September 12, 2011

It’s time to protect the citizens

Posted in Sunday Business Post · 87 comments ·
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A few months ago, Ruairi Quinn – a former Minister for Finance and a man who clearly understands the economy – declared that the country was in ‘‘economic receivership’’.

It is an interesting phrase, and worthy of some consideration.

If a country is in economic receivership, what does that mean for existing state contracts signed at a time when the state was solvent? Can they be honoured? Is there a receivership mechanism for a country in receivership? And if there is, who are the preferred creditors? Clearly, the state can’t deliver on old contracts because it simply doesn’t have the money. So who suffers?

This is an extremely important question, because, over the coming months the state will have to change the terms of many contracts entered into when times were better. Take the issue of golden handshakes for top dog mandarins, as just one example. Last week, we saw what seems to any reasonable person like an exceedingly generous golden handshake to a senior civil servant.

How does a state, and one which is bankrupt, deal with these types of contracts signed when we had loads of money but delivered when we are bust?

The same goes for large-scale capital projects and thousands of employment contracts governed by the Croke Park Agreement. This is particularly crucial if we accept that the most important contract in Ireland – as a functioning republic – is the contract between the state and the general citizenry, rather than the state as a specific group of citizens or a specific interest group.

You are probably sick to death of these obscene state payouts that our politicians condemn as unfair and yet claim that, legally, there is nothing they can do. Or worse still, what do you make of the outstanding payments to Anglo Irish bondholders? It’s your money after all.

And if it is not your money, it is your children’s money, their inheritance, because these monies get paid only because the state has the ability to tax citizens. Therefore, rather than face up to the changed reality now, the state borrows from tomorrow to pay for yesterday and, in so doing, forgets about today.

So we are like a country in receivership but with access to someone else’s cash (our children’s) to pay creditors. So it’s not a receivership in the real sense of the word.

But let’s imagine for a moment – to use Quinn’s analogy – that the state was put into receivership. We would then have to choose a bankruptcy regime based on a hierarchy of creditors. Let’s think about it for a moment. In a normal commercial receivership, there are three types of creditors. At the top of the pile, there is the ‘secured creditor’. Usually, this is a bank that has lent to the company and has taken a ‘‘charge’’ over all the assets of the company so that, in the event of a bankruptcy, the bank gets paid first.

Below this is the ‘preferential creditor’. In the case of a company, this would be the Revenue. At the back of the queue comes the ‘unsecured creditor’. This, in the case of an everyday company, might be the lad who sold photocopiers to the company and is now waiting for payment.

Let’s say, for the sake of example, that the company folds and a receiver sells off the assets of the stricken company. At the outset, there are €500,000 of secured creditors, €400,000 of preferential creditors and €5,000,000 of unsecured creditors. The receiver comes in, sells everything for only €1 million. This €1 million is then divvied up.

From the €1,000,000, the secured creditor gets all his €500,000 back. Then there is only €500,000 left. The preferential creditor gets all his €400,000 back and this leaves only €100,000 to be divided among the €5,000,000 of unsecured creditors.

That’s the harsh world of receivership. Nowlet’s consider the entities the Irish state owes money to. Where would they come in the pecking order if we were to deploy the weapon of receivership and start again? What if a government were to come in and decide to raise no more new taxes to pay for old follies, but deal with the situation and set up a hierarchy of deserving creditors, from the most deserving – whom we have to pay – to the least deserving – who can be treated like unsecured creditors? As money is tight, we have to make a choice. I know it is only an exercise, but it helps focus the mind.

Where would Anglo bondholders come in your pecking order? Would they be paid and treated the same way as Our Lady of Lourdes Hospital? Where would the golden handshakes of the best-paid top civil servants in Europe come? Would their pension top-ups, on already generous pensions, be classed as secured creditors which had to be paid? A re they more deserving of the last of the state’s meagre money than nurses or bin men?

Of all the people the state pays, who would be the most deserving and who would be the least? At the moment, looking at the cuts and where they are likely to fall, it seems that our state has decided that the top-dog civil servants and the so-called professional financial institutions – the bondholders – are secured creditors who have to be paid back in full. In contrast, the average citizen is the ‘unsecured creditor’ who gets the bare minimum when all the rest have been paid. This does not seem to be fair or wise.

The ‘‘fairness’’ argument is self-evident, but the ‘‘wisdom’’ one needs more teasing out.

Is it wise to pay good money to the bondholders of a bust bank? It is only wise if the sanction for non-payment is greater than the payment itself.

The argument made by the establishment has been that if we didn’t pay the bondholders, we would be frozen out of the bond markets. Well, the truth is that we were frozen out of the bond markets precisely because we paid Anglo bondholders.

By paying the debts of Anglo and the other banks, we made the Irish balance sheet weaker, not stronger, and consequently undermined the financial stability of the country. Eventually, the markets said ‘enough of this carry-on’ and shut us out.

Using the same logic, it appears obvious that the reverse is true and that the markets would actually reward us for non-payment because not paying that dead money means there is more money for real, dynamic investment. This is what has happened in Iceland and all the Asian Tigers. The latter are thriving and the former now recovering.

As for the position of top civil servants, it is clearly unfair to pay individuals huge golden handshakes as well as a huge pension when budgets are being cut everywhere. It is also unwise simply because there is no sanction against non-payment.

The top civil servants are not going to jump ship, because they have nowhere to go. They are unsecured creditors if I ever saw one.

With the country in ‘‘economic receivership’’, it is interesting to think about the pecking order of who is deserving of the limited spoils of the country. At the moment, the state regards the banks and the highest paid civil servants in Europe as secured creditors and much of the rest of the society as unsecured creditors. With the budget focusing minds in the next few weeks, this receivership pecking order must change.


  1. Adam Byrne

    subscribe.

  2. paddyjones

    Countries dont go into receivership but we may be about to see what happens to a country that defaults ….Greece . At the moment they are playing a game of chicken with the IMF/EU/ECB and they are going to lose.
    Ireland is next not Portugal …..us. We will have to balance our budget quicker than 2015. The 3.6 billion being talked about for the 2012 budget is fantasy.
    The forthcoming budget will involve austerity on a scale never being seen before, all the low hanging fruit has been picked , now the day of reckoning has arrived .
    Austerity will be with us for the next 10 years , be prepared for tax increases and cuts , adopt your own personal austerity cut back on spending like holidays and new cars , keep a budget and save like hell.
    We are worse than Greece in many ways our total debts are much worse , somewhere in region of 600 billion , Greece is about 300 billion.

    • Dorothy Jones

      I despair though Paddy at the two-tiered approach to austerity in the State and the continued reward of failure. Pension payments to senior civil servants and politicians should be taxed or cut. The shenanigans at NAMA are farcial..think Circumlocution Office in Dickens’ Little Dorrit. It would be funny if the scale were not so enormous and the implications so serious. Explaining all of this in Germany results in disbelief. Personal austerity by all means, but it needs to be ‘across the board’. Anyhow, justice will be meted out shortly by default [pardon the pun]. We betted against the future and that just never works over time.

  3. osg

    The payments to the top dogs in the civil service is obscene, just as the payouts to failed politicians was back earlier this year. Yet again failure is rewarded with massive payouts and pensions.
    How many SNA’s and hospital beds would the €300m dished out to the top dogs pay for?
    We are a disgraced little banana republic and guess what… it continues today after all the promises that it would cease.
    Its extraordinary how a government can change the contracts of teachers, nurses (i.e. those at the bottom of the public service ladder) overnight but the top dogs can’t be touched.
    Rubbish, Enda cut the crap and stop this lunacy today. We need to stand up and stop this crap now.

  4. TJM

    AS I’ve asked before when dose the revolution start?
    Libya can do it against a murderous madman, why cant we kick out a bunch of Gombean-men?

    • molly66

      we sit back and do nothing i with you the shower thats running the asylum are the same as the last shower.lets start now and get rid of the rotten fruit before we are left in the nip.

    • John_stafford@ireland.com

      Is it not yet clear? There will be no revolution. The rebellious Irish are a myth. Irish rebellions down through the generations have involved handfuls of people; some were little more than drunken brawls. That is all you can expect now. Only one protester had the guts to turn up at Bertie’s birthday bash. Forget it.

  5. Fergal73

    Guys, you’re flogging a dead horse.

    We have seen the corruption at every level from Co. Council to the upper house. Payments to politicians, senior civil servants, backhanders, dig-outs, wins on horses, private yacht and island, inexplicable wealth. It has been going on for decades. The Irish electorate are passive, vote on tradition and emotion, not logic and reason.

    There are only 2 options, either start a grassroots party – (hopefully with more science and logic than the US Tea Party) or EMIGRATE. The existing parties will not solve the problems.

    The nation’s “most valuable asset” -its children have already been sold to pay for the golden handhakes, the bondholders and the nod and the wink.

    David’s point is that the leaders of today and yesterday are selling the future, your future tax payments, your childrens’ education, your future healthcare, infrastructure etc. The best thing you can do for yourself and your offspring is to emigrate or encourage them to EMIGRATE. Selfish? Yes. But if your leaders won’t look after you, you’d better take care of yourself.

    Brain drain, Ireland’s loss, ochon mo chroi.

    Change the system or emigrate, asking for change is not going to do anything.

    • kevogh

      Seems to me, emigration is the default option when this country’s elite runs the economy into the sand. I know so many young people who have emigrated or are going to as soon as they can. If we want radical change in this country we would need to close off the ‘safety valve’ of emigration. A safety valve that is for the same old elites who’ve been in charge for 90 years and whose sense of entitlement and total disconnect is itself a consequence of the security of tenure which emigration has given them

      • Fergal73

        Emigration is the default option. Until the Irish electorate are prepared to bring real change through the ballot box, emigration is the only viable option.

        I left in the boom, finally packing my bags in 2004. Housing had become too expensive. The zeitgeist at the time was to keep the party going, despite the warnings that a bubble was forming.

        The zeitgeist (at least as I read the papers and listen to the radio over the internet) has changed. The time may come when Irish people stand up and say enough. Golden handshakes are relics of a different age. Maybe they will change the system.

        Hope spirings eternal, but for individuals for whom the circumstances allow, emigration is the most logical option and is likely to result in a higher quality of life.

    • molly66

      the way is gone now we the have nots are to say just looking after your own corner/family, it feels as if we are being forced to try and survive cut back on everything to keep the running costs as low as is possible to survive .can i take more cuts no ,will i be on the street to stand up to this puppet government yes and i wont be alone.would i emigrate i am to old if i was younger yes i would i like most did not cause the problims and i take exception to the greed the corruption thats out there but hay enough is enough.

    • grougho

      hello all,
      On the 14th of September, TDs and ministers returning to the Dáil after their long summer recess will be met by a new form of protest as ordinary citizens give them the shirts off their backs.
      Giving the shirts is a symbolic protest, a striking image of what is likely to happen anyway — December’s budget will take the shirts off our backs, and everyone will lose their shirts when Ireland goes bankrupt from bailing out private bank-debt.
      Shirt off my back is a new kind of civil protest, without party allegiances, that is fun, creative and open to all. Anyone can replicate the protest; at the Dáil, at your TD’s office or county council. It will create a new political symbol, the very shirt off your back, something that can be replicated anywhere, by anyone. Furthermore, we’ll return when the ECB/IMF arrive to monitor us, and give them the shirts off our back too.
      We are appealing to media outlets of every sort to come and cover the protest. It will provide excellent visuals — a large clothes line covered with shirts of all size and hue, a presentation of a large box of shirts to the ministry for finance, TD after TD stopped on the street and presented with the shirt off a citizen’s back to help them pay their mounting debts.
      What we wear underneath will only be revealed on the day
      see you there at 3pm!
      http://www.facebook.com/event.php?eid=282504215099829

  6. billy button

    the crux of the issue seems to be the state has X ability to pay versus Y debts. X is sadly alot smaller than Y. So it comes down to a decision about what you use the money you do have (i.e. tax revenue to pay).

    The state is unlike a business in that as david said its over-riding contract is to its people. So unlike a business all its decisions are fundamentally political choices. Thats the key, choice!

    Ministers choose how to spend the money. So I woner why they choose the things they do? To the man on the street big pensions for bertie and his mandarins in the civil service or NAMA bailouts for developers seem odd versus closing hospital wards or cutting special needs teachers….. I certainly know which the people of the state both need and prefer. They pay for it after all.

    I think…
    Ministers need to think about a triple bottom line.
    Not for profit but for debt payments. What will do the most good.

    For PEOPLE… what will hurt the people of the country more? Bigger class sizes for kids, Scrapping capital projects like metro north, or cutting top level civil serice pensions. Which of these actually hurts the most? Who is hurt – are they vulnerable? And in terms of their lives which has the biggest impact? Think minister whom should I spend the tax money on?

    For ENVIRONMENT – and in that I include the social context, where does the limited money do the most good? Anglo bond holders or those on social welfare. A small group of wealthy or a large group of poor will take a hit, I think its obvious the societal consequences – the social environment is impacted more when we look after small groups at the expense of large ones. In the green issue, will wasting money on empty shopping centres really do more good than insulating peoples homes? Again in the societal context minister what allocation does the most good?

    For PROFIT… What will help the country economically? Will rescuing badly run monolithic banks with broken balance sheets with billions in bail outs help the economy? Or is that money better used in small business grants, entrepeneur worshops and management training? Would the limited resources be better invested in the service of the debt or in innovation financial awards. Think minister if you put a euro into a project what will it return, what will get Ireland moving again?

    The point is there seems to be a misallocation between were the revenue goes and what will give the best payoff in the 3 ways above. I know there is cronyism and elements of the state have been captured (Ibec & Ictu) ect, but maybe if the government, its civil servants and indeed the people analysed spending decisions on this basis things could start to change?

  7. JHShanahan

    David has raised the proposition of a receivership for the Irish State in the past. In reflecting on this prospect, I have examined the UN Charter and provisions beginning at Chapter 12 for an international trustee system (see http://www.un.org/en/documents/charter/chapter12.shtml).

    Originally intended to establish a framework for governance of countries and places that found themselves without a functioning government at the end of World War II, the trusteeship system is the only legal mechanism that I am aware of that would allow a country to be placed into voluntary receivership and to reorganize its government and its debts.

    Article 77 of the UN Charter allows for “territories (to be) voluntarily placed under the system by states responsible for their administration.” That means that instead of placing Ireland’s economic future in the hands of the EU and ECB, the State could, by resolution of the Oireachtas and approval by the Council of State, place itself into temporary administration by a friendly trustee (how about the USA?) and get about the orderly business of abrogating public service wage agreements and the debt of Irish banks taken over unwisely by the State. The arrangements might also include the inclusion of the six counties of the North as part of the Trusteeship agreement, by consent of the UK government, with a provision in the Trusteeship agreement that the UK might retain a continuing interest in the administration of the territory of Eire for the benefit of UK citizens and state properties. This shared administration might last for such period of time as it might take to accomplish economic relief and to allow for the drafting and ratification of a new constitution for Eire. The entire process, if initiated straight away, might be accomplished in just over four years, with installation of a new government under a new constitution for all 32 counties of Eire in time for the Easter celebration and the celebration of the Centenary of Irish Independence in 2016.

    The international law and process is on the books. All it takes is the education of the people as to the prospects for this avenue of relief and the badly-needed reform of Irish government. It is a clear, legitimate and peaceful pathway to the building of a new Irish state, free of debt and fit for purpose.

    Could we not do this?

    John Shanahan, Drogheda

  8. We need a revolution because the people at the top are openly showing their greed, selfishness and contempt for the docile majority who gave a mandate to the coalition from hell

    Some within the troika believe that our votes gives the coalition a mandate to rob us and out children’s future by imposing unlimited austerity on the Irish people

    The Government will not dare challenge the absurd Croke Park agreement nor the Bondholders nor the Developers in Nama who are pocketing 200k salaries nor the 250k Bertie (I forgot me memory) took from the state in expenses after he was forced to resign from office our of sheer embarrassment

    So much cash goes missing without a whimper into a black hole that serves a minority without any questions being asked while children live in poverty

    Unemployed people need to obtain a Barristers letter to get onto the local authority housing list to prove that they are of ‘sound character’. This say it all really

    We need a revolution!

    Meanwhile people on this blog will spend their time discussing the finer points of receivership!

    What a screwed up, pathetic and corrupt little country.

    • It is the guy on the dole who is problem according to Joan Burton. They can find the money to pay 600 welfare inspectors but they can’t find the will to employ 600 tax inspectors to chase us the rich who take their money off shore in tax avoidance scams.

      Tax avoidance costs the country way more that the amount siphoned off by unemployed people

      600 inspectors to target social welfare fraud:
      http://www.independent.ie/national-news/dole-cheats-600-inspectors-to-target-social-welfare-fraud-2874100.html

      • “Because welfare fraud undermines public confidence”

        Joan is a comedienne!

      • vincent

        Yea it’s the old game of Divide and Conquer at play again…

      • Deco

        When this crisis first started in 2007, Pravda interviewed Joan Burton outside Government Buildings.

        This is what La Burta said…..

        “we are in this recession…because we have run out of money…that’s how we got into a recession….we ran out of money”.

        Unbelieveable stuff…..

        Strangely enough, the Irish media did not classify this as a “gaffe”. Obviously, none of them are any smarter.

        The problem with the social welfare system is not the dole – it is the social housing. It costs an absolute fortune. This is because it acts as a floor in the housing market. In fact it has done so for years.

        • Pedro Nunez

          The problem is paddy has to stop ‘sucking on the hind teat’ and clear out all the gombeenites and culture in the public service the H.S.E and the supposed regulators who are political appointees to preserve ‘gombeen nation’ rather than provide the checks and balances the regulator is supposed to do.

    • coldblow

      Pauldiv, the continuing discussion here doesn’t stop your arrangements for revolution. (!)

      Leaving aside barristers, I wonder if proof of sound character is necessarily a bad thing if it can weed out criminals and undesirables. You know, housebreakers and holders of all night parties. However, beyond that what is sound character? As there are now so many contradictions within the culture (throughout the West) I think the question is impossible to answer. Does anyone know the criteria for allocating council housing? I have long wondered about this.

      • Does anyone know the criteria for defining ‘sound character’?

        • coldblow

          “Of all the people the state pays, who would be the most deserving, and who would be the least?” As things stand now this is no easier to decide, objectively, than the other question. However, they are probably not seen as equivalent issues and while attempts at clarity in one area might be welcomed as ‘common sense’ in another they could be resisted as “judgmental”. We may find ourselves in a position, shortly, where such issues can no longer be left unresolved. What interests me, apart from the outcome, is the principles employed in getting there. My own guess is that, following the established pattern, it will be largely left to emotion.

  9. Scipio

    Don’t live in Ireland anymore so can someone answer me this – We are told that these payouts to “public servants” are legal/contractual obligations of the state. So, if the public are so outraged, why don’t they get after their TD’s and have them introduce special legislation to tax these payments at 100% ? Alternatively, have an attorney draft the legislation and circulate as a petition. Maybe 300-400,000 signatures might focus the pols. BTW I would include all nationalized banker payolas/pensions in this legislation. Maybe throw Bertie, McCreevy, Cowen et al in for good measure.

  10. “With the country in ‘‘economic receivership’’, it is interesting to think about the pecking order of who is deserving of the limited spoils of the country. At the moment, the state regards the banks and the highest paid civil servants in Europe as secured creditors and much of the rest of the society as unsecured creditors. With the budget focusing minds in the next few weeks, this receivership pecking order must change.”
    Who is going to change it David? not the present coalition.Will the IMF enforce change?
    More importantly will the people pay the new charges in the next budget? If they can (and do) there will be no change.
    The new water and property charges regime, is a relatively painless way of again socializing the the public sector fat cats incomes, and their continued shielding from real pain,such as a special pension levy.
    The reaction of the people will be a make or break issue for democracy in Ireland.
    If the people do not join together in mass boycott, there is no hope left.
    http://youtu.be/n1Xo6rgC1sM
    I attended a meeting chaired by Joe Higgins in the Teachers Hall in Parnell Square last Saturday.
    I was impressed by the determination of those present to try and unite all groups and communities
    in a mass movement to boycott the tax.
    The Labour Party have sold out the people in favour of their own favoured,if sizeable, minority of workers in the public sector.
    Some unions are coming on board.
    Sinn Fein has-incredibly refused to endorse non payment.They are simply “opposed” to the new taxes.Whatever that means.
    This fight will be a fight of ordinary people against all the main Political Parties.

    • Deco

      In Ireland, the Taxed Enough Already movement is coming from the non-instituional left.

      Excellent assessment of the ILP. FF 2.0, with a leader that is as good at dithering as Bertie Ahern. Always trying to put the right spin on a bad job.

  11. healthadvisor

    Unfortunately, much as i subscribe to what David says, the Irish people are too damn lazy to have a revolution. It galls me no end, and the reason is that too many people are being paid too much money at the top of the public sector. I am a public sector worker too, a nurse, but i remain sick of my stupid managers and hospital managers (with no management training, nevermind qualifications!) running hospitals into the ground. To put the 300 million euro into perspective, it takes 350 million to run st james hospital for a year, which has 1000 beds. So the govt would rather keep a small amount of the “lads” sorted, than care for its electorate. I do despair every day in work, as those in power do not have the brains nor the intelligence to fix the issues. This is not the case in all hospitals, but it is the case with many in the HSE. I know many who want the rot to stop, but we are told we are negative, and to shut up.
    I agree with taxation on our pensioners and i think the pension levy of 10% should definitely be placed on Berties, Mary Harney, and all the rest of the TDs who took retirement this year as well as the civil servants who are our ascendancy. The tax should be at least 50% as if they expect me to work for e46800 after 20 years, well surely they can live on that too, and “be patriotic by cutting THEIR cloth”.
    Mise le meas

  12. Malcolm McClure

    Moderator: Thanks for that.

  13. Adam Byrne

    September 12th (and 11th) has come and (almost) gone John Allen. Time to put the crystal ball back in moth balls, or better still chuck it off the cliffs at Dun Aengus. I’m afraid to say you have about as much credibility as Harold Camping at this juncture. Nothing personal John, sorry.

  14. grougho

    hello again all,
    the shirt off my back protest will be having a protest picnic in fermoy town park this saturday, free comedy with abie philbin bowman – free music and more.
    it’ll kick off at 3ish – bring a flask of tea, the kids if you have a few and some time to sit and enjoy
    .
    hope to see you there
    http://www.facebook.com/event.php?eid=286628298019957&notif_t=event_invite

  15. rebean

    David You are on the money here . We have a shambles of a public service run by a right bunch of molly coddled overpaid yes men . No more I say. WE need a new political party that runs on the single agenda of firing senior civil servants. Yes fire them or allow them to take a serious reduction in salary. The university professors and overpaid lectures are next on the agenda. Leave the lower paid civil servants alone . Anyone on less than 50 grand should be left alone. I would tax all those Fine Fail ministers that have retired like Dempsey up to the eyeballs and basically get the cash back. Bring on the revolution. It will happen soon here anyway . The ECB wont put up with this bullshit any longer.

    • Deco

      There used to be a time when the brightest children from the most improvirished villages (mostly strung along in wet cold mountain areas along the West coast) would endeavour for years with their learning, to be come at the top of the civil service exam. Kids in damp cold houses under a light bulb or even a candle trying to master their studies, to serve the people.

      It was highly meritocratic, and it attracted the brightest brains from the student politicians.

      Then along came the era of CJH and The Dithering One.

      Nepotism and the old school tie destroyed the Irish Civil Service.

      We know something is seriously wrong with the Irish Civil Service, when you seem first class gobshites like sNeary being put in charge of the Financial Regulator, and we read in Shane Ross’s book “the Bankers” about the Financial Regulator playing golf with the Bankers, and the bankers giveing the financial regulator “customer priveleges”.

      Then we had the rampant alcoholism in the last government – the so called “Drinks Cabinet” – given that so many of them are carrying booze problems.

      • Deco

        Sorry I meant to say.

        It was highly meritocratic, and it attracted the brightest brains from the student population.

        Student politicians (Harney being a prime example) have not been a success. In fact across Europe they usually turn out to be spoiled brats trying to avoid the rest of the economy.

  16. Copied from the last article but relevant here;

    This “Pecking Order” is the clearest indication of the self-preservation amongst our political establishment.
    To tinker with salary, lump sums and pension arrangements would be sacrosanct to people who truly believe that
    “Public Service” more accurately means “Public Serve Us!”

    See http://www.dailymail.co.uk/news/article-2036014/Fake-expenses-shame-Dail-Eireann-So-culprit-investigated.html?ito=feeds-newsxml

    There’s absolutely no need for an expenses regime – it’s clearly mismanaged often fraudulent and very wasteful.

    Abolish constituency offices because they achieve nothing in the national interest – they are merely arms of political parties and actually replicate official state services! Afterall 20 years ago these so called “clinics” were held in pubs, community centres or donor offices and it was just as efficient without the expense! And has anyone ever seen a queue outside one?????? – Nah me neither!

    Give TDs/ Councillors free travel passes and put them up in Dublin in a State owned Hotel out of NAMA. Hand out free mobile phones and charge Vodafone unlimited monthly tariff for government staff (which is currently €15 per month)

    But who am I kidding? Official Ireland is already singing aloud “I’m not listening!”
    Accountability and common sense are blatantly ignored!
    Alas Citizens will not be protected!

  17. Tull McAdoo

    The big fear at the moment of course and one of the key concerns among the establishment is “will Fianna Fail’s rehabilitation come in time for them to form the next coalition government”.

    Pat the plank, Maid Marion, Hypocrite Harris, Fionnan Mac Fail, and all of the rest are using every opportunity to plant ideas in people’s minds along the lines of……Comical Lenny was bounced into the bailout by Trichet!!……..Fianna Fail polices must have been correct because the new Government are still implementing them!!………German and French banks!!…..Wall Street!!….The Regulator!!…..The Central Bank!!…..

    Will Tweedle Dee be airbrushed and white washed and all that when Tweedle Dom falls flat on its ass. If not then who in the name of all that is “insider” will be elected to run this little haven of bailiwick’s as Mammy Mary from Athlone likes to call her little midland dung hill.

    It seems pretty clear from down here in the antipodes that some of the more seasoned campaigners have realised that the game is up and have decided to jump with their euro parachutes, pensions and 42 inch paunches all gathered from their years at the trough. Well the large paunches should at least guarantee them a “soft landing”.

    I think that a major realignment is on the way for Irelandes, politically speaking of course. The hard left and hard right are going to generate support. There will be deeper divisions in Irish society. Huge policy swings, uncertainty, u-turns almost to the point of anarchy. The guarantee that was signed will in time be viewed with the same animosities as the treaty when it was signed way back in time……

    That guarantee that was signed will be responsible for the next civil unrest. I can sense from reading blogs and reports etc. that it is simmering just below the surface waiting for a trigger, and in all fairness these shower of bastards who cannot see beyond their own self interest are NOT helping. This last bit of smash and grab and general looting of the taxpayers money will have to stop, I shit you not my friends. As I have pointed out before, I have seen this shit played out before in Zimbabwe and elsewhere and it can get very ugly, very quickly.

    The next 100 days will decide Irelands fate for generations to come, it IS as serious as that……..

    Given the time of the year that’s in it, and John Allens fondness for all things lunar, move your cursors in to 2 minutes and relax to wonderful sound of Cassandra Wilson and her rendition of an old Neil Young classic…..Take it away Cassie and Goodnight Ireland .Sleep well.

    http://www.youtube.com/watch?v=IRsN-VnZwQg&feature=related

    • Deco

      Maid Marion (on air for something like five hours a week – mostly waffle that anybody picked off the street could do) was on the case, touching base with the unwashed masses on their wireless sets, and trying to get talk out of civil servants getting half a million a year in pensions.

      And as I was listening to this the absurdity of it all was just too much.

      The senior civil servants would actually have better claim to have done service to the people than Marion talking rubbish non-stop, with her chums like John Delaney and the like, telling the people to cheer on the green jersey and interviewing old favourites like Mammy O’Rourke, and members of her dynasty.

      The absurdity of it all is too much.

      Break up Pravda, and sell it off.

      But keep TG4 and RnG as state institutions for cultural reasons. There is no cultural mandate for extortion of a levy out of people to pay for bread and circuses, with wall to wall US sticoms, Aussie soaps and Millionaires getting paid millions to follow a ball of air around a field for 90 minutes.

  18. ladygee2

    Mammy Mary from Athlone along with a whole load of former FF TD’s got what they deserved at the last election. Bertie,Noel Dempsey and Mary Harney new what was going to happen and they got out while the going was good with fat pensions that will keep them in the style to which they’d gotten used to for the last 14 years or so. Fianna Fail are a spent force and anybody who’d go away and vote for any of those that now remain in any future general Election would want to be completely ‘off their heads’ altogether!!!
    Did anyone watch Vincent Browne’s programme last night where he interviewed those clowns from Fianna Fail? What a complete and utter bunch of tossers!!!
    I know the new bunch aren’t much better, but as various contributers to this site have mentioned countless times before that a new ‘People’s Party’ needs to be formed to take on the shower of idiots who have been running this country since its foundation. There are a lot of people in the public eye who could do a whole lot to improve the lives and futures of the ordinary citizens of this country, but would they take the bull by the horns and do what was necessary when the time came, well, that would be a completely different kettle of fish altogether. Talk is cheap, but actions speak louder than words and that’s what this country needs, action!!!

  19. Deco

    David – you stated
    {
    Ruairi Quinn — a former Minister for Finance and a man who clearly understands the economy
    }

    I would not be so sure about this.

    Quinn signed us up into the Euro. Look where it all ended up.

  20. seanmac

    CITIZENS EDUCATE YOURSELVES! [IT'S TIME TO PROTECT THE CITIZENS - David McWilliams]

    David, thank you for the title of the post! It’s time to protect our citizens!

    It begs me for the first time to clear understand the role and the responsibilities of the ‘democratic’ government of Ireland. Let’s look at the constitution and see how well it reflects the behaviour of the current governments! BUNREACHT NA hÉIREANN.

    Download it from http://bit.ly/1937constitution

    Let’s have a quick look at the Preamable and the 50 Articles that form the contract between the State of Ireland and its citizens! The purpose of this is really to check what is missing not the details of what already exists because we have many people who those in detail. What context is missing that is now needed in the agreement between the State and the citizens of Ireland that wasn’t needed in 1937?

    Preamble

    The preamble was written went religion gave backbone and courage to those who had to fight to regain power from dominance against a protestant nation. Now in 2011, we have received with hospitality the Queen of that Nation into our Capital and we recognise that majority of our commercial trade is with the State that she represents. We have gone from a country in submission to an ‘independent’ country [at least in our minds and political status] to maybe the awareness that we are ‘interdependent’ at all levels to the people and institutions of the countries that surround on this planet. The well being of this country depends on understanding our ‘ASSETS’ [our people] and the hierarchy of the remaining assets of the country tangible and non-tangible and how to manage our ‘CASHFLOW’. We as a nation are missing at a FUNDAMENTAL level a LACK OF FINANCIAL EDUCATION. We can see the symptoms of this through the level of personal debt that individuals are acquiring and now suffer from. How can we expect a behaviour from our government that we as citizens do not exhibit. How can children know any better than their parents. EDUCATION CAN HELP!

    So,
    what I DO SEE is a ONE-SIDED CONTRACT from the State to the citizens.

    And,
    what I DON’T SEE are:
    - the limit to scope of the contract (including the powers of the state)
    - the price of contract for Management
    - the criteria for measure of performance of management

    - the ROLE and RESPONSIBILITIES of the CITIZENS
    – to behave in ways to exemplify citizenry including self-management (including financial), social responsibilities
    AND
    – to pay the price of the STATE
    – to measure the performance of the STATE

    We need 2 parties in the contract the State and the Citizen.
    We need a scope of the contract
    We need KPIs to measure performance

    AND

    We need education at a fundamental level to children and adults on finances and economics.

    You will note that I mention finance a lot. Our world is not made up of only money BUT this is the area where we as individuals are lacking knowledge, understanding and application of those concepts and principles which has lead and unfortunately will in the future re-lead us to these crises!

    Describing the problem is only one aspect, creating a building a solution is what will bring us to the next step.

    Solution Proposal:

    Education of all Citizens on the Principles of:

    - Daily Personal Finance [the banks won't like this because they confuse the basics to keep us in debt like - Assets and Liabilities]. I would propose that every citizen read a book like Rich Dad Poor Dad and be tested on the know of it, with a refresher test every year. Link http://bit.ly/citizenshiprr to Rich Dad Poor Dad by Robert Kyosaki

    - National and International Economics. David is doing a great job and has even created a syllabus of aware with his Economics without Borders Course and the book Follow the Money. Link http://bit.ly/economicswithoutborders to Books recommended by David McWIlliams

    - Constitutional Contracts. We need to understand as citizens the fundamental agreement we make by accepting citizenship and living in Ireland. Link to Constitution of Ireland and http://bit.ly/contractbasics Books on the Fundamentals of Contracts.

    If enough people are aware and behave in a personally responsible and socially responsible way, we will address the long term health (financial, social, political and spiritual) of Ireland.

    As for the short term answer, I really subscribe to the receivership model rather than worsening our situation with additional debt. It simply aggravates our issue.

    My best to you all!
    http://jonathanmcguinness.com/live/2011/09/13/irish-citizens-educate-yourselves/

    A link to all the books mentioned
    http://bit.ly/citizenshiprr

  21. Deco

    It is impossible have an effective Civil Service, in the long run, when you have the Social Partnership process, with IBEC and ICTU pushing their senior title holders, and heavyweights onto the boards of state quangoes.

    In other words, the K-Club Clique, and ICTU HQ have ensured that the politicians are not sufficiently empowered to do anything about it.

    Throw in the EU and the ECB, and the weight of their institutional power, and you get a mechanism for frustration, harshness, and bank bailouts.

  22. Deco

    Iceland did the sensible thing. And Gordon Brown went ballistic, putting Iceland on the same list as Iran and North Korea. (The same clown was actually getting on great with Gadaffi – square that circle if you can).

    Basically, it is a matter of standing up for yourself.

    And also continually shaving down the debt. I think that Noonan is trying to do this, but that the EU does not want it (or specifically corporate lobbyists in Brussels, Paris and Berlin, do not want it).

  23. Jonathan

    CITIZENS EDUCATE YOURSELVES!

    For the first time, the argument begs me to clearl understand the role and the responsibilities of the ‘democratic’ government of Ireland. Let’s look at the constitution and see how well it reflects the behaviour of the current governments! BUNREACHT NA hÉIREANN.

    Download it from http://bit.ly/1937constitution

    Let’s have a quick look at the Preamable and the 50 Articles that form the contract between the State of Ireland and its citizens! The purpose of this is really to check what is missing not the details of what already exists because we have many people who know those in detail. What context is missing that is now needed in the agreement between the State and the citizens of Ireland that wasn’t needed in 1937?

    Preamble

    The preamble was written went religion gave backbone and courage to those who had to fight to regain power from dominance against a protestant nation. Now in 2011, we have received with hospitality the Queen of that Nation into our Capital and we recognise that majority of our commercial trade is with the State that she represents. We have gone from a country in submission to an ‘independent’ country [at least in our minds and political status] to maybe the awareness that we are ‘interdependent’ at all levels to the people and institutions of the countries that surround on this planet. The well being of this country depends on understanding our ‘ASSETS’ [our people] and the hierarchy of the remaining assets of the country tangible and non-tangible and how to manage our ‘CASHFLOW’. We as a nation are missing at a FUNDAMENTAL level a LACK OF FINANCIAL EDUCATION. We can see the symptoms of this through the level of personal debt that individuals are acquiring and now suffer from. How can we expect a behaviour from our government that we as citizens do not exhibit. How can children know any better than their parents. EDUCATION CAN HELP!

    So,
    what I DO SEE is a ONE-SIDED CONTRACT from the State to the citizens.

    And,
    what I DON’T SEE are:
    - the limit to scope of the contract (including the powers of the state)
    - the price of contract for Management
    - the criteria for measure of performance of management

    - the ROLE and RESPONSIBILITIES of the CITIZENS
    — to behave in ways to exemplify citizenry including self-management (including financial), social responsibilities
    AND
    — to pay the price of the STATE
    — to measure the performance of the STATE

    We need 2 parties in the contract the State and the Citizen.
    We need a scope of the contract
    We need KPIs to measure performance

    AND

    We need education at a fundamental level to children and adults on finances and economics.

    You will note that I mention finance a lot. Our world is not made up of only money BUT this is the area where we as individuals are lacking knowledge, understanding and application of those concepts and principles which has lead and unfortunately will in the future re-lead us to these crises!

    Describing the problem is only one aspect, creating a building a solution is what will bring us to the next step.

    Solution Proposal:

    Education of all Citizens on the Principles of:

    - Daily Personal Finance [the banks won't like this because they confuse the basics to keep us in debt like - Assets and Liabilities]. I would propose that every citizen read a book like Rich Dad Poor Dad and be tested on the know of it, with a refresher test every year. Link http://bit.ly/citizenshiprr to Rich Dad Poor Dad by Robert Kyosaki

    - National and International Economics. David is doing a great job and has even created a syllabus of aware with his Economics without Borders Course and the book Follow the Money. Link http://bit.ly/economicswithoutborders to Books recommended by David McWIlliams

    - Constitutional Contracts. We need to understand as citizens the fundamental agreement we make by accepting citizenship and living in Ireland. Link to Constitution of Ireland and http://bit.ly/contractbasics Books on the Fundamentals of Contracts.

    If enough people are aware and behave in a personally responsible and socially responsible way, we will address the long term health (financial, social, political and spiritual) of Ireland.

    As for the short term answer, I really subscribe to the receivership model rather than worsening our situation with additional debt. It simply aggravates our issue.

    My best to you all!

  24. EireUSA

    I have been reading David’s articles for a number of years and as usual,he brilliantly points out the injustice that is being inflicted on Irish society by a small group of people.
    But one thing the likes of David et al don’t mention is how we ourselves are compilcit in the how we are being robbed,ignored and pulverised by the elite circle that controls this country.

    During the election campaign Michael Martin stated the truth (probably for the first time) when he told Enda Kenny to his face that Kenny would continue the policies of Fianna Fail/Greens should Fine Gael gain power.
    This was obvious to even a casual observer but despite that,Fine Gael got a huge endorsement from the Irish electorate and now we are all paying the price.

    What is so infuriating to me is that we gripe and moan about what this and the previous administration have done to the country but we don’t mobilise in any meaningful way and take to the streets in protest.

    I was taking to a Dutchman recently who asked me why the Irish complain but not much else? He actually said to me-”Where’s the Irish spirit gone to?” I was genuinely embarrassed but couldn’t defend the indefensible.
    We can converge in our tens of thousands onto mud-soaked fields in the middle of nowhere for 3 days at a time to see bands play-and pay through the nose to do so.

    80,000 people show up to Croke Park to watch a hurling or football match-Nothing wrong with that- but imagine the reaction if 80,000 took to the streets and marched on Dail Eireann? Maybe-just maybe-the greedy,criminal fools and liars that run our country would pay attention when we say we won’t take it anymore.
    We should have been on the streets years ago.

    The government treats us with contempt because it knows there will be no penalty for doing so.

    We are getting what we deserve because we have signalled to the Fat cats that we feel we deserve nothing more.

  25. piombo

    Hello all,
    David’s idea is fair and conceptually straightfoward and readily comunicable. However, there is one element missing, ie., what money/currency does the State employ during the receivership? Let us survey the terrain:
    1) We will all know that the State has at best estimates three months cash on hand at this juncture;

    2) The ECB would cut our nation off in an instant if we dared “do an Iceland”;

    3) There would be compensatory tariffs on all our Euro-bound exports that same day;

    4) Whilst the state organised the printing presses (there are only two currency producers in Europe), the State would have to “borrow” from the private pension funds (a Daniel Gros idea) in “hard currency” for at least the time to get the “punt nua” into the international monetary system;

    5) Lastly, lest we forget, we would need Soviet-style capital flights blockers in place. Google and all our multinationals would be gone by the time we woke up on the Monday morning.

    All the above presupposes we are ejected from the euro, the moment, we move for voluntary restructuring of our debts. Let us not believe for one moment that Ireland will be allowed to remain within as the Germans have had enough and will ensure that whatever retribution they believe to be adequate will be doled out to Ireland in zwei seconds.

  26. redriversix

    EireUSA,

    Your right , but as a Nation I believe the Irish like to complain.We were always told to “know are place and speak when your spoken to,never question authority and keep your head down.

    I went into business for myself when I was 25 and found a solicitor to act for me,when I explained what I needed, he told me how much it would cost, I questioned the bill and asked for a breakdown.He began to rant and rave and saying how he had “never been questioned before” He then referred to me as an “impudent pup”…..!!!!!

    Haven’nt seen him since.

    What is the difference between a Terrorist and a freedom fighter ?

    What is the difference between a Rebellion and a Revolution ?

    Whats the difference between a small business and a Bank ?

    People really could not care less unless something happens to them and then they might ring Joe Duffy.

    We need to do something , everybody here is agreed on that , but what ?…I Believe we should default as a Nation , but firstly as Citizens.

    Stop paying what you can, put away enough money to survive for at least a year and than renegotiate every loan you have.

    Either way Greece , Ireland , Italy etc will default because as I stated before their is not enough growth , or Money to repay these debts.

    If we are ejected from Euro,so what ? Other Countries markets will always see were a buck can be made and if they think an ejected,non-euro Ireland is a good place to do business or make money then that,s what they will do…except WE would be in control of the deals that are made.

    Unless People except that things are going to get worse , they will have no acceptance.

  27. tony_murphy

    It’s time for the citizens to protect themselves.

    They got to wise up. A Politician is the last person I’d expect to help me, and I would be right.

    Get a referendum on EU membership and get out of it ASAP.

    Buy yourself some silver + gold.

    http://wealthcycles.com/

    goldsilverdvd.com

  28. dwalsh

    It may be neither wise nor fair to pay Anglo bondholders; but as David points out, it is standard business practice — banks get paid first. And since according to the holy cow of the market (our new state religion) business is the primary purpose and highest expression of human life…well then, government should be business too. All this stuff about citizens contractual rights is all very well, but business is business.

    I guess I’m suggesting our minds have been colonised by an ideology that now binds us to its austere Darwinian logic. It is just an ideology; not reality; we can change our minds.

  29. dwalsh

    Thinking further on what David has written:

    Anglo is not a secured creditor in the usual business sense David seems to imply. Anglo is not a creditor at all. Our state is not paying back a loan it contracted from Anglo in the course of normal business. As we all know the losses of Anglo (and the other banks) were foisted, with threats of national ruin if refused, upon our state by the banksters here and in Europe.

    According to the procedures of standard receivership practice I do not see how Anglo qualifies as a secured creditor.

  30. piombo

    I believe the only democratically way out is through political due process. Tax evasion is not the solution. People are generally persuaded by policy which protects their families and property. A clear, fair and feasible platform for the people is well within the grasp of most-aspiring opinion makers/leaders. As well, people despite all that has befallen the country seek leadership. In the absence of politics, societies can only be governed by dictators through violence.

  31. redriversix

    Hey dwalsh

    you are one of the brighter contributors on this forum , but we are not in Kansas any more nor have we been for a long time.

    What was once know as “standard receivership practice” is long gone.The Banks threatened us in the middle of the night so they could get bailed out.

    Its a two tier system , how is that democratic ? Its a whole new world and I do not think anyone has any experience in how to deal with this crisis.

    E.U. Stumbles from solution to solution “hoping” something works , but the markets always respond in the negative.

    And yes , I admit , I have lost faith in the system I grew up with , moral , social , and in business.We talk about the political due process and perhaps having a referendum , but are we past that ? , Have we gone too far ?

    Who can we believe when “they”inform us that we are on the right track and austerity is working , when clearly Europe and America are in a state of emergency.

    I have said it before and I will say it again, we will have no choice but to default either directly or dressed up in some other guise as the money is simply not ANYWHERE to repay all this world-wide debt.

    Look after Families

    Keep it simple…its all about debits and credits and we sure do not have any credits….

    • dwalsh

      Hi redriversix

      Thanks for reminding me about Kansas and all. I keep pinching myself; but sometimes it doesnt work.

      Reality is fiction.

      • redriversix

        What I wouldn,t give to be back in Kansas right now with Toto and Auntie M and not have to deal with this sh1t every day….!!!

        I am really beginning to dislike reality…or maybe this IS fiction and Oz is real ?

  32. redriversix

    Something I heard over the weekend is that Iran , Iraq , North Korea and Libya and finally Afghanistan do not owe any money to the World Bank.

    Is this an obvious statement or realisation of “new markets/Colonies” for those with the power to consolidate their own position..?

    Curious.

  33. Neo Nua

    Who do we want to be?
    What kind of country do we want to live in?

    Lets come out of the shock phase and get to work.

    We don’t have to wait for others, we can lead.

    For the sake of our grand children why don’t we:

    1. Default
    2. Leave the Euro
    3. Critically analyse our comparative advantages (i.e. what can we do better than anyone else in the world for the next 50 years? – premium food,arts,renewables not making computers/drugs)
    4. Enforce a maximum wage
    5. Ensure that banks are publically owned non profit making utilities
    6. Maintain or lower our corporate tax rate
    7. Borrow from China to fund employment intensive infrastructure projects
    8. Never vote for FF/FG/Lab again

    ????

    • ict

      Almost agree

      1,2,3 and 8 are “No Brainers”.
      I also strongly agree with 4 and 5 (but accept that arguments to the contrary could be made, in theory at least).

      I am not at all sure about 6 and 7 though.
      Both essentially involve gaining advantage by cosying up to rich, powerful, but potentially sinister entities. This may seem tempting, especially at a time like this, but we shouldn’t do it, or at least it is not compatible with the sort of country I think we should be.

      Re Corp Tax; I appreciate this may be an unpopular thing to say, but I feel there is something in the argument that by having a low corporation tax a country is, to put it bluntly, offering a tax haven to assorted capitalist exploiters. Put aside the artificial constructs of National boundaries for a moment and take a bigger view; A race to the bottom on corporation tax means allowing the mega rich to minimise their contributions to paying for ordinary peoples’ education and health care. It is unethical, and, if you want to be Machiavellian about it, not likely to win us many friends and therefore probably counterproductive in the long run.

      As for China, I’m old enough to remember the Tianamen Square massacre. I’m not at all convinced that replacing debt owed to Germany with debt owed to China would be a good thing, other than, (and I seem to remember David quoting an Icelandic saying something along these lines), if and when it comes to default, China is further away!

  34. Concur. The Irish citizenry are a great people. And for the Irish perhaps a look at the future:

    The Self-Organizing Self Assembly Bounded Global Macroeconomic System: The September 2011 Historical Global Equity Crash

    Apple, Ford, the Nikkei, the Wilshire and US Bonds (the DAX, FYSE, CAC et. al): The September 2011 Historical Equity Crash and Countervailing 150 year US Bond Blow-off

    The absolute magnitude of the macroeconomic system’s mathematical nonlinear September historical correction is secondary to the extreme unbalanced conditions of four of its primary elements: not-to-be-repaid bad debt having reached an extended saturation point via central bankers lending ex nihilo to other central bankers; over supply and supply saturation of the system’s primary asset class of value(commercial and primary residential real estate via excessively facilitated past production and facilitated mortgage creation); continued overvaluation of that real estate asset class in spite of three years of orchestrated low interest rates with refinancing to lower monthly payments on overvalued homes, money printing to maintain direct government related and multiplier effect jobs and the related continuance of mortgage payments on those overvalued homes, governmental promotional cash for residential clunkers sales gimmicks, and finally a 30 % market retrenchment; and current derivative asset class extreme overvaluation (equities, commodities including gold and silver) relative to the real estate valuation collapse; bad debt saturation, poor economic activity and resulting high unemployment levels, and secondary to historically low interest rates and money exiting from noncompetitive and non performing savings accounts to defacto support the Financial Industry’s speculative equities and commodity futures.

    The derivative equity and commodity futures asset valuation system is poised to implode in September with the sudden default and disappearance of Euro debt.

    The Euro and Swiss Franc are non linearly devaluating. Note that the Swiss Franc finished an 11/27/27 week :: x/2.5x/2.5x exact maximum Lammert valuation growth fractal before its collapse. European currency collapse will be monumentally nonlinear as part of a 13/26 year first and second fractal series with the US dollar poised to dramatically rise in value.

    These extreme conditions would naturally occur at this time period.

    However, coalescing forces of one hundred years of continuous political and financial greed, misunderstanding of how the system really works, the lack of good clear simple rules on economically favorable use of the money system, and the lack of simple rules delineating rapid and severe punishment associated with the malevolent misuse of the money system – have contributed to a near maximum distortion of the system’s asset valuations.

    Apple, Ford, the Nikkei, the Wilshire and US Bonds: The September 2011 Historical Equity Crash and Countervailing 150 year US Bond Blow-off

    As of 10 September 2011

    Apple Ford NIKKEI Wilshire: 10-11/26-27/22 /2-3 of 16-18 days:: x/2.5x/2x/1.5-1.6x) (13-15 more trading days) (The Nikkei is a trading day behind the West)

    Terminal Growth (TFC chart): US Bond/Ten Year Notes 11/28/9 days of 22-27 days :: x/2.5x/2-2.5x (13 to 18 more trading days)

    Reciprocal Terminal Decay (TYX/TNX) 12/28/16 of 28-30 days :: y/2.5y/2.5y (12-16 more trading days)

    Consistently for several years the patterned science of saturation macroeconomics has been predicting historically low US long term interest rates – even in the face of the S and P downgrading of US debt and in opposition to the pessimistic, US Fed bashing, US long term bond and note managers who have mistakenly lightened their US bond holdings.

    A final third fractal 52 month US 30 year bond blow-off fractal is expected in September 2011 with historical 150 year low US interest rates mirroring a September 2011 historical collapse of equity prices. (For the Ten Year Note 9 September 2011 reached 150 year low interest rates at 1.896 %.

    The operations of the macroeconomic system is an elegantly simple mathematical self assembly time ordered patterned science of growth and decay of the valuations of the system’s assets. The macroecomony’s patterned time ordered mathematical relationships of the growth and decay of its asset classes of which duality money is one of the asset classes – confers on the system the properties of a science.

    The two most prominent self-assembly deterministic non stochastic patterns of the macroeconomy that are now operative and countervailing at this historical transition phase in September 2011 are terminal x/2.5x/2x growth of the global system’s most valuable asset by plurality – US long term debt instruments – and extreme terminal time portion second fractal 2x-2.5x nonlinear collapse of US equities.

    The macroeconomic system is a integrative bounded system of asset production, asset supply, asset valuation, and the medium that both facilitates asset transactions and is part of the asset element of the system: money. The macroeconomy’s medium money has dual properties existing as an asset with incoming interest payments and as a liability as debt with outgoing interest payments.

    Qualitatively the world’s macroeconomy is at the time of phase transition where money that exists in the form of lower quality debt with the properties of asset/liability duality ceases to exist as default of lower quality not-to-be-repaid debt occurs. The three year push on the string by ex nihilo bailouts by the global central banks to preserve ongoing payments of at risk debt, the bond holders holding that debt as an asset, and the massive quantity of duality money that it represents – is at the end. The interest on Greek one year debt notes is on 8 September currently over 95 percent.

    The Predictive Science of Saturation Macroeconomics

    In concert with expected euro debt default and erasure of Euro duality asset/debt money, September 2011 is the 52nd month of a 27/64/52 month US 30 year Bond x/2.5x/2x fractal series starting in 1990 and a second three phase growth fractal series to the three phase growth fractal series starting in 1984 with an incipient 2 year fractal starting in 1982.

    The world facilitated 30 year growth pattern of US debt instruments with progressively lower interest rates has been associated with about a 1400 percent increase in US composite equity valuation since 1982. Equity valuation is dependent on the total duality money supply – with the portion of the money supply involved in poorer quality asset-liability debt especially in the Euro-zone expected to vanish in September. Euro smaller nation bankrupcy and default is timed with the US debt instrument September 2011 27/64/52 of 52 monthly growth fractal (x/2.5x/2x) and the 10 September 2011 11/28/9 of 22-27 day :: x/2.5x/2-2.5x dtaily terminal growth fractal.

    For equities September 2011 is in the terminal most portion of a composite equity 22 year second fractal starting in 1990 with a 9 year base starting in 1982 or 34/84 of 85 quarters (3 month time unit).

    Tax rules favor ownership of the speculative equity asset class over savings. Because of this, composite equity second fractal nonlinearity has been be pushed to the terminal most time portion of the second fractal. The 84th quarter of a potential 85 quarters of a 1982 34/85 quarter first and second fractal series for the Wilshire represents the extreme terminal portion of the second fractal.

    Are the daily valuations of US long term debt interest instruments – which represent the global macroeconomic system’s greatest most valuable liquid asset’ occurring by chance? Or is there defined pattern that these daily valuations are undergoing self organization leading to a final 150 year low interest rate, highest ever valuation point?

    The science of saturation macroeconomic’s hypothesis is that the system of money-reciprocal debt- credit creation, asset supply, asset valuation, and jobs and wages created by ongoing demand and credit creation is an internally bounded system with limits in growth and decay of sub elements, self organization, and nonlinear transformations that both characterize fractals and the energy universe.

  35. redriversix

    Hey Lammert

    Any chance you might put that in laymans terms for those of us in the “cheap seats”

    Is it good or bad…?

  36. mishco

    Every week this website chronicles the absurdities, the crimes and the economic disaster of Ireland today. But where are the filmmakers? We have great filmmakers recognised the world over. They’ve done a fine job with certain historical events, especially the War of Independence and the Troubles; also with “everyday” characters like the Butcher Boy or Dublin singers.

    But isn’t it about time one of them had the guts to make a film about characters like Seanie Fitz, Ronan or Bertie? Even if they have to make it semi-fictional to avoid being sued, surely there’s a film there like the recent “Inside Job” about the US?

    They may find it hard to get the facts, but isn’t that what a good journalist/screenwriter is paid to do?

    Let’s hope someone somewhere is doing this already.
    Or do we need Alan Parker or Ken Loach to do it for us?

  37. Curach

    What are the current views on bank deposits? If the government/EU balance sheets are so bad, surely they couldn’t cope with the calamity of footing this bill also …but the consequences of not doing so will be far worse. What’ll happen Joe soap then?

  38. george

    Excellent article David !!!

    I am sick and tired of talking about it!!!

    As I told you before, my local doctor gets from the HSE almost half a million to look after patients with medical cards. Probably in Germany they can run a small hospital with it, that would look after many more patients, in a more comprehensive way and cheaper as well. Because the most you get from a local doctor here, is a prescription for drugs or a referral to a specialist in hospital, that is going to cost the State more thousands of euro per every citizen that is going to use it. And we have reached this point where doctors, teachers with three month holidays, lawyers, top civil servants, politicians etc etc, are getting paid more than in other Countries of Western Europe, but services and vital infrastructure cannot be sustained. And we keep repeating something nobody at this stage believe any more, here or abroad, that we have developed “The Smart Economy”

    I don’t see a way out of it, unless as you have said many times, we start with a debt forgiveness for people, and a haircut for bond holders. Only then we can follow with a reduction in salaries in the Public Sector, and fees for Professionals in the Private Sector, and a drastic reduction of commercial rates from Local Authorities. In this way we can restore value to the currency and we can make the economy more competitive and viable.
    And then as I told you before we have to decide what the difference is going to be between the top salaries in the Public Sector and the average industrial wage. And a fair tax system where people with most of the personal wealth pays most of the taxes.

    And then people have to take personal responsibility and the State has to educate people accordingly. Is it logical that with one of the highest unemployment rates in the EU we have the fastest population growth in Europe? Isn’t enough to have one or two children and provide adequately for them, and in case of need to have a State with the resources that can provide for it? Isn’t a stable growth in population and economic activity better for the future of human societies?

    And last but no least. I don’t think we can have a United Europe with a single currency and free movement of people without having a Federal Europe where Salaries and conditions, Tax Policies, and Social Welfare Systems are exactly the same for all.

  39. Alf

    David,
    We need to be clear on the current situation. Greece, Ireland, Portugal are clearly broke but everyone needs to be clear on exactly what is happening. Merkel and Sarkozy know full well that these countries are bankrupt and cannot pay. However, the name of the game is “bleed the stone dry”. We have the EU powers using the ECB/IMF as loan shark to lend as much fiat currency to the bankrupts as possible. This will postpone the default until Greece, Ireland etc have privatised and sold off everything they possibly can.

    Then default will be the “only option”. It’s simple loan sharking.

    • george

      Yes I totally agree!!! And at the end of the day Ireland is going to end with no control over many state companies and services, that a Country with a vision should keep under its control.

      The only question I make myself sometimes, also in reference to what David has written is:

      How ordinary, “Ordinary People” can be, when knowing what was on the line, the big majority voted FG+LAB to replace FF? And already they are starting to complaint about the reduction of vital services in the areas of education, and health, and even of a further deterioration of the economic and social situation in general. And this is only a little sample of what the next Budget is going to be.

      First came Obama and said that “we can” and we were waving the flags like mad, and now the IMF and de ECB are sweetening “the pill” with the reduction in interest, and the extension of the repayment period. How good of them!!! In 2016 we’ll be owing only approximately 200 billion, that is if everything perform OK and NAMA doesn’t en up in a total fiasco. And now probably our current Government will start to blow their own trumpet, as the best achievement an best possible deal, when the only game in town as you well said is “bled the stone dry”. And probably most of our Political Class and Ordinary People will go along with it.

  40. dwalsh

    Lammert wrote:

    “The derivative equity and commodity futures asset valuation system is poised to implode in September with the sudden default and disappearance of Euro debt.”

    If Lammert is right we are in for a world changing event. If Europe defaults it would surely bring down the whole global system. America is bankrupt. US treasury bonds are only doing well because everything else looks so bad; no one knows where else to go. It does not mean the dollar is getting stronger in real terms. The dollar is finished. The global system, such as it is, is finished.

    This report concurs:

    http://www.europe2020.org/spip.php?article696&lang=en

    What then?

    Things could get very difficult for a while. We will all need to pull together. Stop blaming each other for the mess. Ireland should be OK — relatively speaking — if we pull together. Parts of the USA could be hell on Earth. Martial law.

    Some see the global scene descending into war and chaos. I don’t. I see a global emergency summit and the first steps towards the introduction of a new global system based on a new global monetary unit controlled by a new global central banking system. A new world order in other words. We need it. The system we have is insane. I have no doubt the blueprints for the new system are ready to be presented.

    This is a big deal. The beginning of a new world era. We will all have roles to play.

    • coldblow

      I didn’t understand Lammert’s post. The article you link to is quite unusual. It seems to have been written by a French group. Your prognosis for the US – is that influenced by Kunstler? I agree with you that there won’t be war but rather than chaos we might just have depression as trade slows right down with all the uncertainty – that’s just a wild guess of course. I agree that a new global system will have to be worked out. Holders of money and debts will understandably seek to get the best deal they can in that. I agree the current system is mad but I doubt blueprints are in place for an alternative. It will just have to be worked through.

  41. coldblow

    Good article here about what needs to be done immdediately in Europe to avert a European collapse:

    http://www.project-syndicate.org/commentary/eichengreen34/English

  42. dwalsh

    @ coldblow

    Much of what Lammert says is incomprehensible to me too.

    No I am not influenced by Kunstler. Don’t know his work in any depth. He seems to be mostly concerned with the crisis of the physical economy — which is the biospheric crisis; depletion of resources (peak oil etc) and environmental degradation. The crisis Lammert is talking about is the financial crisis. They are interconnected naturally but they are distinct. The biospheric crisis is a much bigger problem than the financial crisis in my opinion.

    Re America: beneath the surface I sense America is highly unstable. The population is furious and fractious and armed to the teeth. If there is a serious crisis and a bank holiday (no ATMs) and possibly disruption in supplies, things could get very messy.

    I know it is currently popular to believe that the world is some sort of Darwinian chaos equation working itself out entirely deterministically (non-linear and non-stochastic as Lammert puts it); but I personally believe that is a mistaken view.

    It is also currently popular to believe that everybody is on a treadmill of making money day to day to pay the bills like all ordinary folk are. That nobody is mindful of the direction of world events at the global level other than in the relatively short-term reactive manner that politicians are. I am convinced this is a mistaken view also.

    There are people in the highest echelons of power — and I am not referring to politics here — who have anticipated this scenario and many other possible scenarios and have been preparing. The UN and IMF (and many other interested parties) have had think tanks working on all this for years. We can be quite sure that plans for a new global banking system and reserve monetary unit are essentially ready to be rolled out.

    Even so, when the s*** hits the fan they wont just say here’s one we made earlier. No, it will be more subtle than that and will look perhaps as if it is being worked out by the politicians; but really there will be powerful forces moving to direct the process in preferred directions.

    But that is just my estimation.

    • In 2005, the great Tiger was flying in the stratosphere?

      How many economists in 2005 predicted the dire consequences of unregulated impudent debt expansion and asset overproduction and overvaluation?

      All have sense of gravity. With the Greek one year note trading at above 150 per cent, most qualitatively know a phase transition is coming.

      Overnight what was considered an interest bearing asset will become worthless.

      There are simple empirical mathematical relationships that define gravity and how things work (interact) and most have sense that these relationships are intrinsic to the basic interactive forces of the energy universe.

      The simple quantitative fractal laws of Saturation Macroeconomics is how the system, integrated into the valuations of its various countervailing assets, deterministically evolves over time.

      http://www.economicfractalist.com/

      • dwalsh

        The insanity of the “unregulated impudent debt expansion and asset overproduction and overvaluation” was obvious to anyone who was thinking clearly. I am not an economist or any kind of expert and I could see it; so did many others.

        But that does not in any way undermine the value of your methods; and I do not mean to.

        Do you think human behaviour is entirely deterministic?
        I don’t….think it is ENTIRELY deterministic.
        Nor do I think its stochastic elements are ENTIRELY random. This is why I dont think the economy is ENTIRELY deterministic.

        In my opinion there was a definite policy coming from the highest echelons to misslead the public. Many academic and professional economists either played along or were sincerely duped.

        I do not believe those at the top did not realise what they were doing and what its inevitable effects would be.

        Either way economists who spoke the truth about the credit and asset-value inflation were generally shouted down and shutout of the media. In my own case among friends I was accused of being negative and a naysayer whenever I mentioned it. No one wanted to hear it and they got upset with me about it.

        • What if…. What if … the macroeconomic system is a patterned science?

          Debt asset-an essential element in this countervailing self balancing system : represents the the other side of money and limits asset valuation and real economic growth… producing time denominated asset valuation decay. Bad political, bad lending,and bad entitlement rules all a product of human greed – contribute to the extent of dysequilibrium, but all are organized under the self organizing macroeconomy’s very precise, elegantly simple, mathematical laws of time based limits.

          Edison, a poor incandescent intellect, relative to the fluorescent brilliance of Tesla, nevertheless knew that his simple primitive filament light bulb idea worked.
          The energy passing thru Edison’s 1000th attempted filament and transmitted as light behaves perfectly and ‘entirely’ deterministically to the underlying laws of the energy universe.

          • dwalsh

            Yes I do agree with you: although we can never conclusively ‘prove’ it, we must presume that the “underlying laws of the energy universe” are as you say entirely deterministic; otherwise I cannot see how science would be possible at all; and experience and experiment do seem to support the presumption.

            I do think it is so.

            My thought is that there is another element or factor in humans which is not part of, or an effect of, the material energy universe. I refer to that part of us, or in us, that is aware of the material energy universe — pure consciousness or pure awareness; and arising from that, inherent in it, the possibility of intelligence and agency or will.

            I know this is an unpopular position in these times; but bear with me.

            Under most normal circumstances our actions and thinking are almost entirely habitual and automatic; but pure awareness can ‘awaken’ as it were in the midst of activity and observe the mind and body function and make conscious adjustments or ‘choices’ which alter the otherwise habitual patterns.

            This is the non-random indeterminism which I suggest is not included in mathematical modelling of the economy. This is the fluorescence in the genius Tesla.

            Have you read his short autobiography? He describes how he learned to observe and use his mind in the most astonishing ways. He was able to design and test electro-mechanical equipment entirely in his mind. Tesla was a master of his mind — not mastered by his mind as most of us are.

            In our world economic agency is very unevenly divided. Almost all the investment capital pools of the world are concentrated in the hands of a relatively tiny minority. Either directly owned by them or indirectly controlled by them. These elites are above and beyond the world of toil and bills most of us live in. They own the money production system, the commodities production system, the news and entertainment production system etc. The choices and decisions of these elites are Olympian compared to those of most humans — even those we might consider very rich. I do not see their aims and goals included in statistical models…and I think they do have aims and goals…they are thinking ahead and seeing a bigger picture than is portrayed in their media outlets.

            This crisis is an opportunity for them.

          • dwalsh

            PS Lammert: None of what I am saying is meant to deny the value and use of macroeconomic systems analysis per se.

          • re: Yes I do agree….

            Human language allows description, categorization, and cause and effect supposition of external events.

            Noam Chomsky recognized this … or this was recognized by Noam Chomsky’s organic gray matter computer.

            Did human language arise for the purpose of ‘free will’ or was it a Darwinian development. For the scientist this is a rhetorical question.

            With language as part of human brain function, even Telsa’s 1 in a 100 billion ability to construct in his mind without draft paper detailed mechanical plans for the Niagara Fall generators … correspond to a 1 in 100 billion Darwinian unique pattern of neuro networks with a unique percentage and arrangement of acetylcholine, serotonin, dopamine, glutamine, GABA, and 100 other neurotransmitter receptors and their connectivity is a deterministic part of the energy universe.

          • dwalsh

            “For the scientist this is a rhetorical question”

            I think that should be – for the scientific materialist. Science is not equivalent to materialism – that is merely the current orthodoxy.

            I appreciate your replies and I will not be surprised if your forecast is confirmed shortly.

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