October 17, 2011

When will the penny drop?

Posted in Sunday Business Post · 219 comments ·
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The economies of the eurozone desperately need to start growing again, but the very currency that binds them is also acting as a straitjacket to growth
Do you want to know what bank recapitalisation looks like? I am sitting opposite it right now. It looks like two well-heeled French bank executives, in matching rimless Armani glasses, scanning spreadsheets nervously in the foyer of the swanky Bonnington Hotel in Dubai.

They are here looking for money. They have been sent here from Paris to get cash from the Arabs. This is the human face of the mad grab for cash that is going on all over the Gulf as Europe’s bankers turn to one of the few places in the world with enough money to bail them out. Obviously, the French will hope to have bagged the swag by midweek so that their clubbable chairman can clear his throat and announce solemnly on RTL that the bank is ‘‘well capitalised’’.

This is what Europe has come to – down here in the Gulf with the begging bowl looking for capital and prepared to give almost anything away to get it. This is the endgame, and Arab money alone won’t solve it.

A few years ago, this column wrote that the euro would split up because of the inconsistencies of having a currency union in an economy that was not suited to it. The inconsistencies are not limited to the fact that there is no political or fiscal union, but extend to the deep demographic, cultural and industrial divergences that are so wide that no amount of integrationist cheerleading from Europe’s elite can possibly mask them. Of course, questioning the euro back then was tantamount to treason – a bit like questioning the property jamboree a few years earlier.

Anyone in the Gulf with a long enough memory will remember that this has happened before, and the solution to the crisis then, as now, will be massive write-off of debt all across Europe. Without debt write-off, we will get political and social implosion.

Make no mistake about it – Europe is the Argentina of the global economy. By this, I mean what is happening in Europe now is exactly what happened to the emerging markets in the 1970s and 1980s. The common denominator in each episode is oil and the Gulf. If you want to know how the world works at a certain level, all you have to do is follow the money.

In the 1970s, the first oil shock led to a massive transfer of wealth from the West to the Arabs. The Arab economies (out-side of the oil industry) were too weak to absorb all this cash, so they deposited it in the international banks. The international banks needed to lend this to someone, but the Europeans and the Americans were in a recession caused by the very spike in oil prices which led to the Arab windfall. So the banks needed to find other borrowers.

They found what were called then the ‘‘less developed nations’’. These were the commodity-rich countries like Argentina, Brazil, Mexico and the likes of Zaire. These countries proceeded to blow the cash on all sorts of stuff, such as the 1978 World Cup and the epic Rumble in the Jungle, for example. Anyway, whatever it was spent on, when the creditors looked for their money back, there wasn’t any. Citibank – the biggest lender – was bailed out by the US government, and the eventual solution involved massive debt write-offs. These write-offs were made legitimate by the US government’s Brady Bonds scheme, which swapped old debt for new debt and the old creditors took a massive loss today in the hope of being paid something tomorrow.

Crisis over. I spent some time working in this Brady Bond market for the very same French bank that tonight is being represented by my two neighbours wearing Prada and sitting across the opulent foyer. What interested me was the fact that the banks that had been burned by the likes of Brazil and Argentina didn’t walk off in a huff after they had been told that they would not be paid back. On the contrary, they were fulsome in their participation in the new debt market. If you want evidence that the market has no memory, it should be this.

The Arabs were paid in full by Citibank – with the help of the American taxpayer. Today, oil is again a factor in Europe’s debt crisis. Again we see the massive increase in the price of oil from 2000-2008 filling the Arab world with money. This time, much of it was spent at home. As I look out my hotel window at this gleaming new city, it is easy to see where it went. But like the last time, this new cash also injected liquidity into the global economy, and Arab money went looking for a home.

One of the homes was, of course, Europe, and particularly the eurozone. As the Arab money linked up with cash from German savers, it created a wall of credit, which was lent out to fuel the Irish property boom, the Greek budget deficit, the Spanish condo craze and governments all over the eurozone. In fact, almost anyone who wanted cash could get credit. The banks thought they were invincible. Then – at its most simple – someone asked for the money back and, lo and behold, there was none. Initially, Germans asked for money back that they had lent to Ireland, and discovered that they owned a ghost estate. Now that experience has been repeated and the lenders – both European and foreigners – realise that they are not getting their cash back. It’s all spent. It’s all gone. So now the share prices of banks have collapsed as investors understand they are not getting their cash back.

Equally, even if Europe does come up with a Brady-style plan, the missing ingredient is growth. Without economic growth, no debt deal will work because only growth in the future will pay off the debt. It is beginning to dawn on everyone that the euro is a straitjacket. It makes weak economies like Greece too expensive so they can’t export enough, and it makes strong economies like Germany too cheap so they export too much.

The currency reinforces the initial inconsistencies. The only way out is either a United States of Europe, where Germany pays the bill and calls the tune, or the reversion to national currencies.

The banking crisis is only the start of this long process. In a sense, the French bankers here in the Gulf are only fooling themselves if they think that a few hundred billion dollars of Arab money is going to solve the problem.

This is a problem at the heart of Europe, and its outcome will define the European Union for a generation. Without growth there is no EU and with the euro there won’t be enough growth. The currency that was supposed to gel Europeans together is driving us apart. When will the penny drop?


  1. PIRATES or… Scooping the political capital

    Preacher man no tell me
Heaven is under the earth
I know you don’t know
What life is really worth
Isn’t all that glitter is gold
Half the story had never been told
So now you see the light
You stand up for your rights

    Robert Nesta “Bob” Marley 1945-1981 – Peter Tosh (Winston Hubert McIntosh – Grins) 1944- 1987

    It was the last song Bob ever performed on stage 31 years ago.

    x x x x

    Exactly one months ago OWS started. What has been achieved? What are the dangers? What are the future options?

    It has to be said that even before OWS started, the Indignados marched in Spain and other parts, but this is not about who came first, important is that someone started to get out there and practice basis democracy.

    Captured politicos around the globe are playing since a long time now into the hands of vested interest groups, mainly corporations and banks. The instrument of lobbyism is the underlying process that allows laws for cash and other fascinating phenomenons to undermine and destroy democratic principles.

    Movements and protests around the globe are increasing. In Israel demonstrations happened to express their discontent with the establishment, discontent with the fact that four Tycoons and the surgically attached leaches of rich and super rich families are in control, the expansionist and illegal settlement policies and more.

    Even in Dublin, and I do not mean that cynically, but it has to be that that for a deeply reactionary society like Ireland, it is heartwarming to see even protestors arrive in Dublin and camp out in Dame Street.

    The right wing fringes in USA and elsewhere started right away with their campaigns of slander and attempts to discredit the protests, no surprise really. I guess the tea party is somewhat miffed now, so what?

    Some spoke of a media block out, and in deed, it could be described, and even worse, some mainstream media attempt to marginalize the protests, but we live in times of the Internet and global communication, so it was clear that a counter movement to the established and politically captured media would be launched.

    To date, a full month after it started in NY, I wondered why David McWilliams was 100% silent on these events, although I do not know what he might have published last sunday, October 16th, he published many articles since middle of September, and not a single word he wrote to acknowledge the movement, he offered no support, or critical perspective on the events.
    So I thought I offer him an opportunity to do so with his Kilkenomics show and suggested to give the public a chance to decapitate Irish traitors on stage for a small fee and donate the proceedings to Occupy Dame Street or alternatively to the fund for impoverished Keynesian economists instead, his choice. He wrote back, expressed this to be a nice idea and to forward it to his team that deals with the logistics and organization of Kilkenomics,

    I am not sure though what exactly he thought to be a nice idea, the decapitation of Ahern, Cowen, Fitzpatrick, Drumm and others, and now I really wonder, perhaps I should not have mentioned the fund for impoverished Keynesian economists. Hmmm?

    x x x x

    Seriously though, what can be observed since a few days is remarkable but I fully expected this to take place.

    The right wing fringes rather ignored or now started to slander the protests, and the rest?

    They sat back and waited. They waited, for what?

    This the easy to explain, the established parties observed whether this can be politically exploited, they waited to see whether the movement gains numbers and shows enough persistence. Then they started to act.

    They started to express solidarity. They started to express understanding and support for the grievances and criticism that slowly becomes more eloquent and precise, the lack of which was highlighted constructively by many, including Matt Taibbi

    http://www.rollingstone.com/politics/news/my-advice-to-the-occupy-wall-street-protesters-20111012

    There are great and inherent dangers in this new found solidarity amongst the establishment, elitist Infiltration.

    Infiltration does not only happen by sending out agents provocateurs and start violence to discredit protests, it also happens by means of faked solidarity to scoop up political capital.

    Have we not witnessed exactly this pre election phenomenon by the established opposition parties in Ireland? Today, nothing is left from the pre election talk, it was nothing but waffle on the same purpose, scooping up political capital.

    Today these outspoken critics of the FF/Green betrayal on the citizens of Ireland do what?

    They execute Banksters marching orders, issued by ECB and IMF and their executioners the unaccountable EU commission.

    This danger from this Infiltration is much greater than the establishment’s agents provocateurs on the streets, or police violence in the US. Politicos in Europe now see an opportunity to use the people who occupy places in Europe and around the globe for their advantage.

    This establishment has been fed from the same trough for decades, all of them and they failed to protect democracy and their citizens, they sold us all out.

    x x x x

    The chances are to be seen in the formation of new political parties, the Pirates are one of this new phenomenon, they won in the Berlin elections, they are strong in Sweden, and are an expression and reaction to many of the sentiments expressed by the occupation movement.

    Remember Gráinne Ní Mháille – Grace O’Malley, the Irish warrior women, the sea queen of western Connacht, the Irish Pirate?

    I would propose to the good people of Ireland to establish the Irish version of a Pirate Party.

    What the established parties in power for too long now grasp as an opportunity, can be used at the same time to start establishing a democratic movement that has no interest in bowing to a European totalitarian system that betrayed them from day one.

    A political party that is inclusive and not based on the ridiculous and anti democratic whip system, a party that is from and for the people, and not from and for corporations. banksters and their lobbies, a party that acknowledges the peoples wellbeing as well as global responsibilities and ethical principals to be the guiding forces at it’s core, a party that stands for political honesty and accountability at all times, a party that strives to build an Ireland that many of those who gave their lives in the struggles dreamed about, a party that rejects the secret and anti democratic behind closed doors politics performed by the established political parties.

    A party that acknowledges our environment to be protected for future generations and not to be exploited by predator capitalist interests, that refuses to be the extended arm of corporations and other vested interest groups.

    This party is on my mind since a long time now, and it is the first time that I write about it here in public, so allow me to plant this seed, this idea, this dream now and here, and hope for it to develop some roots over time.

    I shall finish now with a Greeting to the people who hold out in the camp on Dame Street, thank you for being there! The global activism we witness at the moment is reason for hope, and this they achieved already, by all means, their ongoing attempts to break the political ignorance of a consumerism captured and paralyzed by fears society can only be applauded.

    Best
    Georg

    • Great post Georg.

      The American Spring is well under way and I predicted
      on this blog a while back that once the American public woke up and took action it would spread across the world.

      This is happening now and at the weekend there were riots in Rome and other cities that according to the Irish media never happened. As a point of interest go to the Irish Independent web site and a take a quick glance at the contents. It is full of junk and looks like a comic aimed at teenagers and adults with very limited intelligence. It is pathetic

      Like I said yesterday if people want to know what is really happening there are other sources of news out there that are not afraid to rattle some cages

      Tough policing fails to deter New York’s 99% (video)
      http://rt.com/news/occupy-wall-street-police-983/

      • I no longer read the Irish Independent or the Irish Times, but I had a look as you suggested, and I am afraid I have to throw up when I get Bono and Clinton, Gallagher and Mitchell as well as three advertisements for Dubai and the Emirates, or a report about footballs richest owners and player fired in my face.

        I would not wipe my butt with these any of publications.

        • uchrisn

          Its interesting to find links from this site to many alternitive media sites. By in large the main Media is run by the rich. The CSmonitor was reccomended to me by a U.S. friend they had daily frontpage coverage of the oil spill which was not well covered in other publications. Also they are covering the occupy movement daily.
          Hopefully as more and more people use the net we can have more independent media, as we are now, and also independent campaining for elections.

          • CitizenWhy

            I would suggest Al Jazeera as one of the best sources. It streams on the internet free.

          • Aljazeera’s new Boss is is Sheikh Ahmed bin Jassim Al-Thani, not a journalist by trade, but member of the Emir’s ruling family in Qatar.

            it appears american interests have greater influence in Aljazeera now.

        • Our media is owned and run by people who have a vested interest in making sure the population is turned stupid by trash news. The politicians are corporate puppets and traitors to democracy

          Here is a video from Alex Jones that the Federal Reserve are threatening to take off the air

          Federal Reserve Tries to Censor Infowars (Video)
          http://www.activistpost.com/2011/10/alert-federal-reserve-tries-to-censor.html

          You wont find news like this in conservative Ireland

          • I saw it, and yes, people need to be told this BS, the FED looks like a state run institution in deed, and on purpose, however, the FED is not the tip of the iceberg, it is the Bank for International Settlement, Worldbank and IMF.

          • The Board of Directors has at present 19 members (September 2011). The Board has six ex officio directors, comprising the Governors of the central banks of Belgium, France, Germany, Italy and the United Kingdom and the Chairman of the Board of Governors of the US Federal Reserve System. Each ex officio member may appoint another member of the same nationality. The Statutes also provide for the election to the Board of not more than nine Governors of other member central banks. The Governors of the central banks of Canada, China, Japan, Mexico, the Netherlands, Sweden and Switzerland and the President of the ECB are currently elected members of the Board.

          • Alex Jones interviewing Max Keiser on his Sunday radio show

            Naomi Klein back on the scene playing a main part in the Occupy Wall Street campaign. The federal reserve is the nut to crack because that is where the bankers get the power to own and control the US Govt. Corporate entities are supporting the campaign! I smell a rat

            http://www.infowars.com/

          • dwalsh

            Good link Pauldiv :)
            Alex is a hoot.

          • dwalsh

            @ Georg

            So basically it’s a privately controlled global cartel of central banks.

          • The Fed and how it operates is well worth comparison with the ECB, ECB is FED light, and we’re finding out FED light doesn’t work, its powers of oversight of its member regional banks rank much more powerfully than the equivalent powers of the ECB over its national Central Banks, eg ICB which spawned much horror eg Anglo:

            “http://en.wikipedia.org/wiki/Federal_Reserve_System

            “The Federal Reserve System’s structure is composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous privately owned U.S. member banks and various advisory councils.[8][9][10] The FOMC is the committee responsible for setting monetary policy and consists of all seven members of the Board of Governors and the twelve regional bank presidents, though only five bank presidents vote at any given time. The Federal Reserve System has both private and public components, and was designed to serve the interests of both the general public and private bankers. The result is a structure that is considered unique among central banks. It is also unusual in that an entity outside of the central bank, namely the United States Department of the Treasury, creates the currency used.[11]

            According to the Board of Governors, the Federal Reserve is independent within government in that “its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government.” However, its authority is derived from the U.S. Congress and is subject to congressional oversight. Additionally, the members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system’s highest-level employees. Thus the Federal Reserve has both private and public aspects.[12][13][14][15] The U.S. Government receives all of the system’s annual profits, after a statutory dividend of 6% on member banks’ capital investment is paid, and an account surplus is maintained. In 2010, the Federal Reserve made a profit of $82 billion and transferred $79 billion to the U.S. Treasury.[16]“

        • rebean

          It will take a while for the Irish to riot. They are too cosy in their jobs or they are too afraid to upset the applecart. We are a sad nation and we have alot of our protesting educated out of us . Its that religion you see that old catholic guilt coming back . We cant think for ourselves. Hey was that Argentina that bankrupted itself too. Were they into that old guilt too. Ah we need a bit of revolution the French were good at that along time ago but were ridiculed for their republicanism. It seems to me its every man for himself now and the guy with the biggest cohojones will survive. Its high time we had a revolution

    • gizzy

      Couldn’t agree more with the need for a new political party.How does it make an impact and how do you break the hold the permanent government have over the country with their teams of advisors and the legal system that builds rigidity into our institutions and state employees and stifles change at every turn. Met some good young politicians in the existing parties who are in the Dail but still cannot influence effective change. By the time they have served their dues they are institutionalised and burnt out.

      • I am not saying it is easy, but I refuse to think it can’t be done. Berlin was a good example, they came out of nowhere, and they have the establishment trembling in their boots.

        • People all across the world are wakening up and change is under way. The old establishments can and will be beaten but not on this piece of turf

          Too many selfish people care only about themselves and are preoccupied with infantile priorities such as how much interest they are paying on their mortages

          This thing is far far bigger than any individual and people across continental divides have found a common cause and this is what it scaring the crap out of the old establishments

        • gizzy

          Oh i agree, just be prepared to dig in for a long battle, I have never being politically active but know now it is not possible to sit on the fence anymore

      • Deco

        Actually, I reckon we need several new political parties.

        As much diffusion as possible. And as much competition as possible.

        Imagine if you went to a shop and there were only three brands of cheese, and they all left a bad taste in your mouth afterwards.

        The existing political parties, and the vested interests that they dutifully serve, have every reason to prevent any new political parties/options existing.

      • rebean

        You need one representative in each constituency. The people vote and you have the balance of power in a dail vote in the ideal world. you set down your policies and stick to them. No bullshit no deviation and bring the govt down if needs be and start again. That way people know you are for real and the next time you will get more votes

      • astainexile

        One way I believe is if some credible people from the media stop trying to mask their inability to truly understand what is happening in the global economy through the use of jargon and rhetoric that very few ordinary people understand or can relate to in terms of how it might affect them personally. Radio and TV interviewers do not seem to know the right questions to ask nor the right people to question. If the ordinary man/woman in the street could really understand how the actions of those in the upper stratosphere of wealth affect the rest of us minions down on the ground, I am sure it would help to mobilise them. By the way, I am one of those who frequently listen to political and economic debate and find myself none the wiser at the end. However, occasionally when I do hear a response or comment that makes sense, I realize that I am not totally stupid after all.

    • dwalsh

      Good stuff Georg

      What is most heartening about the ‘Occupy’ movement is the peaceful nature and global expansion of this phenomenon.

      The emergence of a new expression and level of integration in the noosphere perchance?

    • Perhapx

      Good post Georg, thank you. But can you explain more about this new party. I too am deeply troubled and frustrated by the lack of real democracy. What would make your new party any different, apart from their aims, dreams and aspirations. How or why could another party make a real difference. How would it provide more democracy.

      I do realise that David is an economist and economics the main topic so how far can we go off topic on this blog. Can you tell us more without breaching the ‘off topic’ rules.

      • Too complex to start discussing here, the blog is really insufficient. In a nutshell:

        I can see seven emergency tasks to be tackled for and by the people:

        1. Food & Water
        2. Energy
        3. Shelter
        4. Health
        5. Education
        6. Work
        7. International Relations

        Then structure into sub groups
        1.1
        2.1
        and so on…

        It is the people who need to start to get their heads around this, no one else will. Otherwise they continue to sell us and the resources out to the wolves.

        The Banksters and Corporations are one thing, the political class however, is an entirely different matter, they have proven over and over again to be incompetent, focussed on secrecy, behind closed doors arrangements and serve one interest only, maintaining power, this counts of all of the established parties, no exception!

        • and for crying out loud!…. ditch this sorry piece of a constitution that is there to protect the political class and not the people, and write from scratch.

          I just saw some excerpt of the last frontline…. I mean…. just have a good look at them, really!

          • Perhapx

            In that new constitution, can we please have it structured into sections so that the most important rules are in section one (or even in the preamble if necessary) and these rules trump every rule in following sections. Rules in Section two trump all beneath it and so on.

            And in section have a rule that allows TD to be replaced by another party member at the wish of the Cumman. That is give the power to the Cumann and not the TD. Much like the Taoiseach can be removed when needs be. That is we vote for a party/manifesto rather than an individual. As it is much more difficult to corrupt many.

            Then I have an idea for a new party that could benefit from such a rule. Its called the HomoGenius Party.

          • Perhapx

            Oops, that should read ” And in section one have a rule that…”. Sorry

    • astainexile

      You are singing my son Georg and I only wish that your vision for the type of political party you suggest could be realised. True democracy operated by people who have a vision beyond the development of their own personal wealth is the answer and is what the ordinary people of the global uprisings are seeking. People power is the most effective instrument of change so we must get out there are demonstrate it.

  2. CitizenWhy

    If they want to recapitalize the banks, why don’t they deposit a certain amount into the accounts of all depositors. Money to the people first, and, through the people, to the banks. You could even have a rule that the money must stay in the account for at least one year.

    • dwalsh

      Excellent suggestion. I would be willing to volunteer to hold such funds.

      Also just think of the juicy profits to be made in personal loans on these funds as collateral; not to mention the derivatives spin-offs.

  3. wills

    David,

    Synchronous trip to Dubai so :-)

    The banking / financial industry are *addicted to eazy money*.

    They will do anything to keep the eazy fake money good times rolling.

    Its become a crisis of mental derangement at the top.

    The article defines the crisis reality a-z and brings it up to the here and now.

    The game players though are bent on preserving their hollywood glamour lifestyles though.

    And they are, so far.

    WIll they hand in the keys of their Gulfstream Jets and get the bus.

    They will go down with the titanic before that reality ever even threatens to emerge.

    • wills

      Imo / In my opinion.

    • EMMETTOR

      Yes, the game players will go down with The Titanic and perhaps this is the only way they will go down. We may be at a point where only a financial, social and political armageddon will yield any meaningful change. The political system has a built-in ability to smother, absorb and extinguish any and all attempts to change it from within. As I think my way through this I begin to question whether any parliamentary system with an electorate of more than a few million can actually function as a democracy. As for the concept of an economic system based on perpetual growth, well, I just can’t buy that anymore. In the real world it’s impossible for anything to keep growing forever, blow air into a balloon forever and it will burst, no matter how big it is. The political and financial elite are now so totally opposed to the will of the people, so clearly trying to sell us a load of snake oil, that they are merely making everything worse. They are not part of the problem, they are the problem and nothing short of sweeping them into a bin and closing the lid will achieve any progress towards a solution.

  4. NeilW

    Good line from Rob Parenteau

    “Or, as economist Jan Kregel put it in very clear terms, if Germany wishes to run a sustained current account surplus with the periphery, Germany can chose to accept either liabilities issued by the periphery, or tradable goods provided by the periphery, but they do not have the option of choosing neither.”

  5. mumenomics

    The United States of Europe with Germany in the driving seat will be politically difficult to sell.
    To dissolve the Eurozone in a globalised world makes no real sense-common currency though needs a solid financial structure behind it for credibility. It’s Hobson’s choice David. MJH @mumenomics

  6. CitizenWhy

    David, the best article yet on the EuroZone preference for cake over bread.

  7. mjm2000

    Hi David
    I agree the Germans will have to dig deep and pay up to save the euro or else the euro is history, my question to you is this in your opinion will they pay? Or is the euro history?
    Regards Michael

  8. Sheik Rock & Roll

    All those heavy smoking French Bankers in the foyer of the Bonnington Hotel are only meeting ‘middle men’ . The real donors of the money are inaccessible to them .I worked for such middle men before during the late 1980s and our donor was Sheik Zaid of Abu Dhabi .There is no money in Dubai and never was and it is only a talking shop .

    During the 80s Europe was expanding and GNP was increasing and the Arabs wanted a part of that .That is not the case today so I believe the Arabs will not part with their hard earned cash without a good collateral .

    My work then was introducing large European companies to ‘The Camp’ and to get Royal Sponsorship .Transfer technology was a big success then for both parties .There are many pretenders too in the hotel and it is too easy to loose your sponsorship money before you even meet the donor .

    In some cases inter Arab debts can be negotiated by the Arabs with the French Banks and after a fat commission that debt is satisfied between the parties.Such case arose there between Saddam Hussein and Larry Goodman however the Gulf War put an end to that .

    In the previous life Bank of America and Bank Credit & Commerce International were the centre of bank gravity in all the Arab world then .Unfortunately that bank is now extinct due to …..lets call it mismanagement .

  9. Lyndon Jones

    Were it not for the euro my mortgage interest rate would be 7%, 8% maybe more.
    The problem is that politicians want to spend more and more and borrow to do this , they are weak .
    The prudent thing to do is to live within your budget and everything would be fine , this is the solution.

    Austerity => balance budget => repay debts

    This is the road we are on and I say get there as fast as possible , sack 50,000 public service workers , cut social welfare increase taxes to EU average , get the debts under control .
    Do it now or be forced to by the IMF when we eventually ask for a second bailout in 2013 .
    we are still living the high life on borrowed money and need a dose of reality.
    120,000 young people have left the country since 2009 , I will join them if the government doesnt get a grip and cut much deeper and faster.

    • uchrisn

      lydon are you thinking what you can do for your country or your country can do for you. The message here is that its better to lay off loads of workers instead of you having to pay a higher interest rate for your mortage.
      By the way if your mortage rate was 8% outside the Euro inflation would also be comparitavly higher meaning your debts would get smaller.

    • gizzy

      Austerity is a pill best perscribed for others

    • dwalsh

      Austerity => crippled economy & budget => repay debt???

      Even a tiger economy couldnt repay the debt we now have.

      Nor can the debts be repaid in flesh & blood. Throwing our citizens to the wolves wont work either.

    • EMMETTOR

      Right, this is exactly what our “leaders” are telling us. Cutbacks to achieve growth – complete crap! This is the real 180 degree spin – telling us that they are doing what is needed to achieve “growth”, while doing things that will achieve the exact opposite. Oh, by the way, your house would never have cost so much in the first place if it was not for the political imperative that FORCED a single currency on multiple economies. Emigrate.

  10. BrianC

    Soros said the problem centered on the fact common currency without a common treasury with divergent political beliefs as how to create growth dividing any chance of focused effort to resolve the liquidity crisis.

    There is only one choice for Europe within a fractional reserve banking model and that is the Guro where all good little Europeans do what the Germans tell them to do to hold the fiscal line. Unfortunately the Germans only believe in growth through austerity and inflation is not permissable. So the Guropeans will have to find markets outside the Gurope. And they may as well look to Mars or Nibiru for customers because the BRIC boys can trade happily between themselves without any need for the now defunct Gurope. LOL.

  11. transitionman

    The key as always in these articles is the final line
    “Without growth there is no EU and with the euro there won’t be enough growth.”

    The increasing number of commentators who are pointing to what I thought was glaringly obvious “There is a serious problem with economic growth from here on” The reasons can be analysed and argued but the existing global financial model is based on economic growth ” without economic growth no debt deal will work because only growth in the future will pay off the debt.”
    The politician who announces no economic growth is also announcing increasing unemployment, less money for everyone, less services less everything. Not a platform to get votes. True leadership however requires the a realistic assessment of where you are and based on that a decision on what future path to follow. At the moment that leadership belongs to the occupy movement as they have identified that the banking system that runs the political system is beyond recovery. All efforts to inflate this burst credit expansion bubble with more complex pumps financed by the taxpayers is not going to work. This blog site has hundreds of articles and comments on how to deal with bankrupt companies and the same applies to systems. The conversation has to move to improving/ modification on the ruins of the existing system.
    Expanding on the final line is therefore the conversation on an Ireland without economic growth,without the euro.
    The alternative is business as usual, the EU will resolve the euro crisis and the global economic recovery will have green shoots with FDI multinationals employing the retrained half a million.
    Me I am going back to occupy Cork its the only flicker of light I see.

  12. Falling Stars

    The caption says ‘When will the Penny Drop ? .

    Its falling and the real question is when will it hit the bottom ?

  13. Lord Jimbo

    Pennies don’t drop, they get pocketed.

    “They have been sent here from Paris to get cash from the Arabs”. Who are these ‘Arabs’? Unforuntate turn of phrase.

  14. BrianM

    More gibberish from McW. Now it’s apparently the Arabs that gave us the credit for the building boom !!

    Arguing that the Eurozone will fail because of cultural, deomgraphic and economic differences between the states of the common currency ignores the massive cultural, demographic and economc differences between US states who use a common currency despite their massive differences (anyone who thinks California, Iowa and Texas are “the same” has never been).

    The reality – harsh and all as it is – is that there is no easy solution, there will be no break up of the eurozone, deposits in Irish banks are actually safe, austerity measures will continue here, cross guarantees of debt will ultimately be introduced, private sector exposure on defaulting bonds (sovereign & bank) will be introduced in the future and the Euro will continue as a currency.

    The cost (and pain) of breaking up the euro would be a multiple of the current costs (and pains !!).

  15. CitizenWhy

    When you recapitalize bi banks you are recapitalizing lending for boom and bust, but mostly for financial speculation, moving capital around the world in huge sums without that capital staying anywhere long enough to be used by any operating companies and business growth and consequent job growth.

    So “the answer” to all of Europe’s problems is to fuel the job destruction machine through austerity and the recapitalization of speculation-drunk banks.

    We are truly living through the Mad Hatter’s Tea Party.

  16. uchrisn

    The description of the french desperatly looking for money from the Arabs is true. John Bruton was over there a while ago too. Oil rich countries will get richer, its a trend. We may see more strife in the middle East, Iraq was about oil. Dictators were tolerated cause they were selling off their oil on the cheap. Look what happens to countries who refuse to sell oil on the cheap – Iran and Venesuela. They get ostrisied.
    We need to get alternative energy going soon.
    The occupy protests raise pretty much the same issues that have been bouncing around on this site for a while, in fact Joe Stiglitz comment earlier this year on the 99% is a motto.
    Jeff Sachs is also supporting them, excellent guest for Killkeninomics.

  17. Peter Schum

    The global economy is working its way through another cycle of Creative Destruction. Society will survive although for many it will be painful, and this pain is being voiced at the moment on streets across the globe. We need to innovate to generate the growth which is required to complete the cycle. Our government should invest heavily in this innovation and also provide support for individuals who are bearing the brunt of the the current pain, and who will be required to support the growth when it returns.

  18. John Q. Public

    ‘the French bankers here in the Gulf are only fooling themselves if they think that a few hundred billion dollars of Arab money is going to solve the problem’-History will simply repeat itself if we go down the same old route again. It would be less worrisome if the ECB engaged in large scale quantitative easing and supplied European banks with the cash they need instead of the banks borrowing from Arabs.

  19. easypoints

    Oil fuels growth, but also keeps what has already been built running. Today, OPEC can still keep their supply up with demand, but not at prices that are friendly to growth (along with the rest of the world’s big oil producers), and they know it. Some day soon, prices of oil will won’t even be friendly to zero growth, because let’s face it, oil is not a renewable resource.There will be no bailouts from the Arab world that doesn’t take this into account.
    Even with a restructuring of the entire euro zone, if they ignore the effects of energy depletion on economics, and the fact that growth as we know it may very well be over, they are only creating yet another monetary system that is doomed to fail.

  20. Deco

    This is begining to sound like John Maudlin’s Endgame (unfortunately, I will not have time to read it for at least one month).

    Not impressed with the Euro Fudge.

    FIAT – Fix It Again Today. The Euro is a paper currency based on the FIAT principle. We have seen the “Fix It Again Today” approach to the Euro, for about 18 months. Every fix lasts a short while, then there are more problems, and we find out that it was not really a fix at all.

    There is only one fix. The rich have to take the pain. But that is not going to happen. The EU’s institutional collossus was created on the assumption that moneyed interests would be able to devolve decision making away from the masses – who are never enthusiastic about grand projects of a Freudian scale. And this is what happened.

    Never mind Occupy Wall Street. Look at Athens for the past 18 months. That is a serious challenge to the Gordon Brown method of dealing with a financial crisis, by bailing out the rich with the resources of the poor, and declaring “we saved the world”.

    And Oil is another matter altogether.

    I think John Allen has it sussed. Dubai is a dodgy place to have to go, in order to get money – as it is also a bubble.

    • CitizenWhy

      But Athens did not lead to protests in the many places that Occupy has inspired. Occupy Wall Street correctly identified the broken banking system that is ruining so many countries.

      • Deco

        Occupy Wall Street did actually target the nexus of the problem, in it’s precise location.

        However, I think everybody owes the Greeks some recognition for what they did, when it was never cool or fashionable to do what they did.

        I can see Occupy Wall Street becoming a TV event, and when that happens it will become subsided with opportunists, and people who will eventually negotiate a sell out to authority, for the sake of a media or political career start. Sorry, for being cynical, but the corporate powers in this world know how to buy this sort of thing off.

        • Praetorian

          The Greeks were right to target the Greek parliament, that is ultimately where the buck stops, it is also an exercise in democracy as opposed to showing up where bankers can simply laugh at you. They should be camped outside Capitol Hill and the White House, embarass Obama into action. Of course they’ll all be arrested in no time, which tells you all you need to know about the true state of democracy.

          There has been virtually no coverage of the large group of unemployed youth who are marching from Spain, through France and on to Brussels where the police are already waiting for them. Some European Union.

        • CitizenWhy

          Occupy Wall Street was actually started under the influence and prodding of a few Spanish anarch-syndicalists/distributionists using the General Assembly model favored by that type of economic-political thinking. In effect Occupy has created a national forum for grievances and will at some time suggest actions and remedies (action now going: withdraw money from big banks and put in credit unions or good local banks; remedy proposal out there: tax financial speculation).

          There are co-opting forces at work, mainly from Democratic-liberal groups but also from an effort to equate Occupy and the Tea Party as “wanting the same thing (a total lie or delusion).

          The dispersed aspect of Occupy, and its educational efforts, make co-opting, especially by Obama, not likely.

  21. Deco

    This is an excerpt of a debate in the European Parlaiment.

    Nigel Farage, lambasts Juncker for completely ignoring the plight of people who are being asked to make sacrifices for the sake of the lobbyists who get policies that they want from Brussels.

    http://globaleconomicanalysis.blogspot.com/2011/10/nigel-farage-calls-juncker-political.html

    Note : when Juncker completely ignores Farage’s points, and questions – the rest of the MEPs make a loud continuous round of applause in support of Juncker.

    In the Irish media, and particularly with reference to Pravda, we are instructed that Farage is somebody who is completely untrustworthy. We even had a spat between Dick Roche, and Farage the other year – where Pravda were completely supportive of Roche.

    Significant parts of the Irish media are not telling us the truth about what is going on in the Eurozone. In particular, they spent much of the previous decade telling us that it was inevitably going to be a success, and that anybody who said otherwise was intellectually challenged.

    This is the second time in five years, the Irish media has been found with it’s trousers down around it’s ankles.

  22. Adam Byrne

    subscribe.

  23. dwalsh

    The only penny I want to hear dropping is the realisation that the financial markets must be shut down. There is no possible solution to this global crisis while they are operating. The tail is so obviously wagging dog it beggars belief no one seems to see it.

    • EMMETTOR

      Yes, shut them down before they finish us off. It’s Us or Them, simple as that. We cannot afford the rich anymore, they must go the way of the dinosaurs and we can put their skeletons in museums where our grandchildren will look in awe at the monsters who tried to destroy our world.

    • dwalsh

      @ redriversix
      Thanks for that.
      USA concern for civilians in Africa (or anywhere) voiced by Obama and Clinton et al is so cynical.

      • Praetorian

        Anything they give, they get back 100 fold through debt payments, access to markets, contracts from corrupt elites and so on. Cynical as you say. Haiti is probably the most perfect example of same.

        • Deco

          And most importantly – cheap commodities, which results in a feedback financing deal. Pay the kleptocrat in paper money, drive the price of the commodity down, and have the kleptocrat lodge the money in Western Banks.

          If they want to spend the money, offer them fighter jets.

      • Adam Byrne

        Not to mention Bono the wanker.

        • dwalsh

          can you fill me in there Adam?

          • Adam Byrne

            He’s just a sanctimonious tosser dwalsh and I wouldn’t trust him as far as I could throw him – which would probably be quite far admittedly.

            Licking the arses of all these ‘world leaders’ (genocidal maniacs more like) and telling other people what they should do while evading tax and writing supermarket music as if that gives him some great insight.

          • I would love to give Bono a pair of new glasses, they are very attractive you know, first they are deep blue and black, then they change color, lesser blue, little yellowish, even greenish and so on, if fitted right, they would last about 2-3 weeks depending on the strength in which they are applied, and he would be welcomed to return to me, he gets a free pair every two weeks, no charge.

          • EMMETTOR

            I’m from the same road Bono grew up on. A mutual friend gave him “History of Western Civilization: A Handbook” by William H. McNeill and Bono gave it back after about a week, saying that he found it very hard going and hadn’t read much of it. A few weeks later he named it as one of his favourite books in a magazine article! He’s well-meaning but he’s a spoofer. This is all true. I quite like him, he’s a nice guy but his single-issue, non-political politics is just Christian-inspired bullshit.

    • Very interesting indeed. Have a read of this:

      A bonanza beckons

      “One of the most spectacular recent finds has been in Uganda. The reserves of the Albertine rift, which takes in the Ugandan and Congolese shores of Lake Albert (see map), are said to need $10 billion for development. All being well, Uganda will soon become a mid-sized producer, alongside countries such as Mexico. Foreign investment in Uganda may nearly double this year to $3 billion. The country expects to earn $2 billion a year from oil by 2015.”

      http://www.economist.com/node/15825780

      • CitizenWhy

        So now I know why Obama has sent in the military to go after Uganda’s weird Lord’s Army.

        But the Chinese will get the oil rights anyway, the way they alone are profiting from mining operations in Afghanistan, despite all the US military (well, they do protect the Chinese).

    • And Irish company is involved

      “A deal in the offing will link Tullow, an Irish company much involved in the oil discovery, with Total, a French giant, and the cash-rich China National Offshore Oil Company (CNOOC)”

    • Asia Times correspondent Pepe Escobar says America has far-reaching plans for the region, which have little to do with protecting civilians.

      “Even Obama admits that those ‘advisers’ are also going to South Sudan and the Democratic Republic of Congo as well. When you look at that area in Central Africa and see the amount of oil and mineral riches at stake and see China making investments in this area, when you look at AFRICOM’s agenda which is to combat China commercially via the militarization of Africa, then you understand these 100 [special forces] are the beginning of many that will be going there soon.”

      http://rt.com/news/uganda-us-commandos-africom-067/

  24. Praetorian

    Very interesting article from Mark Weisbrot, looks like Obama’s job stimulus won’t get past the political process and if it does it is too small to achieve anything.

    “For all of our political leaders’ spectacular failure — the lack of leadership from the White House and the successful economic sabotage of the Republicans — we can give special thanks to the major media. With a handful of exceptions, they have been the great enablers throughout this malaise, lending credibility to ridiculous arguments that America is constrained by a “debt crisis”. The federal government’s net interest payments on our public debt are running at around 1.4% of GDP, about as low as they have been in the past 65 years.

    We are now more than one third of the way through a “lost-decade”, having barely caught up with our income at the end of 2007, when the recession began. Thank God there are people in the streets who understand that there is nothing inevitable about this misery. It is their strength and organisation that is currently our best hope for a better future.”
    http://www.guardian.co.uk/commentisfree/cifamerica/2011/oct/07/usemployment-useconomy

  25. [...] David McWilliams » When will the penny drop?. October 17, 2011 [...]

  26. Praetorian

    Should be listened to as we watch the market system, championed by so many, crush people before our very eyes.

    For the unemployed, the sick, the disabled, the penny dropped a long time ago.
    http://www.youtube.com/watch?v=vQVeaIHWWck&feature=related

  27. dwalsh

    The current global ponzi scheme is reliant on growth.
    Austerities strangle growth.
    Those applying austerity know this.

    1+1+1 = ?

    • redriversix

      Evening Dwalsh

      Growth is not there Goal.default is.

      Then they can take assets,like the sheriff.

      Hidden in plain view is the default they want.They know none of this money can be paid back.Its a smokescreen.

      They want our assets….

  28. Malcolm McClure

    When will the penny drop?

    Anyone remember the 1960s when Irish currency was freely exchangeable with Sterling?

    Well, our old pre-decimalization friend, the copper penny with the hen and chicks would now be worth five cent, just as scrap metal, so a Euro is now worth about 1s. 8d. old style. That is to say it would take about 20 Euros worth of old pennies to make the copper value of one old Irish Punt.

    When the Euro was introduced we Irish were given to believe that the fair exchange rate was 1 Euro for 0.787564 Punts i.e. about 1.25 euros was worth one old Irish Punt.

    So, if we had kept our savings in old Irish pennies we should now be better off by a factor of 16 (sixteen).

    Of course, we gifted our national Punt reserves to the ECB on a non-returnable basis, so we have been well and truly taken to the cleaners.

    • Praetorian

      The cent drops and becomes a penny when we leave the euro, either way we get royally screwed by an elite who are well protected from it all. Interesting to see the Bar Council allegedly met the IMF behind the back of the Irish government, leads to more questions as to who actually runs this state.

      Shatter accuses Bar Council of ‘briefing against State’ on Bill

      ““It is extraordinary that the Bar Council should put itself in a position where it is briefing against the State and seems intent on doing damage to the credibility of the State with the EU, IMF and ECB in circumstances where the State is fully compliant with the agreements it concluded, and in circumstances in which the State remains dependent for public services on funding from those bodies,” Mr Shatter told The Irish Times.

      He said a report on the meeting between the Bar Council and the EU-IMF representatives had been brought to his attention, and he said it seemed to be “an unprecedented and ill-judged intervention by people who should know better”.”
      http://www.irishtimes.com/newspaper/frontpage/2011/1010/1224305519450.html

  29. dwalsh

    From what I have heard the oil shock was a deal struck by the Anglo American oligarchs with the Arabs. Oil would be denominated in dollars and the money flowing from the price hike would be routed through the Arabs, as middle men, back into the oligarch’s European and American banks and lent to 3rd world countries at sufficient levels to bankrupt them; with the final prize being 3rd world commodities and resources. And of course they arranged for the losses in their banks to be transferred to the taxpayer. The whole thing was a scam brokered I believe by Kissinger.

    They are now running the scam on Europe and the USA.

    • the representatives of the EU-IMF emphasised that any reform the Government intended to introduce that went beyond their requirements is essentially a matter for the State and that the State is free to impose any reforms it deems necessary in the public interest.”

      Oh really, then lets bring in an emergency act within the next 48 hours to stop pay outs to unsecured senior bank holders. I wonder what they would say then.

    • redriversix

      Your right.

      You left out the part were America agreed to greatly reduce its Oil Production.Circa 1974/76 if I remember correctly.

      N.B

      The U.S has a Carrier group “parked”in the black sea which is pissing the Russians off,because they have a Naval base in Syria.

      Tally ho…

      • Deco

        I suppose this is all in the name of the cause that is broadly called “the cause of World Peace”.

        George Orwell seen this corruption of the language a long time ago. The Black Sea is “strategic” – in other words, there might be oil there. The Turkish government has leased out drilling rights. And then there are pipelines.

        • redriversix

          But of course,Deco..!.World peace, Humanitarian Missions.

          Just like Libya was a humanitarian mission,nothing to do with “Afri-Com”a organisation set up by the U.S to work with African nations to “teach”them how to develop and benefit from their own resources.Strangely,in Feb 2008 Libya refused to sign up to this partnership because they felt America was trying to control the continent’s resources through “the back door”

          Libya signed a deal to supply China instead with Oil.

          Prior to the Libyan “revolution”,there was 30,000 Chinese working on Oil production and R&D.29,000 were evacuated once the onslaught of Hostilities was confirmed.

          Perhaps if the U.S does not have the financial clout to deal with China anymore,it sure has the Military might to “acquire”assets ahead of China.

          Perhaps this game has moved on,somewhat….

          • Deco

            Well, the most telling part of this saga, is the rapid detioration in the relationship between Washington and Beijing since Libya was “liberated”.

            In parallel, there has also been a cooling off between Beijing and Riyadh.

            Gaddafi, was buying gold queitly behind the scene, and selling USD. Now, this is about the greatest crime any third world ruler, sitting on a commodity based trade surplus can do. Effectively, undermining the military industrial complex, and expecting to get away with it. And he didn’t.

            This all points to verify the theory that this entire unravelling of the Ponzi scheme will end in a conflict. We even have people like Paul Krugman who think that an all out military mobilization would be a great economic stimulus.

            MAD Mutually Assured Destruction.

  30. redriversix

    We need to shut down the financial markets.

    We need to close all banks which are insolvent.Their are some fine writers on this site but I believe there points are “lost in the fog of war”

    The Government is irrelevant.Any party can make genuine pre-election promises,what happens is when elected,they walk in all gung-ho and then are taken to one side by Senior Civil servants were the actual truth is revealed and they are given a choice,cooperate with IMF/ECB or Cooperate with the IMF/ECB.

    At this stage,Governments are caretakers and spin doctors.thats it,they open up in the morning and turn the lights of at night.

    Austerity in a normal society or any business is good practice.

    What we are witnessing and experiencing is not austerity,but the well-planned takeover of Countries and their assets.

    The formal introduction of slavery to a whole generation of people and the next.

    Fear is the weapon and our generation have become so self absorbed with “self” and all that that implies that they do not question anything.They are afraid to stick their head above the parapet for fear of scorn and ridicule.

    The introduction of low wages to skilled workers.The debts these workers are afraid to default on keeps them enslaved and mute.The loss of full time employment and the offer of contract work only,say 6 or 12 months also keeps people quiet.

    OWS is a excellent worldwide movement and deserves support,from dame street to Dallas.But it will take a lot more to “rattle”the powers that be.

    They are completely detached from the real world and see its population as pawns on a chess board.

    Most of the articles in this site are correct and repetitive because the basic reasoning behind them never changes,only the subjects.

    Larger military action is coming,maybe 6 or 12 months,although the military War has already begun some time ago.The Powers that be will run out of patience and they will want a large event.

    I still ask.”what do we do”..AdamByrne says he would prefer to Riot like Rome then be a “treehugger”…maybe he is right…maybe it is time to become “foot soldiers”for ourselves,…….or is that what “they ” want.

    Either way I believe we are Fucked…

    What would Jesus do.?
    What would Goerg R do..?
    What would do Dwalsh do..?

    “Because the NWO sure knows what it has
    to do”…..

    • Excerpt from my private communication with Prof. Steve Keen:

      I say shut it down. Bankholiday, shut down the data centers that enable HFT, darkpool trading etc. and disembowel the banks at the core of this trade, all of them. GS, JPMC, UBS. Credit Swisse First Boston, Deutsche Bank, you name them. Shut down the entire financial gambling Industry that is minimum 20 times, I guess it could be 50 times, the ‘value’ of the real productive economy, and delete all debts, across the board, not selectively, but delete them all. Push the button and forget about it.

      Build new banks from scratch that are more based on ‘social banking, and social finance’ (Roland Benedikter)

      What could be said against it, really? Apart from the disciples of the necrophiliac resurrection of a past failure, mathematized Keynesian Harvard priests of course.

      Theoretically speaking, imagine a Hacker succeeds to delete all debts tonight

    • Adam Byrne

      This probably sounds a bit petty but here goes:

      What really cracks me up about these hippys in New York etc. is they are all sitting around smoking fags, some of them roll ups because they think they are being (somehow) more environmentally friendly doing that. But some of them with the old Marlboro lights as well. As if tobacco is a product that we need to grow on this planet in place of food that people need to survive. And as if tobacco multinationals weren’t some of the most evil and exploitative (especially of ‘native’ people) corporations ever to exist – oh and yeah, they make the roll up fags too, they just put them in that nice little hippy packet for you to make you feel better you bunch of gullible twats. A bit of Old Holborn never did anyone any harm, did it? (Not to mention the waste of money on treating hundreds of thousands of idiots with self-induced lung cancer, who kill themselves slowly for their sick habit to the utter dismay of their kids and grand kids).

      Discipline, like charity, begins at home. Give up the poxy fags then hippy, and let some Brazilian farmer use the land for food instead. Put your conviction where your mouth is. Nah, they’d rather keep puffing away and f**k the Brazilian and the Amazon. Hypocrites most of them and they’d run a mile from a scrap.

      Smoking is just one example by the way, but it’s a particularly bad one. There’s plenty of other stuff that we here in ‘The West’ don’t need and shouldn’t buy but we just can’t help ourselves and paying lip service to stopping corporate greed, is just that – lip service, until people reevaluate their whole way of living.

      • EMMETTOR

        Yes, as a smoker, I acknowledge the speck of sand in my eye but get real. All those words to make that pointless point. You may need therapy or maybe just open your eyes! Hitler was a vegetarian, don’t ya know?

        • Adam Byrne

          Enjoy the smokes EMMETTOR – and the lung cancer. Or else quit while you can. I’m trying to eliminate unnecessary vices from my own life but it’s not always easy of course. Therapy would be great if I could afford it, haha. I’m not sure what to say about Hitler, something insightful about Godwin’s Law? Or perhaps not.

        • redriversix

          hello my name is RR6 and I smoke…….

    • redriversix

      Sorry should read.

      “They”the NWO,are completely detached from the real world and see its population as pawns on a chess board.

      …..

    • transitionman

      Here is what I did.
      I figured out what was going on.The saying . The first actual plan that made sense was “How to build a life boat “on The Automatic Earth looks more relevant now than July 2009.Todays edition has Nicole Foss on utube on finiance and energy. The sad part is they see the problems the are now calling for answers and suggestions.
      Next I did a deep energy retrofit on my home. I started a food growing garden. Having identified debt based money system as the problem I researched alternative currencies. I became involved in setting up a web based trading alternative currency platform.I unwound my debt and cashed in most assets. I came to the conclusion that I had better enjoy the lifestyle that we take for granted.Like you Redriver sixI take care of family and those around me. . I watch the drama unfold and reading this blog see that others in Ireland have now to a greater or lesser degree reached similar conclusions. I don’t have any faith in magic bullet solutions like closing down insolvent banks or new political parties. I think it will be little things done locally will produce change. But I do think that a collective intelligence is at work in occupy movement it could lead to an awareness that some idiots think we are pawns on a chessboard and maybe we can change the rules of the game because this board belongs to all of us.

      • redriversix

        Hey T-man.

        Well said..

        Perhaps we decide not to participate in their “World” and look after our Families and those who “ask for help”….? On the other hand,why should we “go quietly in to the night”?

        As you rightly point out it is our chess board..,perhaps we should fight for it..?

        Theses “fuckers”seem to be 6 months ahead of us all the time.We need to change the way we view them and their actions to get a clearer picture.

        Or start stocking up on essentials…..

        Take care of families first,if you do not have a family,find one to take care of….!

      • mishco

        I agree – God bless the child that has its own; and
        we should all read or reread Thoreau’s “Walden” while we’re at it.

  31. ECB

    Humpty Dumpty sat on a wall,
    Humpty Dumpty had a great fall.
    All the king’s horses and all the king’s men
    Couldn’t put Humpty together again.

    EFSF

    There’s a hole in the bucket, dear Angela, dear Angela,There’s a hole in the bucket, dear Angela,
    There’s a hole.

    Then fix it dear Sarkozy, dear Sarkozy, dear Sarkozy,
    Then fix it dear Sarkozy, dear Sarkozy, fix it.

    With what should I fix it, dear Angela, dear Angela,
    With what should I fix it, dear Angela, with what?

    With a straw, dear Sarkozy, dear Sarkozy, dear Sarkozy,With a straw, dear Sarkozy, dear Sarkozy, with a straw.

    But the straw is too long, dear Angela, dear Angela,
    The straw is too long, dear Angela, too long.

    Then cut it dear Sarkozy, dear Sarkozy, dear Sarkozy,
    Then cut it dear Sarkozy, dear Sarkozy, cut it!

    With what shall I cut it, dear Angela, dear Angela,
    With what shall I cut it, dear Angela, with what?

    With an ax, dear Sarkozy, dear Sarkozy, dear Sarkozy,
    With an ax, dear Sarkozy, an ax.

    But the ax is too dull, dear Angela, dear Angela,
    The ax is too dull, dear Angela, too dull.

    Then, sharpen it, dear Sarkozy, dear Sarkozy, dear Sarkozy,Then sharpen it dear Sarkozy, dear Sarkozy, sharpen it!

    With what should I sharpen it, dear Angela, dear Angela,With what should I sharpen, dear Angela, with what?

    With a stone, dear Sarkozy, dear Sarkozy, dear Sarkozy,With a stone, dear Sarkozy, dear Sarkozy, a stone.

    But the stone is too dry, dear Angela, dear Angela,
    The stone is too dry, dear Angela, too dry.

    Then wet it, dear Sarkozy, dear Sarkozy, dear Sarkozy,
    Then wet it dear Sarkozy, dear Sarkozy, wet it.

    With what should I wet it, dear Angela, dear Angela,
    With what should I wet it, dear Angela, with what?

    With water, dear Sarkozy, dear Sarkozy, dear Sarkozy,
    With water, dear Sarkozy, dear Sarkozy, with water.

    But how shall I get it?, dear Angela, dear Angela,
    But how shall I get it?, dear Angela, with what?

    In the bucket, dear Sarkozy, dear Sarkozy, dear Sarkozy,In the bucket, dear Sarkozy, dear Sarkozy, in the bucket!

    But there’s a hole in the bucket, dear Angela, dear Angela,There’s a hole in the bucket, dear Angela, a hole.There’s a hole.

    I believe the Chinese are lining up to buy some euro securities in return for austerity demands and maybe assets like Pravda RTE:)

    • The plan was to have a plan by the end of this week. But now the plan is not to have a plan by the end of this week. But there will be a partial plan. But I’m not quite sure if the partial plan is a partial plan, or if its a partial plan of a partial plan to have a plan; or, if its a partial plan of a partial plan to have a partial plan, or, if its a partial plan of a plan to have a partial plan….do you wan’t me to go on:)

      • redriversix

        ….and your plan was..?

      • Don’t Touch That, Frankenstein Is being created for us, by men ‘in matching rimless Armani glasses’ and maybe even women wearing pink platform shoes….

        http://www.youtube.com/watch?v=tTNN5h8CG_Y

        I’ve great admiration for Angela Merkel. She’s the only political leader in Europe willing and able to knock the banks.

        She’s resisted the French demand to get Germany to backstop French banks and the peripherals ad finitum.

        She’ll not walk Germany into a long campaign similar to the drawn out campaign Germany fought against the Russians, even though France appears up for it to repeat the mistakes made by Napoleon.

        There’s a possibility the euro will devalue and the painful cost of the peripherals will be shared that way. But this would cost the members of the EMU dearly and arguably cast an unfair burden on the good members of this club. This would not work as the Lisbon Treaty is a hole in the bucket. Members will not vote the changes necessary.

        The solution is rather simple if painful. The EMU has travelled down the wrong road, in the wrong direction.
        It needs to turn back to the point it was at before mistakes were made.

        Greece was a mistake made with falsified information. Greece should leave the EMU.

        Ireland similarly entered a mistaken path under the euro.

        It must be returned to a point before joining. It must leave as well.

        The rest of the mess with similar logic should see an end to the experiment which has gone badly wrong and is in danger of creating a Frankenstein.

        It is simply better to allow broken member states who wish to leave, to leave, to allow them to fix themselves with appropriate exchange rate devaluations with regulatory and fiscal disciplines that will allow them to heal.

        If Merkel can persuade the G20 to clean the FIRE economy, fix the banks, clean up the investment banking, ponsi financialisation, brokenness of the global economy, with a cleaner and fairer public banking system, a new attempt can be made in the future to make more successful cross border currency experiments, such as the euro, work with a better chance of success.

        Negotiation of our debt levels with the ECB on exit should be based on a dual currency issue whereby the principal of our €150bn debt to the ECB could be rewritten in our new currency; with an appropriate discount based on ability to pay, plus a damage premium allowable against the total cost of a real bailout.

        There are 2 ways to fix this: the Frankenstein Way or The Way of Democracy and a return to public banking.

        Get the printing presses ready.

        • EMMETTOR

          Well the Euro only really suits France and Germany and doesn’t even suit France too well. As a currency, it should’ve been introduced to those two countries first & if they survived it for 10 or 15 years, it could’ve been rolled out, gradually, to other countries. However, it wasn’t a currency, it was a political representation of “European Unity” and, when the dust settles, it will have succeeded in bringing Europe closer together, under the control of Germany, of course.

    • Deco

      Don’t tell the Chinese Banks, but Pravda RTE is not an “asset”….

  32. Peter Atkinson

    I wonder will the poor residents of Priory Hall in North Dublin be recapitalised following the eviction orders issued last week.Maybe if they took a trip over to the Gulf and sat in the foyer with David he could introduce them to those French Wankers (sorry Bankers).I doubt the figure they would be looking for,approximately €3 million, would be noticed in the scheme of things.Or maybe they could they could drop in to Manchester City Football Club and ask fot it there.

    Ironic in a week where new oil exploration licences were issued by Comrade Rabbitte do we have the Americans cooking up an assassination plot by Iran with a view to invading that same country.

    Folks, those twats in Europe don’t give a toss about you or your troubles.Look closer to home for answers and bring the perpetraitors to justice before its too late.Look whats happened to Sam Smyth.More of the same to come to a journalist near you.Its only a matter of time before they realise that to shut down the media is to solve the problem.No dissenters,no protests.And remember,the holy grail of media,the internet isn’t safe from censure either.Look what happened to Blackberry as an example.

    • Praetorian

      A block of apartments near where I live is sinking as it was built close to a stream and on boggy ground, everyone apparently is now in court. Little comfort to those who purchased a place.

      A Broken Republic and not a mechanic in sight.

    • EMMETTOR

      No need to shut down the media, what difference would that make? Control of the media in a liberal democracy is the equivalent of control of the armed forces in a despotic regime and who controls the media in Ireland? Sam Smyth was a great help to Michael McDowell in the past and what goes around, comes around.

  33. CitizenWhy

    As an old guy participating part time in an Occupy effort, this is what I see: Young people galvanized to creep toward a consensus on what to do about a broken financial system, the impoverishment that financial capitalism brings to our and other economies (the 1% vs the 99%), a political system corrupted by special interest and billionaire money, politicians who cannot be relied upon to do anything effective, MBA programs that preach an inhumane version of capitalism, etc. All without relying on political of celebrity “leaders.”

    The Occupy movement is a generational movement, one that will take years to cohere on an a “pro-citizen” agenda to renew American democracy and democracy in other countries.

    We old folks give our support, and we could offer sage advice, but it’s best to just support and let this generation work out what it has to work out. The parks may be evacuated over the winter, but the movement can survive and grow by holding weekly or twice weekly General Assemblies and monthly or bi-monthly mass events coordinated worldwide, as happened on Oct 15, 2011.

    Read more http://www.newyorker.com/online/blogs/johncassidy/2011/10/top-ten-unlikely-occupy-wall-street-supporters.html#ixzz1b48zNDoM

  34. liamquinn79

    Great article. Insightful as always. Thanks David

    • I can hear them already…. There is no other way!

      • redriversix

        Thanks for the link Georg R.

        I was shocked and i still don’t know why…

        P KENNY and his quests,once again rearranging deck chairs.

        Georg R,do you think Kenny would react to any of your links if he got them ?

        I think things are starting to get out of hand,you have really joined up a lot of dots recently..

        • Honestly RR6, I don’t care a flying Bull what Pat “The Patronizer” Kenny has to say.

          If people do not continue to increase the pressure now, and when this is over, there will be no trace of democracy left anymore, global supply chain control of commodities is even more concentrated and in the hands of a few (Glencore, Dreyfus etc.). They already are telling people what seeds they are not allowed to use to force their products (Monsanto).

          ‘Things’ as you say, are in the hands of the wrong people, this much is for certain.

          • redriversix

            Thanks for that Georg.

            I still get very annoyed over the way Monsanto conducts business,it is so criminal,I mean to be able to patent a seed and dictate to farmers that they cannot use the “natural seed ” from their crops is…..incredible.

            Only in America..!!

      • EMMETTOR

        “There Is No Alternative” (TINA) M. Thatcher

  35. Lord Jimbo

    Really uplifting stuff from RTE this evening, if they don’t get you with the repetitive nine o’clock news, they might get you with the pensions crisis programme courtesy of what’s his name, should we all just die now so we can avoid the ‘kiss of death to the economy’ as one contributor put it, save the economy but finish ourselves off Masada style in the face of the enemy.

    If after you’ve taken the anti-depressants, you get through that, then maybe, just maybe they’ll finish you off with the third wave, Frontline, from what’s his name. Just as well for them they have crises to report and comment on. I’d nearly prefer to take my chances with the IMF or roll on the next presidential debate, or David’s interview with what’s his name……..the word ‘crisis’ is beginning to lose all meaning.

    • redriversix

      +++1 LordJimbo

      “you mention Crisis or terrorism enough it loses all relevance and people quietly walk off a cliff in to a “new society”

      Whatever we allow that to be…….Fear..Fear..fffff

    • Fair comment, but I managed to catch that programme and thought it a great comeback programme by George Lee.

      I noticed he wrote it himself.

      It was tightly and comprehensively researched and put a searchlight on a coverup exposure under the nation’s nose.

      Let’s see now, we owe ¢500 bn, our pension funds are down average of 40-60%, Government are raiding the pension funds, unemployment reaching for 500,000, emigration 60,000 annually and we’re the poster boy for European austerity policy!

      Good to see we are succeeding at something and we’re growing as well! I might be worried were it not for Government reassurances.

      • According to Gay Mitchell, we could be on the cusp of marvelous growth in the economy. Lol.

        Mary Davis wants to appoint a person with intellectual disability to the Council of State? I’m an advocate for the rights of the disabled, but is this not akin to appointing a blind person to a post as bus conductor.

        Arn’t the demands of a member of the Council of State intellectually challenging perhaps requiring concerned research into the demanding area of legal reform, constitutional rights? Am I hearing things? Is there a hidden message there that brains are not required for this post?

        I put out a challenge to you guys? I know its a tough one for ye. I know you guys prefer simple, black and white, spade is a spade, plain vanilla truth. You guys don’t like too much choice. In a supermarket, confronted with too much choice, eg 7+ jars of different brands of jam on the shelf, ye walk away and refuse to make a choice and make up some story to your partner as to why you have no jam:)

        Get back to that supermarket aisle to the narrow aisle, the one with all the jars of jam with different brand names: Imagine a presidential howler is one of those jam jars.

        Whats the biggest howler of the presidential campaign?

        Choose a presidential howler. Only present incumbents allowed, no best advice for incomings from McAleese, ‘choose a good chair to sit at your desk’. Not allowed:) We know she’s looking around for another chair to sit on, that’s not the point. No nonsense now!

  36. Dorothy Jones

    From the article above: ”The only way out is either a United States of Europe, where Germany pays the bill and calls the tune, or the reversion to national currencies.”

    Yep:Here in Bonn, this is the sentiment among those with whom we are working. There is no appetite for the approach as heretofore; people are taking to the streets countrywide.

    This feeling is summarised by Dirk Müller, trader and und bestseller-author, who writes in today’s FAZ [sic]:
    ,It would be relatively easy if Germany would leave the Eurozone. But the politicians will NEVER do that. As previously in the course of history; they allow the German people to crash into a national catastrophe on a grand scale rather than to admit failure and deal conclusively with the issues.’

    • Dorothy Jones

      Oops; Handelsblatt not FAZ

      • Maybe the Germans have that Irish problem. You know, we are good at beginnings, we are even good at middles, but we havn’t a clue about how to handle endings.

        Perhaps its a relic from our colonial past.

        Psychologically, we can’t do it. We’re waiting for some master to come along and complete it for us:)

        I’d admire the US for its approach to endings, eg for its clean approach to bankruptcy law.

        We seem unable to end things and move on preferring to create a Frankenstein monster rather than letting the dead be dead:)

        Sometimes its a good idea to stop building on flood plains with a quick sand and erosion problem.

        • Malcolm McClure

          +1 colm brazel. “we havn’t a clue about how to handle endings.”

          It’s an essential part of our reputation. Like ‘Waiting fro Godot’. Pure existentialism.

          • yes, GoDot is a conflation of Go Dot. Now the dot means the end of a line, but it could also mean writers block. But you see Beckett’s dislike of endings. As for existentialism, B has a particular brand, in one way its not existentialist, more like paranormal existentialist minimalism we can all learn from, to help us forage from litter bins given us by the Troika. The Anglo monster is still alive you know, only renamed. Need I speak of the Moriarty, Grendel Nama and the Tribunals from middle earth filled with Transylvanian vampires masquerading as Irish leprechauns :)

            .

        • redriversix

          Its very easy to start a War….very hard to finish one.

  37. The ridiculous FT announcement – EU ban on ‘naked’ CDS to become permanent

    The article from today is symptomatic for what is happening since many years now. The headline suggest what? That’s right, shoot more crap against the wall and wait to see what sticks, that’s all really.

    So the EU parliament, let’s face it, de facto the EPP is throwing up another smoke screen to deflect from the inherent problem. It is nothing but a kite, to pretend to be able to make an impact.

    This is not going to solve the problem, on the contrary, besides, this is far from factual yet, the council is part of this process, and it’s a long way to Tipperary. From here on Lobby power will take over, wait and see. Exemptions will be agreed upon, the whole package will be homeopathically diluted to the point of Charlatanry, but perhaps most important, why would they not ban the selling of CDS if they are serious? This shit should have never been allowed to begin with That’s right, they have no clue, they are incompetent idiots who are way out of their league.

    See, it is exactly like saying, oh well, we are really against war and want to stop this insane business of death, look at us, are banning the sale of .55 caliber ammo. (Ahem, in Europe that is!) Great political initiative isn’t it?

    Excuse me? So what about DU’s?

    What about the depleted uranium 30mm ammo, or while we are at it, the fact that 14 billion rounds of ammo are produced every year, that’s right, two bullets for each person on the planet.

    The political class in Europe which is overwhelmingly driven by the good friends of Enda Kenny, Angela Merkel, Sarkozy, Grabosso etc, the EPP, that is trying everything in their power to implement the Super State at all cost have really lost all marbles.

    x x x x

    Someone told me in a very agitated manner about the RTE George Lee production from last night that must have dealt with another well known Ponzi scheme, pension funds.

    Actually, he was very shocked to be honest and I felt sorry.

    To be honest though, I was shocked that he was shocked. I mean, come on, this is decades old news, the pension lies produced by governments not only in Ireland that is.

    In Germany it is the RIESTER pension plane, and if you google a bit in depth you will quickly find out what the reality is, besides, while we are at it, these funds were directly investing in military mass destruction technology as well.

    He told me that Joan Burton was in there as well. I could not resist and I asked him whether he was 100% certain, that this was filmed in Ireland.

  38. You might be tempted think this is from Kilkenomics

    How can broke economies lend money to other broke economies who haven’t got any money because they can’t pay back the money the broke economy lent to the other broke economy and shouldn’t have lent it to them in the first place because the broke economy can’t pay back?

    Well, watch for yourselves:

    http://www.youtube.com/watch?v=LyePCRkq620&feature=player_embedded

  39. Money is not about Banking and Banking is not about Money . Banking is about Time . Money is a measurement of Time .Broken Economies can lend to broken economies .

    I can lend you my bicycle even if I am broke .What do I want ? I don’t know maybe it depends what do you want .

  40. Solving the Euro crisis requisites:

    1. Know what you have to do…………but nobody knows what needs to be done…
    2. Say “We can do it”…………..but we can’t agree on what needs to be done…
    3. Have a plan………………..but we can’t agree on a plan about the unknown…
    4. Let us know the plan…………but we can’t let you know the plan because:

    we really don’t know what’s to be done, nor can we agree on a plan to execute an unknown plan, for the unknown; nor even let you know there might be such a plan, as this would raise, false expectations.

    Best we can do is signal we have a partial plan which is already partially known and almost in the can:)

    • @Colm

      What you said on the left is a ‘Circle’ and on the right a ‘Square ‘.

      Empowering the Circle ( a celtic gene ) will defeat a Square ( a germanic gene ) .

      Dun Aengus was a circle ( power house ) and now no more ( made by both man and nature ) .

      A Snake comes to mind .

  41. EMMETTOR

    It was the name given to the state by the population of Czechoslovakia (I think) but it could easily be applied to the entire EU now: Absurdistan.

    • Wir nennen es Absurdistein EUSSR?

      Here comes Ajai again to tell me how much he’ll lend me to help pay my taxes in return for his favorite cutbacks.

      I thought he was here last month and we gave him some of our assets!

      Ah well, he was very kind to allow Irish kids join the German army!

    • Deco

      A new political union called….. Absurdistan – does Denial run through it ?? If it does, then it is highly appropriate…..

  42. Deco

    Well, I think you will all find this interesting.

    Surprised nobody mentioned it yet.

    John Mauldin, who wrote a very good book, that I have on the shelf, but have no time to read yet, called “Endgame”. Anyway, he was recently, in Ireland, and spent a fair bit of time discussing the economic and banking crisis with David McW.

    http://www.marketoracle.co.uk/Article30870.html

    By all accounts he was impressed with David’s knowledge, and also with the eagerness of various people to sell Ireland as a business location. Also he gave us a very interesting insight into the stuff that is not being said in our own country – but which is said behind closed doors.

    Now, where is Baldy Noonan, and where are those “Ireland is not Greece” T-shirts ?

  43. Commodities scam – UPDATE

    Those of you who know me and what I wrote here in the past will remember that I warned about the inevitable commodity scam that is unfolding. I wrote about Glencore’s IPO as well as Monsanto’s conduct of business.

    Because this blog here offer so little interaction, I can not even search for my contribution and link it here again for your convenience.

    On various occasions I pointed out the unethical practices of banks and Investors, whether it is military technology, or the equally evil to the bone, investment games in the commodities such as sugar, corn, wheat etc.

    There was a well researched report on the german political broadcast series ‘Frontal 24′ that confirmed what I am warning about since quite some time.

    There is absolutely no doubt left, the whole industry is heavily invested in bets on hunger, starvation and death, the web of Lobbies and Banksters did a great job to still have Brussels not sign of a complete legislation to forbid all of these bets on the market.

    Deutsche Bank has around 4.5 billion in this business of gambling with death, speculating on rising prices, or in clear words, for those who do not know this, MANIPULATING THE GLOBAL PRICES FOR FOOD!

    In 2011 this segment of bets increased tremendously.

    As a result people are dying, prices doubled although enough food was produced globally, and in the slums in kenya and around the world people can no longer buy basic food supplies.

    Still, the right wing EPP talking shop in Brussels has not stopped the game, it is all lip services against the banking lobby which by now is governing 500 million people in Europe.

    Is it really required to bring back some RAF type activists and shoot some bankers before Brussels takes account of the voices of the people?

    I would not be astonished if sooner or later exactly this will happen again. In germany, there is not a single bank that is not involved in this gamble with hunger, criminally rigging international prices to scoop up profits.

    This will be pretty much the same around the globe.

    Please educate yourselves on this matter and spread this information amongst your peer group.

    http://www.businessweek.com/news/2011-10-18/g-20-should-focus-on-curbing-food-speculation-le-maire-says.html

    As I wrote in an earlier contribution, this AMIS program is NOT ENOUGH and nothing but a bankster initiative to drag heels on this issue, every month where they can continue this gamble, they increase profits made by hunger.

    Thanks

  44. The Greasy Till of The Blood Sucking Minister For Penance

    December 6th has been the date announced for the Austerity Budget 2011 .

    Lets see who will speak at length the euligy to false logic in the dahl cause his throat will game up on him .

    December 6th, 7th 8th are the peak dates of the next and last Moon WOBBLE this year .

    Buy Hot Water Bottles and shoe chains to steady during this weather major crisis .

    For anyone wanting to understand more into Brady Swaps astrologically speaking here is the reference for past and future :

    http://www.qm21.com/moonwobble.html

    Watch out for Tubridy as the year calls to an end.

    • Re “The Greasy Till of The Blood Sucking Minister For Penance”

      +1

      I wonder as we speak are the cryogenic cutbacks being planned, already on Mr Choppers (our own economic anesthetist/hit man) desk for approval, to see if this will put Ireland’s ¢500 bn debt and economy into long term Deep Freeze, to save French banks and the French economy from a similar fate?

  45. Follow up to couple of posts on this topic earlier that due to the threadbare help to follow different topics on this site, you may have to do some digging to find:)

    ———

    There could be more information given on this site on the negotiating position of the state and what exactly the terms and conditions of these licenses are:

    This would help end controversy that the state’s terms for licenses are too accommodating for the oil companies against the view, which may be the correct view, that the state has done a good deal securing attractive terms for the state comparable or equal to that achieved by other states.

    http://www.dcenr.gov.ie/Natural/Petroleum+Affairs+Division/Role+of+PAD/

  46. george

    David XXX excellent article!!!
    .
    “The currency reinforces the initial inconsistencies. The only way out is either a United States of Europe, where Germany pays the bill and calls the tune, or the reversion to national currencies”
    .
    I’m all for it, because if what we are looking for is economic growth and technological development, combined with good organisational and administrational skills, they have shown they are the best!!!
    .
    But I’m afraid that if that becomes a choice, between it and probably to join the UK and USA in another sort of political and economical block, I’m sure we’ll make the wrong choice, as we did in the last election.
    Time will tell!

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