s roughly how it works:

      They raise the pupil teacher ratio. This means eg a school with ten teachers finds it is now two teachers over the quota. When a teacher retires, that teacher is not replaced. The end result is that a school previously resourced with ten teachers, is now resourced with eight teachers only.

      The quality of the Irish education system takes a hammering. Your children get poorly served.

      Young teachers out of college can’t get jobs, so they go to Australia. If they did manage to find a job in a school, they would have to work in that school for four years before they would qualify to get a CID, Contract of Indeterminate Duration post.

      If they get a CID, they get put on a panel and await a vacancy to apply for. But note above, raising the pupil/teacher ratio has put a huge number of schools over the quota, so there are no jobs. Even part time work dries up.

      Similarly, in hospitals and throughout the public service, the drawbridge over the moat is pulled up. Those retiring or leaving the profession because of age or increasing workload stress, are not replaced. the quality of the service provided by reducing Frontline staff diminishes and diminishes.

      The troika are pissed off at the miserly 34% of our public budget spent on social welfare. Plus the banks don’t want to fund long term unemployment, or any unemployment – preferring to drive such vassals to other jurisdictions.

      So here’s how that works:

      They are practiced at the divide and conquer routine above.

      They won’t reduce unemployment benefits or other social welfare rates fearing the villagers will come to Dracula’s castle:)

      So, they’ll make it more difficult for people to qualify for benefits.

      But they will try to cut as many rates as they can often appealing to the gullible public on the waste of eg ‘free public transport for the old’

      Butcher the public service, the hospitals, the army, the police, the schools, colleges, they will to the tune of €3.6 – €4 bn.

      Ronan Lyons has done a good job here and his analysis is good for 2012


      He targets the huge mess that is the health service.

      The problem is that the proposed cuts do not serve the Irish public, the benefits of such cuts will be siphoned away to Dracula’s banks and those who serve Ireland’s foreign Troika bondholders; our quissling FG/ILP hypocrites who guard their place at the trough:-)

      We are heading for Enda’s Titanic Default.

  35. Praetorian

    RTE have announced that any action taken in relation to the Anglo Irish case won’t happen until next year at the earliest.

    It would be laughable if it wasn’t so serious.

  36. Gege Le Beau

    Inside Job, so good worth posting again.

    Inside Job – Part 1

  37. Tim

    Colin, paddythepig, I am not going to waste any more of my time replying to your questions, since you don’t bother to read the answers, preferring instead to attack/criticise/disbelieve a post you imagine I have written.

    Take care.

  38. Tim

    Colin, what a bizarre list of assumptions you make, yet again, about me and the “priviledges” you assume I have.

    There is nothing “guaranteed” about my income, Colin, as the last four years prove.

    “The persona of a victim”? That was not my intention and I don’t know where you think you saw me write that. I attempt to present myself as an honest person who defends the rights of working people to be properly remunerated for that work.

    On a scale of 1-10 of “devastation” of my income? You didn’t specify which of the two ends of your arbitrary scale is good or bad, but I will try to explain it like this:

    For a suitably (maybe highly) qualified person to apply for, be offered, and accept a job, with a fixed income and specified conditions in a non-profit role to suddenly and unilaterally have that income dramatically reduced and conditions worsened (from a very low base to begin with) despite no drop in performance of quality of work or time delivered to the paymaster is quite devastating. To know that this position within that role will never recover and that if one continues to work in it that one will forever be worse-off than on the dole is worse than devastating. It is as if the employer said that your life’s work is worthless, in monetary terms. To pay a teacher of children a lower net income than a person who doesn’t work at all is pretty devastating.

    I am sorry that I cannot put a 1-10 figure on it for you.

    As for saying things in public, I doubt anyone can fault me on that score. Where would I say anything in private to you? I don’t know you and you clearly don’t know me, so, again, I’ll ask you:

    Where do you get this stuff from?

    • Colin

      I’ll spell it out for you Tim OK, 1 = total devastation, and 10 complete lack of devastation, So on a scale of devastation, ok, devastation not luckiness/unluckiness, on a scale from 1 to 10, consdiering you have a house, an income, a career and a guaranteed future income, where are you on the scale, and where is someone who has no house, no income, no career prospects and no guaranteed future income? I thought an English Teacher would have interpreted my language that way, but apparently not.
      -So come on, try a little harder to put yourself on a scale of devastation. Here’s mine right, I’m at 3 since I’m long term unemployed, I don’t own any property, but I hope to be employable in the future as I’m educated. I’d say Michael O’Leary is at 10 as he is very financially secure and has had a very successful career. I’d say a homeless heroin addict is at 1. So come on now Tim, give it a go.

      Here’s a little reminder:
      Tim says:
      July 27, 2011 at 9:00 pm
      Colin, what’s your @?
      -So lets keep it Public Tim and don’t act all innocent.

      “There is nothing “guaranteed” about my income, Colin, as the last four years prove”

      So, has your gross salary been cut from 2007 to 2011? We all know income tax rates have increased for everyone in that time frame, but many in the private sector also have had to shoulder huge pay cuts, like 75%.

      If you’re gonna be better off on welfare, that begs the question why you haven’t gone on welfare, maybe you enjoy the social status of being a teacher and are willing to put up with being less well off as a result? You tell us Tim, we’re fascinated. Is the pension too tempting to pack it all in now?

      • Tim

        I might answer later or tomorrow. You refused my @ invite, so…. though your questions are good in that they afford me the opportunity to tell the truth about teaching, they make me wonder why you do not appy for my job. since you evidently believe it is so fantastic, secure, permanent and “priviledged”.

        • Colin

          I would say to anyone that a minor reduction in salary is quite priviledged in comparison to a 75% reduction. That aint fantasy Tim. Come on, you feel undervalued, they clearly don’t appreciate you, pack it in, you’d be better off on welfare you said, give some young fella a chance of a job.

  39. Tim

    How utterly bizarre. Poor old Ireland really is screwed. The masters have the majority eating out of their hands. No wonder FG/LAB got elected despite supporting the last FF/GP four-year-plan and budget.

    I almost despair.

  40. Tim

    Colin, “If you’re gonna be better off on welfare, that begs the question why you haven’t gone on welfare”.


    Why do you think a person is “better-off” if they earn more MONEY on social welfare?

  41. Tim

    Colin, I sense that you are a good guy, despite your efforts to the contrary. You claim to know me on twitter. Please contact me, at any time.

  42. Tim

    Colin, don’t leave yourself in the position of coming-across as a COMPLETE dick, eh?

    That honour is for paddythepig.

    • Colin

      Tim, what you might think of me doesn’t concern me in the slightest.

      I’ve disagreed with paddythepig in the past, but I will say that he is honest and sincere in my opinion, and he asks tough questions which irritate highly sensitive souls. He is 100% correct when he said “You do hardship a dis-service”.

      Now come on, you enquired about where 1 and 10 were on the scale, and I have come back and explained it to you, so can you please put yourself on the scale.

      And don’t go posting about how you’d be better off on welfare, and then question why I ask you why you haven’t gone on welfare. Its a valid question. And blame your pal Bertie for making welfare so generous, not me nor paddythepig. You were a Cumann Leader of FF, why didn’t you demand Bertie do something about “over generous” welfare then? And don’t hide behind your other pal Behan. You were in situ in FF long before Behan broke free.

      You are the most disingenuous person I know.

      I do not comment on twitter, so like I say, keep it public here.

  43. paddythepig

    Tim, in my absense, Colin has exposed your patronising, nauseating self-pity for what it is.

    You do hardship a dis-service, if you think your own relatively minute lifestyle adjustment qualifies as hardship.

    Better to take that spotlight off yourself for a while, and open your eyes, and your mind.

  44. Tim

    Colin, paddythepig, both still not reading posts. I never said dole was “overgenerous”, nor did I mention “hardship”. You are making-up things to argue about. Colin, even if I wanted to, you think a person can quit a job and simply go on the dole? Also, if a teacher leaves their job while this moratorium is in place, no-one new will be hired.

    Cbweb explained that above also. Why don’t you read the information people write here, instead of carping at words you imagine I have written?

    “Disingenuous”; “patronising”? You really couldn’t be more wrong about that, but the irony of that judgement coming from posters with hidden identities is not lost on anyone, I am sure.

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