November 14, 2011

The end of the euro is nigh

Posted in Sunday Business Post · 228 comments ·

One of the great American popular economists of the last century was Herbert Stein who combined journalism, policy work; he flirted with academia and dabbled in all sorts of private ventures. He also held the prestigious position of Chairman of the Council of Economic Advisors in the US during the 1970s. His greatest contribution to economic was the simple rule “when things can’t go on forever, they stop’.
Thinking of the endless crises within the Euro whether it is Greece, Italy, Belgium, Ireland or Spain, whether it is bank debt, household debt or sovereign debt, whether it is Germany’s taxpayers of France’s banking system — Stein’s law comes to mind. This can’t go on forever, so it will stop one way or another.
Increasingly, as events overtake and eclipse all previous “bailout”/”rescues”, it is becoming evident that the option of the two-speed euro is now on the cards. Ireland will be firmly in the “softer” euro camp.

No one has mentioned this specifically yet, but it is likely because Europe has always had a core/periphery dimension. In times of crisis, such as the last financial crisis the 1993 currency crisis, the European elite’s instinct is to save the core and deal with the periphery in as expedient a manner as possible.
Faced now with a meltdown of their system, Europe’s elites need a solution that snatches a political victory from the teeth of financial defeat.

Apocalypse — in the guise of a country being ejected from the euro – is not a political option because the risk of everything falling apart are simply too high. In addition, a two-speed euro, with a hard euro for the core and a soft euro for the countries in trouble, relieves the pressure on the whole European financial system.

Arguably, for the average citizen such a deal is preferable to the choice we face now. That choice is either a complete, chaotic break up of the system with huge negative implications for savers; or ten years of austerity with huge negative implications for borrowers.

A two-speed euro — involving two distinct but related currencies — keeps the entire euro project together and gives the EU donkey the carrot of moving forward and the stick of promised economic reform. It is important to understand the perpetual forward motion idea lies at the heart of the EU. As long as the project seems to be moving forward slowly towards the nirvana of more integration when the time is right, “Europe” is progressing.

A break up of the Euro means the project has stalled and this is unacceptable to the people who make the rules in the EU. They are believers; and like any ideologues, these true believers are driven by the utopian notion that the future is always brighter than the present. Incidentally, heaven is based on the same premise.

This weekend we are at a tipping point and it has been a long time coming. Don’t be suckered into the spin that this crisis came out of the blue or was unforeseen. It has been brewing
For many years now this column has pointed out that the Euro could/would breakup, presenting Ireland with a big dilemma. At the time it was pretty radical even to question the economic legitimacy of Euro. It was unfashionable to suggest that the currency might be dogged with internal inconsistencies centered on inter-country trade and capital imbalances, national idiosyncrasies and profound economic differences. More radical still was to follow this logic by predicting that the system would implode.
As is typical in Ireland, the dissenter is dismissed as a crank or worse an enemy.
But after all the insults we are where we are, the euro in its present form is doomed. So lets look at what is likely to replace it.

Consider what the two-speed Europe might look like.

The first thing we know is that the peripheral countries can’t keep up with Germany. Take Ireland as an example. When we had the Punt linked to the Deutsche Mark we devalued six times in thirteen years just to try to keep up competitively with the Germans. Conversely, when we joined the Euro and could not devalue, we lost 30% competitiveness against Germany. It could not be clearer.

For the other peripheral countries the situation is worse.

So we all need a change in the value of the currencies we trade in to make our companies more competitive and thus, more likely to export. In tandem, we need to make imports more expensive so we don’t buy too many of them. The weaker exchange rate achieves this. Devaluations work. And to any one who doubts this, just point to the lasting competitive gains garnered by Finland and Sweden after their 1992 devaluations.
Without currency change, we can’t keep up with the Germans and this makes the EU’s promise of economic convergence hard to achieve without huge borrowing. Up till now, we borrowed to achieve a lifestyle and a level of economic activity. Now none of us can pay this money back.

So we need debt forgiveness or some debt deal. Accompanying the new euro would be mass debt write downs because if you reduce the value of the currency that the people get paid in but you don’t commensurately reduce the value of their outstanding debts, the people will simply not be able to pay and the country will default after the devaluation. This would not be clever. Everything must be done together.

So let’s think about the new euro. The new soft euro would trade at 70% of the old one (my figure plucked out of the air). This would mean that relative to Germans, our standard of living would be cut by one third overnight. We would achieve in one night what the present policy seeks to do in five years.
We would be extremely attractive place to investment in because our labour would be much cheaper. But don’t forget that this reduces our income by the same amount.

All our debts would be reduced by 30% because they would be in a new currency. Obviously, the banks that lent in hard euros and would now get paid in soft euros would carry a huge exchange rate loss. This would need to be dealt with. Possibly, the banks in each country could issue bonds backed by the EU and redeemable for new euros at the ECB. These bonds could be considered capital so that the banks didn’t go bust.

What about the savers who lost out on their stock of old euro saving which would be devalued by 30% when converted into the new euro? They could be given new inflation-linked euro bonds issued by the State and redeemable from the ECB but not straight away. There would be an incentive to keep them in the banks as savings. This is normal because if you think about it, most people don’t touch their savings. The State would have to make sure that the new bonds were credible enough so that people wouldn’t want to cash them straight away.

There is no easy way out of this mess. There is no way we can wave a magic wand and promise that no one will be affected, but it is clear that the euro is on its way out and will at best, mutate into something else.
The two-speed euro idea, at least prevents the chaos of a messy implosion and the rushed reintroduction of many currencies. It achieves the competitive devaluation, which for us with the majority of our trade and investment coming from and going to, America and Britain, it would give us a shot in the arm. The debt forgiveness element would also give the heavily indebted commuter generation — the Pope’s Children — a break.

There is never a best way to do things in a crisis, simply a least bad way. Maybe this is it.

One thing we do know for sure is that “when things can’t go on forever, they stop”.

  1. Dorothy Jones

    Yes, Germany is putting structures in place to accomodate the two-tier Euro. But….the real battle is being fought within the ECB at present. Frankfurter Allgemeine Zeitung online yesterday 111113 quotes one of the Directors José Gonzalez Paramo as follows: ‘Die Zentralbank sei der Kreditgeber der letzten Instanz für Banken, aber nicht für Regierungen’ [ECB is the lender of last resort for banks but not for governments].
    In Germany the practice of bond-buying by the ECB is seen as sacrilege…….Juergen Starck and consortium will have blood on the floor..bald [soon].
    There is another element: Germany will want to teach errant ‘Laender’ a lasting lesson to curb their wayward behaviour. So if the strategy as outlined above is implemented, there will be a further layer of punishment imposed. David’s old friend Udo Lindenberg has been waiting in the wings for some time now and will enjoy a certain degree of Schadenfreude after realising that he is not getting any return on his savings….
    Insightful view by Derek Scally in IT 111112:
    ‘Merkel’s negotiating strategy is not just informed by a European power play as much as political survival and domestic necessity.
    Her hold on power hangs on a wobbly coalition partner, the increasingly eurosceptic Free Democrats (FDP), while her mandate to negotiate bailouts rests with an unpredictable constitutional court and an electorate incensed at bailouts for Greece. To keep her momentum, she is executing a complicated, two-stage political manoeuvre.
    Abroad, she is preaching austerity in the hope this will right economic woes and boost competitiveness just as they did Germany’s — a risky and unproven endeavour — while keeping German voters behind her.’

    • Allow me to translate this: To keep her momentum, she is executing a complicated, two-stage political manoeuvre.

      She is a psychopathic two faced political bitch with no convictions whatsoever, and the worst chancellor in the young history of the BRD.

    • gabe

      Germany (as well as every other country in the world) will always do what is in its best interest. So, no surprise there.

      The really important question though is this: why would anyone think that the “soft euro” would work any better than the previous euro. Without fiscal oversight and the power to COMPEL the errant nations to “behave properly”, surely the exact same problems would be repeated……….or am I missing something here?

      • Dorothy Jones

        EU fiscal control over member States:In Leipzig today, [CDU Parteitag] the proposal of transfer of further power to EU and its Commissioners to deal with affairs in struggling countries and moving apace is aired….changes to the Treaty?
        New ‘ phrase of the day’ today [for me anyhow]: NORDEURO.
        Proposal by a German author; an industrial lobbyist who formerly was in support of the Euro.
        ‘…prescription for Germany’s dilemma: exit the euro zone to create a new hard currency with Holland, Finland and Austria, leaving behind France, Italy, Spain, Greece and others to deal with their own problems in the original euro zone….’

  2. Chris16

    Let’s assume this two-tier Euro is going to happen….

    For those people with savings, is it a no-brainer then to buy say Dollars or Sterling now with our “strong” Euro and then just buy back the weaker Euro when it is implemented?

    • tony_murphy

      Cash is trash, be it euros, soft euros (i guess that’s like andrex), dollars, sterling..

      if you haven’t been made stupid by the sodium fluoride the government have been mass medicating you with for 50 years, then you’ll be able to think for yourself. If not, then I suggest you get yourself some assets that should store the value of your hard work, gold + silver, real proper physical gold + silver.

      David has the inside line, the outsider thing is just an illusion imo.

      I long for the day people wake up and realise that the EU and their paper nonsense money is a massive SCAM.

      • Fergal73

        Tony, I agree that there is a scam in terms of fiat (paper) currency.
        However – given that the main currencies are all now fiat, and that getting your hands on gold / silver bullion is extremely difficult in Ireland, for someone looking to lower their exposure to the EURO, it may make sense to convert to another fiat currency and take the exchange rate hit that you have no choice but to take as a retail buyer.

        I’ll leave the flouride debate to a health page.

  3. richodon

    Hi David,very interesting and informative. I have found it very difficult to get answers to the following 3 questions and it would be great to get your opinion: 1.Logically then and in order to take advantage of the more valuable Tier 1 Euro those of us with some savings should try to put them in Tier 1 or Hard Euro banks before the 2 Tier setup is brought in? 2. Which countries (aside from Germany, and France I presume) do you think will be Tier 1? 3. What about Sterling, what do you think will happen there and what about the possibility of opening a Euro account in the UK?

  4. Reality Check

    DMcW says;”we need to make imports more expensive so we don’t buy too many of them. The weaker exchange rate achieves this. Devaluations work”

    What imoprts would that be?
    Inflation would go through the roof, the price of inputs for production would go through the roof.
    Fact is there there is no such thing as a successful well developed country with a weak currency.

    • I understand your scepticism, however the evidence from small European economies devaluing when output gaps are large – Finland and Sweden – as well as all the small Asian Tigers in 1997-98, is that devaluations in recessions generate lasting competitive gains, without commensurate inflation.

      The key seems to be the stage of the cycle the economy is in.



      • Original-Ed

        David, recently on the BBC “This Week programme” with Andrew Neil, Will Hutton said that the competitive advantage gained by a devaluation is no longer what it used to be. Do you know why this is so?

        I had this question typed out to hand to him in Kilkenny , but didn’t get an opportunity to do so.

    • breltub

      and the reasons we are 30% less competitive than the Germans; corruption, gombeenism, poor educational standards, uncompetitive monopolistic domestic market place, political inertia, poor health care, intellectual stagnation, this all drives away generations of people, from where innovation, industry and advancement should be driven from.

      A currency fix is not all we need, without really addressing the problems of the society and state we will be back here, 3 years after a currency fix looking for something else.

      It would be an interesting challenge to undertake! With good leadership, clarity of purpose and frank self assessment then there is a lot of potential here.

      • Deco

        Countries that conserve their resources, and apply them intelligently will suceed to a greater extent than those that through any good fortune they may get with liberal sense of recklessness.


    Let me start with a two points that we probably would agree one, well, more than likely, but do correct where you feel we would not agree!

    1.Capital is mobile

    Herein lies the reason for the protracted defaults forced upon nations.

    In reality, what appears as chaotic to the public, and I can not overstress that point enough, it is played out as if it would be chaotic, in reality this is a deliberate deception tactic, it is a highly organized ‘retreat’ from the peripherals.

    Let’s face it, this is about the fraud with risk. Right? This is not about growth, this is not about economical ‘common sense’, if the latter exists, but at least you are publishing on these grounds. This is not about the people and their future, this is not about saver and borrowers, this is about fraudulent risk!- In a further and more far seeing step, this fraudulent risk is only the means to achieve other goals. -

    So what happened with the millions and billions of Greece tycoons and economic leaches that ran very profitable businesses that were politically connected into the highest ranks with the help of GS and others? That’s right, capital is mobile!

    The world consists of more than only savers and borrowers, and they are not the players!

    2. Monti ‘Ponzi’

    The other point where I guess we would agree on, what we witnessed is the unfolding of multiple Ponzi’s at the same time, and by far not all of them unfolded. – Agreed? –

    In deed some of them just started from zero, such as is the case in Libya, where one of the very first activities was to, that’s right, establish a central bank!

    My point is, all this is no coincidence, this is not a systemic flaw that no one was able to see, on the contrary, it is the very system inherent and deliberate design that allows for the events that we witness since years now.

    Without going into epic details, as I did that before on your blog, it started at the same time within a few weeks, with the introduction of SNA in the US, and Maastricht in Europe, it is that simple really, and by no means is a coincidence. From here on, debt was linked to GDP, and in the national accounts of the US, every cruise missile shot, and every citizen incarcerated, every war enabled the US to take on even more debts due to the ‘handbook of fraud’ the SNA. – Agreed? –

    By ignoring these facts, or avoiding any discussion on their systemic importance, we would allow the continuation of the same dynamics in the future.

    You can not just separate global power dynamics from the international fraud that helps states to maintain or expand their powerful grip. The grand area doctrine, the middle east events, the BRIC’s, the engineered attack on the Euro, all this is interconnected.

    Hidden from the public perception are events that already began to unfold as we speak, events that will reshape the planet in such drastic ways that no one dares to speak it out, and I remember to have posted it here before in a different context, and again, the notion of ‘We did not see this coming’ does not apply, it is known lately since the 70s and the publication of GLOBAL 2000 and I speak of THE WATER WARS!

    When the Glaciers in the Himalaya are gone around 2,0 billion people are affected. Today, there are already skirmishes between India and China, chinese Military forces trespassing borders etc. Why?

    China is about to construct the biggest water theft of the Millennium, redirecting the River Brahmaputra, originating in Tibet of course, to North China, a river that is existential for the survival of Bangladesh and the entire North-East of India. The importance of these events might be best reflected by this publication which will have to be rewritten once this project is finished:

    The struggle between the USA and the Chinese in the South Pacific, the reshaping of Africa and middle east, all this is connected and a deliberate omission from a reshaping of our societal structures is a death sin.

    It is very important to point out that this current reshaping we witness is exclusively engineered by the players and engineers of the ponzi schemes! The strategical placement of two technocrats in Greece and Rome is no coincidence, it is part of this social engineering forced upon millions of people on the chessboard of players.

    3. Conclusion

    Apart from what I feel are economic flaws, or errors of judgement, such as your statement that All our debts would be reduced by 30% because they would be in a new currency. but your new wages will be in the new currency as well, and they will be lower, so essentially you will be faced with the same or even a heavier burden!

    Apart from the flawed economists mantra of eternal growth, their omission of the exponential function, and other ideologically locked in mantras that originate from the 19th century, and hey, I mean we arrived in the 21st already, right?

    Your suggestion is a continuation of the same old game. It could come straight from the Goldman Sachs Lords like Peter Southerland or Alexander Dibelius, it would allow for the re arranging of the chairs on the deck, and keep the very system alive as is.

    It is as narrowed a perspective as was the suggestion of the EFSF, it excludes the underlying reality of the problems we as a species, not as a nations, are confronted with, and as such is insufficient.

    The possible underlying notion in your article, that we would gain the needed time to fix what is broken, it has been proven an Illusion, we had all that time, and nothing was fixed.

    • 33square

      now that’s a post!

    • @georg

      This can explain why it is impossible for indigenous Irish Industries to be owned by Irish Nationals yet Israeli Industries are owned by Israeli Nationals .The only conclusion is then Ponzy Control must lie with Israeli Diaspora .

      • I did not draw this conclusion and I think it can easily lead to dangerously focussed assumptions.

        All roads in Europe end at the ECB, ‘conveniently’ located in Frankfurt of course. All roads in the US end at the FED.

        Do you remember when FF used David’s teacher I think he was, Patrick Honohan to play their public perception game? Look at who sits on the board of BIS, this is the most important Bank of all to focus on, and their actions, or better lack of speak louder than anything else.

    • CitizenWhy

      In theory:

      1. Devaluation tends to strongly keep spending within the sovereignty being devalued, except for absolutely necessary imports. Thus Irish people would find imports (yes, including oil) more expensive and also find it much cheaper to spend at home rather than abroad. Even the UK and the US as well as the non-periphery EU will be more expensive. Spending power, which indeed is relative, makes domestic goods cost the same (not less) as before. But far cheaper than anything from abroad.

      2. The government gets serious about … A. Alternatives to imported oil. … B. Exploiting its own energy reserves. Perhaps there will be a new equivalent of the Shannon Scheme. And perhaps Venezuela decides to sell Ireland cheaper oil.

      3. Domestic manufacturing, perhaps in the form of craft, could increase. Here Ireland would have the chance to encourage the development of worker-owned enterprises, mutually owned enterprises (in service), and locally owned private enterprises (which exits in remote areas of the US).

      A worker owned craft manufacturing enterprise could also own a farm where in housing can be built for the workers in the latest low-to-no-energy green technology. In fact excess farm waste could also be turned into electricity (as in some small Swedish cities).

      Worker-owned enterprises could be contracted to operate manufacturing operations for foreign companies.

      Irish goods would sell in strong Euro countries at normal or near normal prices, thus increasing profits.

      Not likely to happen, given the lack of any vision among Irish leaders, but it could induce Venezuela to consider selling oil at a discount to Ireland. And maybe Bill Clinton will be given Irish citizenship and he will chosen as Prime Minister (excuse me, but I cannot remember the Irish spelling for that office). You never know, he could also become the most compelling EU leader. P.S. Please excuse me for overindulging my imagination.

      3. The reduced currency increases tourism and encourages vacation taking to be domestic.

      4. The reduced currency, in which wages are paid, induces more foreign companies to locate/manufacturing operations in Ireland for sale to the rest of the EU. The cheap wages and normal prices in the strong Euro countries would increase profits. The political stability of Ireland, its legal system, its pretty good educational system, and its English speaking people, would make it more attractive than the other Tier 2 countries.

      So that’s part of the theory, with historic data to support the more conventional points above.

      Of course none of this would get at the evil roots of financial capitalism, and the boyo traders in New York, London, etc, will continue in their ways and cause another recession, perhaps quite soon. But a cheap Tier 2 Euro, and the adoption of some of the practices above, would provide a buffer against such a recession.

      Well, that’s the theory. But we know that Ireland will just muddle through.

      • But we know that Ireland will just muddle through.

        More than likely, and at the great expense of people who had no hand in all this, the evidence of which we probably will hear in the upcoming speech of perfect Prefect Kenny addressing the Nation.

    • Deco

      There is a “water war” between Turkey and it’s neighbours to the South – Iraq and Syria.

    • coldblow

      I would guess that Georg’s take is exaggerated but it’s beyond me to say how or where. On the other hand I agree that there’s geopolitics and deception involved.

      I don’t know if anyone was listening to Marian Finucane’s show yesterday lunchtime. I was driving so tuned in. I didn’t think the guests had much of a clue what is going on, or if they did they had little to say worth listening to. Perhaps Mansergh did, but if so he was keeping it to himself. Then Philip Boucher Hayes came on and spoke interestingly about what he’s seen in Greece. He said that he’d met public represenetatives there who believed that it was a financial conspiracy against Greece and dismissed this view as silly as the markets are just people’s savings and pension funds looking for a safe haven. Well, on a sliding scale, my view would be closer to Georg’s than to PBH. I’m sure he is genuine, but it’s a little worrying.

    • BrianC

      I agree with 33square that is a post!

      The global citizen is being duped. So called market forces are replacing so called demogratic governments with division executives of the real powers behind the scenes. If you spoke about such before they would measure you up for a straight jacket. Look at the records of those who are being appointed. In fact governments are being duped.

      Napoleon said ‘when the yellow pearl awakens look out’. The US owes China circa $13 trillion. China has an army of 200m compared to the US forces of 500K. China now equals the US in technical military cabability besides the superior man power. China has no water None NOT A SINGLE DROP. They buy all their water from Brasil and Argentina a fact that is not known to the markets or the public. How come a country that has no natural resources can end up top of the pyramid.

      Georg you are only touching the edge of what you know.

      • China now equals the US in technical military cabability besides the superior man power.

        That is not correct Brian, and I would recommend Jane’s Defence, Gobalsecurity but most of all SIPRI to dig a little bit deeper. There is no other military force of such might on this planet than the USA. To give you an idea:

        Total Aircraft: 18,234 [2011]
        Helicopters: 6,417 [2011]
        Serviceable Airports: 15,097 [2011]

        Total Aircraft: 4,092 [2011]
        Helicopters: 1,389 [2011]
        Serviceable Airports: 502 [2011]

        Of course, this is just a fraction of the total asymmetry. The real schizophrenia goes much deeper, if you were to plot two curves from 2007 to date into the same chart, you would find that in the same amount this financial heist unfolded, the military expenditure increased…. That’s right, increased!

        If you do the back of an envelope calculation, it is easy to see where we could get the cash from to solve this insanity once and for all, and reconstruct a society that is build on other values and serves the global community instead of national and supranational Corporatism that is sold to the public as ‘democracy’.

      • On water:

        China looses around 4,000 square kilometer every year to desertification. South America and Africa are on top of the chinese shopping list and they aggressively buy into these countries.

        Russia is about too lose it’s northern ‘ice protection’ and they started to implement military strategies that deal with the loss of this protection.

        It is pure idiocy of certain interest groups to pretend that there is no climate change problem. The most powerful nations on this planet have long started to implement plans that deal with this situation, however, they are surprised themselves to find that their projections are getting shorter and shorter on the timescale.

        What is perfect Prefect Kenny proposing on these grounds? Wind turbines to export energy to the UK! Ever came across The Spirit of Ireland guys? It could not be more risible.

        In Ireland, I can only warn as loud as humanly possible to allow the privatization of water, it should trigger social upheaval and outright civil disobedience. Water does not belong into the hands of private profit sharks, not a single drop so to speak!

        On a side note, BIG THANKS to Christy Moore for making the effort and showing up at Occupy Dame Street!

    • bonbon

      Water, water everywhere and not a drop to drink! Difference between we the human species and all other life, we make water – almost all the drinking water worldwide is made, filtererd, cleaned, diverted etc. Anyone who depends on “natural” water, like in Haiti after Obama condemned them, will very quickly descend to a lower population density – the stated intention of Prince Phillip’s WWF.
      Look at Riyadh – desalinated.
      Great desert greening projects? NAWAPA, North American Water and Power Alliance to divert Arctic runoff to the Great American Desert, on the table since 1964. Transaqua to green Chad by the Congo. The Sudan Sud swamp canal. The Soviet-era plan to refill Aral with arctic runoff, back on the table now. China greening Gobi diverting southern water.
      Typically Greens are against greening deserts, they want them to remain brown ( a color they like! ).
      Libya had a major nuclear desalination program – lets see if the new regime continues this or goes green (brown). They are living off ice-age fossil water in Sirte.
      Israel had an Oasis Plan for nuclear desalination – they sure have the expertise, and badly need water like Jordan etc. The power density required can only be nuclear.
      Germany, trying to usurp Greek and Moroccan desert sun to go green dumping nuclear, cannot now play a part in solving the water needs for 7 billion. Germany has gotten off the human species train, to China’s stunned amazement.
      So a combination of nuclear power, large scale pumping and desalination is the alternative humans have. And greening deserts will modify climate. Stopping this will lead to genocide which a British faction would like to accelerate using Obama on the nuclear trigger against China and Russia.

    • astainexile

      Georg I think you are so right and so very eloquent. Shame the topics are so devastatingly imminent.

  6. David:
    They could be given new inflation-linked euro bonds issued by the State and redeemable from the ECB but not straight away.

    In the first part, the article shows that most of the segments of the long-term debt funding markets have recovered from the tensions experienced during the crisis.

    Source: ECB monthly bulletin 11/2011

  7. Malcolm McClure

    David writes: ” Obviously, the banks that lent in hard euros and would now get paid in soft euros would carry a huge exchange rate loss. This would need to be dealt with. Possibly, the banks in each country could issue bonds backed by the EU and redeemable for new euros at the ECB. These bonds could be considered capital so that the banks didn’t go bust.”

    The fatal flaw in this argument is that inflation by 30% represents walking away from debts totalling €200 billion (Assuming that Peter Matthews estimate of total debt being 490% of GDP is correct). Thus banks would have to raise money from EFSF. Unfortunately in its latest bond sale offering a mere €3 billion EFSF fell short of its target and had to buy €100 million of its own bonds to make up the total. Weird, huh?

    The bottom line is that Eurozone is broke and all the talk about Germans’ fear of inflation is just ballyhoo to obscure that fact. Merkel knows that printed money will just be poured into a black hole of speculation, but that doesn’t mean that it won’t happen. And it won’t pause for breath at 30%.

    Businesses that want to protect themselves from hyperinflation should read:
    As well as solid advice it contains several amusing cartoons that help lighten the doom- laden mood of readers.

  8. MOCON

    David, Interesting article on the ‘two speed Euro’. It might work but I can see difficulties. Another thing we do know is: “when things can’t go on forever, they change”. We know for certain that a single currency for Europe does not work when we have independent national governments, different cultures, values, language, custom, etc. The Euro experiment clearly has failed. The Euro could exist as a single currency but only under a federal Europe, probably resulting in Germany & France dictating to the rest of us. This is now an unlikely option because of the mistrust built up over the last three years. If the currency crises had not forced urgency, then this might have worked. A two-speed Europe suffers the same difficulties of the single currency, urgency, mistrust and who will sit at the top table. I fear that forcing some EU members to swallow the bitter pill of a ‘second class’ currency will just be too hard to swallow for some.

    For Ireland, it occurs to me that leaving the Euro currency might be no harm. There would be benefit for Ireland in regaining control of the economy, devaluation, etc. Ireland has strongest connections with the UK, USA and increasingly with the East. Surely there is merit in looking outside Europe and become a Global player, a financial and multinational HQ hub for the whole world? Too big an idea?

    Another option that occurs to me is that rather than have a two-speed Europe with a two value currency, make the Euro a standard currency against which all the member states can value their domestic currency, a bit like the re-introduction of the gold standard if you like. The Euro is withdrawn (temporary or not) as a currency in general circulation. Member states revert back to their own currencies to allow devaluation and adjustment of national debts but the Euro can remain as the standard. This would not be ideal but would give breathing space that we currently do not have.

    • Tony Brogan

      I like your thinking. A sovereign country requires to have control over its own currency.

      Central to the current problems are the central banks.
      They are literally operated as a cartel for the benefit of the bankers themselves. There HG is the BIS the Bank for International Settlements. It is in Basel, Switzerland.

      As such the central bank should be closed and the handling of monetary affairs be directly from Treasury.

      Your other ideas have merit IMO.

      Another thing is that Ireland should champion the cause of a monetized silver coin as money. It can circulate in parallel to the paper fiat currency and give people a choice. Current EEU policy forbids such a thing. I wonder what they are afraid of. Perhaps they know what the people will choose given the chance.

      Shortly I an going to post such a proposal.

  9. 33square

    the contrarian in me asks: if it were possible for the avaerage joe soap to invest his savings in icelandic króna, would that be worth doing or is that a total wackjob of an idea?

  10. Deciphering the Codes

    David has gone Aquarius ( element -air ) in this article . He projects : devaluation to 70% , ‘plucked out of the air’ . He did not say something like well lets say ‘ based on the national GNP ‘ . No, he went jugular to his inner conscience and that is what it is, don ask me how .

    David has also gone spiritual when he roars like a Lion to all the little people in the forest and says , ‘ the end is nigh’ , this is in line with his Leo Sun sign .Its liken to Moses in the Desert and ‘tongues of fire’.

    David was hungry too when he was writing this article . He uses the words ‘ plucked ‘ as in Turkey meat and the word ‘ Christmas’, which indicated he was going to eat a good dinner when the article was finished.

    There is a sublime equation he draws too :

    less competitiveness = 13 years devaluation = 30% inflation = 70% value of the Euro ie New Punt .

    The above ignores that Irish People had no borrowings then as they do now and there was no austerity then as there is now and that our population was homogeneous then as opposed to now where we have many ethnic communities. My hunch would dictate that the new Punt devaluation would be at least 50% of the Euro and not 30% as said by David.Also before devaluation our communities were more grass root politics compared to faceless thugs at the top of the civil service and government.

  11. CitizenWhy

    David, What makes you think the feckless Merkel et al., the deciders of all things Euro, will accompany the creation of a Tier 1 and Tier 2 Euro with a debt write-down? This makes sense but the Euro gang leaders do not.

  12. CitizenWhy

    The other move the Euro gang leaders can take:

    1. The ECB is authorized to print money.

    2. Countries are encouraged to do stimuli rather than austerities.

    3. Inflation.

    4. The debts are paid with cheapened money, thus being reduced.

    5. The Euro loses value against the dollar.

    6. EU bonds are issued at a fairly high rate of interest and they find a market.

    Of course none of this gets anywhere near the roots of the evils of financial capitalism, so the traders live another day to cause another big recession.

  13. bonbon

    Interesting, the quote on Herbert Stein, AEI member etc. The wiki page is a mess, but a cursory glance must alert one. Being on Nixon’s Economic Advisory committee, raises the question : Had Stein something to do with Nixon 1972 axing of the Bretton-Woods 1944 currency agreement? This opened to the door to derivative trading by the Inter-Alpha banking group within months. So the stable currency regime did not just “stop”. The only remaining brake on chaos was the 1933 Glass-Steagall Act repealed under Clinton in 1999 by Larry Summers.
    Presto – the financial crisis tool off. Sure it had been building up. The LTCM 1998 disaster was the precursor for the quake. The tsunami is arriving at the TransAtlantic shores now, and the FED is termed the great bazooka. Like Japan, the tsunami is too big for that “firewall”. So a financial system is “stopping”. Stein’s sophistry is a fig-leaf on what those who own this transatlantic system are prepared to do now to “save” it. Their man is Barak Obama now. Just watch his behavior, ordering assassination of U.S citizens, his military buildup for war sold as anti-Iran, but in reality anti-China/Russia. Any conflict will involve thermonuclear weapons. This is the response to a “stopping” system, and must be dealt with.
    I recommend Prof. Francis A. Boyle, lecturer on international law at the University of Illinois College of Law, author of “United Ireland, Human Rights and International Law”. He has drawn up a Bill of Impeachment to remove Barak Obama from any proximity to the nuclear trigger. The case is well documented, and urgent. We are in grave danger of WWIII, because the financial system has not been regulated. Obama has blocked personally all attempts so far at regulating the casino.
    The Euro/Punt calculations become somewhat meaningless in light of this reality.
    President Higgins on his first RTE chat clearly and unmistakably cited Glass-Steagall, as the core issue. He is the only head of state to mention this publicly. Wow! Ireland must use this! No weird financial algebra will work without re-instating the split-banking of FDR’s Glass-Steagall, rendering the derivative mountain null and void. Only then is there any hope of any kind of algebra. Those who will lose an entire system are not standing idly by – their response is obvious.

    • Deco

      Ron Paul has been continually pushing to eliminate all the powers that the US President (or Vice-President) holds with respect to initiating military conflict.

      Basically, according to Ron Paul’s interpretation of the US Constitution, if the US is to go to war, then this must be voted upon by the Senate and the House of Representatives. War is a serious business, and it entails the responsibility of sending people to their death, in the service of the state and it’s authority structure.

      Considering the Weapons of Mass Destruction episode, this is a good idea.

      • CitizenWhy

        “Troops on the ground” wars have always been authorized by the US Congress at the request of the President as Commander in Chief of the US military.

        “Special ops” and fly overs and no-fly zones have always been done solely by the President.

        There is some question about the constitutionality of special ops but they have happened so often over the years with no serious challenge so their constitutionality is now assumed. But could still be challenged by the Congress and perhaps in the Courts.

        • redriversix

          I do not think the U.S has declared “WAR”for a long time to the best of my knowledge.

          Korean War was under “U.N intervention”

          Vietnam War was a “Police Action”

          Grenada was to “liberate” U.S students.please note,CNN was on the beaches before the Marines…

          Invasion of Panama was under the Auspices of D.E.A to arrest Noriega.

          “Desert Storm” was a limited operation with defined and limited U.N objectives.


          “The Mog” was a humanitarian U.N Aid mission, except when “U.S Rangers and Army” went after “Aideed” to arrest him.Which was done without U.N permission leading to the greatest loss of U.S Servicemen’s lives since Vietnam,not to mention the local population.and pissing off Pakistani U.N MISSION Commanders.


          was and is recognized as a illegal War.but was sold as regime change,introduction of Democracy,Free the people etc etc etc.

          I could go on,but you know the story now….



          • Deco

            Ah yes….Weapons of Mass Destruction….Phony Tony….and the dossier…..and Dr. Kelly who officially committed suicide….

            Saddam did such an excellent job of hiding those weapons of mass destruction…..that five years on and still they have not been found…..amazing stuff….not a mention anymore of WMD….

          • CitizenWhy

            Actually Korea was the UN “police action.”

            Vietnam was declared by Congress after the Tonkin Gulf incident in which a well armed US ship was “attacked” by some sort of North Vietnamese tiny boat. The incident was later proven to have never happened.

            Both Gulf Wars were declared by Congress. Testimony/evidence was staged in both.

            It does not take much to get the US Congress to declare war. Just a fairly decent PR firm. And for the conservative propaganda machine to go into full gear, its talking points picked up and repeated endlessly by the “regular” media.

            Iran is next on the agenda. But the right wing have thrown in Pakistan as well, probably so an Obama-style “compromise” can be reached, with an agreement to attack only one country. For the time being.

            Just as The Irish cannot seem to do anything about the government’s endless commitment to pay off private bank debt, we USA people cannot seem to do anything about what are now regularly scheduled wars. As the saying goes, “A big war machine is a terrible thing to waste.”

          • coldblow


            I never looked into this. Is there any suspicion that Kelly’s death was not suicide?

        • redriversix

          U.S Special Forces operate around the World,Around the clock,All year round.

          Always have, always will.

          South America
          Iraq [pro government 1980s]
          Afghanistan [ 80s]
          North Africa

          These operations cannot be challenged as they “never happened”

          Except if your Colonel Oliver North….

          • Deco

            And then on top of that you have “bilateral aid programs”. This means giving a country money, provided they spend it on your weaponry….

          • CitizenWhy

            Even in the Vietnam War, as in previous wars, the US had a citizen Army (in Vietnam, of course, most of the citizen army wanted out, so the draft got them).

            Now the US has a mercenary army made up of three elements: … A. Contracted private armies … B. Internal mercenaries, that is, volunteers. Cannon fodder. … C. Career military, many of whom leave to join private contract armies (after being expensively trained at the taxpayer’s expense). … As a result there is no mass mobilization against our wars.

            With Special Ops (Military and CIA and who knows what other branch of the Executive) you have career military whose involvement in civil life is minimal.

            The inevitable course of how an empire’s military works?

          • Deco

            Yes. It is easier recruit into a citizen army, when the army is a provider of free third level education or a job in the police force, security, Walmart, or other parts of the state system. And when the alternative is non-realisation of consumer happiness through being unable to buy the stuff it advertises relentlessly….

        • bonbon

          “Special Ops” and outsourced contractors (Cheney’s Haliburton), are basically the British East Indie Company private army model, idolized and theorized in books such as “Soldier and the State”. The SS was also modeled on this, not to mention the Black and Tans and Cairo Gang in 1921. And Britain’s model is Rome as documented in The Rise and Fall of the Roman Empire. No wonder we have Nero back again. They believe Rome would only work with about 1 billion, not 7 billion people, and the best way to achieve this and save their system is Obama on the nuclear trigger. This is not hidden, it is openly stated – just hear Sir David Attenborough, or Dr. Schellenhuber (Merkel’s advisor), Bill Gates, Al Gore, Prince Phillip, Bertrand Russell.
          We are at the end of the financial system, euro or not and the people who launched 9/11 are now poised to unleash a holocaust. Congress must act now, the tools and evidence are richly available. Nixon got a choice – resign, or face impeachment. Obama must be given this option now. Article 25 section 4 on insanity would do the job.
          Then Glass-Steagall will go through, and massive projects to rebuild the planet ruined by 40 years of economic collapse can be given credit.
          Ireland can and will play a role in this. There is much to be done.

      • bonbon

        Ron Paul, to his credit is basically citing the U.S. Constitution. The Executive cannot declare war, and even Bush needed Congress after 9/11. Obama did not, and smashed Libya (with France), an impeachable offence. Obama organised basketball on the USS Carl Vinson carrier in San Diego, the deck from which Bin Laden’s body was thrown in the sea, forced his staff to watch the Navy Seal murder live. No surprise he danced with joy on Gadaffi’s murder. Roman Circus a. la. Nero anybody? This is a step beyond Bush, pure Roman psycopathy,
        which is exactly why he was handpicked for the job.
        Unfortunately Ron Paul will not go for impeachment at least afaik. Election tactics?
        Do we want this person anywhere near a nuclear trigger? The war buildup is deafening as I write.

    • President Higgins on his first RTE chat clearly and unmistakably cited Glass-Steagall

      Is this chat somewhere on the internet?

      • coldblow

        What, he mentioned Glass-Steagall?! He didn’t, did he? “Wow”. He’ll be speaking Irish next.

        I read that it was a great speech. Charlie Bird on Saturday was ecstatic about the ‘great’ speech. Everyone agrees.

        “Well… I am… … … spiritual.” And he had a humanist there. That’s a great start.

        I get up when I want except on Wednesdays when I get rudely awakened by the dustman.

        Park life.

        I put my trousers on, stand on my box, and think about writing another speech.

        Park life!

        I feed the pigeons, I sometimes feed the sparrows too, it gives me an enormous sense of well being.

        Park life.

        It’s got nothing to do with Vorsprung Durch Technik, you know
        And it’s not about you bloggers who go round and round and round…

        And they all go hand in hand, hand in hand through their
        Park life!

      • bonbon

        First few sentences, if RTE have not removed/edited it. RTE has a certain bending-over posture, very subservient – remember the “boom years”.

        Best would be to ask for comment at a press conference.
        Very, very refreshing to hear. Amazing the media, and its sidelining, but typical transatlantic and Irish.

        By the way, London telegrammed D.C, a couple of years ago, when the first Glass-Steagall repeal was going through, that “Any attempt to re-instate Glass-Steagall would be considered a hostile act”. Is that not clear enough for the Celtic-Tiger ears, considering what they are capable of doing and the funding.

        • coldblow

          Hi Bonbon,

          Unfortunately my computer can’t play RTE. Re world news they do ‘safe’ versions of stories that have already been reported by other broadcasters. On say crime stories it’s like trying to interpret Pravda: was the murderer the victim’s son or husband, the victim a Traveller, what was the real cause of the car crash? etc You’d only really look at Six One if you want to see what they are wearing. My Wow comment above was not directed at you, by the way (hadn’t noticed you’d said it to), but refers to Mary Mac’s reaction to QE2 using the cúpla focal.

          • bonbon

            Using google chrome I clicked on the link and then
            clicked on this :

            President-elect Michael D Higgins: Interview

            The RTE player was not needed as it is audio. No funny plugin needed either.
            It should work. Hope they leave it online as I cannot download it, yet…

          • coldblow

            Won’t work with me afraid. Hopeless case. I’ll use my imagination.

  14. David
    A strong Euro / weak Euro scenario sounds fine, if one could just wave a wand and make it happen. What nobody seems to be able to tell me is how we get there in practice, avoiding complete chaos en route. What are the steps to be taken? How does one avoid a run on banks, bankrupt financial institutions, empty ATMs, non-functioning financial software and so on (not to mention rampant litigation)? How long would it take to have the new currency printed?

  15. mumenomics

    David-please do elaborate. What is the new currency? Who controls it? Are we lumped in with Greece/Portugal etc? Can we not revert to £punt and regain our own currency and control of our monetary policy? Would that not be better for Ireland Inc?

  16. Deco

    Things must be serious when the Italian President is putting an economist in charge.

    I mean, even though things got bad here, we continued to appoint lawyers, school teachers, student union politicians and social workers into positions of responsibility.

    The only economist we picked was Baby Brute, and his investment strategies really give the game away, as to his economics ability….

    • Deco

      I meant to say “into positions of economics knowledge related responsibility”.

    • redriversix

      I do not believe we will see a two-tier European currency because it’s not “clean”enough for the powers that control the Banking Corporations / Dynasty.

      Governments and people enslaved by debt are in a weak position,they believe, to negotiate terms so “those in control” swap debt for Natural resources.

      The End game here is to gain control of a Nation’s Resources.

      Everything else , I believe is a smoke screen.

      This N.W.O is looking to secure the next 100 years , not the next 20.

      Can.t pay..? No problem Sir…you have the “option” of signing over your Natural resources in lieu of payment.We can also police your “Coastal waters”for you and keep you secure”.

      Greece now has unelected leader

      Italy now has unelected leader

      China will invest in Europe for Resource “Guarantee’s”,not money.They can print that….

      “it’s the Resources,Stupid”…..

      Was that President Clinton’s Campaign Quote..?


      • CitizenWhy

        Intended or not, you are right about what the End game will be: appropriation of national assets.

        • redriversix

          Thank you CitizenWhy.

          No matter how financial solutions are dressed up or rolled out or debated,they can’t work with this huge crisis getting bigger every day….Simple debits and credits…..Any solution will end with the surrender of National assets / Resources..

          Fear and the media shall play their part,but what are “Rescuers” will want is Natural Resources and some obedient servants [France,Germany] to make sure “we” comply.

      • redriversix

        “The pen is mightier than the sword”

    • redriversix

      Hi Deco

      “I was always curious why “bilateral Aid Programs”wore a khaki jacket”..!!!!


      • Deco

        I always thought the phrase was slightly Orwellian.

        Even this country managed to give a heap of money to a country in East Africa, which subsequently bought arnamnents from the US and our “EU partners”. And purely by chance an Irish oil explorer was active in the country, and found a lot of oil.

        And the minister they called “kebabs”….. Of course he is not even a TD anymore.

        • redriversix

          “did I hear today that China has invested in Tullow Oil..? that,along with a french Company who’s name escapes me has been “awarded” exploration contracts in North Africa, primarily Uganda and the D.R.C [Congo] etc,Congo recently gratefully received assistance from Afri-Com,including 100 Special Operational troops from the U.S….

      • “I was always curious why “bilateral Aid Programs”wore a khaki jacket”..!!!!

        Haven’t heard that one before…. excellent!

  17. Deco

    If we get a new currency – the debts will still be owed in Euros. This is the law as such. A case of the “the small print” of EU Treaties.

  18. Adam Byrne


  19. Unicredtit, Italy’s biggest bank writes 10,6 billion losses in Q3 adding up to a combined loos Q1,2,3 of 9,3 billion. Oh, and guess what, Unicredit’s stocks were excluded from trade today!

    Eat that Monti.

  20. paddythepig

    Did the Finnish devaluation of 1992 inspire Linus Torsvalds to invent Linux? Was it the seed that created Nokia?

    Of course it wasn’t.

    Real quality permanent change is not really a function of the currency that country transacts in.

    In the absense of such real change, devaluation number one would be followed by devaluation number two, three and four. At the end of which it’s back to square one.

    If David was a dietician, he’d be all for liposuction. Changing your own habits and behaviour is far more effective.

    • Deco

      Paddy – we should have changed our habits in 2001. The excess goes that far back on aggregate.

      From 2001 onwards the inner idiot did all the talking, and made all the decisions, in this country.

      What concerns me is that every now and then I see evidence that the inner idiot is chewing at the bit for a chance to let the absurdity and nonsense start again.

      We are not learning our lesson, but still purposefully avoiding it – for fear of what it will do to the well-spring of the inner idiot’s assumptions – the pride concept.

    • Colin


      Most of the inefficiency in Ireland is within the Public Sector and Semi State Sector. Its simply not tolerated within the Private Sector, that’s why there is Employment Apartheid in Ireland.

      Why are we the only country in Europe which doesn’t have a Post Code system to facilitate easier Mail Deliveries? Answer is the Unions in the Post Office refuse to allow the system they work in to become more efficient, for fear of job losses. Real answer should be, tough luck fellas, car assembly operators were replaced with robots decades ago, and that car they drive was built on an automated car assembly line.

      We have teachers who don’t turn up at school when there’s a bit of snow on the roads, and they’re not asked to make the days up later in the term as they have sking holidays booked at mid term and Easter. That wouldn’t be tolerated in Germany.

      I could go on and on, but after implementing all these reforms, we should become more competitive, and if that doesn’t help, then we should look at currency devaluation. However, as you know, the Unions are still running the country and holding it ransom, and Kenny et al are afraid to take them on.

  21. David, would you explain to me why countries kicked out of the eurozone would accept a common 2nd-rate currency. Why would Greece team up with Portugal e.g.? They’ve different debt structures and need different policies to keep afloat.
    When the euro blows up, the overhead structure will crumble. Confusion will reign and angst. Every country will reconsider and weigh its options along lines of national interests, and save who can. Don’t you think so?
    I even doubt the core to hold under those circumstances.

  22. Lyndon Jones

    There will be no eurolite and euroheavy , lets just see what happens to Greece , they are first in line .
    My guess is that they return to the Drachma. Merkel and Sarkosy want them out but why would they set up a another common PIIGS currency , it doesnt make sense.
    The big issue is the unravelling of Euro contracts for the PIIGS .
    Remember after Greece is Ireland , Portugal is way ahead of us economically , we have 494% debt to GDP if you count all the debts.
    There will be no soft euro , it will be the punt for us …..if it ever happens, time will tell.

  23. alex1

    Would it be wise to purchase physical gold or silver with any cash you might have to spare at this time.? Keeping in mind that the financial wizard Max Keiser thinks the price of both is going to increase in the future

  24. SFR Daniel

    So with a two-tier currency, we would still have, for Germany and France, say, the Euro. For Ireland et al, would it be the Pean? Or the Peon?

  25. Deco

    Within Ireland itself the High Street is dying. Little emperors on the local authorities are sucking the life blood out of the Irish retail sector. Whatever business exists is going to chains operating out of dreary, energy consuming, plasticky, monotonous shopping malls. Brought to you by credit from Anglo Banglo, and paid for ultimately by the same austerity pressed taxpayers who previously supported the High Street.

    The concept of the urban centre is being killed by idiots sitting in plush new expensive offices in local authorities, and running riot over their domains, like mini-Bertie Aherns.

    And the media pumps out the crass advertising – propaganda for the masses in a superficial narcistic society, instructing the people that happiness is a result of buying junk on credit.

  26. straboe1

    The German aim is as stated by Merkel, a united federal Europe. A two tier Europe would put back this option for perhaps thirty years. I can not see this being done unless there is no other option available. The alternative is that we are all offered a out clause from our outstanding debts, if we agree to a federal Europe. This will be done very soon. We are gradually being educated into believing that this is the only option left to save all of our economies, and our politicians will go along with this fiction.

  27. TopsyTurvey

    Why is it a given that borrowers would have to repay there money in “weak euros”? Surely if banks have to convert all previous lendings to weak euros, we are again revisiting the world of bank recapitalisation…..after all won’t the banks claim that they needed to borrow that money in strong euro’s? Also does anybody know if you can open USD/SEK/NOK bank accounts with Irish banks?

  28. wills

    Article states – *Now none of us can pay the money back.*

    This I reckon is the nub of EVERYTHING.


    Well because insiders have socked away the swag.

    The swag could pay the money owed back.

  29. grenaldi

    Topsy turvy, you can open non-resident accounts easily in other countries. See Might provide more security than savings in Irish banks but who knows… Like the idea that savers would somehow be protected in a conversion to a two tier euro but not sure how likely that would be.

  30. molly66

    If I have this right someone correct me, the bonds that are being bought up at the moment are as far as I can see junk bought to help save Greece / italy/ect ect why buy these junk bonds if there are going to be worthless or at best only worth a fraction of what they cost,which brings me back to Anglo is ther not something in common here.that’s why I am convinced that the present government in place are going about running and rep the Irish people very very badly, the stakes are just to high they are playing the slots with our lives our futures our dreams or what’s left of them. The Irish people need to realise that kenny /Gilmore are to week to stand up to the french and Germany who are running Europe they are calling the shots .it’s like we are been run by an alcoholic still drinking in denial ,

    • Harper66

      “The Irish people need to realise that kenny /Gilmore are too week to stand up to the french and Germany who are running Europe they are calling the shots .it’s like we are been run by an alcoholic still drinking in denial…”

      Agreed a thought made all the more frustrating by the fact FF bankrupted this country by taking on banking debt in order to “save ” French and German banks amonst others and now those same countries want to demote Ireland to the lower tier of the a two speed euro. What a way to say thanks…..

    • The Irish people need to realise that kenny /Gilmore are to week to stand up to the french and Germany

      When the FF/Green traitors were still in power, I remember that Brian Lucey described exactly this, and as eloquent as can be! In my own words and from memory….

      Lenihan and a Cowen, the pub educated solicitor from Offaly against the heirs of Richelieu and Bismarck… place your bets!

    • CitizenWhy

      I believe that the ECB is buying them.

  31. molly66

    Does this meen anybody with savings here should convert them into sterling to protect there savings before savings follow the pension route?:

  32. I have a very simple question.

    “Prospects are uncertain as the German government, the Bundesbank and hardliners in the European Central Bank have blocked key policy options. These include issuing common euro zone bonds, mutualising the euro zone’s debt stock, letting the ECB create money to fight the crisis, or having it act as lender of last resort, directly or via the euro zone rescue fund.” – Irish times

    Why are they not pursuing ANY of the above solutions?

  33. abutler

    I am really getting fed up of you sensational economics, which are only to raise your public persona even more.

    Saw you on the Cowen crisis, and your feeble attempt to rewrite history; the famous bank guarantee. Defending your idea with T&C that I cannot remember! The weak Irish media gave you a real easy ride on that idea when does anyone take you on in Ireland.

    Enough, when is the simple economic solution the best, but that’s boring and does not sell books, TV series and seminars making you a wealthy man.

    I was a fan when you wrote exclusively in the Sunday Business Post but now like U2 your creativity has dried up and you are spread to thin over all those books, TV shows, seminars, globe trotting… time for a break perhaps.

    I am tuning out, as you have not answered the fundamental question in any Euro breakup; how are the billions of euros belonging to ordinary savers better under devaluation? Plus since we have no oil, nuclear power or other really sustainable better energy how are our utility bills and day to day bills lower (all imports)? Their not, so please form a complete argument not your usual Euro bashing.

    As for this half baked euro bond idea we leave in the bank for a couple of years, please, you have seen the amount of savings that left the country in the last few years and was moved around? No reality again.


    • Harsh words from someone who can’t spell..

    • Andrew

      I would like to take the opportunity to get something straight with you about the Bank Guarantee, not in my words but in the words of Brian Lenihan.

      It is true that when he called out to my house I told him that in my opinion (Opinion, not advice – advice is given by paid advisors, civil servants, paid consultants, paid central bankers etc) he should copy the Swedish banking policy of 1992. This would stop the bank run that was happening.

      That was it. I assumed that they would do their homework – that is after all what these guys are paid to do. Remember they had teams of civil servants, central bankers and personal economic advisors.

      In contrast, I have never been inside the Department of Finance in my life to advise on anything. I was never asked to clarify the parametres of anything – re timing, scope etc.

      Very soon it became shockingly apparent to me that the Swedish approach was not being followed. In fact, the opposite was occuring with devastating consequences. I then thought it best – even at that stage – to rescind the guarantee and call the creditors into a room and tell them the game was up.

      In response to this stance, Brian Lenihan, personally wrote a op-ed page for the Irish Independent. I am sure this is one of the first times such a thing has happened where a Minsiter of Finance writes a personal attack on an individual commentator.

      I would like you to read it as it clarifies my position and the fact that the Guarantee as implemented was nothing like what I had suggested and the fact that within three months, I had realised it was a diasater because it had been hijacked by the very bankers who had brought the country to ruin in the first place.

      It might also reveal to you the level of establishment smearing and undermining that goes on in this country when the entire appartus of the State is used to blacken someone’s reputation.



      • abutler

        Only looking through the avalanche of posts on this topic now, briefly.

        Thanks for your response which I will look over in detail over the weekend; I am fortunate enough to be very busy with work so hence the delay.

        I did however notice a small amount of humility and an acceptance from you that no one has the answers for the current GLOBAL economic issues in your piece in the Independent on Wednesday.

        I say that because the EU area has been getting unfair focus which politically suits the US, UK as a distraction from their own failed economic policies; it’s all Europe’s fault when any serious analysis shows that basically almost all 1st world economies are drowning in a sea of debt, and unaffordable social protection systems, backed by a bureaucratic inefficient public service coupled with an aging population that has increased longevity together with other factors of human creativity on a barren spell: technological age entering maturity.

        What is really interesting is that the US and UK programs of quantitative easing (QE) have failed so disastrously to stimulate economic growth in their respective countries. So how is a common euro bond with the ECB as the lender of last resort the magic bullet to the crisis in Europe?

        Looking at the US QE has only added to the trillions of debt with little stimulus, value of dollar unchanged, very small upwardly movement in inflation and no injection of extra consumer spending, ditto the UK. Add in China manipulating their currency and what we see is every country / trading block trying the same economic tricks and in essence cancelling each other’s policies out.

        The leaders of Europe need to speak up and challenge the current norm that they are the whole problem. I would like your thoughts?


  34. Eireannach

    The above encapsulates much of what is wrong with Ireland:

    DMcW offers yet another of his ‘this wek’s magic bullet’ solution to get this under-regulated, mediocre-educated, iphone fidgeting spoiled brat country ‘back in business’. If only it were that simple David, we’d have bounced back since 2007 already!

    …then Andrew above takes time out to criticize David, fudges his own point by meandering into an ad hominum attack and is then too lazy, or perhaps too impatient or too disrepectful to both DMcW and readers of this thread, to be bothered proof reading his own contribution. His argument is that he’s ‘tired after a hard days [sic] work’.

    All work and no capacity to get basic punctuation right or argue clearly makes Andrew an example of why Oirland is weak, a land of losers now that the free money has dried up. It’ll take a decade to breed a new class of citizen, at least.

    Judging by the 20-somethings and teens, I’d say this country is facing a slide downhill from confusion to delusion to frustration to escapist derangement to cry-baby blubbering followed by ad hominum rants and bouts of personal depression to yet more waffle and powerless ranting for a long time yet.

    • bonbon

      Odd, but I hear an echo of the 19th century Gentry in your choice of words. About the same as what Berlin is quoted as saying in the FT about Greece. Add the use of the eugenic term “breeding”, well, case closed.

      The cultural point is touched upon, almost as if citizens are rediscovering that such a thing exists. President Higgins emphasizes this, and at the same time Glass-Steagall which is a cultural response drawing on deep history which only humans can do. No “bred” subject, only a citizen can do this. Empires always fail on this point.

    • Eireannach

      Well Bonbon,

      You take exception to the fact that I said it’d take a decade to “breed a new class of citizen”. It’s just a term of phrase. Cultivate a new class of citizen? How about develop, shape, produce, generate, foster?

      We can’t simply follow our super-invidualist laissez-faire culture of let each person do whatever they want and it’ll all be fine. That’s what we’ve been doing…regulate the banks or building or legal professions? Nah, it’ll be “grand”.

      Leave them alone! What have they got to do with you!

      • bonbon

        Argument against Glass-Steagall I heard : sure they are people too! Also used against SF’s “burn the bondholders”. Meanwhile the robbery goes on. What whisper are citizens listening that stops the outcry? Well to answer that see Homer’s Illiad, mentioned below. Then it was “gods”, today “powers”, but in reality as Shakespeare’s Caeser said, “The fault lies not in the stars, but that we are underlings”. Which brings us back to the 19th century again. Empire leaves a mark, and it now more than ever visible.

    • abutler

      Ok just for you Eireannach the post had a grammatically incorrect first sentence:

      “I am really getting fed up of your sensational economics, which only serve the purpose of raising your international public persona further.”

      Happy now.

      I think all and sundry can see my point anyway.

      It seems clear by all the posts regarding setting up non-resident accounts, and how to move money around this “locked in saver bond” proposal made by DMcW is a nonsense.

      In these crisis times people want liquid, readily accessible assets not long term investments; which is not ideal for investment vehicles and growth however that is the current reality.

    • Eireannach

      I would like to take the opportunity to get something straight with you about the Bank Guarantee, not in my words but in the words of Brian Lenihan.

      It is true that when he called out to my house I told him that in my opinion (Opinion, not advice – advice is given by paid advisors, civil servants, paid consultants, paid central bankers etc) he should copy the Swedish banking policy of 1992. This would stop the bank run that was happening.

      That was it. I assumed that they would do their homework – that is after all what these guys are paid to do. Remember they had teams of civil servants, central bankers and personal economic advisors.

      In contrast, I have never been inside the Department of Finance in my life to advise on anything. I was never asked to clarify the parametres of anything – re timing, scope etc.

      Very soon it became shockingly apparent to me that the Swedish approach was not being followed. In fact, the opposite was occuring with devastating consequences. I then thought it best – even at that stage – to rescind the guarantee and call the creditors into a room and tell them the game was up.

      In response to this stance, Brian Lenihan, personally wrote a op-ed page for the Irish Independent. I am sure this is one of the first times such a thing has happened where a Minsiter of Finance writes a personal attack on an individual commentator.

      I would like you to read it as it clarifies my position and the fact that the Guarantee as implemented was nothing like what I had suggested and the fact that within three months, I had realised it was a diasater because it had been hijacked by the very bankers who had brought the country to ruin in the first place.

      It might also reveal to you the level of establishment smearing and undermining that goes on in this country when the entire appartus of the State is used to blacken someone’s reputation.



      • Hi,

        can I just ask somehting? This particular piece in the papers, first time I read it, it is extraordinary in deed, and a good example how the media functions as well.

        I do not know whether you had a chance for a statement in the paper to react to Lenihan. In my view the Independent was under an obligation to offer your a direct response to this letter.

        Did that happen? I guess not!

      • Eireannach


        I’ve read Lenihan’s response to you and I’m sympathetic to your position. But for heaven’s sake, take a lead from our new President Michael D Higgins and tell the people of Ireland what they need to hear, what they must hear if we are to get our act together.

        Namely, that the neo-liberal, insouciant, nonchalant, it’ll-take-care-of-itself under-regulated culture of this country from 1990 onwards has been an unmitigated disaster, leaving us mired in needless personal debt, with thousands living in vinyl-and-glue “houses” on floodplains and it was our vicious, myopic, as Michael D heroic points out “anti-intellectual” culture that could never, ever in a million years have ended otherwise!!

        Notwithstanding the misbehaviour of their banks in Europe’s periphery, why hasn’t a similar crash occured in Europe’s core? Why are Ireland and Spain stuck with the ridiculous over-build in floodplains and in scenic areas?

        We need higher standards at all points, and that means regulations which will not tolerate low standards. The solution to Ireland’s problems are not merely technocratic, monetarist or fiscal. They are cultural and attitudinal, as Michael Casey continuous points out in his brave series of articles in the Irish Times examining the shenanigans and malfaisance in various business practices of the professions in this country.

        The naughty banks and the need for a new flow of credit ain’t the half of it.

        • Eireannach,

          What do you think I was doing from 2000-2008, precisely this telling people through the use of economics, “that the neo-liberal, insouciant, nonchalant, it’ll-take-care-of-itself under-regulated culture of this country from 1990 onwards has been an unmitigated disaster, leaving us mired in needless personal debt, with thousands living in vinyl-and-glue “houses” on floodplains and it was our vicious, myopic, as Michael D heroic points out “anti-intellectual” culture that could never, ever in a million years have ended otherwise”

          You put it better than me!



      • bonbon

        Firstly keep up the good work, in spite of attacks.

        Regarding smearing by the state? Nothing new in Eire, UK, Germany, US. Perhaps that is why only Higgins dares to mention Glass-Steagall, not merely the Swedish model. Split the banks, go over the books. No bailouts for derivatives. Commercial activity supported. All this FDR did in 1933. And push this at the European level. There are similar currents in Germany, France, Italy, US and an echo in the UK.
        Put it another way – they will only attack when they hurt. And by the gods, Wall Street frothed when Peccora revealed their criminality, with FDR and the state standing behind him. They even tried a coup using General Smedley Butler, who blew the whistle! They will not stop with smearing – that’s only an entree. Look what EU finance did to Berlusconi, Papandreu. Even DT’s AEP expects coercion, troops. I wonder how Kenny, Noonan can rest knowing what wolves are at the door. 3 governments down and not even half-time! Higgins is likely wondering how Napolitano caved in.

  35. Eireannach

    week’s :-)

  36. Eireannach

    My error above gives me an opportunity to apologize for my mistake. My comment reads ‘wek’s’ when it should read ‘week’s’. I recognize my error and correct it accordingly.

    All over Ireland the revolution is about to begin – shake-ups in the public sector and the professions. Michael Casey and others have been highlighting the amazing carry-on of architects in terms of dodging accountbility for poor building regulations standards.

    What I’m optimistic about is the coming overhaul of institutions and practices at all levels. But the resistance to change will be impressive. The conservatives are well entrenched absolutely everywhere in Ireland. They are the reason it’s hard to change the country and the reason we are a crap country, as it stands. It’s going to change, little by little, victory by victory, like the Battle of Stalingrad – house by house, street by street.

    There is no other option at this point other than Michael D’s ‘real republic’.

    • CitizenWhy

      The biggest crowd in Ireland was to greet Obama, who has imposed, through convincing the EU’s masters, the policy of making governments pay the debts of private sector banks and for the EU to act as the debt collector for the banks. Feelings drive out facts.

      • bonbon

        Cowan met Obama, who emerged from the Office speaking Irish! Is fedir linn! We can do it. Guess what they meant – we can literally steal trillions from voters to bail out finance. Obama’s Supercommittee, totally unconstitutional, right now tries, in secret, to steal $1.5 trillion (dwarfing Cowan). This is genocide,
        and an insult to the Irish, and Gaelge that that sentence was uttered and will go down in the history books. Obama sure fooled many, but you cannot fool all the people all the time. His true psychopathy is now plain for all to see. Still, with the right phrase, rhetoric, supporters cling, but the absence of an empathic personality is becoming visible. Senator Kerry refuses to face reality. What “Feelings”?

      • bonbon

        Forgot to mention : Merkel tried to form a Supercommittee of 9 in Berlin to secretly oversee the budget – Obama’s model. The Constitutional Court in Karlsruhe uncharacteristically fast stopped that dead in the tracks. This Court by the way is the reason Merkel cannot satisfy Sarko, and print money.

      • Deco

        The clowns here grovelled like servants. I mean when the US President goes to Latin America, the local leaders at least maintain their sel-respect. But not here. Kenny’s speech and the crowds of naive idiots cheering him on made matters much, much worse.

    • bonbon

      Obama got elected on “Change – I’m the One”. Result – bailout robbery. Change does not happen the way he ranted or the way you describe. Rosa Luxemburg has the best insight into both empire and the mass-strike social change now underway. A must read. She criticized Lenin as an insider, pointing to the Marxist blind-spot. Better is Percy Shelley’s Defense of Poetry I cite below, or Mask of Anarchy – to get an idea of how change occurs.
      “At such periods there is an accumulation of the power of communicating and receiving intense and impassioned conceptions respecting man and nature. The persons in whom this power resides may often, as far as regards many portions of their nature, have little apparent correspondence with that spirit of good of which they are the ministers. But even whilst they deny and abjure, they are yet compelled to serve, the power which is seated on the throne of their own soul.”
      That is something finance does not understand.

    • coldblow


      Thanks for the tip earlier about the demand for Swedish speaking tour operators. I passed it on to a friend of a friend, a Swede married to an Irish woman, who has been finding it hard getting a decent job, even during the boom years.

      By the way, ahem, I believe it is spelt ad hominem (not -um)!

      • Eireannach

        Touché! Ad hominem of course :-)

        Pity I wasn’t speaking to you lately because the Fáilte Ireland National Tourist Guide Training Programme has just begun. 6 months online study and €900, worth every penny. If he’s really interested tell him to email me at and if he’s in Dublin I’ll meet him for coffee and give him names and addresses of contacts to get started out on the road.

  37. CitizenWhy

    Here’s a fascinating book review about our dearly beloved global economy and culture.

    From, Nov 13, 2011

    “Monoculture: How Our Era’s Dominant Story Shapes Our Lives,” by Maria Popova

    What Galileo has to do with the economy, or how Wall Street is molding your taste in art.

    “The universe is made of stories, not atoms,” poet Muriel Rukeyser famously proclaimed. The stories we tell ourselves and each other are how we make sense of the world and our place in it. Some stories become so sticky, so pervasive that we internalize them to a point where we no longer see their storiness – they become not one of many lenses on reality, but reality itself. And breaking through them becomes exponentially difficult because part of our shared human downfall is our ego’s blind conviction that we’re autonomous agents acting solely on our own volition, rolling our eyes at any insinuation we might be influenced by something external to our selves. Yet we are – we’re infinitely influenced by these stories we’ve come to internalize, stories we’ve heard and repeated so many times they’ve become the invisible underpinning of our entire lived experience.

    That’s exactly what F. S. Michaels explores in Monoculture: How One Story Is Changing Everything – a provocative investigation of the dominant story of our time and how it’s shaping six key areas of our lives: our work, our relationships with others and the natural world, our education, our physical and mental health, our communities, and our creativity.
    The governing pattern a culture obeys is a master story— one narrative in society that takes over the others, shrinking diversity and forming a monoculture. When you’re inside a master story at a particular time in history, you tend to accept its definition of reality. You unconsciously believe and act on certain things, and disbelieve and fail to act on other things. That’s the power of the monoculture; it’s able to direct us without us knowing too much about it.” ~ F. S. Michaels

    During the Middle Ages, the dominant monoculture was one of religion and superstition. When Galileo challenged the Catholic Church’s geocentricity with his heliocentric model of the universe, he was accused of heresy and punished accordingly, but he did spark the drawn of the next monoculture, which reached a tipping point in the seventeenth century as humanity came to believe the world was fully knowable and discoverable through science, machines and mathematics – the scientific monoculture was born.


    Ours, Micheals demonstrates, is a monoculture shaped by economic values and assumptions, and it shapes everything from the obvious things (our consumer habits, the music we listen to, the clothes we wear) to the less obvious and more uncomfortable to relinquish the belief of autonomy over (our relationships, our religion, our appreciation of art).

    “A monoculture doesn’t mean that everyone believes exactly the same thing or acts in exactly the same way, but that we end up sharing key beliefs and assumptions that direct our lives. Because a monoculture is mostly left unarticulated until it has been displaced years later, we learn its boundaries by trial and error. We somehow come to know how the mater story goes, though no one tells us exactly what the story is or what its rules are. We develop a strong sense of what’s expected of us at work, in our families and communities – even if we sometimes choose not to meet those expectations. We usually don’t ask ourselves where those expectations came from in the first place. They just exist – or they do until we find ourselves wishing things were different somehow, though we can’t say exactly what we would change, or how.” ~ F. S. Michaels

    Neither a dreary observation of all the ways in which our economic monoculture has thwarted our ability to live life fully and authentically nor a blindly optimistic sticking-it-to-the-man kumbaya, Michaels offers a smart and realistic guide to first recognizing the monoculture and the challenges of transcending its limitations, then considering ways in which we, as sentient and autonomous individuals, can move past its confines to live a more authentic life within a broader spectrum of human values.

    “The independent life begins with discovering what it means to live alongside the monoculture, given your particular circumstances, in your particular life and time, which will not be duplicated for anyone else. Out of your own struggle to live an independent life, a parallel structure may eventually be birthed. But the development and visibility of that parallel structure is not the goal – the goal is to live many stories, within a wider spectrum of human values.” ~ F. S. Michaels

    We’ve previously examined various aspects of this dominant story – why we choose what we choose, how the media’s filter bubble shapes our worldview, why we love whom and how we love, how money came to rule the world – but Monoculture, which comes from the lovely Red Clover, weaves these threads and many more into a single lucid narrative that’s bound to first make you somewhat uncomfortable and insecure, then give you the kind of pause from which you can step back and move forward with more autonomy, authenticity and mindfulness than ever.
    The book’s epilogue captures Michaels’ central premise in the most poetic and beautiful way possible:
    Once we’ve thrown off our habitual paths, we think all is lost; but it’s only here that the new and the good begins.” ~ Leo Tolstoy
    Images via Flickr Commons

    • bonbon

      There is an error in the Galileo story. Copernicus challenged the geocentric fraud of Ptolemy, which Aristarchus had already dumped long before. But both Copernicus and Tycho Brahe got it wrong, and Kepler founded modern astronomy, uniquely discovering the gravitational principle giving non-circular elliptical orbits. Kepler send Galileo a copy of his revolutionary work, which Galileo never acknowledged, only to write a friend that he understood not one word of the work. That’s the truth about “scientist” Galileo. Drawing pictures with a borrowed telescope is not science. Can you see a gravity?

      But the idea of stories is nice. Children remember stories, which span generations, amazingly unchanged. That is how human civilization works. Take almost any of the ancient tales in Irish, English, Finnish and the detailed astronomical (cosmogenic) content is stunning. Homer said, with the advent of the written word (new Greek), the old spoken story telling was dying, a two-edged sword. I recommend “Hamlet’s Mill”, and Koneckis “Mythen und Märchen” (German) and especially Gandhar Tilak’s “Orion” (English) for an idea of how ancient these stories are. They can be dated to well before writing, possibly 20,000 years, by precession.
      See Homer’s Secret Illiad and wonder how a “blind” poet knew such exact astronomy.
      The Illiad story 800 years before Homer, now documented exactly with ceramic coins found from Wilusia (Illion) in the Hitite city of Taruisia (Troya). Schliemann knew the story and found Troy. That’s storytelling for you!
      Does Michaels mention any of this?

      • CitizenWhy

        Yes, the conventional account of the Galileo story is wrong on many fronts, leaving out that the Pope and his advisors agreed with Galileo but felt pressured to condemn him publicly by the European professoriat and the Protestant claim that the Catholic Church ignored the Bible. The Jesuits were allowed to continue teaching what he taught and to experiment along similar lines. The real story is so much more interesting that the grade school version.

        • Colin

          Good post CitizenWhy. But since RC Church bashing is fully in vogue these days, it’s not surprising the truth gets spinned and suppressed.

      • CitizenWhy

        Ptolemy’s system accurately explained and predicted the movements of the known planets from a point of view on earth. That’s what older societies wanted. Ptolemy was mathematically sophisticated.

        A good theory explains known facts. All scientific theory, we now know, is subject to correction based on empirical discoveries. They did not know this then, although many in the learned class did.The Catholic Church tended to interpret the Bible metaphorically for the most part (except on Eucharist and the commandments). It was the Protestants who insisted on strict Biblical interpretation (often literal, but sometimes metaphorical) and the Catholic Church gave into them on Galileo and Genesis and that part where the sun stood still. The church officials in Rome, and their Jesuit advisors, knew that Galileo was right.

        • bonbon

          Ptolemy? How can it be that Aristarchus’ heliocentric system was replaced by a Ptolemaic geocentric epicycle? For 1200 years? Kepler asked himself why is it that circles are perfect – who says? And discovered elliptical gravitation, a step no-one else managed to do. A very similar question Ampere posed – why is circular action so beloved by the Polytechnic establishment, and discovered electrodynamics. I hope to make clear the difference between science and, well, journalism.
          By the way Bohr’s atom is a replay of Ptolemy.
          If as you say Ptolemy was accurate, to small error, why is it that gravity could only be discovered in what today would be called noise or statistical error?

          To borrow Steven Colbert’s great phrase “Truthiness is not truth”.

          Kepler, afaik Protestant, had to save his mother twice from burning at the stake. He himself was a follower of Roman Cardinal Nicolas de Cusa’s De Docta Ignoranta, the foundation of modern experimental science, rarely acknowledged by either branch. Truthy “explanations” seem to forget this…

      • coldblow

        If you read German, you might try Grimm’s preface to the Maerchen about the beauty of folk tales/lore. That and a nature description in Goethe’s Werther are among my fave reads. (Might already have read it.)

    • bonbon

      Forgot to add : Homer’s Illiad and Odyssey tell of a pointless long war that destroyed Greek culture for 800 years, even the written word was lost. Homer used the new alphabet to warn us europeans about the damage, but especially the oligarchy (gods) that almost wiped out civilization. Strong stuff.

      • CitizenWhy

        Themes in Greek literature are announced right at the start. The theme in the Iliad is “mynin agan,” excess of passion, the behavior of youth, gods and heroes, the US War Machine, Hitler, Lenin, Stalin, etc. Lack of prudence (meaning foresight into consequences). Doomed to die but that is irrelevant to the players, grand gestures and boasting being more important. Style.

        The theme of the Odyssey is “andron,” that is, the making of a man, an adult, a person capable of being the philosopher king on his own island, however small. To grow into that adult he must journey to many lands and learn different cultures, and also go on an inner journey to the land of the dead, and then return to normalcy (Nausikua) and finally home, there to restore moral order.

        In effect, taken together, despite the veneer of realism (combined with the fantastic), the two epics are a Western Wisdom journey, perhaps echoing a temple ritual and psychotropics.

        A very different story from getting an Ivy League MBA, maximizing shareholder value, “monetarising” dreams and destroying an economy.

        • bonbon

          Weird how you never mention the gods, their grip on people, why Agamemnon could ruin the Ionian economy, why the Greek alphabet changed, the collapse and dark ages. Did you know Zeus was a Green? Perhaps another story, “Prometheus Bound”, but relevant as ever.

          Perhaps the psychotropic comment is more culturally revealing than Homer’s or Aeschylus’ original, eternal work.

    • bonbon

      Stories, language and poetry are key to culture. Shelley’s Defense of Poetry, last section, is the best in English: “Poets are the hierophants of an unapprehended inspiration; the mirrors of the gigantic shadows which futurity casts upon the present; the words which express what they understand not; the trumpets which sing to battle, and feel not what they inspire; the influence which is moved not, but moves. Poets are the unacknowledged legislators of the world.”
      What future then? What gigantic shadows, what influence moves? The Occupy people should hear this.

      • Deco

        We live in a world where advertising is continually squezing off any form of narrative that does not result in a sales transaction for “our advertising sponsors”.

        • CitizenWhy

          Yes, we live in a transaction monoculture where literature is relegated to the trivial except for video games and TV stories (some of which are quite good – The Walking Dead and Homeland are two in the USA, and the Torchwood saga for one on the BBC). These stories explore our divided human nature, with its capacity for good and evil, the evil including self-righteous misdeeds visited on those we call heretics. They offer moral dilemmas and flawed people, the way we really encounter life.

          I read many books and the only person I met who read some of them was a conservative Anglican priest who converted to RC and was allowed to work as a priest. He was alarmed, however, by many of the Catholics that he later met, not because they were liberal or disagreed with him or agreed with him too harshly, but because they were not well read and expressed their views without nuance (and often without charity).

    • Eireannach

      I’ll give you a perfect example of the monoculture:

      All the time, Irish people ask me what’s the point of learning a European language?

      Their argument is always one of use-value, i.e. the number of hours of study required for the return on investment in terms of money earned.

      They don’t see the point if the ROI isn’t a decent margin.

      In other words, their is no native passionate curiosity about other worlds, other language landscapes, adventures into realms of the linguistically unknown, and so on. No – what’s the ROI, is the question that comes up again and again.

      P.S. Many people object to Michael D Higgins because he isn’t an ROI “business man”. Remember on Frontline – how many jobs did you create? HOW MANY?

  38. Emigrant lass


    What would anybody advise to do with say 50,000 euro savings in Irish bank accounts???

    Already sent it home monthly from Australia for the past two years! So its pointless sending it back, or is it??

    Don’t know who to ask about this and I will not contact any Irish bank personnel!!

    PLEASE give some guidance or my plan to build a house in Ireland next year is doomed!!

    • What I have done is buy gold and silver. Of course don’t put all your eggs in one basket.

      Go to on how to open accounts in non euro countries.

      Keep something in your irish bank account in case the worst does not happen and for cash flow.

      Also I have about one thousand euro in cash always.



    • Steve88

      I have noticed at least 5 different posts on this article from concerned individuals asking what best to do with their savings to safeguard against a possible/likely devaluation of the Irish currency, be it a second tier Euro/Punt etc. Despite this question cropping up regularly there seems to be very little advice being returned.
      I’m not asking anyone here to tell me what I should do with my life savings, i’m just interested in opening a discussion regarding the different options open to the people in this country who actually do have savings!!!
      Open a sterling bank account, invest in Norwegian Krone/Swiss Franc, invest in silver………? Please discuss

  39. A little bit of history that we shall never forget!

    Busy with my yearly IT cleanup, I thought I post this here for you to download as a historical document, something that in my opinion shall never be forgotten.

  40. @Bonbon, Citizenwhy, Deco etc.

    You know what I would find most interesting? The personal intersections of our ‘good Lords’ in Banking, Legal, DoF, the core of senior civil servants etc. and the Opus Dei in Ireland.

    It is just a hunch, well, a bit more than just a hunch really, but I feel that the influence of certain groups in ireland has been instrumental to a public behavior that I would call extremely submissive.

    • coldblow

      Hi Georg.

      You were wondering above why I said that I thought your overall analysis is exaggerated. Well, it’s a judgement thing and this is an example. I can’t read the Herald link (or David’s link) as my computer just brings up a blank screen. The Herald would make Bild look like something written by Goethe. I don’t know anything about Opus Dei but I imagine that they are, just like Michael Higgins,’spiritual’.

      • Understand.

        I beg to differ, the centuries lasting deep rooted psychological influence of the church in ireland, well,it is evident in many ways, and the Opus Dei is anything but a bible lesson club.

        • coldblow

          Hi Georg.

          Our posts crossed. I’d say the most accepted explanation for submissive, or passive aggressive or whatever, public behaviour would be the trauma caused by English colonialism, land expropriation, penal laws and the institution of alien concepts of private property, especially in land, ie postcolonialism. I think a certain version of Catholicism, based on an imported model or so I have heard, thrived in this culture, perhaps similar to Methodism in the slums of the Ind Rev. Crotty counts the Church as among the four big winners, the other three being Harland and Wolfe, Guinness Brewery and (but of course!) the banks. You know that old aristocratic lady you used to know well, the one who disliked FF? Well, you should have asked her where she thought the nexus lay – and then all you’d need to do is take the opposite view!

      • coldblow

        My own hunch for a nexus would be banks, law (including 8 former Attorney Generals) land owners, private schools, rugby and (of course)the Irish Times.

        • Eireannach

          The IT is basically a Labour paper these days.

          The Old Anglo-Irish Establishment, the ones who owned 95% of the surface land area of Ireland at the time of the Act of Union in 1802, can these days be found hiding out in the Irish Independent and especially the Sunday Independent.

          FF are basically the bastard child of Fenian agrarian secret societies, attacking these land owners, and the propertied farmer class who emerged from the victories of the Land League.

          These FF types distrust Dublin. Well then, lets let them run the country and see how we get on, shall we?

          Control of the power centres of Ireland is always shifting hands, and the rest of the population are always unhappy because they think they should be in control. Of course!

          • coldblow

            Yeah, they all want to be in the nexus. I forgot golf. Reminds me of the Simpsons’ Stonecutters secret society.

            Actually, anyone who’s read their DMcW will know that the countryside has already captured the Civil Service.

          • CitizenWhy

            FF succeeded because it spent all its time forging local relationships (including power relationships) while the precursors of FG were trying to form and make work the Free State government, focusing their energies on that enterprise, the eternal political mistake of technocrats (de-emphasizing relationship building). In certain sections of the country the “hard men” of the IRA eliminated by murder or threat of murder any former IRA militants supportive of the free state.

            Irish culture favors “those we know.” The strategy of relationship building brought FF to power.

        • coldblow

          That could also be “Attorneys General” I suppose, but I make sure I always use the forms stadiums, referendums etc. That’s my criteria. Also Peking, Bombay. Kabul with the stress on the second syllable, like normal people pronounce it. Ditto Mayo. As for Ballaghaderreen… Never say whom. It’s me (Leclerc). Everyone went back to their seat. For us men and for our salvation. Any English reading: it’s good not gyd. About, not in relation to. Hope that’s all clear.

          Oh yeah, forgot to add. Don’t say that’s inappropriate behaviour but you’re in f”"”"”"g big trouble now, mate!

  41. Deco

    Spain = Ireland muliplied by seven.

    I personally, have been absolutely bemused at how a country with 50% plus unemployment rates for people between 23 and 30 is able to tell the world that real estate prices have only declined circa 15% from peak.

    This is a load of official nonsense from the Spanish govermnent, the Mr.Bean like prime minister, the banks, and the state authorities.

    Unemployed people do not bid on real estate.

    Spain’s accounting is loaded with regional government waste, and off balance sheet accounting tricks – like having a stimulus plan now, and incurring the bill in 2014.

    The number fudging in Spain is much worse in absolute terms than in Greece. Sure, Spanish banking includes a massive loan book in South America, which is coming good, Spain has some excellent industries, the infrastrucure is top class, and Spain has a commendable plan for renewable energy. But there was still a massive housing public, a massive local government waste bubble, and labour productivity in sectors that involve the expenditure of tax money is a disaster. And there is an unemployment problem, and it is chronic.

    Italians have spent the past decade saving in an acknowledgement that the politicians were cluelessly leading the country nowhere. Basically Italians have looked at the leadership, and accordingly prepared themselves for disaster. But Spain has done the opposite, and soon the debts are going to come due.

  42. gizzy

    People will not change even given a burning platform until the flames are licking at their own feet. Change is not driven by empathy at the struggles of others but by personal need and sometimes it even needs desperation.

    To Eireannach. The fify and sixty somethings have to take the blame for this mess not the youngsters. They are in charge set school curriculams and ignore things such as language teaching for the ages when they are far easier to learn. The older generations grew up in a poor country and decided that accumulation of wealth was the key to life. So if you went to college and got a degree you were entitled to earn a fortune. You did not have to be a very good doctor or a good solicitor just a doctor or a solicitor would do. You did not have to be a good politician or a good senior civil servant just a politician or senior civil servant would suffice.

    So we end up with mediocrity prevailing throughout the government and permanent government and their advisors.Because mediocrity paid well.

    And it is still going on.

    Hope my spelling is k o (joke)

    • Eireannach


      The spelling issue is one of standards. Do we feel entitled to misspell words? I hope not, it would mean our hubris has not abated.

      The older generation have been a total disaster. To a man (and woman) they herded their kids into overpriced houses built on floodplains. What a bunch of fools!

      They will have to be replaced is putting it mildly. But look at the sniggering kids in their 20s – there’s another disaster for you. Texting muppets will mean pot-bellied medicrity will rule us for a long time yet, because we’re too bust texting to change anything.

  43. Morning,

    There have been a number of comments about the Bank Guarantee. I would like to take the opportunity to get something straight about the Bank Guarantee, not in my words but in the words of Brian Lenihan.

    It is true that when he called out to my house I told him that in my opinion (Opinion, not advice — advice is given by paid advisors, civil servants, paid consultants, paid central bankers etc) he should copy the Swedish banking policy of 1992. This would stop the bank run that was happening.

    That was it. I assumed that they would do their homework — that is after all what these guys are paid to do. Remember they had teams of civil servants, central bankers and personal economic advisors.

    In contrast, I have never been inside the Department of Finance in my life to advise on anything. I was never asked to clarify the parametres of anything — re timing, scope etc.

    Very soon it became shockingly apparent to me that the Swedish approach was not being followed. In fact, the opposite was occuring with devastating consequences. I then thought it best — even at that stage — to rescind the guarantee and call the creditors into a room and tell them the game was up.

    In response to this stance, Brian Lenihan, personally wrote a op-ed page for the Irish Independent. I am sure this is one of the first times such a thing has happened where a Minsiter of Finance writes a personal attack on an individual commentator.

    I would like you to read it as it clarifies what my position by early 2009 and the fact that the Guarantee as implemented since Oct 2008 was nothing like what I had suggested and the fact that within three months, I had realised it was a diasater because it had been hijacked by the very bankers who had brought the country to ruin in the first place.

    It might also reveal the level of establishment smearing and undermining that goes on in this country when the entire appartus of the State is used to blacken someone’s reputation.



    • Hi,

      I have a question.

      This particular piece in the papers, first time I read it, it is extraordinary in deed, and a good example how the media functions as well.

      I do not know whether you had a chance for a statement in the paper to react to Lenihan. In my view the Independent was under an obligation to offer your a direct response to this letter.

      Did that happen? I guess not!

      • Of course not.

        Most journalists don’t jump to defence of other journalists in this country, they try to undermine them and side with the establishment.



        • Thanks David!

          See, this is precisely why I find your open statement so interesting an example on how the media in this country works. It is a disgrace really, the editor of the Independent was under a clear obligation to offer you a direct response, no excuses, full stop.

        • P.S.

          ….and as one side result of this deliberate neglect, not offering you that slot, you had to endure years lasting false accusations, permanent attacks from people who did not know the whole story because a certain picture was painted in the public brain. I remember well that that even the ‘peacock’ from the German Handelblatt fired it at you in the Zeitgeist Google session.

        • Colin

          Fionnan Sheehan springs to mind immediately. I feel like using a few expletitives here about him, but there’s no point. The kindest thing I can say about him is that he’s a useless journalist.

        • molly66

          What would you do with this government?

    • In my own opinion…. I have no doubts about that:

      …it was a diasater because it had been hijacked by the very bankers who had brought the country to ruin in the first place.

    • David ,
      I am glad that you have written the above because you have clarified many issues for the believers in you and the non believers and your transparency has simplified what sometimes is complex for the general public to understand.

      My experience in 1993 when acting with foresight to prevent a bank robbery in Dublin showed up all the same malicious tirade from Irish Bankers so that they could climb a career ladder and kill the messenger even though the Gardai were in agreement with my evidence . All the experience I endured from Trial and acquittal to obtaining damages from Irish newspapers enlightened me into how dis-functional our small country really was then and still is .Subsequent to that and following many meetings with members of Professional Ethic Committees of Accountants / Solicitors , Criminal High Court Judges , Constitutional Lawyers , Secretaries to Dept of Justice , Finance etc , Central Bank Regulatory Division , Criminal Injuries Tribunal , Special Fraud Office , and more , I realised that the system is Banjaxed . In 1998 my oral / written and filmed submission to The National Crime Forum revealed the serious shortcomings in Irish Banks .No other submission was invited in writing to talk about Irish Banks .This was chaired by Bryan Mc Mahon in Civic Offices in Limerick and who in his final report omitted to mention anything about Irish Banks .Irish newspapers refused to print anything I said then that eventually in good time proved to be correct .

      For me I learned that ‘ Logic is Dead’ because it does not prosper on corruption. Therefore to allow Logic to regain its glory ‘ a culture of crime prevention’ is a necessity to be inscribed into the ethics of all professional bodies.

      What is amazing during the dark personal moments is that you learn who your friends really are.

    • CitizenWhy

      Well put, David. The simplicity of your narrative, with specific facts, is characteristic of truth telling.

      Next time you have such a conversation:

      1. Write a memo to yourself about what was said and where and when and who was present, date it and sign it. Later sue for slander on the basis of this memo. In the US such a memo stands as evidence against anything the other party claims.

      2. Email the person, or chief person, you spoke to, with the content the same as the memo. This gives the other person a chance to correct or dispute your narrative. If you get no response then your word goes undisputed. Keep paper copies of these emails as well as electronic copies.

      That’s how you protect yourself from slippery, sneaky, snarky types. Presume any government official or corporate type fits this definition.

      There are two ways to nationalize: … 1. The Swedish way, in which bank investors and lenders lose everything, or a substantial part of their investment. That’s free market capitalism. … 2. The way Ireland did it, nationalizing precisely to pay off the investors and lenders, with taxpayer money and money borrowed at steep interest from Europe. In effect Ireland was conduit for Europe’s disguised bank bail outs and had to pay high interest rates for the privilege on top of it. For balance, Ireland was not to be lent any money to run its now deficit ridden government unless it agreed to pay the banks. At any rate Ireland took the route to crony capitalism, corporate socialism, aristo-capitalism.

      All the austerities in Europe are also part of the disguised bank bail out scheme.

      Ireland was not allowed to adopt the Swedish route. The pressure from Europe to pay off the European banks was and is enormous – from Europe and the US.

  44. Malcolm McClure

    Here is an intelligent American view of the reality behind widespread misunderstanding of European leader’s motives.

    There has been a resurgence of comments in this blog about an assumed American thrust to warfare as solution to global economic problems. Americans are portrayed as irresponsible war mongers on one hand and the European elite as irresponsible federalists in pursuit of global domination using financial instruments on the other.

    Friedman’s better balanced review concludes that European elite is simply trying to prevent a recurrence of the wars that have devastated the continent so often in the past. Those leaders see the Eurozone as a unifying principle that will reduce the likelihood of future nationalistic wars.

    Perhaps we all need to tone down our inward-looking nationalistic sentiments and instead support solutions intended for the common European good.

    • bonbon

      Transatlantic finance and culture is dying, while APAC is booming, a situation unacceptable to Obama’s managers in Britain. He is set up to go after China, Russia now because of his psychopathy.

      This is not an American thrust to warfare, rather an imperial one. After all, rejecting national interest leaves only supranational in other words, imperial, and inevitably imperial wars.

      The Common Good in the U.S. Preamble indeed defines the nation-state republic of the USA, rejected by the Confederacy. There is no such EU state – attempting to force one using Carl Schmitt financial crises emergencies is not by any fantasy democratic, and an insult to imply a United States of Europe has anything to do with the US Preamble.

      Each European nation state has some version of the common good by consent already in place. This is what is being destroyed.

      Britain alone supported the Confederacy then, and now Obama. Britain foisted the Euro with the explicit intent of smashing Germany as a re-unified nation state. Nations get in the way of empire, by their very nature.

      The attempt of implied bungling do-gooders is destroying Europe. In fact imperialism has always destroyed europe from Rome to Venice to Pan-europe of the British Empire and Napoleon, and Hitler who destroyed the nation of Germany first, then any other nation he got his hands on. Hitler is quoted as rolling back history to before 1783, the Treaty of Paris, the founding of the first modern nation state, defeating the empire. That explains granpa Prescott Bush’s personal funding of the 1932 election in Germany. No surprise the kid used 9/11 to roll back the US constitution – its in the family.

      Lets see what unbalanced geo-politicians think of that!

    • CitizenWhy

      The European elite as irresponsible federalists in pursuit of global domination using financial instruments?

      Who in God’s name in the US is saying this? This is a very silly straw man.

      No one in the US thinks Europe is pursuing global domination. The most published view is that Europe has a serious problem and cannot or will not fix it. That problem is generally ascribed to the failure of how it set up the European Monetary Union and its central bank plus huge financial bubbles and collapses and national debts in some countries. This hardly a story about a lust for global dominance.

      As for the US solving global problems through war the record is mixed. But the war on drugs, as well as the wars in Asia, and numerous special ops (as cited in a post above) do argue for a tendency to use force. In principle I am not opposed to special ops but there are far too many.

      Obama, out of financial concerns and following the example of Bill Clinton and Ronald Reagan, has opted for intervention through short air attacks and special ops. This preference for special ops vs troops on the ground, was how Donald Rumsfeld planned to transform the US military and shrink its size and budget. The shrinkage will probably never occur but Obama is trying to keep war costs low.

      The Republican candidates are calling for attacks on Iran and Pakistan. The right wing in the US IS fully committed to war with Iran.

      • CitizenWhy

        I forgot to add that the general consensus in the US is that Europe’s austerities are not working and that they need instead to opt for stimulus.

        The left in the US see Europe setting out on a path to shrink/shrivel its social democracy in favor of transferring wealth from its people to its banks. Hardly an image of global lust for domination. The left believes that Europe will be left weaker as a world player.

        The right in the US rejoices in Europe’s problems and its path to destroy social democracy. The right sees Europe as morally corrupt and politically inept and it sneers at its military. Hardly an image of global lust for domination.

        • bonbon

          The spectacle of Geithner at APEC, lecturing Europe on the FED’s QEII, is not what I call “consensus”. Its desperation. Partly fired by the fact that the FED has funneled $billions to rescue the Euro already. Tell that to the American tax-payer and take cover!

      • bonbon

        Remember BRIC? The so-called alternative to the Dollar? Well the BRIC is broken, IMF’s Lagarde begging in China, collected, well, a typical church donation basket full. Blair etc, promoted BRIC, and Medvedev bought in. Firing Finance minister Kudrin in front of camera’s shows he had burnt his fingers. Russia, belatedly, has figured the swindle.

      • Malcolm McClure

        CitizenWhy: May I suggest that you read up on the Bilderberg group? I think you’ll discover that it was started by Europeans like Dennis Healey and that Europeans still predominate in its numbers. Van Rumpuy and Sutherland are not straw men.

        I thought i’d made clear that in that paragraph I was referring to hyperactive suspicions of some contributors to this blog and not to American beliefs.

        I think we should all calm down and try to follow the thread of David’s reasoning a bit more closely. After all, it’s his blog.

      • redriversix

        Hi CitizenWhy,

        Are you suggesting that the War on Drugs and America’s War in S.E Asia were a success..?


  45. lifeflow

    We are the many not the few – / it’s the same in Europe as in the states – listen to the song!

  46. gizzy

    I listened to Warren Buffet yesterday repeating what he has said before that credit default swaps are socially destructive. He is one of the most successful capitalists in history, he says that but no one moves to ban them.

    G 20 could make three decisions to immediately help the world economy.

    Ban cdss.
    Ban short selling.
    Ban speculation on oil and gas.

    • bonbon

      CDS are a derivative along with various other “instruments”, and Buffet, oracle from Omaha, lost a fortune on these recently. He probably means his wallet was burnt, bad for social conversation.
      Anyway Glass-Steagall is a 33-page law versus the Doddering-Frank 700-page bill of loopholes, to ban derivatives. The bailouts are an attempt to transfer derivative debt to taxpayer economies. The reason it simply cannot work even with dictatorial government-toppling known as “governance”, is the outstanding numbers : $10 ** 15, that is quadrillions debt on a world GDP of about $41-trillion. A 1000lb flea on a 10lb dog. We have to feed the flea, eh?
      Obama has personally blocked Glass-Steagall bills 2 times. London has clearly signaled that this would be considered a hostile act!.

      Nice sentiment, but it takes more than that.

      • CitizenWhy

        The 400 page law has been written by the lobbyists for derivative traders. That’s how things work in the USA.

      • gizzy

        Thanks for info.
        I’m saying what I would do not what they are doing. They are allowing speculators who create nothing smother the real economies of the world. The starting point to clearing the mess is to stop creating more of it surely or have i the wrong end of the stick.

  47. Reality Check

    David, an easy $400,000 for you!

    Simon Wolfson, the CEO of European retailer NEXT, is offering a prize of �250,000 — about $400,000 — to the person or group that comes up with the solution for how one or more of the 17 countries now using the European common currency can stop using it without causing a massive shock to the global financial system.

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