October 3, 2011

Welcome to the economic stagnation, 21st-century style

Posted in Sunday Business Post · 200 comments ·
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The other night, in Cork, I was chatting to a woman from Mayfield. Let’s call her May. She works in a clothes shop on Patrick Street, Cork’s main shopping street. Last Sunday, she worked all day on this prime retail thoroughfare, and guess how much she took in the till during the whole day? Well, a shop like this should be – andwas in the recent past – taking about €1,800-€2,000 on Sundays, around €6,000 on Saturdays and anywhere between €1,200 and €1,500 on weekdays. Last Sunday,May took in €60 for the entire day!

Although this example might be a tad extreme, the reality for retailers all over Ireland is one of collapsing demand. Strolling down Patrick Street last Friday morning, it was clear that everyone was struggling.Every shop I counted, from the top of Washington Street to the English market, had either ‘for sale’or ‘massive discounts’ signs on the window.This is what happens when the economy slumps.

The question that worriesMay is: what happens next? Whenwe discuss where the economy could go over the next five years,much of the discussion focuses on one of two possible outcomes: the economy will either growor it will contract.But there is another possible outcome.The economy might not growor contract; it might well stagnate. With the financial markets in turmoil everywhere and growth slowing massively all around the world, economists are mentioning the stagnation experience of Japan between 1990 and 2010 as a possibleblueprint for thewesternworld in the year ahead.

Having grown dramatically since the SecondWorldWar, Japanwent on a credit binge in the 1980s and then, following a dramatic property crash and asset price crash that destroyed its banks and its national balance sheet, Japan stagnated for a generation.The economy flatlined and the national debt exploded. One of the interesting things about the discourse among economists is the sense that what happened in Japanwas unique. It was not. In fact, economies stagnate all the time.There is nothing unprecedented about stagnation.Think about Ireland in the 1980s.

One of the most extraordinary things about the 1980s is that the Irish economy grew in nine out of the ten years of that decade.GNP fell only in one year -1986 – and even then, the fall was modest.However, for people living through it, the 1980s felt like a recession. Around 480,000 emigrated from Ireland, and thiswas in a decade when the economy actually grew 90 per cent of the time.That is what stagnation feels like, and it happens all the time all over the world.

Recent research by Goldman Sachs shows that long periods of stagnation – as happened in Ireland fromthe late 1970s to 1990 – are not so unusual.There have been 20 such episodes in the past century. Interestingly, stagnation often occurred in developed countries, rich countries, countries like Ireland. In all cases, these periods of stagnation are preceded byone of four types of crisis. The probability of stagnation increases dramatically if the country experiences either (1) a banking crisis, (2) a financial crashwith stock and asset prices falling significantly, (3) a currency crisis or (4) a war.

The stagnation is characterised by modest growth in the economy of around 1 per cent per annum. Inflation is low, and so are interest rates.However,because the economy has just experienced a crash of some sort, the balance sheet is destroyed by debt and actually needs jaunty levels of inflation towipe out the debt. Low interest rates don’t spur growth because there is toomuch debt. Unemployment in this scenario spikes upwards and stays abnormally high for long periods, leading tovery high levels of long-termunemployment – or structural unemployment, as economists often call it.

And, as anyone who has been looking for work knows, it is much easier to get a new jobwhen you have one.The longer you are out of the game, the harder it is to convince someone to take you on. House prices fall dramatically and don’t recover in the stagnating economy. They remain low for prolonged periods and, of course, the stock market gets hammered,which affects pensions.The reason pensions take a battering is that with very low interest rates, it is impossible to guarantee an easy yield.Think about it.

Take an example where the yield curve is upward sloping (as it iswhen an economy is growing and there is a bit of inflation in the system), short-term interest rates are 1 per cent,but long-terminterest rates are 6 per cent.Then it is easy for even a dozy fundmanager to generate 5 per cent for the pension fund by simply investing the pension at the long end. But if the economy is stagnant, interest rates will be very low and there will be no yield to generate the returns for pensions. This has massive ramifications for the unfunded pensions of huge semi-states and the public sector. If the economy hits a period of stagnation, how will it throw off the necessary cash to generate the money for pensions? The question is then, how likely is it that Ireland will go into a period of stagnation? It is highly likely, aswe have experienced two of the four conditions for stagnation: the banking and asset price crises.

We are also in a dreadfully overvalued currency compared to our major trading partners, Britain and theUS, and this means that to get competitive,we have to go through the stupidity of this ‘internal devaluation’.Thismeans that we will grind downwages and prices over years, practically guaranteeing the stagnation that we are trying to avoid. We are entering a period that could come to be termed the ‘Great Stagnation in Ireland’.Like the 1980s,we may achieve the statistical feat of GNPgrowth, but it will feel like a recession characterised by high unemployment and emigration. It can be reversed by applying normal Leaving Cert economic solutions to an economy, such as a managed default and a profound change in the value of the currency. If we are not prepared to do this,welcome to stagnation, 21st-century style.

What does a 21st-century version of stagnation look like? It looks like a till with €60 in it at the end of a full trading day.


  1. David, at least stagnation is a reasonable prospect. More reasonable than complete economic fallout although the two are not incompatible. Stagnation seems to represent the dilemma of the 2 extremes that we will verge towards.

    1 -Economic Fallout – where we let those ‘bankrupt’ countries and banks be liquidated, if there are any that can be restructure try but faith in financial assets is currently limited.

    2 – Continued DIP (Debtors in Possession) Financing continue i.e. IMF, ECB Funding for countries and Bond Issues at country or euro or world level to cover the bad debts of banks, companies etc (NAMA).

    I would to give another alternative but it would require honest, trust, transparency and man core values that are not present at least by those wielding the swords of powers.

  2. wills

    Goldman Sachs are one the reasons for the crisis in the first place.

    So, common sense dictates toI take what they report with a grain of salt.

    • CitizenWhy

      Goldman Sachs is made up of many parts, not all corrupt at all times. It is actually against the interests of Goldman Sachs to predict stagnation. It would prefer, as it did at the heyday of its deceitful selling, to predict great growth and wonderful opportunities, no worry about your debt or about buying its debt instruments.

      Some economic historian has traced recession back to the 1700s, analyzing them and discovering two kinds. One is the normal business cycle rercession, lastiung a few years, with growth and job recovery. The other is a credit/banking recession, broiught on by a surplus of debt and bank lack of liquuidity and lendoiing. This one takes about 15 years to recover from. The US economy is also in stagnation, but jobs recovery may never happen due to globalization and the aggressive offshoring of jobs. That would make this recession totally different from past recessions. The seemingly permanent high structural unemployment in the US has fallen primarily on Afro-American males, the young, high school graduates, industrial workers and middle managers laid off while up to their necks in debt.

      Ireland’s previous stagnation was due to its status as a provincial, primarily rural backwater where emigration is normal to business centers. During the early Celtic Tiger it became a business center. It would probably still be in good shape if it were not for the huge capital inflow (loans form EU banks) that led to foolish lending and property speculation, setting Ireland on a course, as Lewis puts it, of “selling ireland to each other,” with all the capital spent on soon to be rapidly deflating property leaving the property owners with onerous levels of debt to pay for overvalued property, a money sucking black hole if there ever were one.

      • SandyfordAl

        Not all corrupt at all times? That makes me feel better

      • wills

        If u read my comment u will notice the absence of the word *corruption*.

        Again, Goldman Sachs are one of the reasons for the crisis we are all paying for and they are profiting from.

        So, by logic and reasoning, common sense dictates that Goldman Sachs are compromised and so not to be trusted.

      • CitizenWhy

        If you are corrupt you must maintain credibility by providing some truth. That’s how a classic con game is run. The GS economic reports have generally be trustworthy though, like any report, not always accurate. I would assume that GS is right now devising “investment opportunities” that are suitable for stagnation,” some actually good opportunities, some typical of their famous, well deserved reputation for con games.

        Sober analysts have been saying that in the US investors will return to an old investment strategy, investing based on dividend yields and consistent dividend payments, with no expectation that the stock price will rise in any significant way. This type of investment favors companies outside the financial services industry. Financial services generally pay big bonuses to internal people rather than good dividends to investors. Their promise to the investor is that the stock price will rise.

    • I was asking myself the same question. Why is David referring to a Goldman Sachs report when we all know that banks are compulsive liars?

  3. ‘What Happens Next?’

    Answer : Toxic for a generation

    There is no comparison between the 80′s and now in Ireland or between Ireland and Japan or antwhere else for that matter . What differentiates Ireland from the 80′s and any other country currently is how it began in Ireland since 2000 .

    Irish Banking Fraud and Banksta-ism proliferated since 2000 and that Toxic Glue it has deposited will be a hard Scum to remove .

  4. Colin

    And what did May do with the €6000 a day she was taking in on Saturdays during the boom? Any remorse for such high markups? Perhaps she felt she deserved a bolt hole in the south of France to escape from time to time the windswept rainsoaked emerald isle? People like her were part of the problem. If clothes weren’t so expensive, people wouldn’t have demanded higher wages in the boom, which as we know helped us get into this mess.

    • crossroads

      @Colin:
      I think you’ll find she was paying massive rent and rates which hoovered up a lot of it, for starters.

      And she’s most likely still being squeezed for boomtime rents and rates by people who don’t care whether or not it’s jutified by the level of business.

    • gizzy

      How can you deduce the clothes were expensive, what her mark up was, how many people she employed etc from the article.’people like her’ is a bit harsh

    • Colin

      Guys,

      She was raking in €15000 a week. Mark Ups are huge in this industry. She was probably buying those sold products for €3000 a week. That leaves €12000. She may have employed a few min waged staff, costing €1500 a week, and VAT would be €3000, leaving €7500 a week. Rent and Rates cost maybe €1500 a week. Her electricity and other utility bills would be very low, throw in an allowance for theft, and she had the bones of €5000 a week left over to herself. And remember, you don’t need to spend money on yourself getting trained in University to become a shop owner. If you dispute this, then give me your breakdown please.

      • Eireannach

        May’s in the wrong business, in the current climate.

        As DMcW might say, “that’s capitalism”.

      • Eireannach

        David could inform May that Irish tour operators are ready to pay at least €200/day basic for an independent Swedish-speaking tour guide for coach tours of Ireland.

        May’s skill set would separate her from everyone else and guarantee her work – we have no Swedish speaking coach tour guides in Ireland, but demand is high from Swedish coach tour operators.

        So it’s a supply-demand thing. Learn Swedish, May.

        My younger brother did, but he lives and works in Stockholm.

        Anyone who bawks at this comment I would invite you, as DMcW says, to “think about it”.

  5. Colin

    In the 80s, there was emigration to the UK & USA primarily, with less going to Australia, Canada and the Continent. The difference is this time all these places do not offer a long term emigration option. Australia only want under 30s for 2 years, then its “Thanks, nice knowing you” time! Same with Canada. USA is closed, obvious reasons. The continent requires language skills that most of our unemployed do not have and are incapable of developing. The UK is treading water, very little opportunities there compared to 80s.

    So, its not quite like the 80s. The Emigration valve needs a good servicing (in the eyes of the insiders).

  6. INTO

    I attended a Pension Conference in Thomond Park last friday evening run by the INTO to listen to the advice given by an internal Advisor .The message given was ‘its up to you to make it out in your personal circumstances’.All the arithmatic was accurately given and debated likewise.

    I could not help watching the anxious eyes of those in attendance and the delema they were facing .They all seemed so cool and oblivious to the real outside world they inhabit .Their only concern was the extra pennies they might lose whether they leave by 28th February 2012 or a later date of their choice.

    Most would be receiving €100,000 and more lump sum and an annual pension of between €35,000 and €40,000 depending on grade and length of service.

    I got the ‘grey impression’ that the Advisor was trying to stem the flow of retirees and that there was an ‘Uber Agenda ‘ elsewhere .

    Nothing was mentioned about :

    Default
    Devaluation
    Frozen Bank Accounts
    Inflation
    Stagnation
    Protecting Cash
    etc etc

    Would someone contact the INTO to Tell The Truth .

    • Today I have verified that Pension Lump Sum Payments will be paid at least two months after date of retirement of Civil Servants…..this was never announced by the INTO

  7. SandyfordAl

    David, don’t sully your credibility by using Goldman Sachs as a source of information or data. To say that they played an instrumental part in the world’s financial problems, past and present, would be a major understatement.
    As Matt Taibbi referred to them “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” he’s not wrong!

  8. As ever David you are on the money. Economic behaviour can often be explained in micro economic anecdotes – the 60 euro in the till is one such example we all know of many such cases. The new legisltation on pensions introduced the other day – is only a soft ball before the end of Croke park, the pensions we cannot afford to pay our public sector – cos there will be no growth to pay them in a stagnant economy is the big issue for political economic observers – you as good as said it in this article david the money won’t be there – and I am not talking 40 years time but 4 years time.

  9. In the 80s Banks were functioning and businesses were not .

    In the 2008 – 2012 Banks are not funtioning businesses cannot .And will not for a generation.

  10. wills

    To quote a Trader on BBC last week……………

    ‘Goldman Sachs RULES the world…’.

    Check it out : http://www.youtube.com/watch?v=kpg76VjTa58

    • CitizenWhy

      Goldman Sachs may rule the world, but that “trader” has been exposed as a self-promoting penny-ante, unsuccessful, unaffiliated day trader of no significance in London. Not an insider. And not a well connected outsider. No special information or credibility from him. He was good at conning the BBC, however, so maybe GS will hire him after all.

    • thx, excellent repartee there…I missed scandal ‘front running every single trade on new york stock exchange with this high frequency trading scandal’ and will look out for info on that.

  11. We won’t have stagnation, problems are too deep rooted debt wise to ride the waves of stagnation, default will come first..get the printing presses ready:)

  12. Can you explain why most unemployed people are not capable of developing foreign language skills please?

    • (Question is addressed to Colin above)

      • Colin

        Most people on the dole are former unskilled construction workers, Breakfast Roll Man if you remember him? Now, BRM typically left school early, sometimes as early as 16. He had no interest in school, didn’t like doing his homework, viewed learning French as a bit girly. He wanted to work and earn money while he could. He didn’t consider the future.

        And Deco is right, English is a problem for them too. They seem to think that the stronger your accent is, the more masculine you’ll be perceived. A hard man.

        But if you have noticed BRM types reading the Irish Times while sipping their cappuccino and munching on their croissant at your local coffee shop, and discussing Voltaire in French, then please take a photo and let us know about this new species, Culturius Francophonius Hibernicus.

        • Eireannach

          Hilarious, I’m from Lucan, my Dad’s from working class Dolphin’s Barn. He did well in the civil service.

          I read the Irish Times, drink espresso and read ‘Le Monde Diplomatique’ or ‘Le Monde’, édition quotiedienne, which I procure in Fallon and Byrnes of Exchequer St!
          I buy one of two daily copies, and enjoy a read over a coffee at the counter.

          One generation ago, I was working class.

          Now I work as a French language tour guide of Ireland – love it. We need more Irish French-language, German-language, Italian, Spanish, tour guides for Dublin and Ireland.

          Bringing corporate clients to rugby matches, going for dinner, hitting Shelbourne PArk greyhound track – it’s nice work, and YOU can get it.

          But first, we need to acknowledge that neither ourselves nor Britain can simply foist English upon the continentals.

          The European of future will be linguistically multi-polar.

          We have passed the Anglosphere-Imperial moment. Let’s adapt! BRM too!

          We learned English before when we had too, and it stood to us.

          • Adam Byrne

            Eireannach,

            I am also from Lucan and also working class. My Dad is from Kenny’s pub in the village; that’s where he’s spent most of his 71 years anyway. He’s been drinking there since he was 14 – when it wasn’t even called Kenny’s and he’s never done one good thing for me in my life apart from making me with my mother. My mother is a great lady though, as most Irish mothers are.

            Anyway, I wasn’t that interested in languages in school, certainly not Irish (which I failed in the Leaving – I walked out of both exams after a half an hour), however I did reasonably well in French despite minimal study.

            However, I learned Hungarian in my twenties and am now very fluent if a bit out of practice over the last couple of years. I could never forget it though.

            My point is though (as I made after another article on here a few weeks ago) that anyone can learn a language, the libraries are full of free books, DVDs, tapes etc. and the internet is overflowing with language learning aides. Anyone who says they can’t learn a language is just pure idle – plain and simple. Mind you, that’s a massive percentage of this nation.

            If you can’t get a job, get off your arse and learn Swedish (or whatever) and take advantage of the bountiful opportunities both here and abroad thereafter.

            Thanks, Adam.

            PS. Any jobs for Hungarian guides? I would have thought not, Hungarians are a tight lot and they have the cheek to call people ‘SkÏŒt’ (Scottish) when they perceive that they are being stingy. A fine example of the pot calling the kettle black.

          • Colin

            But Eireannach, were you working on the sites 6 years ago and eating Cholesterol soaked breakfasts from Spar’s Hot Food Counter? That is who I’m talking about, and if you think 250,000 of them have the inclination to walk into a library, learn Swedish or whatever it is, and become a tour guide, well you’re simply deluding yourself.

          • Colin

            And you were not working class one generation ago, as you didn’t exist in your father’s working class childhood?

          • Eireannach

            @Colin

            I’m not suggesting Breakfast Roll Man can learn a foreign language. I’m not deluding myself.

            I’m saying that in principle, nothing can stop any one of us learning a new language at any time, nowever long it might take.

            That’s in principle. In practice is another thing altogether.

          • Eireannach

            @AdamByrne

            Check out the Fáilte Ireland website for a national or Dublin tour guide training programme. The national tour guide training programme is running this winter.

            I don’t honestly know if there are Hungarian coach tours of Ireland, probably a couple a year. But if you are Irish and you speak Hungarian, you could tour guide the island of Britain too by working as a sub-contractor for UK incoming tour operators.

            I can tell you that in Ireland there is a skills shortage of French, German and Italian guides, and Swedish is particularly prized because there are simply no guides for coach tours who speak Swedish.

            The best tour operator for Hungarian tours would be CIÉ Tours. French and German speakers have work all year around. You are self-employed, invoice the tour operator your day rate and agreed daily expenses (Phone, transport, car park fees. etc.)

    • CitizenWhy

      Good question. A prominent US business investor in Ireland has said that Ireland could become a very attractive place for business investment if the Irish were to focus on developing language skills in many languages, including Asian.

      Almost anyone can learn a language by immersion, as opposed to the usual classroom instruction. In some countries in Europe there are “American camps” where some of the country’s children are sent in the summer for games and fun but every word spoken is in American English. In fact they will not American hire camp counselors who can speak the country’s language. Total immersion.

      Ireland could develop similar immersion residence programs for youth and the unemployed. China is actually willing to pay to support such programs in Mandarin Chinese.

      My students relatives in ireland have gotten good summer jobs in Austria and Italy because of their skills in English and the country’s language. They started the learning in school but really learned by immersion.

      Sorry, I’m not Colin, but I thought I’d answer anyway.

      • Eireannach

        I speak fluent French and I started on BBC Languages. Fantastic free online resource!

        • CitizenWhy

          Thanks for the BBC lead. I am now using it to review my French and learn Spanish. Too bad I can’t use it to review my Latin and ancient Greek. I can still read them well enough though. Scholarship boy to a rare truly Classical High School in US.

      • “Sorry, I’m not Colin, but I thought I’d answer anyway.”

        Your answer was very interesting and helped open up the debate. “Anyone can learn a language by immersion” is spot on.

        Learning by immersion is the best way to learn any language whether it is a spoken language or a computer programming language

        Regarding my original question I know it is possible for unemployed people and people from poor backgrounds to be successful in life with the help of some educational opportunities and a bit of drive

        • CitizenWhy

          I had a bit of a learning by immersion experience when I went to Paris many years ago. On my first day I ended up speaking with some rich people and my school French worked fine. Then I went to stay at my Irish-Jewish cousin’s apartment (they were away) in the left wing district, met no foreigners, and had to speak French all the time to people who spoke city French, rapidly. The woman at the bakery looked at me like I was stupid when I talked. Then one morning I noticed that she was looking at me with pleasure, and I suddenly realized that I was speaking city French rather rapidly and I did not have to translate what she was saying in my head, the need to translate leaving a gap between my inner translation and what she was saying, producing what she took for stupidity in my behavior.

          I keep thinking of how the Lutheran Archbishop Absolom of Denmark in the 1880s (I think) solved the terrible problem of drunkenness among the Danish farming people, the drinking often leading to infanticide, as it did also in Britain, but mainly in the cities. The bishop opened residential folk schools for the farm women and their children where they were taught literacy and math and practical skills and how to make money selling items such as eggs and crafts. The women were not to return to the husbands until they stopped drinking. Seeing that the women had a real alternative to living abusively with them, the men did sober up and became responsible. Social transformation can happen.

          • Praetorian

            Females in villagers in India I think withheld sex from their menfolk, domestic violence declined, more carrot than stick approach (pardon the pun).

    • Deco

      The problem we have currently, is that many of them cannot use English properly.

      People have become dumbed down. They will only get an ediucation that enables them to produce wealth for the system. And it will never be enough for them to opt out of the “I consume, therefore I am” dictum that is being persistently fed as propaganda to the people, as the route to happiness.

      • CitizenWhy

        Admittedly many Irish speak with a difficult accent. When in Ireland touring around with my Irish uncle I would often translate what certain people were saying for him. I understood because we had many different Irish accents on my block in the Bronx!

        But a difficult English accent should not really interfere with learning to speak a foreign with a decent accent.

        Now that I think of it, perhaps some could improve their English by using BBC English. And if that upsets a person’s nationalism, why doesn’t the Irish government offer a similar online languages resource? Or, for a fee, lease and repackage the BBC resource?

        By the way (BTW for you younger folk), the BBC Spanish understandably is Castilian. Here in the USA we prefer to learn Latin American Spanish. Latin Americans tend to make fun of the Castilian pronunciation. But that’s just a minor problem. Maybe Spain will decide to switch, as Portugal now teaches Brazilian Portuguese in its schools because that version of the language has recently been legislated as the official language of the country..

        • Deco

          I am more concerned about people who are too lazy to learn how to bring any concept of preciseness to their communication. I suppose, if you start as English as your first language, then that should be the language where you can attain a certain proficiency in good, clear, precise, communication.

          Instead we have the McDonalds effect of modern mass consumerist hard sell culture. It is very good at isolating and insulting anything that is a threat to it, and which requires depth of though or analysis.

          In other words, the “dumbing-down” of public discourse, of communication, and of anything that can come anywhere near functioning as a threat to the Ponzi scheme, FIRE economy, model. Anything that can cause people to think outside the mandatory possibility that is fed to the citizen (called a “consumer”) and which regards life as an existence to support consumption.

      • Eireannach

        @Deco

        What you’re talking about here is your usual message – we in Ireland have to up our game.

        We need to be more proficient in the two passive literacies or reading and listening, but also in the active literacies of writing and speaking.

        John Taylor Gatto wrote an amazing, eye-opening book called ‘The Underground Histroy of American Education’, wherein he reveals that the best private schools in Britain and America actually teach secondary school students stuff like:

        1) Each student must formulate a personal theory of knowledge acquisiton – how do we come to KNOW something? How do we confirm if something is true or false?

        2) Each student must have a grasp of the active literacy of speaking, esp. public speaking. To this end, debating societies and clubs train young people to defend a position or make a case that they may not believe in. The most technically accomplished, well-trained public speakers can go on to become barristers or politicians (often both).

        3) Each student must understand the importance of sport and physical exercise in the conferring of grace, elegance and strength to the human form (as in Ancient Greece).

        4) Each student must have a grounding in the classics writers of Ancient Greece and Rome, and an understanding of historical development, since only through understanding the past can we see the outlines of the future.

        and so on.

        How far our secondary schools have strayed from this elite education!!

        Measured against these standards, we are mostly dumbed down by bog-standard rote learning and standardized testing.

        However, those who go to elite schools see their opportunity and go into top business and politics jobs and become the ‘Old Boys Network’ which is, fundamentally, a network of Old Boys who have been educated in the above way.

        How many Christian brothers’ schools teach kids to be skilled public speakers, for example? This is the ultimate ace up the sleaves of the elite – they have been raised with public speaking from the age of 10.

        • Juanjo R

          Sure worked with George Bush Junior! no elite boys network or use of connections went on there – that education based on pure classical values sure shone through there!

          I’m tired of your “grass is greener over the hill type” posts – why don’t you go pose, sip coffees and read a newspaper in France where you wouldn’t stand out eh?

          A psychologist would have a field day with your ‘should this’ and ‘should that’ mentality. Who pays attention to all your ‘shoulds’ in reality? all those wonderful people you hung around with for just a day? or no-one maybe?

        • Deco

          I actually went to a CBS school that was being transitioned out of control.

          In other words we were being educated to think on the basis that we would be exam candidates, problem solvers, engineers, tradesmen, business operators, machine operators, workers etc…

          Now, maybe that could have done better. But by the standards of the 1980s, and the 1990s it was as good as what was going. And back then people actually seen the connection between doing a good job and earning a living. And everybody knew from outside school that earning a living was a tough assignment.

          I never actually seen an effort to stop us from speaking up for ourselves. But there was an emphasis on doing some thinking before you opened your mouth :))) The religious orders that look after the elite, train their students to do public speaking, and to practice it a lot – and to become lawyers, etc.. I mean the places that gave us Brian Cowen, etc…

          Many of the teachers, being from humble backgrounds themselves tried to teach a bit of common sense, and a streak for survival.

          The one thing I did learn is to always watch what is happening now – because then you see the scam that is in progress and you will be able to avoid it. Now, this is contrary to the general drift of Irish society. In Ireland you are always looking way back into the past. It is like somebody reading about revalations about the ditherer, and then going out and engaging in a bidding war for an apartment in Laois. A bit of perspective. Irish intellectual culture is very accomodating to the fact that people have to make fat margins and run scams in the present tense. And therefore flogging a dead horse is an essential part of our media and public culture.

          Anyway, the way I see it, the schools are outgunned by popular culture nowadays. Basically the entire society is saturated with propaganda about celebrities, sports, lifestyle etc…. In other words the people who funded the PDs in the political system, are in control of the media. And they are not letting go. They have the genius of behavioural science at their disposal. They can “press the button”. A new set of social mores are being created based on narcism, hyper-assertiveness, borrowing, superficiality, and neglect of concern for your neighbour.

          I would not fault the CBS or the ASTI for that. They never seen it coming. Nobody did.

          • Eireannach

            @Deco

            You’re right when you say there doesn’t seem to have been a programmatic effort made to stop us standing up for ourselves, speaking, reaching for influence and power.

            I guess the main difference between an elite school education and a CBS education is that the elite kids are told to examine the key institutional forms and to device strategies to gain access to people in positions of power in these institutions – Mayors, Senators, TDs, CEOs, Heads of NGOs and so on.

            Bolshevik revolutionaries are actually instructed in how to seek election to office inside the institutional forms – a twist on standard elitist education.

            But at your local CBS, the implicit message is “these are the institutional forms, now get back to work and study hard and maybe the important people will consider your CV if you score high enough marks and get a good, relevant degree”.

            Elite school kids are trained to reach for station and power and influence inside institutions, not to seek the approval of the “powers that be” in the institutions.

        • CitizenWhy

          I can tell you that the real value of a classical education is that you never get bored. Even trivial events of the day can get your mind and feelings connecting too what you learned and imagined, and you can take up political thinking with some passion but without fanaticism.

  13. wills

    Or, even better, Max Keiser on RT…

    ‘Goldman Sachs are S*UM…’

    Check it here : http://zerohedge.blogspot.com/2009/07/max-keiser-goldman-sachs-are-scum.html

  14. Afternoon,

    Just to clarify on Goldman Research. This piece I read was a 150 years time series that their economists did and it simply evidenced incidences of stagnation. They then tried to see what were the common denominators preceding the stagnant period. This is worthwhile stuff.

    Don’t worry I hear what you are saying about Goldman as an outfit. That said, they have some very good economists doing macro work for them and it is always good to read (if you have the patience) as much as possible from whatever source to try and get a handle on what is going on.

    The overall point for us though is that a great stagnation maybe be the most likely outcome. BTW I spent some time with John Mauldin over the weekend http://www.johnmauldin.com. Interesting fella and very good newsletter.

    Best,

    David

    • Deco

      Have John Mauldin’s bootk at home and intend to read it when I get time. He has a very sceptical view of the PIGS macroeconomic picture.

      • Agree with the sceptical view of PIIGS macroeconomic picture:

        Restate above:) We won’t have stagnation, problems are too deep rooted debt wise to ride the waves of stagnation, default will come first..get the printing presses ready:)

        Worthwhile read here, but Stanford miss important point in their analysis here:

        http://aparc.stanford.edu/research/causes_of_japans_economic_stagnation/

        That point is covered here and elsewhere:

        http://www.forbes.com/2009/06/29/japan-debt-financing-business-oxford-analytica-japan.html

        “Japan funds 93% of its huge government debt internally, which is seen as an advantage compared with countries like the United States and elsewhere, which rely heavily on external financing. However, the pervasive impact of government debt on financial institutions in Japan, and on the overall flow of funds within the economy, is often overlooked.”

        Whereas Ireland to ‘stagnate’ best case scenario, will have to return to the markets same way eg Italy last week got pounded with spreads of 5.8%; markets will pound Ireland with a helter skelter of bond spreads that will mean Ireland will grow, or fail!

        Stagnation is not an option. Only stagnation in Ireland is the stagnation in water atop a waterfall of default.

        I’m wondering if David has moved away from forecasting our departure from the euro, to a more ‘populist’ stance of forecasting a long period of stagnation for Ireland?

        Interesting parallels between Ireland Japan under the label ‘Liberal Democratic Party (LDP) and Vested Interest Groups in link above, substitute ‘main governing parties’ for LDP.

        • uchrisn

          Nice link from Stanford on Japan. The one most relevant to Ireland is vested interest groups stopping the clearing of Non performing loans. Nama for example has done nothing with its non-performing loans, it is prepared to sit on them for a decade.
          “the close, symbiotic ties between the economic bureaucracies, like the Ministry of Finance (MOF), and the corporations under their regulatory jurisdiction, like banks and insurance companies – has also contributed to Japan’s problems. The interests of the Banking Bureau of MOF and the banking industry are interdependent. There is little transparency or public accountability. Information is hoarded about the actual scope of bad loans.”
          Sound familiar?

    • Praetorian

      You have to look at the good, the bad and the ugly in your game David, even the most obscure report or article can hold a little nugget of information. I am still turning over the terms: inflation, stagflation, stagnation, interest rates and coming to terms with how they all impact one another and the economy ultimately.

      Washington street is pretty revealing in terms of businesses that have gone, while the South Mall is revealing in terms of the number of professions: Estate Agents and property related businesses, legal offices etc that have also closed.

      Word on the street indicates many others are hanging on by their finger tips, but if this continues for the decade that people have been talking about, who will be left standing? Surely most of the British shops that dominate the high street will shut operations in the face of collapsing consumption and high commercial rents.

      Does have an air of year zero about it all. Anyone who didn’t manage their proftis prudently will not rue the day. Feel sorry for those losing their jobs of course, but there is a point about the high cost of everything during the boom, except one guy I know, a barber on Washington street who kept men’s haircuts at €8 (you’d be inclined to give a €2 tip on a good day bringing it up to €10) while others charged €12 and €15, he ignored the hype and got on with his side of things (the long game), guy is tipping away nicely from what I heard while more expensive places have closed.

  15. David surely if a high street retail operation was taking €1500 on a Sunday during the boom and now only taking €60 it proves that there is no necessity for whatever goods this operation is selling

    Someone with such an operation does not need my sympathy because they have had time to save and quit while they are ahead. Come off it

    Last week I passed one of those pretentious boutique type shops which was empty and the windows were papered with 50% off fliers while the proprietor was sitting at her till dripping in gold. It was a sad sight because she looked like someone who is living on a different planet

    I would rather you focused on ordinary people in this country such as those who are going without food in order to pay the mortgage rather than shop keepers who continually rip us off with grossly over priced goods

    • gizzy

      and who do ordinary people work for. small businesses employ 700,00 people in the country, surely we are not at the stage where we are calling a shop owner part of the elite.

    • crossroads

      @Pauldiv:
      Re: “if a high street retail operation was taking €1500 on a Sunday during the boom and now only taking €60 it proves that there is no necessity for whatever goods this operation is selling”.

      Does it? Or is it just a symptom of your own point that people are now reduced to focusing on the basic necessities of food and shelter?

      If you extend your rationale, we should all go back to subsistence living. Unfortunately, that’s where current policies are leading us.

      And as the ‘unnecessary’ shopkeepers fall one by one, they and their employees will join the subsistence living and below-the-poverty-line clubs.

      Most independent retailers are just ordinary people, struggling to make ends meet like everyone else, excpet that they take a risk and create employment along the way.

      • “We should all go back to subsistence living”

        Many of us are already there.

        “And as the ‘unnecessary’ shopkeepers fall one by one, they and their employees will join the subsistence living and below-the-poverty-line clubs”

        Exactly. Because people can no longer afford to buy stuff they do not need. Surplus to requirements. Austerity is forcing people to put their priorities straight fast

  16. Satan

    Europe is Hell bent on Austerity Measures (God only knows why!!!) Until they change their minds and there is a radical change to the Euro we may all better get used to it!

    • Praetorian

      Paul Krugman had an article on Ireland in the New York Times recently called ‘Ireland Triumphs’, a few triumphs like that he says and Ireland will be back to 1845.

      Ireland Triumphs!
      Or, maybe not.
      http://krugman.blogs.nytimes.com/2011/09/30/ireland-triumphs/

      • Actually, Krugman is only taking half the story into account. The chart he uses is to 2nd quarter 2011 only. What many economists seem to ignore is our austerity obligations going forward. Next budget will hemhorrhage another ¢3.5 bn from the economy, another ¢2.5 bn in 2013 to meet our austerity troika obligations under the program. We need more analysis of the effects of these deflationary controls. They won’t work! They will add to our problems and hasten default. Simples.

  17. mjm2000

    David don’t forget to leave a space between your words in your next article. Michael

    • CitizenWhy

      They are also hell bent on ritual, pretending to be surprised when Greece does not hit its austerity “targets.” They do not want to face the fact that Greece cannot hit those targets. Austerity guarantees deflation or stagnation. The negative results of austerity will fall on the middle class and the poor and chip away or dramatically reduce Europe’s social democratic gains.

  18. Malcolm McClure

    As Einstein might have said ‘Its simply a matter of Relativity’.
    Thus if Ireland’s growth rate is 1.25% and the leading economies in the world are only growing at 1% then there will be a surge of investment towards Ireland from every quarter.

    In fact economies don’t just grow gradually but in fits and starts like quanta. As Max Born might have agreed, the economics quantum is based on chance, rather than causal certainties. Quanta are governed by Heisenberg’s Uncertainty Principle. You can either measure the economy’s actual state or its momentum. The very fact of measuring an economic variable, like unemployment or indebtedness, affects the perception of analysts, because the economy does not have a definite position or path until we measure it. This is a defect of our universe, not simply some defect in our measuring apparatus.

    A consequence, of course would be to make all economists redundant and just put up with whatever happens, as we existentialists have long been accustomed to do.

  19. Deco

    Retail. Consumers have no money. And in many cases they have houses that are full of clutter already. They need to money for food, and fuel ( which incicentally have increased in cost since the crisis began). Some items are more essential than others. Others you can stretch a bit.

    Apart from that, it is obvious that the scale of the Peak suburbia build out, expecially in Retail – is killing town/city centres. Dun Leary is a prime example. Even in Dublin city, things are the recession is getting recessionier to paraphrase a muppet from Drumcondra. Now, this is a very very serious problem, in an international environmnet when motor fuel is getting more expensive, and the population is moving to the suburds. And forget the new urban movement. That was only ever about getting a certain transitory type of individual to the urban centre. For families it is extremely expensive, and only works for those who are conditioned into beleiving in the sustainability of a lifestyle that is financially unsustainable.

    Ireland, tried so hard to follow the California model of economic development, and now we are stuck in it, with a massive motor fuel consumption bill, and an expensive infrastructure to support with big empty shopping complexes on the suburban belt, and a media that is fully bought into the needs of the shareholders in these complexes. End result, is the killing of town and city centres.

    • coldblow

      I just got hold of Kunstler’s book (The Long something or other) and I’m sure he’ll have a lot to say about this. Klein’s No Logo gives another view (marketing strategies etc – I gave up halfway through, not because it was bad or anything, just I’d had enough) and Bill Bryson’s Made in America gives us the history of it all, in a readable way. Was it in 1912 or thereabouts (according to Bryson) that a young army officer (Eisehnower?) undertook to take a unit by road from the east to the west coast, to see if it could be done? Less than a century ago, to see if it was possible. Shows you how recent this phenomenon is.

      We bought a house in town back in May. I mentioned to the estate agent that we’d only need to run one car. He was taken aback and said that nearly every household he knew ran two cars. He looked at me quizzically (as they say), probably wondering if there was a business angle in there somewhere.

      I mentioned here before that my mother grew up between Ballaghaderreen and Castlrea. The latter was a mere half-mile further and as a result, by the time she left home to train for a nurse in England (in her early 20s), she had only been to Castlerea once. When little, there was only one bike in her village. It was not uncommon for a man to walk 5 miles to town to buy tobacco and set off again when he got home because he’d forgotten the matches. I was thinking last night that it wouldn’t be an altogether unmixed disaster to return to the world of darkness, death and magic. (I popped out to the dustbin and those are the words that occurred to me!)

      • Eireannach

        @ColdBlow

        James Howard Kunstler’s ‘Long Emergency’ is brilliant.

        Check out Kunstler in the DVD ‘End of Suburbia’.

        His blog is updated every Monday @ Kunstler.com.

        Another great, sobering read are Richard Heinberg’s books:

        ‘The Party’s Over: Oil, war and the Fate of Industrial Societies’.
        ‘Peak Everything’
        ‘The End of Growth’

        Heinberg is the world’s foremost, and IMHO best, peak natural resources educator.

  20. Deco

    If only we could have seen the way that the economic landsape was developing before this crisis, we could have prepared accordingly, and been better equipped to deal with a new economic dispensation that will be with us for decades.

    Actually, if you look at post bubble societies – the post bubble crash takes a very long time to remedy. Think about France after John Law bankrupted the country, printing money. Think about the Netherlands after the Tulip mania bubble. Thees things take a long time to recover from.

    • coldblow

      Even if they’d seen it they wouldn’t have done anything differently. The dream was too strong, even if they were aware it was one.

  21. Deco

    The troika are calling for more “signs” that Greece will get it’s finances in order.

    Hurray for the holders of Greek sovereign debt in Paris. Frankfurt, London etc… They must be delighted with all of this. Nice to see that all this misery is making the people that matter, happy, for a few minutes.

    http://www.marketoracle.co.uk/Article30757.html

  22. straboe1

    When we, and the other countries in the Euro zone, who are up to our necks in debt get to the bottom, then the Germans and French will offer us way out that will require us to give up our independence and join the United States of Europe. This has been the plan all along

  23. marooned

    If Stagflation was all that was ahead of us it would not be too bad. We are headed for severe deflation and not just in houses and property. And its what is ahead of us for a long time. Houses will drop to 10% of peak as will all other property prices. And its no harm really, houses and property are not productive assets, all they do is use up expensive natural resources which could be more productively used. We need houses ok, just not at the size and scale we are building them. Until Economists realize that energy is the master resource they will continue to lead us down the wrong path. Cheap energy sources are getting scarce and this makes future long term growth impossible. Take a look at energy prices and correlate them with the stock markets, they are starting to move in unison. Of course Economists are ignoring this and take refuge in possible future cheap renewable sources. This is not going to happen. Without cheap fossil fuels we would not have the lifestyle we have in the so called developed world. Our bankers/financial experts would like us to believe that money and credit is the master resource and they have taken over the World. However the next few years will reduce them to penury and all the paper assets which they control(hedge funds, pensions, all credit instruments etc etc )will be reduced to dust. And I won’t mention the coming scarcity of water and phosphorous which puts our very existence in jeopardy. Greek Irish or other Sovereign Defaults are the least of our worries.

    • coldblow

      I think Michael Hennigan reported that Irish houses are smaller than their Euro equivalents. Makes it all the worse really. What’s this about peak phosphorous? I’m worried about tea myself. I think I might buy a few packets so I can come off the stuff gradually, if it goes that far.

  24. paddyjones

    Stagflation has been a feature of our economy for the last few years and will continue for another 10 years due to high debts . This happened in Japan and will happen here . I must say the Irish are useless with money and this will result in boom bust cycles forever.
    Now the EU/IMF/ECB are in charge and it gives me more hope as the locals are useless.
    Austerity will be the main driving force of our economy for the next 10 years . It is better to get it over with ina shorter period of time and start cutting spending sooner rather than later.
    In 2013 the Irish economy will run into a brick wall when the bailout money runs out , then we will see real austerity not the piecemeal approach we have now. We will have to balance our budget then.
    After that we will have to start paying off our national debt.
    Default or leaving the euro are not options now so thats a non runner.
    So the only option left to us PIGS is austerity. If Italy can balance its budget so can we. Only another 18 billion of cuts to go.

  25. Dorothy Jones

    Stagnation?
    Not for some…..! They might have pulled down the drapes in spectacular Scarlett O’ Hara fashion with the bunravelling of their byzantine web [Justice Kelly] of companies; but the boys are back in business.
    You could not make this up…….
    Their property asset management company is expected to manage properties for NAMA and other banks.
    Interest in the Anglo HQ shell in the Docklands is evident apparently.
    This building and the stories behind it are mirror images of the underlying problems in irish society which have contributed to the current dire state of affairs.

  26. wills

    Economists working for Goldman Sachs are bottom of the list for intelligence research on economics.

    If they are prepared to take a wage from such an outfit it indicates ill judgement and compromised ethics and so diminishes the individuals research.

  27. Afternoon,

    Thatks for all the comments. Events in Greece today are moving apace, but we all know this and have known this for ages.

    Can I just come back to the subject of this piece. She was a very ordinary person and we must stop this attitude that “they deserved it” because they spent in the boom or they work in a shop. This person is on a little over the minimum wage and will be out of a job surely if the economy doesn’t turn around.

    There is no point being “investment fetishists” when we know that over 65% of any modern economy is consumption.

    If we are to avoid stagnation or deflation which is much worse, people need to feel confident to spend again. This demands a debt deal which helps the national balance sheet, new credit from new banks, inflation and a different exchange rate. Hard to see any othese things happening right now.

    Best,

    David

    • wills

      An economy based on consumption is a fools paradise.

      • wills

        Just to nail down *fools paradise*.

        Metaphor depicting that building an economy on consumption as bonkers.

        An economy of the sane and of the long-term outlook is built on *patience* and savings and delaying gratification. All three of which contradict consumption as a codex for building an economy.

        • CitizenWhy

          An economy needs to be built on both reasonable consumption and prudent savings. In both cases the essentially speculative nature of finance capital is subversive, encouraging too much consumption based on debt and endangering savings (such as pension funds) through the investment in dubious debt instruments to get large returns, or no return at all when the global “debt as savings” system collapses.

      • crossroads

        Without consumption there is no economy.

        Either we go back to subsistence farming with everyone keeping a cow, a pig, a few chickens and growing their own veg or else there has to be specialisation and trade (i.e. an economy).

        Consumption isn’t the issue, it’s the expectation of constant growth that’s the flaw.

        • wills

          No.

          Disagree.

          • crossroads

            @wills:
            I admire your brevity. So many people seem to use a hundred words where ten would do.

            However, perhaps you could expand a little and explain a world where nobody consumes the output from another persons effort and how that could be called an economy.

            If you strip back the OTT Prada/Gucci stuff you still have an essential element of consumption which is the economy.

          • coldblow

            Crossroads

            Yes, but if you pare down the number of words too much you won’t have a blog either!

    • marooned

      David,

      Until you and Economists like you start taking energy and natural resource depletion seriously then you are failing to see the source of our current plight. The current debt problems are the result of low growth now ( and forever into the future) resulting from high natural resource prices. These high costs are transferring value to the owners of the natural resources and at the expense of consumers in the so called developed world. The huge debts incurred by developed countries and their citizens trying to keep their lifestyle going when producing nothing of value is now catching up with them. The lenders are now finding out that high resource cost is choking off growth and that they will never be repaid. Debt forgiveness and starting afresh will not get rid of the natural resource problem at hand. Get used to paying more for your food, light and heat and travel costs, the necessities and doing without everything else.

      • Deco

        {
        Get used to paying more for your food, light and heat and travel costs, the necessities and doing without everything else.
        }

        Correct. The proportion being spent on non-essentials, on aggregate was maximized in the high point of the Ponzi-FIRE economic model mania.

        We are now, post FIRE economy. The establishment played with FIRE, and burnt the house down, and wrecked the entire financial system.

        • wills

          Deco,

          The Ponzi Fire model is one scam model out of a bag of scam models.

          The financial system is alive n well.

          The derivatives – CDS ponzi scam is toast, but, the financial system remains in business and is resetting itself for the next FIRE-ponzi scheme on the ready.

      • transitionman

        @marooned
        It really scares me no response to both your comments.
        ENERGY ENERGY PEAK OIL
        Please stop focusing on the wrong problems.
        I would advise again people educate themselves on the energy crisis of the 21 st century that is and will dominate the lives of the 7 billion on planet earth. Look around you Iraq Libya resource wars. Barrel of oil $140 july 2008 down to $ 35 Oct post crash. Where is it now? America is designed to operate on $20 a barrel Russia needs $120 to keep Putin going . Food prices started the Arab spring/.If you cannot have growth in the future because the age of cheap energy is over you cannot operate a global economic financial system dependent on growth. Game Over no time and no money to play a new game when the powers that be cannot have the courage to call time. There will be no new employment there will be less. If we could plan for a steady state “stagnant” economy we are in on of the best places to do it. We have an agricultural island with only 4 million on it. We have the assets to survive at a level way below our current standard, that will happen anyway. However because this is such a mind blowing negative thought “We are F**ked” .Most people will get side tracked on financial systems collapsing. The entitlement society agreement we hold for ourselves and our children is too deep in our psyche.
        Websites like Our Finite World, The Automatic Earth, Chris Martenson give an integrated view. Irelands own FEASTA with David Korowicz for scary Halloween reading. I will not post the links as this is a journey that needs to be taken with intent. Lights out by 2030 ??

        • marooned

          What really scares me is that economists won’t discuss any of the points raised. Their silence is deafening not only here but on any forum. The argument in connection with Peak Oil and Resource Depletion seems to scare them. Traditional economists are defending their own patch and refuse to get into a discussion they cannot win so they say nothing. They feel they would legitimize those with alternative views of their theories ( economics as taught in Universities at present is a theory and not a science) if they get involved in a discussion on the place of energy or natural resources in our modern lifestyle. Perhaps those involved in Kilkenomics could arrange a debate between those two David’s , McWilliams and Korowicz, thats one I would pay to attend.

        • Malcolm McClure

          Marooned and transitionman; It is clear that neither of you have the slightest knowledge about the global upstream resources behind the energy market.
          Please desist from your blathering aimed at converting us to Global Governance.

          Feasta asserts that the climate crisis demands a new paradigm of global governance. David Korowicz is merely a physicist and human systems ecologist so he is not qualified to speculate about the future of hydrocarbon suppllies.

          There is a very weak correlation between the energy crisis and Ireland’s debt crisis which was caused by human folly, not lack of resources.

          • marooned

            Global Upstream Resources mmmmmmmmmmm please educate me, I’m fascinated. What has this got to do with Global Governance whatever that is????. In relation to David Korowicz ( who incidentally I’m sure does not need me to defend him) please do not attack the messenger. Please elucidate on what he has said that you disagree with and we can discuss it further. As for me, I simply want to know where we are going to get sufficient quantities of energy to keep my kids living in any kind of comfort.

          • Malcolm McClure

            marooned: Global upstream resources are the technically recoverable hydrocarbons that lie behind your concerns about Peak Oil etc. I happen to know that there are sufficient upstream resources to last for at least three generations. We simply need not worry now about what happens after that.

            I have explained before on this blog that cheap hydrocarbon supplies depend on Politics not availability of resources. If America would agree to solve the Palestine problem the cost of oil would quickly drop to affordable levels. Optimism and economic growth depend on access to easily affordable energy supplies. If the Palestine problem were solved the world would return to boom conditions in short order.

            David Korowicz is a doom and gloom mechant. He argues that the financial system will break down following peak oil, followed closely by manufacturing, services, government and so on. His FEASTA organization advocates Global Government in its paper dated 17th September 2011. His funding, like all people spreading doom and gloom about climate change and other end of the world scenarios, depends on convincing the gullible that he has the answers.

            Do not allow yourself to be bamboozled by these charlatans.

    • Deco

      Actually, it is impossible in the context of a policy framework which has as it’s overbearing goal, the reinforcement of the balance sheets of banks in creditor countries – with the concept of a “bad debt” being expressly off the table, as far as Brussels is concerned.

      Brussels-Capitalism. Nobody loses, except the people at the bottom. But they should have been alerted to this when Brussels indicated it’s insistence of ignoring the views of the people at the bottom, after referenda in France, The Netherland and Ireland twice.

      And there will be no referenda on anything for the Greeks. They simply cannot be trusted to put the needs of the “system” before their own lives.

      We have at the moment a culture of “austerity chic” just like we had a culture of “excess chic” a few years back. A lot of it is accentuated by media organs like Pravda, who need to maintain their credibility. The classic example of this is somebody from the leafy suburbs talking to a multi-millionaire presenter on RTE, talking about shopping in a discount store. I mean if you are living in Tipperary or Limerick, and you cannot find work no matter what you do – then you will live on the cheapest of everything. But some people who are depending on superficiality for sustainance in the media sector are overdoing it, in order that the population will not be requiring an end to the TV licence levy.

      And lastly, you have the local authorities. They are killing retail with their exhorbitant rates. It is their cut. End result is substantially increased prices, and then people will not buy, because people simply cannot afford it. Local authorities are still charging binge era commercial rates, and it is ridiculous.

    • Praetorian

      Can’t spend what you don’t have. Game is up and well we know it. For a debt based economy masquerading as some Celtic Titan on the world stage, giving other countries socio-economic lessons, we now have the reality behind the biggest lie in the Western world, with the pushers of the lie totally silenced. We have the person on the minimum wage with €60 in the till, fitting indeed, given all the high spenders in glossy magazines and fashionistas.

  28. Adam Byrne

    subscribe.

  29. We’re here on Antonio Bay, Ireland, waiting to see if Greece will survive its fog of debt:)

    http://www.youtube.com/watch?v=6m31wSrpHTc

  30. Crash of the Euro is now inevitable!

    In March 1948, Germans believed their savings were secure, but he new D-Mark was already printed.

    What we witnessed in the now three years lasting undemocratic ECB monetary policy is a silent financing via the printing press of the financial Industry, camouflaged by grotesque programs such as EFSM, EFSF, or ESM.

    The ECB knows this since long, and their policy of protracted defaults is extended as long as possible, come 2013, all of ECB’s interventions will be automatically inflationary.

    The public discussion is steered and manipulated by vested interest groups, and is oozing of lies. The focus is the always debtor, whether Iceland, Greece, Ireland, etc., the debtor is the exclusive subject of reporting, where in reality, the creditor should be in the spot light, not the debtor! This is part of the manufactured consent the public is bombarded and brainwashed with.

    This always was a war from day one. You might look at it this way, the combatants are the financial industry and the people, but if you look at it this way, then you will quickly realize that it is typicalasymmetrical warfare.

    The financial Industry outweighs government representatives multifold, by numbers, intellectually, and with many more weapons at their disposal than politicos can even dream about.

    The people on the other side are represented in this war by ‘politicians’ – They truly no longer deserve this title, they are nothing but soul less compliance managers. – and they have no say in the ways this war has been fought, not a sausage. Only Iceland asked their people, no other country did.

    The construct of the EFSF and ESM is illegal, but this does not matter anymore. Every single rule that was designed to guarantee a financial stability in Europe has now been broken, from the Maastricht limits to public debt, the ban on government funding through ECB, the no-bail out provision. Sycophantically grinning politicos are happily signing their country’s economic future away.

    Political expediency is the rule now, but High-Treason is the only proper description for their activities! Parliamentary power in Europe has been circumvented, whether in Ireland or in Germany, parliamentary democracy is no longer reality in Europe’s political landscape.

    The ESFS and ESM construct will be able to allow for multiples of the funds originally agreed on, only a fool who would think that Alexander Dibelius would not be one of it’s architects in one way or the other. He is the german equivalent of Peter Sutherland, the GS vampire squid’s executioners, the financial Pol Pot’s of today!

    There will be a time sooner than you think where emergency legislation is pressed through in Europe and laws will emerge that could disallow the private ownership of Gold for example.

    The financial version of european martial law is already in the drawers and they are ready to cut away your liberties, your citizen rights and more.

  31. There’s movement to be seen in the fog, it’ll become clearer as time moves forward.

    http://www.midasoracle.org/2011/10/02/max-keiser-roseanne-barr-morgan-stanley/

    Its now evident Morgan Stanley

    Societe Generale are probably high on the list of the French banks sitting on enrmous exposure to Greek Debt. The dominos are getting ready to fall just like Lehman’s 2008; we’re moving into Societe Generale 2011 Part 11 (remake of 2008 meltdown?)

    Same situation as in 2008, banks don’t trust who might be sitting on the losses in Europe.

    http://www.voanews.com/english/news/economy-and-business/European-Banks-Exposure-to-Greek-Debt-Erodes-Market-Confidence-130198748.html

    For sure this situation cannot last. The lack of transparency and coverup stress tests won’t work. Barrossa, the federalist, who wants to stitch up Europe into an indentured union of ligatured debt payers to help the investment banks like GS, Morgan Stanley, suck their finance extracted from CDS bets on Greek Default,
    will lose.

    The G20 should write new rules preventing investment banks like Morgan Stanley from operating with illegal powers that create the kind of havoc the world is facing through the failure of this fraudulent system of banking.

    Max Keiser is right. There is too much hidden under the radar. Proper stress tests should be performed on investment banks in particular in areas such as OTC, CDS, forex. The Central banks including the Fed should be investigated and charged with the destruction of democracy. The ECB has been mismanaged outrageously over the past decade. Politicians in Europe have been conned by the bankers.

    If the bankers succeed, we have EUSSR. The smoke, mirrors and fog need to be cleared away to reveal the socialist, anti freedom from capitalism agenda of the banxters.

    Meanwhile according to David Murphy of RTE news, we are doing great, optimism, growth;Noonan’s’ We are not Greece mantra’! as GNP plunges.

    Oh yes we are very similar to Greece, in some respects we are a lot worse. In the fall of the French banks exposed to Greece. Expect to see Morgan Stanley in the contagion to fall quickly as well.

    Hopefully, the people will get their economy returned to them, from its ownership by the banks, at some point in the future:)

    Meanwhile the Euro balloon continues to get ready to burst.

  32. @paddyjones & other potential austerity priests

    The only reason italy is not breaching 5, approaching 6 in this chart that I temporarily put in my dropbox for your convenience here:

    http://dl.dropbox.com/u/4914840/spread.jpg

    is because ECB in their insanity broke their own rules and again purchased Italian bonds like crazy.

    Near Future:

    Watch French exposure to Italy unfolding, and now where Germany has 20% of their entire GDP committed to “The Pipeline”, Ireland btw. committed 20% of GDP to Anglo Irish Bank, the permanent bailout construct, a pipeline to suck continuously money from the real economy and up the arse of the financial industry, well…. it is pretty darn obvious what is happening next.

    So why don’t you just spare me your establishment parroting and look for that little box in your drawer, just remember, blue pills for the mornings, red for the evening, and you should do better.

    Ridiculous!

  33. Just a thought….

    20 Finance Ministers and their staff ‘negotiating’ with market makers, is like 20 seals negotiating with a pack of a few hundred sharks…. just add a wee bit of fresh blood.

    Bon appétit. LOL

  34. irishminx

    David,

    I was at a conference last weekend on debt. There were 31 individuals in the room. Guess how much debt there was in this one room!

    €60 MILLION

    Says a lot huh!

    • That puts the average person there with almost €2m .You must live in a big house Minx in The Schull of On Fire .

      • irishminx

        In my truth, my debt was the lowest there!
        I do live in a big house, but I have a small mortgage, as I’ve said here before & thank God I am not in negative equity.

        I enjoyed reading the number SEVEN!
        I’ve taken heed!
        Thank you & I hope all is well in your world John :)

  35. wills

    Crossroads,

    The concept of *consumption* economically speaking is generally accepted as the gobbling up of something.

    And humans gobble up stuff on a daily basis, I agree.

    But, to base an economy on this is lunatic.

    An economy surely ought to be based on something which is monolithic.

  36. uchrisn

    We should send some researchers to Japanese Universities to study their policies and where they could have done better.
    Perhaps they would say they should have got rid of their non-performing loans more quickly which would not suit the vested interests in Ireland.
    There are somethings that Ireland has an advantage over Japan.
    1. A much younger population/Young Immigrants.
    2. English speaking.
    3. Japans debt/GDP is close to 300%
    and some disadvantages
    1. Japan is right next to high growth markets in Asia.
    2. Japanese people work harder
    3. Japan has much better infrastructure and innovation and a much larger population.

    • CitizenWhy

      When I went on my free trip to China I met no Westerners, but I did meet Japanese business people who owned and operated businesses in China. The Chinese welcome Japanese investment and presence (at least in Shanghai). The Japanese I met liked the more relaxed social customs in China. I also saw some incredibly well dressed (low key) Japanese women climbing up to and walking the Great Wall of China in very high heels, no easy feat. Many of the Japanese are driven not only to work hard but to achieve perfection, including aesthetic.

    • @uchrisn

      Surprised you left out, ‘we don’t have Fukushima’.

      But I shouldn’t be surprised, I regard Fukushima as one of the greatest coverups of the last one hundred years. There is little to no analysis of its economic impact on Japan, on Japanese exports, its effects upon the global electronics industry, on the automobile industry, on local industry in Japan, the costs of cleanup.

      Most we got globally was a short trip by Pravda journalists to visit the immediate areas effected; ‘Yep, the place is wrecked, huge loss of life’ ‘End of story’ ‘Goodbye’
      journalism!

      • Adam Byrne

        How much ‘huge loss of life’ Colm?

      • Colin

        I’d be interested in this new story of yours Colm, the huge loss of life. I presume you’re talking about human life? Tell me, how many died and how was it suppressed from us all? Or are you talking about dead fish in the sea? or dead seals? or is it seagulls? Please clarify.

        • “Thought I made it clear in my post that the problem was I didn’t have a story on ‘huge loss of human life’, apparently you guys don’t know much about it either:)
          Anyways, this is best I can do, quick google, obviously there has been widespread contamination, Dr Busby’s work below shows there will be fallout, cancers, leukemia, blood disease, birth defects and his work is to mitigate this. I cant fast forward say 100 yrs to give a final figure on the mortality rates attributable to the disaster, I say ‘huge’ is fair comment by me. As to the economic effects, check out the cost to Germany of closing its reactors. So which figures do you want to pick, the one’s related to closing Fukushima, or the more controversial but on-the- table
          cost of closing down all the reactors. The industry lied to the level of safety it could provide, so it should be closed down. Total loss of life, you tell me?

          http://www.pacificfreepress.com/news/1/9760-nelles-fukushima-meltdown-update-sept-20-2011.html

          Chris Busby’s video concerns the health of Japanese children and the work he is doing to address this problem. Dr. Busby is to be commended for developing and distributing supplements (iodine, calcium and magnesium) to block the radiation from being deposited in the thyroids, muscles and bones of Japanese children. He has established a foundation if you wish to support his efforts, the only real efforts to help the children of Japan that are occurring in the world today.

          Nobel laureate leads Tokyo anti-nuclear rally

          Tens of thousands of people rallied on Monday in Tokyo to pressure the Japanese government to scrap nuclear power plants.

          Nobel prize-winning author Kenzaburo Oe, economic critic Katsuto Uchihashi, and public figures called for people to take the streets.

          • Colin

            Read your post again Colm. Its as clear as mud that you meant non-human. LOL. Now how many humans died so far at Fukushima? Simple question, you seem to have all the answers.

        • Kenzaburo, Dr Busby, ‘aheemmm, no need to worry. Put away those iodine tablets. Radiation only effects seagulls or fish or seals’, ask Colin. Lol

  37. The Number SEVEN

    Slowley The PULL begins to Hoover all around you and Suck the world about you .Gradually it will become stronger until the Full Moon next tuesday .

    Try to Break and Slow down and do so NOW .

    Watch the insanity become transparent nearby and do not participate , feel the crinkly pain surface in your body reminding you of your mortal self , observe the crazy driver daftness and record your mood swings especially from week end .

    Watch the Presidential Elections become more acrimonious and discredit the public office , try to locate Noonan holding his sore head in a dark room burdened with more than St Christopher could carry ,witness the financial walls crack and more revelations and public outcry etc .

    Fix that broken machine as it Stops reminding you to do so likewise.

    Your Life is a Time Machine that Banks try to control and the Moon never lets go .Watch their Titan Struggle on Public Stage.

    Your Name is now arriving on stage .

  38. SLICKMICK

    Net emigration in the eighties was 22,000 per annum, last 2 yrs, it is 36,000 per yr.

    • Praetorian

      My father lost his job in 1984, he had 4 kids and a mortgage, he took a chance and started his own business and never looked back. As he approaches ‘retirement’, he said to me recently that this period is far worse than anything he saw back then, in particular he talks of the levels of debt people have and the pressure that brings, he also spoke about the lack of hope in people and the very poor response of the last and current governments to what is essentially a national crisis with high paid squabbles taking place in the Dail, which has never looked more out of touch.

      He thought the presidential campaign encapsulated things pretty well, a political elite and other insiders vying aggressively for a job which costs the state too much and with very little in terms of ‘outcomes’, he thought the presidency should be suspended for 5 years and the money used for job creation, would keep 10-15 people in the country rather than seeing them taking a flight to some distant land. Collectively the candidates are spending millions, again money that could be used for a company startup if they were really serious about making a difference.

      • CitizenWhy

        Could you trust this “out of touch” Dail, and the civil service supposedly above politics, to spend that money wisely?

        On the other hand, surely it is time for Ireland to get a President committed to getting the government to focus on job creation? But does anyone really know how the Irish government can effect job creation?

        • Praetorian

          Do you think anyone in the Cabinet will listen to the President? Imagine if McGuinness gets in, after all the things Fine Gael has said about him. Looks increasingly like either Higgins or Norris, but can’t see them getting up to much, least of all leading an employment charge when so little has been done by the government of the day. The word ‘stimulus’ seems to be reserved for the own wage packets only.

  39. CitizenWhy

    Very interesting take on Europe from a strategy consulting firm. It sys the current dilemma is political in nature rather than financial, with solutions being rationalized on the basis of untrustworthy statistics.

    Among other insightful things, it says that Europe can only hold together on “a promise of prosperity” and “the myth of the rational civil servant.” In reaction I think austerity offers a dubious, far-off, mythical return to prosperity, sort of like the workers’ paradise of the Soviets, though not as extreme. And from the comments here and elsewhere about Ireland, Greece and Brussels the production of statistics by “rational” bureaucrats removed from political considerations is also mythical.

    http://www.stratfor.com/weekly/20111003-european-crisis-precise-solutions-imprecise-reality?utm_source=freelist-f&utm_medium=email&utm_campaign=20111004&utm_term=gweekly&utm_content=readmore&elq=75b1d64fffa8404e84c5b0bb6c6e6d11

  40. Morning all,

    The Euro bosses really have their heads in sands on this one. How can Greece be expected to deliver even more austerity when it is missing its budget targets on the previous “austerity lite”?

    Best

    David

    • redriversix

      Hello boys & girls

      Once again , just to remind you all that Greece will default and they will still get their next bail-out money.

      Anybody want to take a bet that German Finance minister is NOT in a warehouse somewhere dusting down the printing presses to start getting the Deutschmark going again ?

      440 Billion EFRS FUND is like throwing petrol on a wildfire.

      All hail JP Morgan because they are the only ones left standing by Christmas.

      Oh Boy,are we in the middle of a shitstorm or what ?

      Whoever heard of a Nuclear power plant’s P.R Company telling the truth ?

      W

      • Praetorian

        Have several contacts in Greece, was speaking to them this morning. National strike scheduled for tomorrow, not that they expect it to achieve anything, salaries being slashed (€540 per month and it isn’t cheap in Greece), tens of thousands of public service jobs to go, more being ‘phased’ out at a reduced salary (with no jobs to go to), property tax coming which one of my contacts said she hasn’t a hope in hell of paying so her mother is going to cover it for year one (linked to the electricity bill, bit similar to water charges soon to come in here). Current Greek government will be lucky if it survives while the cops/riot police have to be getting tired.

  41. mcsean2163

    “We are also in a dreadfully overvalued currency compared to our major trading partners.”

    Check out the exchange rates. Euro is now at a 10 year low against the yen and has dropped to €1.32 against the dollar.

  42. Mc Sean,

    My point re the currency is that the currency should reflect the fundamentals of the economy and our economy needs a profoundly lower exchnage rate to reflect our weakness. Because we are not integrated trade-wise into the Euro economy proper, we always run the risk of being dragged upwards by Germany.

    Point taken about the Euros weakness but in this Anglo/American, Hibernian wing of the Euro, the currency is just too strong.

    Best

    David

    • Anglotax

      Why not replace our Irish membership of the Euro with a New Irish Punt linked via a currency board relationship to the currencies of our two largest trading partners – USA and UK – say 80% USD and 20% GBP? Russia has been doing this as you know with the EUR and USD (we were both living there, no)?

  43. redriversix

    Hello boys & girls

    Once again , just to remind you all that Greece will default and they will still get their next bail-out money.

    Anybody want to take a bet that German Finance minister is NOT in a warehouse somewhere dusting down the printing presses to start getting the Deutschmark going again ?

    440 Billion EFRS FUND is like throwing petrol on a wildfire.

    All hail JP Morgan because they are the only ones left standing by Christmas.

    Oh Boy,are we in the middle of a shitstorm or what ?

    Whoever heard of a Nuclear power plant’s P.R Company telling the truth ?

    Would ye ever wake up !

    • A new Deutsch mark would suit us just fine, it would mean the value of the uero would drop significantly making it easier for Germany with a very strong DM to pay off our debt :-)

      Happy days anyone?

  44. Praetorian

    Fascinating scenes from the US (Wall Street), Americans really showing some metal, who said they were depoliticised?

    http://www.youtube.com/watch?v=cG_TKAJyV6k&feature=related

  45. MidasMoney

    I just love to hear marooned sing his dirges of doom, especially about peak oil etc. To such as marooned, it’s a bit like anthropogenic climate change, a new religion, unburdened by hard science. The issue isn’t about peak oil, or man made climate change. The constant of climate throughout history is change. As to peak oil? Have a read of this;
    http://www.engdahl.oilgeopolitics.net/Geopolitics___Eurasia/Peak_Oil___Russia/peak_oil___russia.html

    and then maybe this;
    http://www.engdahl.oilgeopolitics.net/print/Epochal%20Tectonic%20Shift.pdf

    Now you’re motorin!. None of this SH 1 T is accidental. The fact is, the markets are gamed, and the oligarchs are in control. Democracy is only an illusion. Look up Simon Johnson, formerly of the World Bank on US oligarcy. Check out Catherine Austin Fitts, former George HW Bush undersecretary at the HUD here;
    http://dunwalke.com/

    Check out the writing of Paul Craig Roberts, former Reagan undersecretary to the Treasury and a paleoconservative, speaks of facism being in control now in the US.

    The fact is that the system is now in freefall. It is the end of an era, there is no going back to what pertained before. The criminals, with their insatiable and evil greed, have totally destroyed the equilibrium and whatever equity there was in the system, and the system is now imploding. All the kings horses and all the kings men…..etc….We are on the cusp of a new era. There may well be a dire transitional period, which, if we survive as a species, will give us the opportunity to see if we have leared anything at all from history. We will have the opportunity to co operate together across the planet, to realise that we are all one, that love is the answer and that selfish individualism is insane. We are responsible to and for each other, and until we understand this, we will continue to destroy ourselves and our world. But this would require that people grow up and accept that trusting Government to solve problems is part of the problem. Until we stop behaving like children, only partaking in Democracy when elections come round, there in no hope of changing the system, or of transforming it after le deluge………….

    • Some very enlightening links here!
      Thank you!

    • irishminx

      You’re on the ball!

      What is awful, imho, is that it is the elephant in the room & only a few speak of it!

    • transitionman

      I read the posts I love conspiracy and the idea that the top banking political elite have a generations old game to maintain control the planet is worth being aware of but please invest your energy in solutions. The Engdhal focus on whether oil is fossil or created from heat pressure is a red herring. The deeper oil is the more expensive it is to extract. With Deepwater disaster he ignores the ecological to focus on the potential size. He also credits Merrill Lynch advice with our Bank Guarentee. Ignorance of Peak Oil is widespread look at Malcolm Mc Clure comment” I happen to know that there are sufficient upstream resources to last for at least three generations. “Right now with all banks bust and deflation setting in so a pension is not a certainty a blind belief that it will come out of the ground at a price to be useful is daft. EROEI Energy Returned on Energy Invested is more apt we are running out of CHEAP oil. As I stated above people need to invest time to educate themselves and not be put off by Bertie like comments like “Do not allow yourself to be bamboozled by these charlatans.” As for “There is a very weak correlation between the energy crisis and Ireland’s debt crisis which was caused by human folly, not lack of resources.” I never stated Irelands debt was caused by lack of energy resources I said” If you cannot have growth in the future because the age of cheap energy is over you cannot operate a global economic financial system dependent on growth. ”
      But then again my qualifications to offer my opinion on this economic blog is in question by Mc Clure
      “It is clear that neither of you have the slightest knowledge about the global upstream resources behind the energy market.
      Please desist from your blathering aimed at converting us to Global Governance.”
      This type of argument is why we will never address the problems we have we are more prone to sniping than looking at potential solutions like Default, New Punt, Local Currency ,Debt Forgiveness, Food localisation, Permaculture education.

      A link to a presentation from The Finite Planet on the relationship to growth and oil limits

      http://ourfiniteworld.com/2011/08/15/oil-limits-recession-and-bumping-against-the-growth-ceiling/

      • Malcolm McClure

        There is no immediate prospect of a growth ceiling. If Africa and South America were developed with the thoroughness and intensity of comparable parts of China, they could accommodate populations equivalent to at least ten more Chinas.

    • Malcolm McClure

      Midas Money: Your intuitive grasp that ideas about peak oil are fallacious is correct, but their rejection should not depend on Engdahl’s ideas. These have been around for a long time, and have been considered and rejected by well-qualified geochemists. There are many components in oil and natural gas but in the vast majority of fields of economic importance, conventional source rocks can be identified with confidence. Some exceptions may have migrated vertically through fractures, from conventional source rocks that have been subducted or buried beneath crystalline rocks. Others migrate from conventional source rocks by lateral migration along fractures in structurally higher crystalline rocks. These cases are well documented in the scientific literature.

      Before the end of the cold war western oil technology was vastly superior to soviet technology and Russian geological ideas had never caught up with the plate tectonic revolution. Hence. while some of their science was done to a high standard, many of their ideas required major revision once they were able to absorb the advances in modern western science.

      • marooned

        Transitionman,

        I was going to write a detailed reply to both Malcolm McClure and MidasMoney but life is too short. Anyway we all won’t have too long to wait to find out who is correct in relation to Peak Energy and its relationship with economic growth and development.

  46. coldblow

    Here are some worrying parallels from the 20s and 30s to today’s situation where the currency is put above everything else (from Karl Polanyi’s The Great Transformation (1944)). I’m not sure if he says there was any easy alternative as the way the system had evolved seemed to make the outcome inevitable. Polanyi was (of course) a Jew, though from Hungary not Germany.

    “The achievement of Geneva was remarkable in its way. Had the aim not been intrinsically impossible, it would have been surely attained, so able, sustained and single-minded was the attempt. As matters stood, no intervention was probably as disastrous in its results as that of Geneva. Just because it always appeared to be almost successful, it aggravated enormously the effects of the ultimate failure. Between 1923, when the German mark was pulverized within a few months, and the beginning of 1930, when all the important currencies of the world were back to gold, Geneva used the international credit system to shift the burden of the incompletely stabilized economies of Eastern Europe, first, to the shoulders of the Western victors, second, from there to the even broader shoulders of the United States of America. The collapse came in America in the course of the usual business cycle, but by the time it came, the financial web created by Geneva and Anglo-Saxon banking entangled the economy of the planet in that awful capsize.

    “But even more was involved. During the 1920s, according to Geneva, questions of social organization had to be wholly subordinated to the needs of the restoration of the currency. Deflation was the primary need; domestic institutions had to adjust as best they might. For the time being, even the restoration of free internal markets and of the liberal state had to be postponed. For in the words of the Gold Delegation, deflation had failed “to affect certain classes of goods and services, and failed, therefore, to bring about a stable new equilibrium” Governments had to intervene in order to reduce prices of monopoly articles, to reduce agreed wage schedules, and to cut rents. The deflationist’s ideal came to be a “free economy under a strong government”; but while the phrase on government meant what it said, namely, emergency powers and suspension of public liberties, “free economy” meant in practice the opposite of what it said, namely, governmentally adjusted prices and wages (though the adjustment was made with the express purpose of restoring the freedom of the exchanges and free internal markets). Primacy of exchanges involved no less a sacrifice than that of free markets and free governments — the two pillars of liberal capitalism. Geneva thus represented a change in aim, but no change in method: while the inflationary governments condemned by Geneva subordinated the stability of the currency to the stability of incomes and employment, the deflationary governments put in power by Geneva used no fewer interventions in order to subordinate the stability of incomes and employment to the stability of the currency. In 1932 the Report of the Gold Delegation of the League of Nations declared that with the return of the exchange uncertainty the main monetary achievement of the past decade had been eliminated. What the report did not say was that in the course of these vain deflationary efforts free markets had NOT been restored though free governments HAD been sacrificed. Though opposed in theory to interventionism and inflation alike, economic liberals had chosen between the two and set the sound-currency ideal above that of nonintervention. In so doing they followed the logic inherent in the self-regulating economy. Yet such a course of action tended to spread the crisis, it burdened finance with the unbearable strain of massive economic dislocation, and it heaped up the defecits of the various national economies to the point where a disruption of the remnants of international division of labor became inevitable. The stubborness with which economic liberals, for a critical decade, had, in the service of deflationary policies, supported authoritarian interventionism, merely resulted in a decisive weakening of the democratic forces which might otherwise have averted the fascist catastrophe. Great Britain and the United States — masters not servants of the currency — went off gold in time to escape this peril.”

  47. Adam Byrne

    Fantasy news on RTE yet again at six. Michael ‘The Eternal Optimist’ Noonan, although I don’t think he really believes his own propaganda.

    • redriversix

      Hi Adam

      Noonan looks like one of those P.O.W’s telling the T.V Camera that they are being treated fine…….What you never see is the AK 47 pointed at his forehead from behind the Camera…..!

      Josie, your right,Banks fully insured against any defaults, ,not just mortgages.

      We should really stop slanging Banks because they are the only ones who are in a win win situation….!!!!!!

    • Noonan was just being modest; in reality, we have ‘Jack And The Beanstalk Growth’ due to mass emigration driving down our balance of payments deficit:)

      What we aim for is a low multinational employment footprint with electronic banking zapping in all those zeros from abroad through the IFSC. We don’t need employment for that. Employment is too costly here in Ireland. Mass emigration is the way to grow to achieve maximum growth:)

      Bring it on, we need more loans to add to our growth, just to maximise the potential of our cycle of debt. We’re booming, look at agriculture and our exports! Another ¢6 bn of austerity and the markets will be begging us to take our bonds.

      I do need to say I am being perceptively ironic and sarcastic above! You too can share in this boom. We are all in this together. Yes, you too (U2:)) will be invited to visit the Park. We can all do this austerity if we pull together.

      No sneakies from the AIB trying to boost the new chief executive salary beyond ¢500,000 with an extra pension topup sneaky, or a new sneaky, hidden benefits package, or on retirement, a golden goose lumpsum extra annual salary bonus, no more sneakies, now. We’re watching you. How long does it take to tell us what his salary is going to be, anyway? Lol

    • Pedro Nunez

      Noonan’s syndrome is misdiagnosed ‘Stockholm Snydrome’

      http://en.wikipedia.org/wiki/Stockholm_syndrome

  48. All irish mortgages are insured. Twelve months and one day after default the Bank can cash in on their mortagage insurance to the full amount.

    They will STILL chase you for the money eventhough they have been paid and got the house back off you.

    Sweet business for some hey!!!

    • In that case why have not the legal advisors claim on behalf of the borrowers that the premium paid by the banks ,to cover the loss of the loan defaulted by the residential borrower , has been financed by the borrower in the first place and that the borrower be seen to benefit from the Extraordinary event that caused the default in the first place ?

      I have now established on this Forum a case of Double Jeopardy suffered by the borrower and hs loan should be seen to be paid up in full.

      Oh Lord Give Us Your Garlands !

      • I see your point, it would raise Double Jeopardy, I’m not sure insurance covers Josey’s point re insurance. I vaguely recall in the US or Europe somewhere they insist on you taking out insurance to cover the inability to pay back mortgages due to negative equity or loss of employment; in Ireland unless the property is damaged through fire or hit by falling Nasa satellites insurance doesn’t come into it?

        It would be interesting to hear someone in the insurance field with expertise comment on this.

        • should be ‘not sure insurance IN IRELAND..’

          • I am 100% sure of this from a reliable source. Also I was told that the bank has sold on the promissory note you signed for the house i.e. the mortgage, to other banks.

            So the bank gets money from you til you’re bled dry, they get the insurance claim on your mortgage and they have sold it on in the markets.

            They get paid at least three times and still retain the property!!!!

            But wait there’s more!!!

            According to fractional reserve banking a bank can lend out only ten times of what they have in reserve i.e. on deposit, so to “lend” you the money for the mortgage they ask you for a 10% deposit thus covering them for the need of any deposit on their behalf. After which they wave the magic wand and bring the loan money into existence.

            I’m assuming everyone hear already knows this right???

            Anyway here is an rte video from the past to explain it better than I:

            http://www.youtube.com/watch?v=a37sRjkLtWw

          • Josey,

            I’ve seen the video and am very informed on how fiat money works, however, though broadly speaking you are correct, you need to fine-tune your understanding here a little bit more. In computer programming there is a concept called an object and another concept called a pointer to that object, which is a pointer to a place in memory where that object resides. People mix up the meaning of both. I suggest to you you are mixing up a plain vanilla mortgage secured by contractual repayment obligations and title deeds and another piece of financial paper the bank creates, lets call it bundleOfToxicMortgages SuckerInvestments OTC, which takes a load of these and sells them on, to another bank or financial institution eg Morgan Stanley. The latter piece of financial paper can get traded and further bundled into another OTC made up of loads of OTC’s similar to SuckerInvestments above, and gets sold on to eg a European Bank,eg Societe Generale.

            Lets assume the mortgages upon which the financial instruments above fail and the OTC’s fail. Whoever holds the OTC gets caught. Lets assume the government makes up the capital losses incurred by the bank holding the OTC. Firstly, usually the bank owning the original mortgages in unaffested by these losses if they’ve managed to sell them on. Lets say they havn’t sold them on and the bank holding the original mortgages or an OTC based on these mortgages gets burned because the mortgages are non performing. Lets say the government makes up these losses. Your argument is the government has bailed out the bank, so the bank pursuing the mortgage owner is going to get paid twice over. But my understanding is the recapitalised portion of the mortgage the government replaces merely returns the capacity of the bank to point to that mortgage as an asset, even though it is non performing, and to reclaim that mortgage as an asset. The bank holds a guarantee or insurance against the loss of that mortgage; if the mortgage gets repaid, the guarantee or insurance is not called against that mortgage. The bank can use that guarantee money elsewhere. Its therefore in the interest of the bank in pursuit of consolidating its lending and securing profit to pursue outstanding loans against defaulters. That’s my own understanding of the process, feel free to correct or fine-tune my own understanding of the process if need be:)

          • Double Jeopardy

            We NEED Answers NOW

  49. redriversix

    Hands up who believes we have.. 1% growth ?
    Our Government is either Drunk , stoned, or both.
    “Can they really believe the crap their selling to themselves and to us”?#

    It is truly laughable were it not so serious.

    Greece falling apart in front of our eyes which diverts our attention from France.Germany preparing to relaunch the Deutshmark , Dexia Bank in Belgium has collapsed.

    Currency values are swinging wildly, Oil below a hundred dollars a barrel when supply is greatly reduced.!!!!!

    I could go on but its really not worth it, what you and I are looking at is the “Perfect Storm” ending with the collapse of the euro and the European Union as we have know it.

    We are not Sovereign Countries anymore but mere pawns on a financial battlefield.

    Maybe we should be nicer to J.P Morgan , they might give us a job someday..

    Its too late Folks , we just have to ride along and see were we end up.Maybe we should “OccupyDailEireann”..

    Before we go quietly in to the night………

    Take care of yourself and your families first.

    “the first casualty of War is Innocence”

    • Praetorian

      Good to know our State media is on top of things. Mid-afternoon saw a radio report from the place where ‘the Guinness book of records originated’

      Maybe Ireland will make it in the great book for default which was reported after the event, a bit like the IMF not being here, cheapest bailout in……..

      • Deco

        Just wondering did that record breaking loss statistic from Anglo Banglo put us in the Guinness Book of records.

        We have the highest rate of private sector debt in the world per capita – and it is concentrated in a certain generation. A generation that used to be as confident beyond comprehension, to the point of ebullient even about a disaster. Surely, this merits an entry in the Guinness Book of records. What about the soaring substance abuse epidemics ? worthy of a mention. What about all the booze that was consumed in the binge era – when the boom was getting boomier ???

        I think we need to stop focussing on sensationalist, attention grabbing headlines, and instead concentrate on important stuff like finding jobs for our young people, sorting out the suicide problems, the substance abuse problems, and the abuse of the elderly that exists in “regulated” parts of the HSE.

        We need to get the simple mundane stuff working in this country – and avoid all the bull….

        • coldblow

          Guinness Book of Records. Nice one!

        • Colin

          Your call is a very noble one Deco, but I can sum it all up for you succinctly. We, as a nation, a people, a community…..we’re fcuked! And we’ve only ourselves to blame! There is a solution to our problems, but our insiders and media sponsors would be in uproar. The first thing I’d do would be ban the very mention of Guinness on the TV, Print and Radio, along with all other alcoholic beverages. Then. I’d instruct Pradva to stop importing sports and soaps (Get Cable TV in if you want it), and show real life TV, like documentaries like “A day in the life of an Alcoholic who has lost everything”, or a debt junkie, or gambling addict, or suicidal people. Its time to face up to all our problems in society.

          Then, jobs strategy, public works, tell the IMF we’re gonna complete the Western Rail Corridor all the way, build an Atlantic Motorway from Rosslare to Letterkenny via Waterford, Limerick, Galway & Sligo. Extend Dart to Airport, scrap Metro North and Metro West. You wanna work on this, you do a maximum 40 hr week, and get paid a max of €15/hr even if you are a Senior Civil Engineer. Ditto for Water Treatment, Wastewater Treatment, Broadband, Electrical Grid infrastructure, etc…. Improve it all!

          • Adam Byrne

            I am fully with you on the Guinness thing Colin. Get rid of the disgraceful commercial promotion of ‘Arthur’s Day’ (give me a break) and the putrid, patronizing guff about ‘This is Rugby Country’. Piss off with your poncey rugby and your poison drink that is killing this country.

          • +1
            Hate that rugby ad with a passion!!!!

            England is rugby country not Ireland.

            Play your part by drinking Guinness, yeah right, FFS!!!

    • coldblow

      Are you referring to the “Perfect Storm” chapter in David’s Generation Game, predicting this was all coming down the line? My heart sank when I read it, shame it had to happen.

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