November 9, 2011

ECB has until Christmas to save monetary union

Posted in Irish Independent · 203 comments ·

The crisis has now moved to Italy. Italy is no Ireland, no Greece and no Portugal. It is the EU’s fourth-largest economy and the eighth-largest in the world. Its bond market is the third-largest in the global financial markets. It is far too big to bail out.

The total size of the Italian government debt is €1,900bn. One quarter of this falls due over the next few years.

Italian yields are heading towards 7pc and this would mean that Italy would pay 5pc more for money than Germany. No monetary union can survive such a differential and narrowing the differential was one of the main selling points of the monetary union in the first place.

The reason the figure of 7pc is important is because once a yield hits this type of territory it will be downgraded. In this environment, the market just shuts down to the country in question. This is what we saw in Ireland, Greece and Portugal. The omens for Italy look dire.

Once the yield reaches a certain level, then a downward, self-reinforcing cycle begins which involves your pension.

Traditionally, pension funds around Europe have bought the bonds of governments like Italy, thinking they were safe. The investing rules of many (rightly) conservative pension funds debar them from holding assets which are not rated Triple A.

So if Italy is at risk of being downgraded — as is now the case — and would be guaranteed to have yields going ever higher, then pension funds will be obliged to sell their holdings of Italian bonds. This drives yields up even higher and the only buyers of Italian bonds, which would now be “junk” bonds, would be high-risk investment and hedge funds that are allowed to buy risky assets. Therefore, there would be huge general selling of Italian bonds and the “normal” markets would essentially close to Italy.

According to analysis by Dow Jones, Greek bond yields hit 7pc the day after they hit 6.5pc, Irish yields took 34 days to travel the same distance and Portuguese bond yields took 43 days. But they all went to 7pc eventually.

Given the enormous amount of Italian debt which needs to be refinanced in the next two years — close to €200bn — it is easy to see why the eurozone wants to avoid this trigger mechanism at all costs. This fear explains why the European Central Bank has hit the panic button in the past few weeks and bought over €80bn of Italian government debt — because no one else will touch it.

Present policy at the EU level is in tatters and, more egregiously, the reputation of the EU has been badly tarnished by events of the past seven days.

First, we have the sight of the Greek prime minister being forced out of office because he wanted to get a mandate from the people. This reminded many yet again of the deep fear of popular democracy that exists at the highest level in Europe.

But just because the people will not be allowed to vote in a referendum does not mean that they won’t speak or act. A few months ago, this column wrote about the Italian financial police stopping people at the Swiss border who were driving across the border to deposit money in Switzerland. Given the size of the black economy in Italy, the financial police could charge people with tax evasion while at the same time keeping liquidity in the Italian banks.

Despite this, the Bank of Italy has now revealed that at least €20bn has left Italian deposit accounts over the last two months. This will dramatically increase in the weeks ahead unless there is a comprehensive pan-eurozone settlement.

The eurozone is faced with a perfect storm of three enormously negative headwinds. The first is that growth has disappeared and doesn’t look like coming back any time soon. In fact, recession in Europe is on the cards for the final quarter of this year. The second is that without growth the enormous debt mountain that has built up in Europe over the past 15 years can’t be paid back. And the third element of the storm is the fact that we have a total absence of leadership. So you take the three together — not enough growth, too much debt and not enough political leadership — and you get a recipe for panic.

This panic will be felt all over the periphery as money leaves the periphery and goes to the core. This capital flight will undermine whatever fragile stability has been achieved in Ireland and Portugal, while at the same time exposing the unfinished business in debt-mired Spain and possibly Belgium.

ULTIMATELY, the only solution is for the ECB to take control. Taking control means buying up all the bonds that it needs to buy, replacing these bonds with money, driving down interest rates and increasing liquidity. In carrying out this approach, it also has to know that some of the bonds will not be paid. Such an approach would be financial suicide for a central bank — if it had to make a profit. But it doesn’t. So it can.

The main stumbling block to this is the German public, who will fear the inflationary consequences of this monetary jamboree.

There might also be those who believe that the bank should be extracting some concession in return for its cash. At the moment, the mainstream orthodox view is that the price for help has to be austerity. But it also has to be debt write-offs borne by the creditor. And the creditor in most cases is the German and French banks.

After significant debt forgiveness, some banks — not all — will have to be recapitalised. Initially, this should come from the bondholders being forced to take equity and then this will be bolstered by the governments or the ECB taking protected equity stakes in the banks that survive.

It is crucial that the banks’ job of providing liquidity to the economy is maintained. And if this is impossible with the present banking system, then we should create a new one. We should close down the ‘zombie banks’ and be allowed to move our deposits to new ones.

In order to even have a chance for this to proceed smoothly, the ECB will have to get its act together, find its mojo and realise it is the only institution that can save the euro. And it has to do this by Christmas.

Unless we get this enormous shift in the way the ECB thinks and acts, Italy will be locked out of the markets and the crisis we have seen thus far will appear like small beer in comparison to what is to come.

  1. mediator

    This whole Euro mess has been planned from the beginning, the Euro will collapse and global monetary chaos will yield an opportunity for those who have an agenda.

    David why not provide some free advice for people in terms of preparing – solid advice not general commentary?

    • Blow_In

      Free Advice

      Find the people in your area that can do things and take pride in their work. Carpenters, plumbers, electricians, welders, mechanics, farmers, machinists, computer nerds, and etc. Offer them support and encouragement. We have the technology to redevelop small scale manufacturing that can produce most of the items that are now imported.

      40,000 motivated craftsman can do more for this country than a 4,000,000 economists and politicians.

    • tony_murphy

      I followed David’s articles for a number of years, and I have never seen any direct advice to the ordinary person

      So don’t sit around expecting any!

      Do yourself a favour, and get yourself some gold and silver.,,

      Only have cash in a bank you are willing to lose

    • Colin

      There was plenty of free advice from David over the years. I first heard it about 10 years ago when he presented the TV3 Sunday Lunchtime Programme called Agenda. He used to have Damien Kiberd and some beardy fella from the Sunday Business Post appearing on the programme offering analysis. Bertie came on one programme, and when David asked him to explain why Irish houses were so expensive, Bertie explained the ponzi housing bubble economics as ‘the law of supply and demand’. Looking back, Bertie was a really good comedian, he should have been invited to Kilkenomics.

    • munsterman2011

      I think that it is ultimately inevitable the ECB will end up monetizing the debt and effectively printing money for a period. This will result in devaluing the unsustainable debts of the eurozone. Markets will likely see a strong bounce and economic growth should return. Of course it won’t be a free lunch and the knockon effects might be higher inflation and certainly countries will have to adhere to stricter fiscal management. Tighter fiscal management is a good thing but severe austerity (which is what is being forced on many countries now) will lead to massive social unrest which could have drastic effects. Certainly many respected economic thinkers, such as Paul Krugman, believe that quantitative easing by the ECB is now becoming increasingly likely despite the continued objections from Germany which had an obsession with keeping inflation low. There seems little alternative at this stage, desperate times calls for desperate measures. Germany continues to dictate the rules to everyone else while they have gained most from the Euro. McKinsey issued a report recently whereby they stated that two-thirds of Germany’s economic growth since the introduction of the Euro has come directly from being part of the eurozone. Essentially Germany has being getting a discount of approximately 30% on its currency value which has led to it being the second biggest exporter in the world. It is time that the rest of Europe joined together to start exerting strong pressure on an alternative coherent solution than that favoured by Germany. At the end of the day the ECB is supposed to be a european institution not a quasi German one. It is particularly galling to see our so called government effectively sitting back and not even making a contribution to workable and much needed ideas amd actions. This is certainly not what the Irish citizens voted for earlier this year in the general election.

      • Adam Byrne

        I love Germany and all things German and have enjoyed many wonderful times there. Also, my brother lives in Dresden and absolutely loves it after being miserable in Dublin for years till he finally left.

        Having said all that, it’s about time the Germans woke up and smelled the coffee.

        1. They were bailed out after World War II and had their country and economy reconstructed despite that fact that they (for the large part) started the war that destroyed Europe.

        2. The German hyper-inflationary episode was approximately 80 years ago; how much longer are they going to bleat on about their fear of inflation? It’s simply not going to happen to that extent no matter how much money the ECB prints. Get over yourself Germany. Would you see Ireland worrying about a reoccurrence of the famine if the potato crop failed in one particular year?

        3. German banks made reckless loans to the tune of hundreds of billions of Euros to feckless spenders in Ireland, Greece and elsewhere. What happened to German prudence? What happened to due diligence and checking out whether the people you loan money to are actually willing and able to pay it back to you as agreed? The responsibility rests both with the borrower and the lender in these sort of situations (as the Bible says, neither one nor the other be – something I personally live my life by). German banks made reckless and ridiculous loans and have to shoulder at least 50% of the blame for doing so.

        Apart from my 3 points here, I also agree with ‘munsterman2011′ in regard to how much the German economy has benefited from the Euro – now it’s time to help your neighbours Germany as you have been helped.

        So suck it up Deutschland and print-baby-print – unless someone else has a better solution?

  2. wills

    The markets determining democratic political leadership and dictating economic policy means financial elites are running things.

    I for one see this as insane. Where does this state of affairs end.

    What happens when the plunder system runs out of treasure and loot to swag bag. What then??!!

  3. Wait…..we know why David says we only have till Christmas and that is because …….the Moon WOBBLE is on 12th December …he has come round to his economic astral subconsciousness.

    Fireworks .

  4. Ray01

    Thanks David – have read your commentary for a long time with great interest. However, as ‘mediator’ just mentioned (and beat me to the punch!), what can we, as Mr and Mrs Taxpayer, do to:
    1. Safeguard our current savings against major devaluation – send deposits to CHF, NKr, or even good old GBP Sterling?
    2. Influence the muppets that are governing this country to do what is right for us as a genuinely well-meaning people by and large, instead of repeatedly meekly acquiescing to the ECB and Franco-German dictatorship?

    My feeling is that the answer to both is the same – send whatever cash we have to another currency. Some guidance would be deeply appreciated by your followers and many more.

    • CitizenWhy

      Whatever you do, do not put your money in Chinese currency. Consider a mix of Canadian and US dollars, Brazilian currency, and Swedish and Norwegian currency,

      Recent elections in the US suggest that the US will use stimulus to go forward, not austerity. This may seem like a way to cheapen its currency but it grows the economy (unlike Europe). I simply do not see how Europe can survive more austerity to pay off rich bankers.

    • tony_murphy

      You’ve come to the wrong place Ray01, go check out Max Keiser, Mike Maloney etc.. they will give you proper advice, but to summarise for you, get yourself some gold+silver. some real assets. Be sure and get physical gold + silver, do not buy paper metal. And be in a position to get rid of them when the herd rushes in

    • tony_murphy

      check this our Ray01, we are all collateral

      you will find out who owns you, and what paper money is..

      be careful of disinformation, and those who appear to be on your side, they are the most dangerous

  5. corky

    Here here, come on David get off the fence and belly up, what to do !!!

  6. Julia

    Very interesting article David. I’m beyond worry now though. Dorothy just posted on the last article a remark about Germany possibly losing their AAA rating, since they have lent a lot of money to foreign banks. I’d love to read more about that.

    Good news – some one in Cork has invented biodegradable chewing gum!

    • Adam Byrne

      What about biodegradable cigarette butts? Has anyone invented them? Far more disgusting that a bit of flat chewing gum.

    • Dorothy Jones

      ‘Papademos ist ein Glücksfall für Griechenland’ [Papademos is lucky for Greece] : that’s the sentiment expressed in FAZ today. So here we have the acquiescent PM in situ; German banks live another day, minimising their exposure further.
      Julia; the pattern to hike up bond yields [artificially construed and in Italy's case exacerbated by not triggering CDS's on Greek writedown]; causing political change resultant in the installation of ‘nodding dog’ regimes, has been thus far successful by ensuring that debts are paid without writedowns. So: Banks 1: Taxpayer 0
      Papandreou was threatening to pull a ‘Scarlett O’ Hara’ on it [pulling down all the drapes in Tara]; which would have triggered the ‘Kasus Knaxus’ I referred to in my previous post.
      That would have ‘upped the anti’ to this nice little gig. French Banks may be downgraded [I have a fiver on next Tue 22 Nov] but if this gig had not been played out, German banks may have been ‘compromised’ at this stage. The apparent strategy is to keep this show going…and by the time the two-tier system is inevitably put into place, significant amounts of debt will have been paid, even if peripheral countries subsequently default due to socialising of the amounts.
      The ECB involvement poses the solution as David outlines….but here’s the rub: the views expressed by Jurgen Starck reflect that of the German public. There is no appetite for this mechanism involving and it will be resisted in the strongest manner. Caveat Emptor to those who fear to tread that path….the German attitude to this is an ‘immovable object’ in every sense. It’s Darwinian from here on in.

      • Julia

        So as you say – Banks 1: Taxpayers 0. We in the “nodding dog” regimes are amazing, aren’t we? Kenny, Gilmore and Noonan “dismayed” last night when the local banks refused to pass on a rate reduction. What did they expect? It’s always been Darwinian, dog eat dog. Only charities act on good faith. Businesses don’t. Anyway, thanks. Very interesting, as always.

        • Dorothy Jones

          Re bankers: The irony of it: A banker had a dreadful piece in Irish Time Nov 8 bemopaning a perceived lack of regulation in the Architectural prfession. Said irony was lost on him obviously… was full of inaccuracies also. I wrote a letter to the Editor; it’s in today’s Irish Times 11.11.11 along with others on the subject.

          • Steaf35

            Just a little note; Anglo – Irish are still wasting taxpayers money to the tune of 100s of thousands; They recently re-furbished their offices with no expense spared & are presently advertising for staff; This is absolutely farcial on a cosmic scale. Another e-mail to the Taoiseachs office I wonder requesting a reason re same…….more than likely still not worth it..!

  7. franko

    Maybe it would be better if they dont succeed. Price of being in Euro is becoming too high. Being able to burn bond holders and not having others(ECB) dictate internal politics might prove better in teh long run than having a sibnglr currency despite its otehr advantages

  8. CitizenWhy

    Europe’s commitment to the banker class sounds like a scheme to consolidate assets into fewer and fewer hands.

    Elites always rule, everywhere. The only difference is for whose benefit (besides their own) the elites rule for. For the people as whole? For the elites only? For the elites plus “useful” non-elites (doctors, technicians, etc.)? I see Europe choosing the third route.

    On the other hand Europe has regularly, in the past, collapsed, with war as the means to reestablish a social order (with smaller populations of trouble makers and veterans committed to “patriotism,” that is, loyalty to elite leaders).

    Which way Europe?

  9. Peter Atkinson

    As i see it and for someone who went through the currency crisis of 90-92 and a 16.25% mortgage there is clearly a game afoot here. Its knowing what the end game is that matters. This all stinks of a push for federalism and germany v ECB. Who has the stronger hand will determine who will win. It would be ironic if we all ended up in a German confederation of states (with the exception of the UK) without a bullet being fired or a drop of blood being spilt. The sad part of it all is that the ordinary people in the street don’t know what they know and are being spun the biggezt pile of pooh since the foundation of the state. You all saw it on Monday night and that joker Cowen who once upon a time was Minister for Mayhem (sorry Finance) and was being feted by all and sundry. He was actually in charge of your hard earned pesos at one stage

    • Lord Jimbo

      Cui bono? Berlin is being rebuilt as the capital of Europe, all major EU competitors have been taken out of the game, with France hanging on in there, but it may well be put to the sword when the Germans refuse to cough up the money to cover the bets.

      The problems inherent in the Eurozone has finally come to the fore, and of course money or lack of it has forced the issue.

  10. Pat Flannery

    I am wondering where all these billions of pension funds will go as the sovereign AAA market shrinks.

    Will German bonds and other ever-narrowing “safe havens” go to zero interest? What then?

    How long before this happens? Is that what the markets are mulling right now?

  11. CliveG

    Ray I agree with you.. the ‘Muppets’ are preoccupied with political posturing.
    It ‘s time to get of out of Dodge …

  12. grenaldi

    In terms of how Irish residents in other countries can open bank accounts in other countries etc, check out which has some fairly detailed instruction on the subject.

  13. molly66

    All this talk about Europe is not helping what I would now call the war at home,I hear the post man outside my house and I went out to greet him and collect my post,, as we spoke about the state of this country,he said his son has lost his job and his son and the girl friend are off to oz because there nothing here .my post man said I can’t take anymore cuts my well is dry but make no mistake that’s what this government has on the cards for us . I think we will see car tax up,fuel up cut here cut cut cut. This government is not for the people and if they think that the joe soaps are going to sit back and take it I for one will be on the street and I hope I will not be alone enough is enough,my brother is 13 grand in arrears with his mortgage he works for the hse and has 4kids and can’t make ends meet and he’s far from alone in that .this is the legacy of berty / Cowan and the greens ane the kenny /Gilmore shower who told lies to replace them and are every bit as bad as the last shower now all that has changed is we now have a new shower. Ask your self this are we any better of under the new shower I for one am worse off like a lot of friends feel the same .the resentment is growing and growing and this budget will be the straw that broke the camels back.

    • Deco

      There is the flawed inherent assumption, that the same rules – but this time, if the rule breakers are kicked out – will result in “stability”.

      This is the problem with these clowns. They don’t get the source of the problem. The entire “too big to fail” nonsense is destroying the whole thing. The Gordon Brown/Dan Boyle doctrine of saving the banks before everybody else is a recipe for disaster.

      Let capitalism take it’s course on the rich, for a change.

  14. ppmoore

    Silly question maybe.
    How do you open a bank account in CHF or NKR?
    Do you have to travel to these countries to do this?

  15. DB4545

    So the European project with the euro as a central plank is heading for a wipeout.Our political elite gambled on hoodwinking global markets with the guarantee to bankroll an unknown level of private debt. The markets called their bluff. As any gambler with a bigger pot was bound to do. In this way our politicians demonstrated to the world the reckless and brazen incompetence underpinning decision-making in this State. We elect a Government to govern prudently, wisely and fairly. I don’t think any reasonable person could view the car crash economy before our eyes is anything other than the result of criminal recklessness. Can anyone please tell me of another (democratic) country in the world where those responsible would be at liberty and collecting pensions in excess of 100,000 euro while patronising the electorate and taxpayers who fund this obscenity?
    Where will the money go? And in what currency David?

  16. Malcolm McClure

    Events have moved fast since yesterday when David penned this article so it’s worth mentioning highlights.
    The Italian 10 year bond has risen from 6.8% to 7.25%, well above the 7% point that David said demolished market confidence in Ireland and Portugal. Italy Needs €300 Billion to see them through but the Troika only has €200 billion to cover all needs.
    Berlusconi has said he will resign but no sign of a replacement.
    Greece remains a basket case, with no semblance of leadership, but still wants to milk every last cent it can get from the EFSF.
    Interestingly the Gold price has retreated from $1800 to $1770 mainly because of the day’s increase in the €/$ exchange rate from 1.3824 to (latest) 1.3545. That reflects both the dollars relative strength and the Euro’s weakness. They will probably approach parity before month’s end.

    IMHO all the delays are orchestrated to allow the wealthy as much time as possible to unwind their positions in toxic assets.

  17. Peter Atkinson

    Is that Sean Fitzpatrick offering to open a bank account in the Carribean. Forget the bank account. A chunk of the yellow stuff in a good strong safe should see you through the next 10 years. The euros can be used to paper the walls on that pile of negative equity you are sitting on or as wall insulation in the case of the Priory Hall residents. Listen to nobody. Trust yourself. Remember you know more than you think you you do. Everyone who advises you has an agenda. Why the hell would they be advising you otherwise

  18. Sorry I posted this on the wrong article earlier;

    ECB and Christmas – History’s echoes;

    Many moons ago (including wobbly ones) at this time of year I used to “sense” Christmas. My childhood was not idyllic nevertheless November’s starry skies still managed to herald the approach and existence of a “peaceful magic”. Later as an adolescent I became fascinated by the Great War 1914-’18 and quite frankly that fascination has never left me. The above sentences may seem totally unconnected but bear with me.
    In imagining Ypres, Verdun, Somme or Flanders etc. I guess I could easily relate to a young man entrenched in hell and gazing up at a starry hope! Later at 18 I joined the Army and served a term in the Lebanon. During that time I learned much about the very bright and very dark sides of all our human natures.

    Now this DmcW blog is an informative place where there are many things to be learned. There is debate, commonality, difference of opinion, reflection, education, entertainment, criticism and speculation. For three years now my observations and opinion of the Global Financial Crisis has been affected by my association with this blog and many of its subscribers.
    Todays article poses the question “Who is threatened by democracy?”

    When Generals are threatened by peace;

    Christmas Eve 1914 – a spontaneous truce of humanity broke out in many trenches. Tens of thousands of men saw themselves and their so called enemies for what they truly were; Ordinary peaceful folk seperated only by the poison of politicians and the economics of conflict. After Christmas Day the Generals had some difficulty in getting the “volunteers” to re-engage the enemy. More poison/propaganda/artillery and trickery was required in order to get the lads to re – hate Fritz or Tommy respectively.
    But that can’t really happen to those who saw the truth and many men kept that night and that truth in their hearts until their dying day. You see it’s a universal truth and amazingly in this world somebody is always trying to cloud it. And those that would cloud it have everything to gain from it in a Halliburton sort of way. The blindfolded are thus led “TO LIBERATE” while those with vision are the only ones who notice the anagram of “OBLITERATE”.
    The other truth is that everybody concerned knew the truth about war that Christmas Eve ’14. The tragedy is that the “leaders” denied it, ignored it and made sure there was a bloody offensive planned for the following Christmas Eve ’15.
    Humans are history’s lemmings who never allow facts to detract us from our cyclical horrific plunges into insanity.
    Fact is Sarkozy, Merkel, Obama, Enda, Ollie, ECB, G20 etc. etc. know its all wrong — but they just cannot fight their nature! They’re caught up in the madness. They consequently either fear personal ridicule more than economic meltdown or they have something to gain in a Halliburton sort of way!

    WWI produced at least one magical hopefilled night — Yet WWI led directly to WWII

    And with

    I hereby endeth tonights lesson. I hope you enjoy!

    • mediator

      Excellent Paul, Thank you.

    • coldblow

      Hi Paul

      Madness makes the world go round.

      But I think the significance of Christmas 1914 has been greatly exaggerated. In fact your whole analysis of WW1 above is clichéd, un-nuanced and fantastic. I’m just comparing your view to mine, somebody who has all the facts etc. This is what I don’t like about blogs, you just have to say what you think. Oh yes, and did I included ‘unhistorical’? All right, there is definitely a poetic truth in there, I’ll give you that. A mate of mine from Bradford had two great uncles in the trenches. When the officer kindly asked them to follow him over the top they just told him to f**k off. They survived the war.

      Was it yourself who visited the OWS crowd the other day (on another thread) and they were voting whether to talk to the press etc.

      I posted this link already a couple of times but I think it’s ok to post it again as I doubt anyone bothered with it.

      “At the end of March this year there was a wonderful moment of television interviewing on Newsnight. It was just after student protesters had invaded Fortnums and other shops in Oxford Street during the TUC march against the cuts. Emily Maitlis asked Lucy Annson from UK Uncut whether, as a spokesperson for the direct-action group, she condemned the violence.
      Annson swiftly opened the door that leads to the nightmare interview, saying: “We are a network of people who self-organise. We don’t have a position on things. It’s about empowering the individual to go out there and be creative.”

      “But is it wrong for individuals to attack buildings?” asked Maitlis.

      “You’d have to ask that particular individual,” replied Annson.

      “But you are a spokesperson for UK Uncut,” insisted Maitlis. And Annson came out with a wonderful line: “No. I’m a spokesperson for myself.”

      What you were seeing in that interchange was the expression of a very powerful ideology of our time. It is the idea of the “self-organising network”. It says that human beings can organise themselves into systems where they are linked, but where there is no hierarchy, no leaders and no control. It is not the old form of collective action that the left once believed in, where people subsumed themselves into the greater force of the movement. Instead all the individuals in the self-organising network can do whatever they want as creative, autonomous, self-expressive entities, yet somehow, through feedback between all the individuals in the system, a kind of order emerges.

      “At its heart it says that you can organise human beings without the exercise of power by leaders.
      As a political position it is obviously very irritating for TV interviewers, which may or may not be a good thing. And it doesn’t necessarily mean it isn’t a valid way for organising protests — and possibly even human society. But I thought I would tell the brief and rather peculiar history of the rise of the idea of the “self-organising network”.
      Of course some of the ideas come out of anarchist thought. But the idea is also deeply rooted in a strange fantasy vision of nature that emerged in the 1920s and 30s as the British Empire began to decline. It was a vision of nature and — ultimately — the whole world as a giant system that could stabilise itself. And it rose up to grip the imagination of those in power — and is still central in our culture.”

      • Hi Coldblow,
        As I said above on this site: There is debate, commonality, difference of opinion, reflection, education, entertainment, criticism and speculation.
        In my humble opinion that’s what makes it an interesting place to be!

        The thrust of my contribution is simply that as a species we do tend to cyclically/historically launch ourselves into insane breakdowns.
        And I feel once again that the patient is displaying symptoms of the nasty old disease!!

        I really don’t mind being poetic about it and quite frankly I hope I am wrong!

        As for you comments on OWS and Annson……..It’s interesting that one stupid ignoramus is portrayed as the voice of all those concerned people?

        For a man of your historical factual knowledge I’m surprised you fell for that one?

        • coldblow

          Hi Paul

          You’re right not to take me seriously – nobody I know in ‘real’ life does. I was of course jesting about being in possession of all the facts, known and unknown. If I wanted to be pompous I’d have used ‘ahistorical’ instead of ‘unhistorical’, better still reworded the phrase to feature ‘ahistoricity’, a word you’ll agree nobody would ever dare argue with.

          You may well know more about this than me, but the impression I always had was that the populations of Europe were largely gung-ho at the start of the war (my Yorkshire mate’s uncles and their ilk excepted). I think Graves (Goodbye to All That) tells the story of a troop ship bringing out new recruits to France while another ship bringing returning wounded was docking. “Are you downhearted boys?” cried a soldier from the second ship to them. “No!” they shouted back cheerily. “Well you bloody soon will be!”

          Everyone has their own way of looking at things, and I try to remind myself of that. (If I don’t I will soon be put right.) But I don’t think that the Christmas 1914 eruption of humanity (which is what it was) is typical of wars – more likely would be for a scout party to head for the enemy lines under cover of darkness to slit a few throats. This fellow feeling is probably more a symptom of the spirit of the age, an optimistic one I think and which had experienced several years of humanitarian progress. But it’s the same spirit that was responsible for the jingoism. Also, I don’t accept your contention that everybody knew the truth about war at that time, only the leaders were denying it. It would be uplifting if it were true. So I don’t understand why you say you hope you’re wrong, when I hope you’re right!

          On the madness thing I have been saying something similar. I have an idea that unconcsciously, or largely unconsciously, a consensus will spread and then suddenly we’ll be flipped into a new order of doing things. Pure speculation of course.

          That’s all by the by. I don’t understand your point about Annson – I’ve never come across the name except in this article. From the very little I’ve learned abou Curtis (the author and maker of some tv series about machines) he’s entertaining but very cavalier about selecting facts and stories to suit his purpose – when I first linked to this article I accompanied it with a tv review from the same edition of the paper which was poking fun at him about this. You might tell me more about Annson.

          Curtis isn’t saying that they are stupid, nor am I. Various people have come out in support, in various ways and to various degrees, of OWS, including I think Kunstler, the Observer’s Pol. editor, probably Hudson (can’t remember). I admit to being very sceptical and I’m afraid I don’t even feel much sympathy but I’m open to being proved wrong. But the point I was trying to make is that there are lots of generally accepted ideas out there whose provenance is never examined. The OWS people organizing a vote to decide whether they’ll speak to the press or whatever – that strikes me as a self-conscious charade and open to parody. I’m sure these people’s views are largely shared by each other, so why go through this ritual? We had democratic elections here recently. You spoke to them: how big are they on say humility? As I say, I’m sceptical and I won’t enjoy it if you can prove me wrong, but I’ll have to accept it.

          When I was at university, as I also mentioned here before, in the late 70s, student behaviour was clearly modelled on the the 60s radicals. I experienced BS union meetings and in my first year there was a big protest and sit-in over disinvestment in S. Africa, which I did not participate in. Even my mate from Bradford got carried along with it, along with everyone else in our student house, and he will always call BS, more so than me usually. I must ask him about his view now. My guess is he’ll come clean, but you never know.

          As I said earlier, Paul, don’t take me too seriously. Just thinking aloud.

  19. pauline

    What happens if the ECB fails.. doesn’t that invalidate our debt that is mostly owned now by the ECB? That could be cool..

    • ppmoore

      Someone once said that you can only be certain about death and taxes. You can add debt to that mix. Debt is never cancelled; it is always paid, either by the debtor or (in the case of bankruptcy) by the creditor or the taxpayer

  20. Peter Atkinson

    I assume you all heard the mumblings about Iran being once again being a nuclear threat. Does this have a familiar ring to it. I can hear the likes of Lockheed singing at this news. Just watch their share price over the nexf couple of weeks. We are all getting sucked in at a rate of knots. And guess what. Some bloody war based video game is expected to gross €1bn dollars over the next couple of weeks. Surely that says it all. Between that and the latest offering from Apple ie the 4s I really think the world has lost its direction. In fact this whole European bankruptcy could be played out on some form video simulator. In fact how do we know thats exactly whats already happening. The sad fact is that we are dealing with real people and I reckon that human life has gotten so cheap that they have replaced the video game with real humans. A lesson in ultimate voyeurism.

  21. rogerlde

    New member, first post!
    As a Nordie now in Dublin 12 years, I’ve built up a 85k EUR savings..Whats everyones feeling here on belting that back into my GBP account in the event of catastrophic EUR failure. I’m sure the UK will not be unaffected by any potential breakup but just wanted to hear some (semi?!) informed opinions. Apologies if this is covered on another thread…

  22. Lyndon Jones

    Now it has really hit the fan , Italy cannot be saved , I bet Merkel and Sarkosy are being kept up all night or not getting much sleep anyway .
    What I would love to know is what happens to tracker rate mortgages if the euro fails ? I guess a new punt will try to be pegged to the euro .
    The good news is that Ireland cant get any worse for the immeidate future , our banks are rock bottom and austerity will get us to 3% borrowing of GDP .
    With the budget only 4 weeks away , the euro may not be in existance then

  23. dwalsh

    It seems to me David’s solution is just more of the same…pour more petrol on the fire…or pour more money into the maw of the ravenous beast that is destroying our economies and will destroy our societies and civilisation if it is not destroyed; and destroyed very soon.

  24. dwalsh

    Greetings All.

    I’ve been absent for a bit. I hope you are all well.
    I want to recommend this article from Fintan.
    And add some reflections of my own to what he writes.

    It is not merely that capitalism and democracy have parted ways; it is that capitalism, in the form of national democratic industrial consumerism, is coming to an end. The basis of power in the human world is shifting from national democratic industrial consumerism to….??

    Those who work in the globalised corporate world believe themselves to be individuals successfully competing in a free market. They believe the Darwinian neoliberal economics they were inducted into through education and media. What they don’t understand is that global corporations are more akin to the old totalitarian soviet communist system than to democratic liberal individualism and freedom.

    In fact they most closely resemble the royal priest-king empires of the ancient world; the likes of Egypt or the Persian empire. They are hierarchical hive-like structures. Anyone who works in them comes to know this in a direct intuitive way. But on account of the intense propaganda they are subjected to; and their dependence upon their salaries; they cannot see it clearly for what it is.

    Because of their trans-national status which gives them immunity to law; and their immense capital and financial power (control of resources and markets) these corporations are an emerging new form of State; or more properly global empires. They are the new form of order and power that is straining to come to full dominion of humanity and the Earth, through the mechanism of this crisis.

    At this time they are broadly cooperating to bring about their new world system and have no doubt negotiated how the world is to be carved up among the principle ‘royal’ capital dynasties at the summit of global corporate power.

    A supreme dynasty and ruler could eventually emerge in future times. But that would be in a number of generations; not in our times. In our times they will remain in the shadows behind the public leaders/managers; just like they do today and have done since they disposed of the royal aristocracies.

    If they are successful, the first form of integrated global civilization will be in a sense a reversion to the patterns of the earliest river valley civilizations in Mesopotamia and Egypt and elsewhere; but at a global level; with corporations as the imperial structures through which the royal capital dynasties will rule.

    As I say this will come about in a graduated way. The actual situation with regards to power will be obscured by governance systems that will appear to be representative; much like the old national democratic systems obscured the fact that they were never truly democratic. We can see this truth quite clearly today in the USA political system and in Ireland in the actions of Noonan and our government handing over billions to unsecured bond holders; and the overriding of the Greek population.

    So as Fintan rightly says we are living through the most amazing of times. One of the greatest historical shifts in human order and civilization is unfolding before our eyes.

    This vision I present above is not the kind of noöspheric development I want to see. But it may be the best that humanity can manage at this time. I hope that wont be the case. I hope we will do better than that.

    A lot better.

    • Deco

      For the first time in ages I find myseltt agreeing with Tintan.

      It is a pity he could not have copped this before the Lisbon 2 debacle. But he now realises that the EU superstate will attract the type of political meddling in the economy, and business meddling in the political establishment that will make misery for everybody.

      • coldblow

        I hadn’t read Tintan for ages so I thought I’d read it too. I spent a bit of time trying to separate the reasonable from the superficially reasonable, but it seems reasonable enough – and I admit I’m a little disappointed by this. I’m not so sure about his depiction of the democracy-capitalism dynamic though. Just thinking back to Polanyi, he made the point (I think) that industrial capitalism unfettered and utopian by nature and will destroy host societies without protective counter-measures(so he wouldn’t agree with your views on letting capitalism take its course). I’m also not sure that the last 30 years is really all that different from earlier periods. Polanyi writing in around 1940 said (again, I think) that at least the old fundamentalist bedrock ideology surrounding the efficient functioning of the market etc had been utterly discredited by the events of the 20s and 30s and vanquished. Only that they have reappeared in the last 30 years.

        Did he support Lisbon? If so, then I’d have to discount this article further. What interests me is the wider cultural muddledness that allowed or encouraged this financial and economic lunacy to flourish. Is Tintan’s record unblemished here. It’s not that I think he’s dishonourable, just mistaken. I’m not sure about this, not ‘taking’ the IT, but it’s my impression. I know Kerrigan in the Sindo kept his eye on the ball back then as he seemed so out of step with received opinion, almost gratuitously so. I think what irritates in Tintan is that he seems convinced that he has all the answers.

        Tintan does make however a crucial point about Merkel backing down on bondholder burning last year (presumably due to US pressure). Geithner apparently intervened in both the Irish and Greek ‘bailouts’. Hudson makes this point explicitly:

        “MICHAEL HUDSON: Well, you’ve asked about three questions there. Obama is here to represent the interests of the American banks. And the Europeans are very angry that a few weeks ago Tim Geithner, the bank lobbyist, came over and insisted that Europe not forgive Greece’s bank loans, not let Greece write down the loans, and indeed that it not even claim that Greece should do what Argentina is and write down the loans as a premise.

        “Mr. Geithner explained to the Europeans that the largest insurers of the Greek debt are American money market funds and hedge funds. And he said American hedge funds and banks would lose money and actually would crash the U.S. economy, if Europe made a concession to Greece to bring debts down to the ability to pay. So, instead of a debt write-down or a haircut, the banks said, “OK, we will agree with what the Americans are insisting on, and we will ask for a voluntary write-down by the banks on the Greek debt they hold.” Obviously, European banks who are not part of the credit default swaps have disagreed with this. So the Americans are putting immense pressure on Europe, saying, “We will wreck your economy, if you don’t wreck Greece’s economy.””

    • redriversix

      +1 Dwalsh

      Nice to have you back…


    • coldblow


      Welcome back.

      I just got it! noosphere – noose fear.

      Is nous the Gk for mind? I seem to recall.

      I see you are now putting two little dots on top of the o. Little girls like the name Chloe as it gives the owner rights to those those little dots.

  25. Italian Samba

    What is the difference between Ice and Water at zero degrees ?

    This is what we have now in the leadership in Italy . Berlusconi is there and he is not .Currently Berlusconi is portraying his country to be ‘Ice’ . The Markets are very active and are clearly not accepting that fact and see ‘Water’ only .

    There is a subtle political latent energy in place now and the temperature is still the same namely zero degrees . Political stalemate is puppeteering to be ‘Ice’ .

    This Latent Energy is very damaging although not yet fully transparent it will in time become so .I am reminded of what happened in a similar moment of time in Libya recently when the ancient artifacts and gold were raided from the Benghazi Museum unknown to those who were present nearby.

    So how will this manifest itself in Italy ? Who will gain ? Who will lose ? What will move and from where ? What will be its destination and why ?

    What is very important now is that ‘it is happening NOW’ . We are nearby and feeling unaware of its happening .What is becoming of our Eyes ?

  26. gizzy

    Ireland will now turn borrowers who did very little wrong into tenants of Banks who did a lot wrong.

    Ireland will now turn Banks who were reckless into big landlords.

    And wait for it the balance of the loan owed above the value of the house will now be owed by the tenant to the landlord.

    I know this may get lost in the bigger macroeconomic game being played out but who in effing hell came up with this and is trying to pawn it off as a good deal for the homeowner.

    • Deco

      At this stage the state is already functioning as a debt collection agency for failed speculators who held Anglo Irish bank bonds.

      I do not see an article in Bunreacht na hEireann where it says that the function of the state is to collect debts for failed speculators.

      Neither to I see an article which says that the purpose of the Irish people is to toil endlessly to pay back gamblers, and to make sure that their lives are structured in such as way that the gambling debts take priority over hospitals.

      Maybe that is what will see next. A move to make such measures constitutional by the local stooges serving the Imperial regime.

  27. Deco

    Roger Bootle, London based economist gives his views on events.

    He has no confidence in the leadership from Brussels.

  28. Deco

    Latest update concerning what is going on in Europe.

    It seems to me that there will be a new EU Treaty.
    (amazing how the idiots who brought us into this mess, have decided that the problem is not enough EU Treaties…).

    The usual scenario of an EU Referendum with an engineered result “scare the shite out of the voters, when the voters are ‘ready’….” (i.e. when the people are prepared for it by the media saturation propaganda).

    • 33square

      easily done as we well know… all it took were some well placed ads and a bit of “it’s unpatriotic to vote” this way/that way and we flip flopped! the problem is most of the people in this country TRUST their governance. the word “conspiracy” scares them. most of them fear saying the word above their breath, in case others JUDGE them. to conspire is to breathe together, to breathe as one. when will the fogeys cop that inda & co might not be all they’re made out to be, that they might not even be in control? was their previous suicide promoting leader not enough of a kick in the face for them to realise that their governance doesn’t give two shits about their wellbeing? conspiracies happen, it’s a fact of life. sticking your head in the sand doesn’t make them go away, it just makes your ass an easy target for kicking!

  29. It seems the Euro is taking longer to die than Cleopatra. In my view the sooner it goes the better and we can all move on .The question is what with ? I am not sure a return to multiple national currencies would be the best option. Rather a block currency covering Ex Euro zone states within certain credit brackets.
    In other words a grade one two and possibly three Euro or out;with fixed exchange rates, To replace three.All administered by the ECB.
    It would be up to the participating states to prove to the ECB that they qualified for whatever bracket .AND UPTO THE ECB TO MAKE SURE THEY DO.
    It seems in my humble opinion to be the only possible way to save any gain from the current Euro experiment.

    • 33square

      why do you think google is investing in near field communication, o2 has a money card and bitcoin has made it into the headlines of late?

      digital baby, it’s the future ; )

    • 33square

      i should add that there’ll be a few more acts in this play (the whole world’s a stage) before we get there, but it will happen and more by coersion than by choice (maybe that’s necessity). we’ll beg for it, and we’ll get what we prayed for!

  30. SleeplessInWicklow

    The politicians will find some way to extend the sick patients life beyond Xmas. Politicians have an amazing way of keeping their vested interests alive and well. They will come out with more rubbish like the Greece deal and the leveraged bailout fund.

    Our great leaders might agree to sell Donegal to China for a hundred years. The chinese build a nice airbase there and we get €100 billion in exchange. Hell even pretending to do so might get the USA worried enough that they would print us a $100 billion to keep china out of europe.

    All I am saying is I wont say the euro is dead until it really is dead. Anything and everything should be considered.

    My vote in the destruction of the euro goes to Germany leaving the euro before Xmas. I just dont trust them anymore. They have shown amazing self centred policies from the start of this crash and I dont see it changing anytime soon.

  31. flowerofthemountain

    Since the inception of the Euro project, Ireland has been useful as a pawn.

    A ‘hedge’ deployed by the Anglosphere dominions of Wall Street and The City of London: just in case the Franco-German Europa Dominion Project worked.

    As events unfold, Ireland faces an existential dilemma. Two choices seem possible.

    Continue to bail out miscreant international banker/developer classes by deflation/internal devaluation.

    A decade long Depression could allow Ireland to join whatever Germany allows to emerge from the current chaos. There will be some ‘Germanic Neu-Euro sound money project’. This option would mean shafting the US/uk creditor classes.

    Alternatively, default from the Euro and seek refuge in the Anglosphere via a nua Punt linked to the £. Ireland’s IFSC ‘Canary Dwarf’ will no longer be viable in such a post-Euro scenario. This option would strategically prioritise the US/uk creditor classes whilst shafting the Euro Franco-German creditor classes.

    It seems to me Ireland only has a choice as to which type of insolvency it chooses.

    Bankrupt within the Euro to become a vassal state of Germania. Or bankruptcy upon Euro default, to become even more of a vassal state of the Great Satan / Little Devil US/uk hybrid financialised monster.

    What no longer seems credible is a future as an ‘independent’ or ‘sovereign’ nation state in any historical sense. From 1916 to 2016: quite a journey from imperial bondage to religious bondage to financial debt peonage/bondage. So much for ‘neutrality’ of any variety.

    As for ‘regime change’ in Ireland: the FF/FG incubus/succubus has revealed itself within months. In what way are FG different to FF? Both are revealed as auctioneers selling Ireland to their next Masters. The feudal FF/FG hypbrid will collect taxes/enforce debt peonage on ‘the little people’: to repay whichever neo-colonial Masters now emerge.

    No one with any grasp of the real history of ‘Ireland’ could possibly be surprised by unfolding events.

    best wishes

    • I agree, there are no surprises, not yet.

      The rapacious policies that are implemented in the very same incrementalist manner the European reactions to this debt crisis were unfolding, sacrificing millions of people to serve the interests of a few, maintain status quo, establish a long term neo feudal control structure that dismantles the very core of every democratic foundation.

      It is a coup d’état!

        • CitizenWhy

          I love it. With acknowledgement I will be using it in my USA Tweets.

          Of course in the USA we also have no say in how our big banks are coddled and bailed while they continue their irresponsible practices. So perhaps I should say US(SR)A. Or US(GS)A. GS for Goldman Sachs.

          But we do have the option of putting our savings into credit unions, with savings federally insured up to $200,000. In fact Occupy Wall Street’s Bank Transfer Day saw 650,000 accounts switch from banks to credit unions.

    • @molly

      Very Lucid . Well Done and Thanks.

    • coldblow

      Hi MollyG.

      That’s an interesting analysis.

      Definitely right in your last 5 lines. As Crotty described them, Tweedledum and Tweedledummer. Auctioneers’ Republic.

  32. Deco

    The more this debacle continues, the greater my admiration for small economies who stay outside of the EU, and who manage their affairs, dilgently, resourcefully and carefully. And free of all the Bullshit of all these conferences, gimicks, and manovring.

    I am also realising that Michael O’Leary was correct when he stated that we lost our sovereignty when we binged on borrowed money, in gradually increasing cycles between 1994 and 2008, and especially the mad years when Cowen was Minister for Finance.

  33. MOCON

    It has been my view for the last fifteen years that the politics of ‘social democracy’ would result in the failure of the EU project. Democracy can only function within a constant stream of capital to tap into. In Europe we are now going through a change where the availability of money to fund the type of politics that got us here will no longer be available. Everyone is talking about Greece, Ireland and now Italy, will the Euro collapse, devaluation of the currency, etc. No one is looking at the elephant in the room! This crises is causing an acceleration of the flight of capital from West to East, not just in currency form but more importantly in the form materials that retain and rise in monetary value. Our money is of no value to China or India whereas our resources and markets are. The ECB may well try to save the Euro but in order to do so it will have to run the printing presses overtime and run the risk of the German fear of hyperinflation. So David, I do not agree that the ECB has until Christmas to come to the rescue. It is too late for that now. The dire situation that Europe is on in can only be resolved through politics, perhaps a little less ‘democracy’ in the way things are run would be a good start. Whilst recognising that there is no such thing a benign dictator, we really need to be looking at alternatives to what we now have if we are to get through this.

    • CitizenWhy

      It wasn;t social democracy that has caused this crisis. It was the superstitious belief that markets are self-correcting. Blame the crisis on Wall Street, London and Frankfort, where the evidence points. Yes, in Ireland real estate speculators were allowed to run wild with German, French and British money but the government believed that, since these were loans by the private sector, everything would turn out rosy. The crisis is due to a fetishistic commitment to use public monies to bail out the rich people whose faith in banks has proven foolish, except for the fact that every government in Europe is scrambling to impoverish itself in order to pay off the banks and their owners.

      You conveniently forget to mention that Social Democracy works in the Scandinavian countries, where the banking sector is prudent because the governments are not committed to bailing them out.

      I suggest you read the link below kindly provided for us by dod6.

      the unprecedented divorce between the Eurozone governments’ monetary and fiscal powers would place its members in a fragile position and render them powerless in the face of a crisis.

        • Malcolm McClure

          CitizenWhy: This article is worth re-reading as it shows that some economists get the essential arguments right –well in advance of events. (19 years ago.)

          Utopian fantasies seldom turn out as expected. The EU follows the discredited tradition of many historical precedents.

          • CitizenWhy

            The article is excellent in many ways, including stating what the real purposes of a central bank should be, and that each country, to be sovereign, needs its own central bank.

      • Deco

        The banking system in Scandinavian countries was not always prudent and conservative. They encountered serious bouts of excess.

        Though do they seem to have learned from the experience, and mended their ways…

        • Deco

          Cannot understand why we do not use their experience more concerning the bank restructuring program.

          I mean the Swedes (and Finns) who were involved in the financial crisis in the early 1990s actually know what they are talking about. Let’s face it the clowns running NAMA do not seem to have any idea what they are doing. And neither does the management in AIB.

          • CitizenWhy

            I have always believed that Ireland needed to set up a banking system run by Swedes and Canadians charged with training Irish executives in prudent and civilly responsible management. But the banks would continue to hire some bankers from Sweden and Canada.

            One of my uncles, not a banker but deeply involved in early Irish infrastructure development, was sent one summer to Harvard Business School along with a group of Scandinavian bankers. The professor constantly preached “maximizing ROI” and accumulating individual wealth. All the students agreed that he was spouting a dangerous doctrine. As my uncle said to me, “I’m doing well enough, why would I need more? I was interested in learning how we could build a real wealth for our country and our people. I didn’t learn much there but I did learn some good points from my fellow students.”

            This was long ago. My uncle was politically withdrawn, given his family’s experience of the early politics of the Republic. He focused on putting his German-educated engineering skills to some good use.

      • MOCON

        I agree. social democracy did not cause this crisis but it did allow or even create an environment in which it was inevitable this would happen. Ultimately, greed, expectation, and our other traits mean that a people cannot exist in harmony without governance and supervision. Only some of us, for some of the time, really know (or think we know) or will admit, that what is good for society rather than for us individually are not always compatible. It has been understood for some time that markets are not always self-correcting. Norman Lamont came to understand that when he was obliged to pull the UK out of the EMS on very short notice. We are now understanding that the markets require regulation of varying degree otherwise the markets become like a dog eating itself as is happening within the Euro zone. As for Scandinavian countries – it is not just their politics that is determining their way of life. Their climate and other factors such as their religious history are major influences in their societies. Take Iceland for example?

  34. Watch out for rhetorical changes in the public theater!

    When the german parliament voted on the EFSF, the next increment in the Lego tool box of risible politicians to deal with this crisis, Angela Merkel held a speech.

    It was in this speech that she raised her wimpy voice a little bit, in contrast to her usual emotionally detached way of speaking, and made a statement that echoed in my ears for a few days.

    Since the better part of 1.5 years I call these people Incrementalists, the fanatical worshippers of a currency that is now being promoted and equalized as the guarantor for peace and stability in Europe. Well, of course, this is a ‘Propaganda and Agitation’ and was Merkel’s job under Honecker in the DDR, focussing on the youth in particular.

    In her speech, and I watched this parliamentary session live as I regarded it as one of the more important and potentially historical events, she made this point, People should not take Peace in Europe for granted! and then a phletora of Franco-German centric Euro waffle followed, you know the drill, There is no other way! etc., in short Polit-Prop.

    How dare these people?

    How dare these people to call on the ghosts of war to emphasize their god damn Gradualism as the one and only way, these Incrementalists that are about to ruin the very fabric that holds together civilization in the western world?

    I am saying this because I observe this and other significant changes in rhetoric since two years now, and it is important.

    Europe is about free trade, and free movement of people to begin with, to claim that Europe as a project for peace and stability must fail if the Euro fails is nothing but the statement of political fanatics, who want to link the Euro with Peace in the public brain.

    • dod6

      Superb article from 1992(!) outlining the flaws in the proposed Monetary Union –

      DMcW wants the ECB to solve this – it can’t, it was never designed to. The leadership vacuum was designed into the system.

      It may be just posturing for Merkel to want to link the success of the Euro with Peace – but the failure of the Euro will unleash levels of xenophobia and protectionism that we haven’t seen since the 1930′s.

      What’s the opposite of Peace?

      • CitizenWhy

        Thanks for this excellent link. The big surprise fro me is that the framers of the Euro creating treaty believed that markets are always self-correcting. That is the biggest superstition of our age.

        • dod6

          I think the framers were only interested in advancing integration and containing a reunited Germany. The rest was just details.

          How could financial markets (self-correcting or otherwise) derail these noble, epic aspirations?

          It’s called hubris. From Canute to Hitler, you’d think we’d be used to it by now.

  35. More on coup d’état…

    G-Pap goes, L-Pap comes…. conveniently, the ex Vice of ECB. Remember when Klaus Regling was planted for a few weeks into the DoF, allegedly to head up the investigation into banking matters, a three man team? His job was of a different kind, very different in deed!

    • After leaving the Bank of Greece in 2002, Papademos became the Vice President to Jean-Claude Trichet at the European Central Bank from 2002 to 2010. In 2010 he left that position to serve as an advisor to Prime Minister George Papandreou.

      Shaking head in disbelief!

      • Deco

        Basically the Greeks are stuck with a proven clown in charge. Though on Pravda, we are being told that the markets will take this as a sign of confidence.

        The Greeks would probably be better off if that clown who did not know where the 3.6 Billion came from in the DoF, went over to Greece and took charge of matters.

    • Promoting an arsonist to the chief of fire the brigade!

    • Deco

      This is descending into an absolute farce.

      Check out L-Pap’s career.

      He is as much part of the problem, as Brian Cowen was part of the problem. He presided over the financial waste that created this farce.

      I have zero confidence in the ECB. These clowns are worse than I thought. When Trichet took over the ECB I was a sceptic, because he was involved in a controversy before he got the all clear.

      L-Paps is to function as the debt collection agent of the holders of Greek sovereign debt.

  36. Yesterday I was driving and saw not one but two very large lorries displaying ‘ Shredding Experts ‘, These lorries were mighty big .

    My minds went back to the NIB Bank Scandal .Should I be thinking something else to happen and where ?

    • Peter Atkinson

      Paul Howard in his latest Ross O’Carrol Kelly novel Nama Mia highlights this very occupation.The biggest booming business in the post Celtic Tiger economy he states.I reckon he aint too far off the mark either.Why the hell do you think there is a delay in finalising a file for the DPP in the case of Anglo Irish Bank.They could use all the shredded paper for insulation in the walls of Priory Hall apartments too

      • thirdeye

        I think our past and present governments maybe believe this book is reality to them if they have read it as the Anglo Irish Bank is a good example

    • Deco

      It is all electronic now.

      It requires a comprehensive plan of digital eradication of the evidence. Not like the old films where you see the uniformed bureacrats throwing the papers into a big fire, in a mad rush.

  37. thirdeye

    Latest news on difference costs between France and German 10 year bonds plus the Political interference by Franco German leaders in elected governments in Greece and Italy being told by the 2 largest Euro Currency governments to change the elected participants and avoid any public referendum in Greece has shown European citizens once and for all the so called equal nations in the EU is a fallacy.New announced Greek PM Papademos Greek leader was the person who had brought Greece into the Euro as the countries Greek Finance minister in the first place may appear very strange move because such a person knew that Greece was not in the financial position to join in the Euro convergence rules in the first place.
    Franco German meeting in 2010 and the comments in Doville by France and German leaders also caused the Irish economy to take an IMF bail out should not be forgotten.New austerity budgets going to be unleashed in France and Italy may well spell the end of Sarkozy Presidency and the chances of Socialist leadership taking over the French Presidency does not look to be assured at this time and a possible new French Elections may take place with the upper house Senate of the French Parliament in the hands of the socialists since the present 5th republic came into existence in 1958 could block any new budget proposals added to French protests that will follow in France and Italy is assured.French Presidential Elections may not look as a straight centre left and right wing election as has been in the past.
    Breakaways from Sarkozy’s UMP party NEW CENTRE Party will cut back on the votes that Sarkozy would gain at a presidential election and working class vote has returned to the French National Front and new minor party of and the hope of cutting support of the FN Le Pen’s appeal by the introduction or more women candidates to give more respectability to the FN FN Party of Marine Le Pen gaining the French Presidency could not be discounted if her reported comments on taking France out of the EU and re introduction of French Franc and immigration policy may appear to be very popular to a public to punish the elites within France who they feel has let the majority of France’s citizens down may just work and then we see what the outcome of such a scenario appeared to be a remote possibility may actually come to fruition.The German Greens Party may appear to make strides at local and National level in the German elections due for 2013 have a different view on Europe will also come to play but the damage to the Euro Currency and the European Project may have been fatal blow may have been delivered

    • CitizenWhy

      On your note about the spread between France and Germany, you may like to look at this chart:

      Looks like France, as well as Ireland, Greece, Italy, Portugal and Spain, may be just another German colony rather than its esteemed collaborator.

      • thirdeye

        Well if the French 10 year bond deals keep widening as appears to keep France Triple A rating and new austerity budget is planned in France will have an immediate effect on the French Presidential Elections in 2012 could throw up an unlikely candidate who could be a lightening rod French Nationalism.Euro Currency the remarks by the head of the German exporters, the backbone of the biggest euro zone economy, could manage without the common currency, the head of their BGA industry federation, Anton Boerner, has said.

        “What is important for us is the free market, we do not necessarily need a common currency,” he told the foreign press association in Berlin. “Is there life for Germany after the euro? Yes there is.”

        Shows the Germans may have the old German Mark make a re appearance as Switzerland,Norway and Iceland are doing ok at the moment in such financial turmoil.

        • CitizenWhy

          The monetary union was created politically as a way to enmesh Europe so that wars would not happen agin. It’s not working because it’s constructed all wrong and won’t be fixed.

          Perhaps Germany is trying to kill the Euro. Central and Eastern Europe would be a lot better off on a mark-based system (while retaining their own currencies). The mark, not gold, was the best back-up to east european currencies.

          How long can the Euro stay high? Continued shilly-shallying will devalue it. That devaluation will make it politically easier for countries to withdraw from the EMU.

          • Deco

            The official objective might have been peace, but it seems that big finance had an unofficial objective behind the scenes which we were never informed about….

            At the current rate the Euro is overvalued, and will probably soon be thrashed by the agendas of the corporate stooges like Sarkozy.

  38. dod6

    Here’s another interesting article to remind us how much of the Eurozone’s current problems were baked-in when Maastricht was signed…

    IMHO, German commitment to EMU and wider-European acceptance of German reunification were part of a single faustian bargain in 1992. The design of the currency and the bank’s role were just details to be worked out over time. If the system had weaknesses, future crises and their responses could only strengthen the integrationist agenda.

    Except… no one expected a financial crisis this large… or bailout fatigue in Germany after 20 years of paying for re-unification… or Franco-German leaders woefully short of political capital… or a more equivocal vision of Europe from a younger post-war European Elite.

    The result: the exact opposite of what was expected in 1992:
    – a flawed currency and a pseudo-central banking system probably beyond repair,
    – the credibility of the European Project shattered,
    – Europe’s bloated institutions sidelined to irrelevancy,
    – an enormous chasm between the EZ and rest of the EU,
    – the prospect of a smaller (more-Aryan?) EZ,
    – the velvet glove removed to expose the EU’s luke-warm commitment to democracy
    – an angry over-bearing Germany, feared & mistrusted, no-longer hiding its tendency to see a racial basis for the political & economic problems of others

    I admire DMcW’s optimism that a solution is in the gift of the ECB but I’m not sure it’s realistic.

    We know France and Germany are working on plan B. There may be Generals in Athens and Lisbon working on their own plan B.

    And in Kildare St. it’s plan A all the way, full steam ahead, don’t blot dem copybooks boys, sure aren’t we as Aryan as the next man.

    • CitizenWhy

      Greta article. It’s summarized at the end, offering a solution, but I would say you could easily summarize it this way:

      The EMU does not work, cannot work as currently constituted, and the EU lacks the political leadership to fix it.

    • MizzMarvel

      First point in the new 5 point plan: rename the Arann Islands the Aryan Islands in a sponsorship deal. All joking aside this move isn’t about protecting the German taxpayers its about protecting the wealthy elites accross the world irrespective of nationality. We shouldn’t fall for the old lies which prop up illogical systems and keep us blind to what is actually happening.

      • CitizenWhy

        You are correct. But Merkel, who cannot brush her teeth in the morning without asking permission from the CEO of Deutche Banc, is wittingly or unwittingly acting in the interest of the global elite.

  39. Original-Ed

    David, Heiner Flassbeck made it very clear on Saturday
    night that Germany will hold out against the ECB printing money and hell, you and the others didn’t half put pressure on him a number of times.
    Great event,very informative and a nice succinct format.
    Well worth the trip.

  40. Malcolm McClure

    Goethe gave us hope that even our present troubles will be met with due justice:
    Ihr führt ins Leben uns hinein,
    Ihr lasst den Armen schuldig werden,
    Dann überlasst ihr ihn der Pein;
    Denn alle Schuld rächt sich auf Erden.

    You lead us into life,
    You let the poor be guilty
    Then you let him through the pain;
    For all guilt is avenged on earth.

  41. LKSteve

    As someone who abandoned Ireland some time ago I wish to comment.
    Why all the doom & gloom & austerity talk? Ireland is a great place, full of smart creative people, why continue on like this?
    The gombeen politicians got Ireland into this, why are they still running the place?
    The time has come for a sea-change. Europe is broke, unfixable, stuffed.
    Ireland, dump your gombeen men, dump the euro, introduce a new Irish Republic Currency and make sure you call it something funny, hold a competition to find a name. Create a pseudo-fiat currency, not something that can be printed with gay abandon but something backed by measurable, tangible stuff such as ‘agricultural output futures’ or ‘tourism input futures’ – close all the current banks down, they are bankrupt. Forgive all debt in non Irish Republic Currency, do something for goodness sake. I listened to Irish radio on my computer last night & got depressed thinking how depressing Ireland must be. I got an e-mail from a friend, depressed, thinking he will lose his house next year. Its time to move on & start Fresh. Bugger Europe, its Buggered anyway.

  42. Coup d’état continues to unfold in Italy…. Mario Monti

    • Monti is the first chairman of Bruegel, a European think tank founded in 2005. He is also European Chairman of the Trilateral Commission, a neoliberal think tank founded in 1973 by David Rockefeller and member of the Bilderberg Group

  43. Coup d’état – “A coup consists of the infiltration of a small, but critical, segment of the state apparatus, which is then used to displace the government from its control of the remainder”

    This will be very short and crisp!

    ROMA, what an amazing place that city is, and just as my own hometown, Colonia Claudia Ara Agrippinensium, Cologne, where the Carnival festivities are launched today at 11:11AM, and in a coup d’état women are capturing the city council and declare Carnival, both these cities span around 2500 years of history! Whether you are a religious person or not, you will feel humble when you stand the first time in front of the cologne cathedral, the Gothic architecture that took more than half a millennium to be built.

    History is full of coups d’état. ‘Crossing the Rubicon’ is a well known coinage referring to Julius Caesar illegally crossing the River 49 BCE and leading his army onto Rome to seize control.

    1922 the fascists marched onto Rome and Benito Mussolini came to power as the prime minister of the Kingdom of Italy, three years later Giacomo Matteotti who spoke out agains the fascists and the election fraud of 1924 was assassinated, and Mussolini became Italy’s fascist Dictator.

    x x x x

    In Italy, it is not for certain yet, but the press is already calling Mario Monti to become the Berlusconi’s successor. Italia’s upper house is voting on austerity laws today.

    In Greece, with the blessings of the Troika, L-Pap is taking over the helm.

    In Ireland, the Troika took full control of government, Irish politicians are the Troika’s compliance managers and responsible for propaganda.

    In Portugal, the Troika forced austerity and a new EPP , European Peoples Party, friendly government took over.

    x x x x

    It is difficult for most people to see the reality of these changes as a coup d’état because it is happening in slow motion and not like military putch over night. This slow motion process has now reached a first major climax, substituting the heads of states by unelected people who will stay the course.

    Mario Monti is the first Chairman of Bruegel, a European think tank founded in 2005. He is also European Chairman of the Trilateral Commission, a neoliberal think tank founded in 1973 by David Rockefeller and member of the Bilderberg Group.

    Loukas Papadimos became the Vice President to Jean-Claude Trichet at the European Central Bank from 2002 to 2010. In 2010 he left that position to serve as an advisor to Prime Minister George Papandreou.

    …. I rest my case.

    • Deco

      Yes, basically this is a cycle.

      The media wants to get rid of the existing head of government. No mention of why, except everybody is told that he is the problem.

      And then the media finds a suitable “safe pair of hands” to handle the crisis. And this individual gets to power without their being a direct election. [ As Lucinda says, when you consult the people, that is equivalent to throwing a hand grenade...]. And then the media proclaims the gratitude of the people, at there being somebody “reliable” in charge.

      “reliable” to whom ? to our corporate advertising sponsors !!!!

      The way to dismantle this entire scam is to stop paying these clowns for lying to us.

      Having Monti in charge of Italy, is like putting that fat smug banker Suds in charge of this country. Of course with Kenny and Gilmore, it is like as if he is already in charge. And to think that “the paper of record” actually publishes the thoughts (and agenda) of Suds for the Irish people to obey.

      • You make an important point Deco, the media!

        The notion that the markets are not happy with Berlusconi at the helm, this was trumpeted everywhere, and as ridiculous as it is, as effective is the message to the public.

        The public perception is to be deceived at all cost. The current incumbents in EU Commission, Parliament and Council have not interest in democracy, it is their greatest enemy, followed by the citizens.

        As this is a war, the truth was the first victim to be sacrificed, and media outlets turn into giant propaganda machines playing to the tune of EU technocrats that prepare the implementation of a EU superstate, not hesitating to economically slaughter millions of people in the process.

  44. Bloody Heavy Rain

    This morning I arrived to the office car park under the deluge of very heavy rain in the darkness .It was a scene from Angelas Ashes .I had with me ‘ soft tissue toilet paper unwrapped ‘ .The idea was to bring it into the office.I sat in the car unsure how to get out or what my strategy would be to get it safely inside and to avoid the rain .I turned off the car engine and waited and listened to the heavy rain pounding heavy on the car making its own loud music like cymbals in the night . I must remind you the toilet tissue paper was ‘ pure white’.

    The moments in the car seemed longer than it should be .I thought of the rain and looked at the toilet paper and I knew if they both met it would be disaster for me to allow that happen .The Rain held my emotions and my rational thinking was only a tissue .I thought about issuance but the paper in the three rolls were only so long and that was finite .I did not want to inflate my dalliance with distance to the office door and the naked paper in my arms.The toilet paper is needed today not necessary this morning but later in the day would suffice.
    I knew the Full Moon yesterday had held back this deluge that arrived this early morning and like a good egg it can only boil in the same time .My tissues of thought got the better of me and I decided to leave the paper on the seat and buy time and race to the door without them .When the rain stops I will return to collect them.

    In the meantime I am living on borrowed time.

  45. Deco

    Greek deposit ratio.
    And European leaders of the generation that knew it all, going to Beijing for a bit of “beg-baby-beg”.

    The EU, and the entire culture connected with it, is in complete denial of some very obvious practicalities. These clowns are used to lecturing everybody in Europe on how to rule every minute aspect of their lives, and now they are begging the Chinese, who already supply them with underpriced manufactured goods for a digout.

    • rebean

      You are correct. The chinese will not be bailing out countries in Europe with their sloth and pensions at 50.The whole system is so far removed from reality its scary.In China they have no welfare and you retire when you die. Its a harsh place but I would love to go and teach there I believe it would be a great place to spend time.People in Europe need to be taught how to work again. Have you noticed how lazy alot of people have become.

  46. Deco

    France, and that AAA rating.

    France is a state system that is in denial – and we can tell this by the machinations of Sarkozy, with respect to the PIIGS.

    The classic example being the way Ireland will have to pay the unsecured bonds to the French FIRE sector institutions, and the way that the Irish media has so little to say about it.

    I can see France losing it’s Triple A rating very quickly.

    Also there are new competitors to the Rating Agency game, who are not as pliable as the established firms.

    One of these is based in Beijing, and it has a dim view on most Western European economies, and their credit worthiness.

  47. Deco

    Barroso, as usual, rolling out the scare mongering, to keep everybody compliant with an austerity regime that is a facade, and which is only designed to make an unsustainable bailout of failed gamblers look harmless.

    I have just realised that almost everything since the Treaty of Maastricht in Europe has enable a corporate takeover by big finance.

    There are strong similarities with the ERM crisis in the early 1990s and the current crisis.

  48. rebean

    1900 billion of debt. Who is running this country. Are we actually paying these people to run up this debt. I thought people like Kevin Cardiff only existed in Ireland. It seems like Italy has loads of those lads. Did these guys pass leaving cert maths or is that not part of the actual brief. When I see that guy Berlisconi I see a man that is more at home in Las Vegas or Hollywood. Maybe he could go on a world tour with Def Leopard I hear there is a lot of parties etc. I cannot believe the guy is actually running a country.

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