November 28, 2011

When normal economics breaks down

Posted in Sunday Business Post · 153 comments ·
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Europe’s crisis has gone nuclear. For readers of this column, the endgame in Europe, which is likely to be a currency break-up, hardly comes as news. But the event itself will be traumatic for all of us. The most likely scenario is some sort of two-tier eurozone, where the euro breaks into a strong and weak euro. And yes, you guessed it: we will be in the weak camp.

The euro simply can’t go on as is. Even fiscal union (which would be a disaster for us, because our corporate tax rate would be the first thing to go) can’t help what is now a currency in its death throes.

The reason the euro is likely to be consigned to history is simple. As argued here for years, the currency is a profoundly destabilising influence because it amplifies credit booms and exacerbates normal recessions.

To examine this dilemma, let’s go back to first principles about how economic systems are supposed to work.

The most basic attribute of an economic system is that, when working properly, it smoothes the business cycle. The business cycle is a normal thing. When things are going well, human nature is such that we think that this will go on forever, so we become recklessly confident.

This causes us to do stupid things, like buying too much property at the top of the cycle and borrowing too much to finance this effervescence. This is a mistake.

In contrast, when things are going badly, human nature becomes too pessimistic and believes that the economy will never recover. We therefore sell too much in the downturn at whatever price we can get and, if we can’t find a buyer, we let prices fall further. We stop spending and save too much because we can’t see an end to the downturn. This, too, is a mistake.

The role of wise economic policy is to control these wild human emotions. When things are getting too hot, economic policy should cool things down and, when things are getting too cold, it should warm things up. Unfortunately, the euro does the opposite.

We all know what happened here in the boom. Too much credit fuelled too much optimism and more than a little bit of added local financial criminality, leading to disaster. But let’s not go over that again; let’s focus on what is happening right now.

In ‘normal’ economics – the economics you would learn in school or university – the rate of interest should fall when a country goes into recession. If a country has its own currency, there is no default risk premium. So lower activity leads to a lower demand for credit and a lower interest rate.

The fall in the rate of interest allows those in debt to pay their debts at a lower rate to reflect the lower income they have suffered as a result of the recession.

Conversely, there are those who didn’t take out debt and see the new economic paradigm as an opportunity. They can therefore borrow at lower interest rates. They take a new risk, borrow money, re-invest it in the economy and the economy begins to recover.

This is how things work in the US and Britain because they have their own currency. American and British long-term interest rates have never been lower because the system works and everyone knows that lower interest rates are necessary when the economies are in such a precarious position.

In contrast, within the euro, this ‘smoothing’ mechanism doesn’t work. This is because the euro is a ‘foreign’ currency for everyone. For Germans, the euro is too Italian, and for Italians the euro is too German.

Therefore, there are perceived risks everywhere. Money leaves Italy in a slum and gets sucked into Germany because the very foreignness of the currency makes investors feel safe only in Germany rather than Italy, which is actually using a foreign currency that it can’t print.

Therefore, ‘normal’ economics breaks down in the euro and is replaced with a perversion of traditional economics. Far from falling in a recession, the rate of interest actually and counter-intuitively rises in a recession, making things worse and eventually threatening a melt-down. Think about what happened here last year. As the economy slowed down, the rate of interest charged on Irish assets increased, rather than decreased. This is ludicrous.

Think of Italy in the past few weeks. As the Italian economy slowed down, the rate of interest at which the Italian government could borrow went up, not down.

This creates an enormous liquidity problem. As the rate of interest on Italian government bonds goes up, the price – and thus the value – of Italian government bonds goes down.

But who holds Italian government bonds? Why, Italian banks do. This means that the value of the Italian banks’ portfolio goes down as the price of the bonds fall.

Does this make them more likely to lend? Of course not, as they are now in a position where their balance sheet is weaker than before. What do banks with weaker balance sheets do? Do they lend? Of course not, they try to get money in rather than give money out. So they stop lending.

What does this do to the economy? If there is less lending, it makes the economy contract even more.

So the rate of interest in the euro – outside Germany – behaves in precisely the wrong way. This economic perversion, is made all the more problematic by the policy reaction of the mainstream EU economists.

In the face of the downturn where people are saving and not spending, and the rate of interest is rising not falling, the fools at the EU say that the answer is that the government should raise taxes and cut expenditure. But this means that the economy will contract more.

What do you think happens when the government reacts to a slowing economy by raising taxes? Obviously, the economy slows more. In Italy, to take the most current example, this increases the risk on Italian assets – and Italian interest rates rise more. How dumb is that?

Thus, unlike the US or Britain (or Japan in its 1990s crisis) interest rates in the peripheral countries of the eurozone rise in a recession.

This obviously means that the euro is a perversion when it comes to the ‘normal’ functioning of economic policy. Its inconsistencies make the problem worse. All this makes the break-up of the euro probable, because it is a destabilising influence.

In good times, the euro ensues that too much money flows into growing countries, pushing good, sustainable growth into dangerous boom territory. In contrast, in a recession, too much money leaves countries because investors believe that the country won’t be able to pay its debts. This makes a bad situation worse and drives recession to depression.

So what happens next? A two-speed euro is the most probable outcome now, where we and the rest of the periphery join a weaker, ‘soft’ euro currency, while the core remains in the ‘hard’ euro.

For the likes of the French, they had better drive this forward quickly because, the longer they wait, the more likely it is that France will join us in the ‘soft’ euro and that would be a political disaster for the euro federalist fetishists in Paris.

In reality, the political irony is that a two-speed Europe will not be instituted to save Italy, Greece, Ireland or Spain, but to save France. Plus ça change, plus c’est la meme chose.


  1. Dorothy Jones

    Will the two-speed Euro happen if Germany is not as strong as perceived?
    Deutsche and Commerzbank shares have fallen. A toxic bank may be required for Commerzbank loans, Deutsche is selling assets to gain capiyal [recognise a pattern here?] Apologists for the poor performance of Deu bond sales maintain that tis is because of the low rate of interest. Markets are rapping Merkel, Schaeuble and Roessler on the knuckles over stability bonds and issuing conflicting statements through the media.
    I am not sure what’s on the playlist for this week’s round between Bank and Politic in the EU but I’d be prepared to bet that ‘Smash my Bitch up’ by the Prodigy is right up there.

    • Dorothy Jones

      Apologies for the typos

    • MidasMoney

      I don’t believe the low rate of interest has anything to do with the failure of the Deutsch auction Dorothy. Have a look at Paul Craig Roberts (former Reagan undersecretary to the Treasury, father of supply side economics and editor of the Wall Street Journal and a true blue paleoconservative) article in Counterpunch;

      http://www.counterpunch.org/2011/11/28/just-another-goldman-sachs-take-over/

      His reasoning seems to me to be impeccable. The Oligarachs have long since taken over Washington. See Simon Johnson below;

      http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/

      For the past number of decades they have been setting up their placemen in Europe, along with the neo liberal agenda, and now all the pieces are in place. The Social Market economy is being destroyed deliberately, stealing savings and pensions and workers hard won rights. And I don’t just mean blue collar workers; all of us working are workers.

      The only solution is to bring the whole rotten corrupt system down and start over, beginning with a jubilee year. Fiat Justitia ruat caoelum! Bring it on baby!

    • Dorothy Jones

      Postscript:
      Stockmarkets up now w. central banks injecting liquidity into the markets today….’drama’ as they say in ‘The Hills’. It’s all very surreal in any event.

  2. goldbug

    WHAT CAUSED THE FAMINE?

    CROPS WERE EXPORTED. FETCH HIGHER PRICES ABROAD.

    COLONIZED = NO TARIFFS AND CONTROL -> FREE MARKET

    TODAYs DEBT = OLD PEONAGE -> NO WAY TO ESCAPE.

    NO NATION CONTROL OVER CURRENCY -> MUST GO INTO DEBT TO BANKS TO GET MONEY.

    CENTRAL BANKS-> BANK OF INTERNATIONAL SETTLEMENTS.

    MARKET CONTROLLED CURRENCY. MARKET = LENDER -> SETS RATES TO BORROW AT.

    GLOBAL SUPER RICH LEND TO & PROFIT FROM MORE DEBT.

    SPOT THE DIFFERENCE.

  3. Philip

    What bothers me most is that no matter how rational you are in your estimate of what’ll happen next, precisely the opposite happens – and if you decide to take a more histrionic stance, guess what?, reality rewards you by proving you to be correct.

    We are looking at systems way outside their steady state conditions, yet the people who are trying to control it are still using the same steady state rules for corrective feedback. This is basic control theory in action. A time comes when you must re-assess the system to see what the new rules are. The closest analogy I can come up with was the breaking of the sound barrier where some of the controls had to be used the opposite way to maintain stability.

    We are encountering a barrier of a law of economics. Not being an economist, I have no idea what it is. But like any black box, I know there is something up in the old state matrix called the economy. Maybe a new approach is needed which goes beyond the ideas of supply and demand.

    I am not a conspiracy theorist although it can only be expected that opportunism and greed will take its toll for the coming period. The trick is – how can we handle these parasitic aspects to our development if we are to keep some level of acceptable stability for all. Th scope for cockups combined with an incompetence for dealing with beyond norm issues is really the issue. Put another way, we need some real balls in our leaders sort this out and furthermore, we need some balls in our electorate.

    How do we do a financial strike? Sounds like an idea…but how is it to be practiced?

    • bonbon

      Breaking the sound barrier involves shock waves not simple sound, as Riemann in 1855 clearly showed. Refusal to deal with this is what caused many crashes. Eventually the fluid dynamics was accepted. Wing lift is completely different in this regime.

      The derivative current, started in 1972 by Nixon killing Bretton Woods, and then in 2000 killing Glass-Steagall has produced a shock, highly nonlinear, right now hitting. The economic vehicle simply cannot withstand the supersonic turbulence, in other words the synthetic derivative debts can never be paid by any economy that ever existed in anyone’s dreams. The very effort to do this has the opposite effect as you hint at. Austerity plunges the economy into a nosedive, Quantitive Easing sends it straight back into the shock regime.

      Unfortunately 99% of economists have not the slightest inkling of this either, wondering in utter amazement why the vehicle is falling apart.

      It is appalling to watch the cluelessness.

      Good point!

      • imithe

        That is an excellent analogy.

      • rebean

        This is a good analysis of where we are at. The Glass seagall was a good Act which moderated the casino bankers. Thats the problem really at the core namely Turbo derivative trading and wild west economics, we are in a mess. Maybe the Mayans were right and 2012 is the year of the meltdown.

        • bonbon

          On the Mayan thing running around Hollywood, their calendar is off by 220 years. Some scientist had a hard look at it. But this system will not last 220 years, not to mind months.

  4. Deco

    Excellent synopsis of the performance of the ECB and how the ECB and the EU have got it so badly wrong.

    It also correctly points out that the demands to France are what will determine the timing of what will occur.

    Sarkozy’s current poll ratings in France are at Brian Cowen levels of satisfaction.

    The British media are providing us with details of the case that exists, to prove that DSK was set up in the chambermaid episode.

    If I were Francois Hollande (the presumed Socialist Party French Presidential candidate) then I would be extremely careful. Because he is already into the target sights, as he may prove an impediment to the agenda of the French banking and insurance sector agenda.

    • bonbon

      Everyone knows DSK was set-up – that’s how a sting works. Simply give an opportunity to do what he likes best, and everyone knows what that is, including NY’s finest.

      So DSK out, Lagarde in. Lagarde goes begging in China and comes home with short change. Too bad.
      So rumors today in LaStampa Italy on IMF sourcing $600 billion, up from $60 billion last week for ITALY alone!

      Wow. The money printing DSK just wanted to do, after he got through with all those waiting in various hotels…

      It gets wilder and wilder.

  5. 1. CALL FOR THE IMMEDIATE RESIGNATION OF PAUL APPLEBY!
    2. ENORMOUS SOCIAL INJUSTICE

    22 months ago, in January 2009 the Office of the Director of Corporate Enforcement (ODCE) Paul Appleby started investigations into Anglo Irish Bank matters.

    Incredible events took place since this started, highlights such as top ranking Bank officials refusing to hand over passwords, or Anglo bosses claiming privilege over certain documents, might still be remembered in the public sphere.

    What might have slipped the public is Mr Appleby’s remarkable statement from 29th May 2010:

    Appleby said there was now a “note of realism” about how long it took to investigate alleged white-collar crime, and he said this view had been reflected recently by the DPP. I certainly hope we can wrap it up in a few months, It will be months rather than years.

    The then Director of Public Prosecutions, James Hamilton, retired this year on November 7th with a pension lump sum of 319,315 E and an annual pension of 114,840 E. This and other lump sum payments will not be touched by our friends in the budget control department, they might just slice a bit of his annual for public perception reasons.

    What Appleby also said was that he has 18 staff working on these investigations, half of which are gardai. You have to digest that slowly…. eighteen staff!

    Five months later 3rd October 2010, the message for the public perception ‘slightly’ changed when he said:

    We are happy with the progress that is being made.It was always going to be a matter of years and not months with this.

    Oh really?

    September 14th 2011, Alan Shatter, Dáil Éireann Debate Vol. 740 No. 1 – Written Answers – Investigation into Anglo Irish Bank

    I am informed by the Garda authorities that, following the submission by the Garda Bureau of Fraud Investigation of two substantial investigation files relating to matters in Anglo Irish Bank to the Director of Public Prosecutions last December, a supplementary investigation file was submitted in May. The files remain under consideration by the DPP, and his directions are awaited.

    The investigation by An Garda Síochána and the Office of the Director of Corporate Enforcement is ongoing, in respect of both of these two investigations and also of other complaints received of alleged malpractice at Anglo Irish Bank. I understand that it is intended to submit further files to the DPP in the near future.

    November 2011, the glorious retirement month for Mr. Hamilton. A fourth file was send by the Enforcer to the DPP. – Really? –

    In August the third file was submitted dealing with failures to register loans, and as always, we are waiting on a decision to be made by the DPP…

    Ok, I just had enough of it!

    I have a pile of printed documents on my desk chronologically unfolding since 01/2009. Why? Well, at some stage last year I wanted to make a docu-feature about Anglo Irish Bank, but after speaking to some rather well known Irish film makers, and learning a little bit about the Irish media landscape, I quickly dropped that rather costly idea. However, when I say I just had enough, I mean something else.

    If you go to the ODCE website, on the left side on the bottom there is a box that states LATEST NEWS and there: The Director of Corporate Enforcement has today issued a Press Statement in relation to the ongoing investigation into Anglo Irish Bank.

    You click on it and a press release from two months ago, 29th September pops up, informing you on this third file that was send to the DPP in August.

    You know what?

    Paul Appleby is the Enforcer since this office was setup exactly 10 years ago, on November 28th.

    Do yourself a favor and look at the reports they published, the utterly useless waffle they produced in the 10 years of their existence. Their reports are risible statistics on their exhibitions, and the number of press releases they issued, but don’t trust me, read it for yourself.

    Appleby is in charge of this Anglo Investigation since 22 months, and frankly

    I call for Appleby’s immediate resignation!

    I would have called for the DPP to step down as well, but he retired… with a lump sum!

    The intersections of government and the financial industry, the crony capitalism and corruption, this is the systemic cancer entire nations are suffering from!

    X X X X

    My second part deals with a different matter, then again, perhaps not that different all together, it is related in some ways.

    The Pacific Western University, is an institution that is not authorized by the U.S. educational authority, and it is widely known as a diploma mill. In the world of academia a PWU doctorate does not have much utility.

    Mr. Con Power obtained his doctorate from the PWU and he has served as a former economic adviser in the Taoiseach’s department, he served as – You are going to love this Deco! – Director of Economic Policy at IBEC, he was the first chairperson of the National Roads Authority, he was the vice-chair of the Irish Nationwide Building Society and most important in the context of my below letter, he chaired the Financial Services Ombudsman Council in 2005.

    Now that’s what I call a career!

    In this function back In April 2005, and with the consent of then Minister for Finance Brian Cowen, he embossed a new regulation into the ‘Central Bank and Financial Services Authority of Ireland Act 2004’ and it constitutes an enormous social injustice!

    This regulation was maintained by the department of Justice under:

    Michael Mc Dowell
    Brian Lenihan
    Dermot Ahern
    Brendan Smith

    and since March 2011 Alan Shatter.

    Since March! It is totally inconceivable that neither Minister Noonan nor Minister Shatter have rectified this situation in the past nine months as a matter of the utmost urgency, given the situation the people in this country find themselves in.

    This should have been dealt with before they went into their summer break already, it is November now, and every week this situation continues is unacceptable and unforgivable. They are in charge, and the first duty when you come into such a position is what?

    Get your priorities straight! This matter was well known, and it should have been treated from day one with the highest priority, but it was not. Perhaps they were to busy to execute ECB-IMF-EU marching orders instead, implementing a self defeating austerity that is crippling this country. Shatter who is quick on his feet when a referendum to grant more powers to the government needs to be slipped in, but as slow as can be when it comes to real priorities.

    This matter has to be fast tracked!

    Here is the original letter that I sent:

    Dear Sir,

    Re: Social Injustice

    In April 2005 the then Minister for Finance, Brian Cowen, consented to the insertion of a new regulation into the Central Bank and Financial Services Authority of Ireland Act 2004. This has resulted in an enormous social injustice. As a direct result of this discriminatory regulation, Statutory Instrument No. 190 of 2005, potentially 84,000 small and medium sized businesses in Ireland are disadvantaged.

    The definition of “Consumer” in the Statutory Instrument includes incorporated and unincorporated bodies with an annual turnover of no more than three million euro. However, small to medium size businesses operating as a sole trader will find the doors of the FSO closed to them. This goes directly against the very reason for the existence of a financial ombudsman. Welcome to Absurdistan. On these grounds I grant Ministers Shatter and Noonan the Franz Kafka Medal of Honour for maintaining a regulatory situation which could have come straight from the pages of Kafka’s ‘The Castle’.

    Given the Government’s frequently proclaimed devotion to the cause of small business and entrepreneurs, will the said Ministers please fast track the primary legislation required to redress this unjust anomaly.

    Yours…

    • Explanation: The letter was sent to the editor of the Irish Times. It is the fifth letter I sent to the IT since 2008, I am not holding my breath that it finds it’s way into the paper.

      • redriversix

        Short answer George,is yes,your right.

        Capitalism, Democracy and being in business for yourself has risk’s.Those risks mean being rewarded financially when things go well and losing Financially when things go wrong,these are the choices that people,Banks or Business’s make when they chose this path and that’s fine.

        But we have to realize and sometimes we forget or more importantly Bank’s forgot that when you ask a question,their is a 50% chance that you are not going to get the answer you want,Bank’s forgot that the deals they enter into may work or not work and that they value of their loan book may fall as well as rise.

        Banks have risk insurance,Banks can split risk,Banks charge good money for their services,they have all the angles covered,so do not think they gave a shit about you,me or anybody else,We thought they did because that’s what we grew up with,but we were just a commodity.

        So let them be “just a commodity” for us now……

        Nobody bails out any failing business blindly…unless you are a Bank.If we fail,we dust ourselves down and try and start over,it’s tough,but we knew that…

        They are capitalist as long as they are making lots of money and socialist when they lose and then they run to the Government in the middle of the night claiming the sky will fall in if they do not get bailed out.

        Which was scaremongering at its worst and the Government fell for it.Not just our’s,but all cross Europe and the U.S

        You mention partial debt forgiveness, I believe a precedent has been set by the Banks on that faithful night.We do not need permission for debt forgiveness,is your family or small business worth less than a faceless multinational company ?…..No,I didn’t think so.

        So,protect yourself and your family first.take a financial holiday,seek professional advice if you wish,and I am talking about everybody,rich or poor.

        Have our own mass default and leave fear behind because I guarantee their would be plenty of People willing to do business with a Real Ireland with all it has to offer than this present path to destruction we are facing, while Europe has no clue as to how it will pan out,but you and I sure know how it will if this present path is followed….

        Financial Strike now….and keep it simple,…that means you bonbon !!!!!

        Regards

        RR6

        • Hi RR6,

          the fact that 84,000 businesses in ireland are excluded from making lodging complaint with the Financial Services Ombudsman is a enormous scandal in my opinion.

          Any further administrative delays on the matter are simply unacceptable!

          You have to take the reality of such an discriminatory regulation into account.

          Any business that is discriminated against but this regulation, and that might have a dispute with their bank, and that exceeds a certain threshold, here 50,000 Euro in their business loan, has only one way open to them, the High Court.

          • redriversix

            Agreed Georg,

            Also,next year you will have more companies,business’s and sole trader’s excluded from the regulator as their turnover falls below 3 million which is why they will not change the “law”.

            Win Win for the Bank’s and their pal’s.

            If you are in mediation with the regulator and during this slow process your T/O drops below 3 Million,they can claim you are no longer entitled to representation and by the time it takes to appeal,they hope that you will “go away or go out of business,or lose interest and continue on in the hope things get better.

            Clever fcukers….!

            Financial strike NOW…

            Let’s see how they deal with a “commodity”that bite’s back….!!

            Best

            RR6

          • RR6,

            I am afraid you got that wrong. Incorporated and unincorporated bodies up to three million euro have access to the FSO.

          • redriversix

            stand corrected.Thanks

            what do Companies do who’s T/O Is More than 3 million,is it assumed they do not need assistance ?

          • RR^

            Can I suggest you read up what the FSO is there for, then it will be much clearer.

            http://www.financialombudsman.ie/

  6. Deco

    In his series, concerning Financial history, the Scottish historian Niall Ferguson, stated that at the end of everything, it all depends on the bond market.

    In fact everything depends on the bond market.

    There is a theory that the bond market will snap, and the price of precious metals, and oil will rocket.

    I think the term “endgame” is interesting – because that is what matters.

    And therefore we need to plan accordingly.

    • bonbon

      Somehow everyone forgets the rating agencies, Standard & W*ores, Fitch, and the rest. They apparently are able to topple elected governments by a notch downgrade. Then Goldman Sachs just has to do “good governance”, with “due diligence”. Regrettable, but necessary in these exceptional circumstances, what?

  7. ash

    Deco, you are on the right track, as even the countries that can print their own currency are facing renewed recession and higher than normal inflation. Think stagflation, think 1974 – 1984, regardless of the inept Euro policy response.

    What broke stagflation then was a forced backlash against vested interest unions, who were rightly trying to protect their members’ interests but couldn’t see that the harder they fought the more they reduced the size of the available ‘cake’. This time, it’s not the unions but the financial industry.

    QE was a massive bailout and little of it came out the other side to move the economy. Still, imagine if half and then all the financial industry did collapse?

    A Tobin tax is actually the right solution despite the complaints, as the financial industry does need to be reduced in size gradually. The race to deleveraging at the moment will not achieve that, and will only depress balance sheets further.

    Unfortunately, radical change only seems to have occurred in conflagration.

  8. gizzy

    The article is very clear on what is happening but not the why. How can Europe succeed with commom fisacl and monetary policies for counries with such a diverse range of economic issues. Ireland over borrowed, making private debt public and just plain bad at government leading to budget deficits. Greece with over half the world’s shipping but no proper tax system and lousy at government. Germany highly efficient now, big surpluses but but given a lot of help in the past in rebuilding its economy and infrastructure etc etc.

    It is so easy for the self serving markets to drive a coach and four horses through the differences.

    I find it interesting that since the sub prime crisis which triggered all this inc the collapse of Lehamns and the liquidity crisis that eminated in the States that the dollar has strengthened its position and the Euro is about to fall apart.

    Was it the liquidity crisis that exposed the structural problems in Euro and then was the rest then inevitable.

    Is it a concerted attack by the markets and big investors who hold the dollar.

    How big a role do the speculators and the Business Media play in playing up the Euro problems.

    Are we Europeans just too different as people to have common governemnt. I worked at one stage for a Northern European Firm a few yaers back and their home grown senior management definitely looked on us as inferior.

  9. Charlemagne Empire Encore
    ( France & Germany )

    Yes ,these twins are inseperable and so are Sarkozy and Merkel .They have chemistry on and off the stage .They hold and sweat and they laugh .Their X-Factor has no comparison.

    Maybe the dynasties of the Hapsburg and Bourbon should find solace together with Austria thrown in for spice.

    • bonbon

      Good point. Aachen (Aix-la-Chapelle) should then be declared capital – again? Unfortunately they handed out the Karls medal to some very unsavory characters recently.

      Look in the Aachen City Hall and see the 2 meter high portrait of NAPOLEON, and wife, even today. I am afraid we may be dealing with this again, an insult to Charlemagne.

      What was Napoleon’s achievement – the destruction of the French republic, and a trail of disaster to Moscow. Hitler on visiting Paris, with hand on coffin, is quoted as saying Mein Vorgänger, his model to roll history back before 1783, the Treaty of Paris.

      One can only wonder how the same pattern emerges. It seems yet again they are out to remove any sovereign republics in Europe.

      1783 was a bad year for them, what?

  10. Chris16

    I have some savings in a Euro account with a Bank in the Isle of Man. What will happen to these in the event of a two tier Euro? Which tier will these savings go in to?

  11. coldblow

    OT

    Deco

    I think you mentioned recently that some have expressed doubts about David Kelly’s suicide – was it murder etc?

    This site (Richard Webster: Sceptical Essays), which I stumbled across while looking for something else, has a lot of sense:

    http://www.richardwebster.net/riseofaconspiracytheory.html

    He’s very good on modern witch hunts in general, with a shocking story about the Casa Pia case in Portugal.

    http://www.richardwebster.net/casa-pia-carlos-cruz-reporterX.html

    He made mention of our own Irish versions in recent years (I say ‘made’ not ‘makes’ as he died recently) although there is of course a bit more context to al these cases than simply the mass psychology of a modern witchhunt, which I needn’t go into here. It should be easy to find on the site.

    This is excellent stuff and I’d agree with a lot of it, if not all.

    Sorry to go OT so soon in a thread but I was afraid I’d forget about it. Anyway it’s a warning to all of us to keep our feet on the ground in our discussions.

    • Deco

      David Kelly was an “ostacle” to a certain policy. he was undermining in a very precise and rational manner, the entire Blair agenda.

      The premise for that policy has been proven to be completely false, in retrospect. As exemplified by all those weapons of mass destruction that were found in Iraq. They found none. In fact I don’t think they even tried.

      But…the oil is flowing again…..and the new Iraq will trade greenback paper for oil.

      “business as usual” has been resumed.

      • bonbon

        Hans Blix interviewed on the IAEA Iran lies, clearly referenced Dr. Kelly. Business as usual might seem apparent now, but watch Obama and China – the Pakistan provocation should be clear enough. Do not be fooled by “experience”.

        Rumors have that the did find something in Iraq, planted by the Israeli’s who forgot to remove the “made in the usa” tags.

      • bonbon

        Blair used the Chilcot inquiry to go after Iran. Imagine the chutzpah to repeat the Iraq routine!

        http://www.guardian.co.uk/politics/blog/2011/jan/21/tony-blair-chilcot-iraq-inquiry-live

        This is Obama’s good friend. I suspect Dr. Kelly got in Blair’s way, now today running all over Israel and Palestine “consulting”.

        It’s got to point that Ha’aretz openly discussed for 2 weeks the existential danger to Israel if Bibi gets his way.

        There is no reason Israel should throw itself away for any empire.

      • coldblow

        Hi Deco

        Yes, what you say seems reasonable, but my point was about a conspiracy theory, and by extension, with conspiracy theories (and their ilk) in general.

        Quote from the Kelly link:

        “If the results of opinion polls are to be trusted, the proportion of people in the United Kingdom who believe that the biological warfare expert David Kelly committed suicide declined significantly between February 2007 and August 2010.

        “…The apparent decline in the number of those who accept the official verdict on Dr Kelly’s death should not be surprising. This is because, over the past seven years, propagating the belief that Dr Kelly was murdered, or might have been murdered, has become for some people the equivalent of a religious crusade. The Liberal Democrat MP Norman Baker held this belief so fervently that he resigned from his post of shadow environment secretary in order to research a book.”

        I’m most certainly not directing this at you as you are one of the few people I have come across who have followed events closely over the years. You only provided me (if I read you right earlier) with an excuse to post this stuff!

        Here’s another link which closely parallels the current RTE fiasco:

        http://www.richardwebster.net/whatthebbcdidnottellus.html

        And this one:

        http://www.richardwebster.net/brynestynireland.html

        “There [in Ireland], a narrative in which a significant amount of history is mixed with a great deal of fantasy or fabrication appears to have been adopted, with few reservations, by some of the country’s leading journalists.”

        The commentary here reeks of sinister motives being attributed to politicians, Goldman Sachs, the Pope, Henry Kissinger or whoever. Some of this may be true, to varying degrees, but in all likelihood most of it will be grounded in the mind of the writer and not in objective reality, and the insistent hyperbole just undermines any case that might be there in my opinion.

        Hope I don’t sound holier than thou as I know it can work in my case too, just like anybody else. According to Webster, this phenomenon is no respecter of intelligence or good intentions (in which qualities I excel in addition to superb looks). I’d be sceptical about him too!

    • Excellent stuff Coldblow

      The passage titled A ‘psychopathic mafia’ stood out because I always believed the hidden hand was behind the death of Dr David Kelly

      And who is the hidden hand?
      The first paragraph contains the answer.

      For those who are just awakening the link below might give you some answers

      THEY DARE NOT SPEAK ITS NAME …
      http://tinyurl.com/23x438r

      Read it and weep.

  12. SleeplessInWicklow

    I really wish Comical Ali had Oli Rein’s job. Atleast if he walked out and had to say stupid things like “I can’t see the euro failing” he would do so and be funny.

    God I miss that guy.

    Here is a link to his quotes:
    http://www.welovetheiraqiinformationminister.com/#quotes

  13. roc

    The Euro was essentially conceived as a tool of European integration. What we are going through now is a necessary part of the convergence that a real and worthwhile federal states of Europe requires. The different states of the US manage with the one currency. There is no reason why we should not either. We started European integration, we should finish it. It is worth doing. Either the countries of the EU live up to the combined character of the Euro, or not. For our own country’s part, we would have NO problem living up to the strength of the Euro currency if we did away with gombeenism and our other habits and social institutions of that ilk. Same goes for other countries. The only benefit of the punt nua would be our being allowed to hold onto our gombeen business habits. Periodic devaluation is the perfect remedy for that particular ill. We know this fact from our recent economic history. So why all the cries to go back to this? Rather than point the finger at Europe, let’s start looking to our own house. Anyway these calls for retreat to insularity and petty nationalism, particularly in the context of the current economic and social and political currents, would be disastrous in the medium to long term, in my view.

  14. Adam Byrne

    subscribe.

  15. bonbon

    The first thing I notice about the article is every second paragraph interchanges “economy” and “currency” as if they were the same. This is standard economics 101 and the reason for the mess. This is monetarism run wild, and why even well meaning politicians simply fall over their own shadow, their arguments trailing off with truthiness as they begin to see the hopeless vacuum of economics as preached by London School of Economics, Keynes, Friedman, Mises, Hayek or almost any other “guru”.

    If the article was rewritten with a clear intention to split economy from money, it would be very helpful.

    When one splits the issue this way, Glass-Steagall to split the banks becomes an obvious step. Avoiding this instead induces a dangerous schizophrenic fog.

    See :
    http://www.welt.de/politik/ausland/article13739586/Die-franzoesische-Angst-vor-einem-deutschen-Europa.html

    Amazing that Mitterand’s blackmail to remove the DM as price for re-unification of Germany surfaces again. The very same frothing phobia, which both caused the Euro debacle, continues.

    Ireland is in the wake of this mad Battleship Potemquin, in a currach, rowing like madmen, after an insane Captain, goaded on by, well, Kenny.

    Iceland must be laughing at the spectacle as the currachs whiz by. They have a volcano, but this spectacle takes the herring.

  16. Lyndon Jones

    First of all interest rates are going down as the core are heading for recession. Ireland is insignificant and we only think about ourselves , there may well be a new PIIGS currency sometime in the future but I doubt it ….it will be back to the punt for us because what have we got in common with Italy, Spain, Portugal or Greece . I think David has got this one wrong , it will be a punt pegged to the Euro. This would not be the end of the world domestically as we would still be faced with the same problems of the deficit and debts .
    The only answer for us is austerity leading to a balanced budget leading to repayment of debts .
    There will be no PIIGS euro this doesnt make any sense.

  17. stiofanc02

    Suspicious that our futures are not already plotted. This “state of the nation” on Friday is highly suspect. Is he is going to tell us we are in the German union and Angela will be doing our budgets for the forseeable future. Lets face it its all about Germany not taking a hit, end of. Youve got one pissed off Kraut in this woman and I dont blame her frankley but WTF does that have to do with me? I am extremely wary of Friday nite as I have the feeling it is being shoved down our throats like it or not. The sleepy, Caspar Milktoast finance minister is powerless and no testicualr fortitude between the whole front bench combined, bar Joan, so were fecked. oh,..and then we get to watch the skinny puke with bad ratings in the crap jumper earn another 5 grand. Jesus H. Keeeeerist.

  18. tony_murphy

    Near 0% interest in the UK and America is for the banksters benefit. Free money for them to speculate, and create endless trouble for ordinary people

    If 1 euro currency wasn’t bad enough, now you tell us there will be 2.

    An eternity in hell awaits those who support the policies of the new world order. Federalist Totalitarian government and stealing money and liberty from people.

  19. thirdeye

    Euro currency was the currency that was touted by the political class in Ireland and elsewhere as the answer to boom and bust cycles and was presented in such a way to the gullible public at large.During the last recession in the 1980′s Ireland’s interest rate was in reality at Minus 1% between 1998 until we joined the Euro currency like its earlier version the ERM proving to be useless.Ireland again has a generation of deflation,mass emigration to look forward to. Franco German control over all our affairs is scary now with more intrusive external control not only in Ireland but in every other Euro state excluding the Franco German alliance being the solution to fix the Euro is not going to work as each country economic cycle differs.Ireland and UK economic cycle NEVER FULLY integrated with the continental countries when we joined the EU precursor EEC but economically Ireland was always more suited to a natural link with the USA/UK as an economic model.Trying to save the Euro to keep Franco German politicians and followers of the European Integration happy will not work as ordinary people in Europe will not continue to suffer so called austerity to protect a project that has run its natural course.Charlemagne and Roman Empire before have tried and failed in having a one currency approach as the various groups within these empires strove to have control of their own futures being stronger than the forces that were in place controlling the empires led to the breakup of such political arrangements.Europe’s strength is its diversity and trying to re create a united states of Europe will not work due to history and cultural differences at play on a constant basis

    • Deco

      The Irish political class were purchased for the prospect of being the conduit for all the money flowing between Brussels and the Irish people. Now we find out it flows both ways. It even flows from the poor to the rich.

      The Italians have a saying, when the honey jar passes the state official, the official sticks in his finger. and then licks it all off his fingers.

  20. bonbon

    The Euro is indeed a perversion, to quote the article :

    “Therefore, ‘normal’ economics breaks down in the euro and is replaced with a perversion of traditional economics”.
    and…
    “This economic perversion, is made all the more problematic by the policy reaction of the mainstream EU economists”.
    and…
    “This obviously means that the euro is a perversion when it comes to the ‘normal’ functioning of economic policy”.

    But notice how the implied, and stated perversion is economic. This is very unsatisfactory and must be remedied. It cannot simply be swept under the carpet.

    The Euro is a perversion because its purpose is perverse – to “limit” the German economy after re-unification. This has surfaced today again in the German press.

    Economic perversion is quite another, but in lock-step. To shutdown 17 nuclear reactors, part of the vital physical economy based on hysteria is not only perverse, but suicidal. To build solar units in Greece for export only as the economy crashes is beyond perverse.

    That is why a green Euro is perverse – the Euro is the fig-leaf on the green destruction.

    In fact the Euro is so perverse, it should be quickly put in a dusty archive along with never-to-be-seen Mithra cult objects…

  21. WARNING MOON WOBBLE

    Commencement begins on Wednesday and to PEAK on 12th December.

    • Julia

      John, what is the relevance of a moon wobble? What is a moon wobble?

      • oh… it is a very important time…. the moon witch casts her good spells for eternal equilibrium….

        http://dl.dropbox.com/u/4914840/moonwitch.mp3

        Just kidding :) ….goofing around with my all time favorite Irish singer and a new algorithmic reverb.

      • Julia

        Don’t even ask the question .Think of Haite , Japanese tSunami , Cold weather this time last year , London Riots , …floods in Ireland in recent Xmas …etc

        Even before it happens a prison van gets stuck under a bridge ..

        The Earths energy changes and the Moon is stronger than a normal month and ….and…..if you walk and live a fast pace life …….hold very tight ….The message is ……SLOW DOWN ….DRIVE SLOWLEY …

        Its a Time …when Time re-invents itself and takes center stage and everything we thing we are doing is being undone .

        So , Markets behave disproportionately …Politics heaves sideways ….Revelations arrive ….This Budget will be the Budgets of All Budgets …..just watch Dame Street …bubble bubble toil and trouble ….fire burn and cauldron ….BUBBLE …back benchers worry .

        Appliances get them fixed NOW ….they talk no more ….watch wall picture tilt …especially when a river/lake is dispicted in it …..this measures the number of water signs in the room and the emotions …watch the Earth talk ….even move…..or open ….keep your eyes open ….and keep pinching yourself to stay awake.

        • Julia

          Wow, John, I’m so glad I asked. The moon has been wobbling around my part of the world for some time now. And further, the pub behind my house has installed a very noisy buzzing energy saving heating device in there carpark and at my back wall. They’ve promised to put a muffler of some kind on it but they are moving very slowly. I hate confrontation and now I have to go back to them and ask them to get a move on. At the moment being in my tiny back garden is like being in a hive with 10,000 very angry bees. (One of my dear relatives is a beekeeper so I know)

  22. Philip

    There’ll be no 2 speed europe or anything like it. The political leadership is not even there to make that happen. This will turn into a massive splash and it wont be 3.8bn for an adjustment…it’ll be 17bn in 2012.

    The entire system is smashed. SKF group in Sweden are noticing a major falloff in ball bearing demand and these guys supply the bulk of them.

  23. bonbon

    Going by Die Welt and Le Monde today, Merkel and Sarkozy have no chance of another or different union. The poison of the Euro is deadly, and even these 2 economic partners, the real motor of Europe, are in a pre-industrial tantrum.

    The euro is indeed damaging the physical economy, and for sure some have noticed, and have clear heads on what this means.

  24. Obutail

    We need to understand what is the meaning of this important word especially when we mark the first anniversary of the event today.
    The tail is the end of a living organism and furthest from the head as was the case in Ireland.The length of the tail signifies the distance from the head .

    Obu stem has its meaning to signify a musical instrument .In this case it is a wind instrument and the tail moves when it is played .

    The significance of the head moving to the melody of the ‘wind instrument’ indicates that a conspiracy was in play as the tail moved and not the head.Its a question of dog wags tail .The question is who is talking to the dog.

    To make a long story short the tail did move and we dont know who played the tune.

    So Obutail = Bailout ( mnemonics )

  25. Malcolm McClure

    My greatest fear in the immediate aftermath of fragmentation of the Eurozone is that Border zones in Ireland, Belgium, Austria, Germany, France and Spain will be ungovernable, becoming a “Wild West” of drug smugglers, gun-runners, currency speculators and profiteers. When a few incidents escalate we could be back in a ’30-year war’ scenario.

    Looking on the ‘bright’ side, unemployment will be greatly reduced as there will be widespread demand for mercenaries, gardae, security guards, close protection enforcers, customs officers, coast guards, debt collectors, stool pigeons etc., –all paid cash in hand.

    Public servants and immigrants take note.

  26. LASERBOY147

    So what happens with an introduction of a softer euro ? Does this mean the Irish have to concede to a devaluation of their currency (approx 30%)???

    If this happens how does it logistically /physically take place ???

    What does it mean on a day to day basis for everyone ??? What things change … please elaborate …. without hysteria attached LOL Tx

  27. bonbon

    The EU FRONTEX force has already a Limes (Roman boundary), in good old Roman style, with “camps” for refugees.

    Ireland which never had the Roman empire, has difficulty appreciating the admiration for that pest in EU and British circles. The effort and cost gone into rebuilding the old ruins is stunning. I expect they will offer the infamous Mithra alters for public use, again.

    Add to FRONTEX, now, compliant officers in Athens, a NATO officer Italian Defense Minister and it looks like they are preparing for nasty, ehem, regrettable action, what?

  28. Yesterday , a senior Polish Minister pleaded with Merkel and the Deutsch Volke for the Germans ‘to act’. He said he did not fear ‘their activity’ but did fear’ their inactivity’.

    These words are revealing a powerful message that have not been quantified and analysed properly.

    I do not believe that an active German policy is less feared than an inactive one.

    I believe this Polish minister was attempting to sway the Germans to relieve the ongoing Damage in Europe in general because the existing complete economic mechanism favoured them.

    Lets think about it .If the existing inactive mechanism is so powerful what might be the active German mechanism one be . It has to be infinitely much more powerful.Such action could delete the Irish Nation forever in a nano second.

    And Noonans fancy skirt chasing Legarde will have no results either.So why is he still in this Ministry for Finance .His forthcoming decisions in this Budget will only add further the excruciating pain being suffered by Irish Businesses and Taxpayers .His lack of appropriate level of professional language to the office he holds demonstrates his inability to communicate effectively as should be expected and his parochial school boy mindset is wide off the mark that only sentences The State to indentured Slavery .

    • bonbon

      Polish Foreign Minister Radoslaw Sikorski, in Berlin for meetings with German government officials, declared
      “I demand of Germany that, for your own sake and for ours, you help it [the euro] survive and prosper. You know full well that nobody else can do it. I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity. You have become Europe’s indispensable nation.”

  29. bonbon

    Global Glass-Steagall, Now! This from FOIA, Bloomberg :

    Bloomberg yesterday revealed some of their findings from 29,000 pages of documents, covering 21,000 transactions, revealed by the FED under FOIA, blocked for two years.

    Concurrent with the $700 billion Troubled Asset Relief Program (TARP) program, approved by Congress in September 2008, and run by the U.S. Treasury Department, the FED ran a separate, {secret}, program which ran up to TEN TIMES that amount, eventually totalling over $7.77 TRILLIONS, by March 2009. On the single, “neediest” day, December 5, 2008, bank borrowing from the FED topped $1.2 TRILLION in a 24-hour period. Four of the top six largest U.S. banking recipients were under the direct supervision of then-New York Fed Governor and current Treasury Secretary Timothy Geithner. As one commentator noted, “TARP at least had some strings attached, with the Fed programs, there was nothing.”

    By end of 2008, the FED had “established or expanded” 11 lending facilities, which lent to foreign as well as domestic banks. Had the existence of these programs been known sooner, the debate in Congress — which was also unaware of the secret funds — would have looked quite different.

    In their coverage, Bloomberg focusses on the U.S. banks, failing to mention the figures given to the Royal Bank of Scotland, Barclays, Dexia, or Credit Suisse, just to name the largest foreign recipients.

    As revealed by Bloomberg, then, Bank of America and Citigroup each got $45 billion from the TARP program in 2008, but each had a running credit line from the FED; Citigroup’s borrowing maxing over $99 billion in January 2009, and BoA’s borrowing maxing at $91 billion in February. The total sum borrowed by each, running into the hundreds of billions, is not given. Morgan Stanley, which officially got $10 billion in TARP loans, had previously gotten $107 billion in FED loans. The FED gave $50 billion to Wachovia, to keep it from collapsing before it could be bought by Wells Fargo. JPMorgan, which swallowed up bankrupt Bear Stearns, got a total of $59 billion in loans, just for that deal: $29 billion above the table, $30 billion from the secret FED program. Bank of America also initially got $14.4 billion of FED loans for Merrill Lynch, which got another $8.1 billion. By the time the deal closed, BoA had received $25 billion, and Merrill Lynch had received $60 billion.

    Not even Bloomberg could ignore the obvious implications of their findings — the need for Glass-Steagall separation of the entire banking system. Naming former Sen. Byron Dorgan (D-N.D.), a strong proponent of bank regulation, but not directly quoting him, they say that knowledge of the extent of the bailout “might have helped pass legislation to reinstate the Glass-Steagall Act, which for most of the last century separated customer deposits from the riskier practices of investment banking.”
    —-
    So a ten-times bigger secret bailout and the public dazzled by mere $100 billions.
    Geithner is meeting EU leaders today as Obama’s sidekick.

    • Malcolm McClure

      Obviously Glass-stegal is the flavour of the month. Somebody should inform oddbin that it applied to the United States of America, not to the Eurozone which is the principal subject of our concern here.

      • bonbon

        The Euro is not “made in Dublin”, Goldman Sachs run Athens now, so any effort at provincialism is willful head-in-the-sand silliness.
        Geithner’s methods are being applied directly, and felt in Eire.
        It would be very helpful for the Brits to keep Glass-Steagall at a distance, with wiki-isms of clichee’s, but boys, it coming to a bank near you, either via Occupy, or politicians, but it is sure coming. Sinn Fein calls it “burn the bondholders”, a pretty clear message?

        The so-called Eurozone is now meeting with Obama and Geithner, now why would that be? Since the Euro cannot survive with or without the FED, the solution is from outside it.

        So brush up on the principle involved, and its creative effect on the economy. It has an amazing refreshing effect on the cobwebs of the mind. Get with the program! Even Bloomberg, I quote above, has no choice, but to admit Glass-Steagall is the way forward.

        Get with the program!

  30. bonbon

    A host of hysterical end-of-the-world cries for hyperinflation all over press, only a paragraph here :

    ‘Humanitarian Corridors’ for Brits Should Eurozone Collapse?

    Stoking fears that a Eurozone collapse could lead to Armageddon, the British Foreign Office is drafting contingency plans to aid British nationals trapped in the collapsing edifice of the Eurozone. The DT, citing unnamed Foreign Office sources, says the contingency plans would have to deal with British travelers’ inability to access cash, and also the dangers of “riots and social unrest.”

    DT’s AEP quotes Myron Scholes suggesting the FED will buy up Euro debt, which ECB cannot do. Scholes is the Nobel Prize economist of the Black-Scholes Derivatives formula fame that caused the LTCM collapse in 1998, admitted by Greenspan to have threatened the entire global financial with instant doom.

    The fear of imminent collapse has led ICAP, the world’s largest electronic trading platform for foreign currency, to test their old programs for the old currencies of the Eurozone. They have already tested one for the Greek drachma against the dollar and the euro. Pointing to the fact that it is not just the return of the drachma, but of all the currencies, the FT quotes Ed Brown of ICAP as saying, “There has been enough discussion about a breakup of the euro that we are kicking the dust off the pre-euro currencies and making sure everything works. Some of these currencies have not traded in ten years.”

  31. bonbon

    Greek Statistical Agency Head Accused of Treason

    The head of the Greek Statistical Agency (Elstat), appointed by European Commission and IMF, has been accused of treason and is currently under investigation by a Greek prosecutor. Elstat head Andreas Georgiou, a former IMF official, stands accused of falsifying the Greek deficit upwards for 2009 from the official 13.4% to 15.8%. The new figure in effect forced Greece into the bailout. If convicted, he could face a life sentence for treason for “betraying the country’s interest.”

    The decision to investigate follows a complaint by a former Elstat member, who was dismissed by the Finance Minister, and who charged that Georgiou falsely inflated the figure, “so it would become larger than that of IRELAND and Greece would be forced to adopt painful austerity measures.”

    Georgiou will attend a formal hearing next month conducted by Grigoris Peponis, the senior prosecutor for financial crime, who was appointed this year after the EC-ECB-IMF Troik pressured the Greek government to crack down harder on tax evasion and economic crime.

    A second case, filed by the Athens lawyers union, also demands a criminal investigation, on the grounds that the fake deficit numbers damaged Greece’s credibility and national sovereignty, and violated the Constitution.

  32. Adam Byrne

    This blog is turning into a site for conspiracy theorists, nutjobs and extremists. Might be time for me to check out.

    • Hi Adam,

      why not be more concrete? It is heavily abused as a platform for Larouchepac extremist propaganda.

    • P.S. I separated the conspiracy theorist and nutjobs from the extremist, the latter are dangerous.

    • Dorothy Jones

      Hang in there Adam, …..sure that’s the nature of these things. D

    • 33square

      i love it when people announce in a forum that they are going to leave. it makes me thankful i don’t think myself that important.

      • Adam Byrne

        Neither do I 33square but things have deteriorated badly in here. I’m not important at all to this forum, although it was (more) important to me previously.

        Aside from the afore-mentioned conspiracy theorists, nutjobs and extremists, there is also a surplus of people who simply like the sound of their own voices too much.

    • Welcome to hell Adam.
      All the best.

      • Adam Byrne

        Cheers Pauldiv.

        • This is the time to keep your nerve Adam

          I understand your point perfectly well because it is natural to feel shocked when you realise that everything you ever believed in and valued was all an illusion

          • Adam Byrne

            Nerves not a problem Paul, trust me! I’ve probably been in more hairy situations that most people here combined. So whatever is on the way – bring it on. I was merely confining my criticism to some of the ridiculous theories and comments that have appeared on here lately as well as some people expounding – at length – about utter shite. Having said that, I’m not holding it against anyone personally (said the vicar to the bishop).

          • Adam Byrne

            As for believing and valuing everything – I think you have me mixed up with someone else…

        • Well Adam, See you again, All the best wherever you decide to hang out.

  33. Malcolm McClure

    Adam Btrne: I totally agree that many of the comments here are over the top. The reality is that people are afraid. They have every reason to be afraid as we have recent experience of an ethnic social breakdown on this island.

    I too have considered withdrawal from the DMcW scene but have decided to stick with it for the time being, as it seems better to have crackpots out in the open, where their opinions can be tolerated, refuted or ridiculed, than lurking in the shadows where they might infiltrate a political party as fifth columnists and become a real danger.

    It is a time for moderation; cool heads are needed so that a bad situation doesn’t become far worse. Your opinions are particularly valuable when they refute idiotic opinions that emerge from some people under the stress of events.

    Free speech requires a lot of tolerance. This is no worse than Hyde Park Corner.

    • Malcolm,

      I am all for free speech, but IMHO it requires more than tolerance, we all would be well advised to define ‘free’.

      Free speech requires two things, responsibility on the side of the speaker, and helluva lot of vigilance on the side of listeners, you are so very right to point out to the dangers that can turn into real threats at a later stage.

      It is well known that Larouchepac members are infiltrating internet fora. The group has a strong sectarian character, it is a cult with a self appointed galleons figure fronting the movement in a strictly authoritarian style.

      Their infiltration methods are easily identified by.constant indoctrination and throwing a cocktail of twisted historical events on the table to push their agenda, they are often presented by members that are well educated and intelligent enough not to answer specific questions.

    • coldblow

      Hyde Park Corner is a good comparison. As I read through the comments I was wondering what David had done to deserve this. But it’s as well to have it out in the open and you can always skip through the repetitive stuff, though I find I can often learn something from that too (even if it’s not what the writer intended). On the whole, still preferable to RTE!

      My Richard Webster link above is an excellent antidote to some of the wilder ideas: satanic cults where the police and the politicians are in league with paedophiles, etc.

  34. Afternoon,

    I would hate to lose some of our most informed contributors, so lets not fall out. I agree that people are scared and angry and that is why all sorts of ideas take hold.

    Best,

    David

    • No-one is falling out here David. Growns ups will always come here to educate themselves, debate and then use the information gleaned here in their research. I think of blogs as educational tools and I don’t let the personal views of others get to me. I used to when I first started reading blogs but then I realised it was just a waste of energy

      This blog is like a bar frequented by some informed, interesting and colourful people and a lot of the analysis is razor sharp. It is a good blog. You have shown yourself to be very tolerant and not the type of reactionary who gets emotional and uses your power to censor and ban people, even when the flak is directed at yourself. Good. It shows that you are grown up

      Economics is a pseudo science and is open to all sorts of ridicule but it is a very dangerous kind of science. Amid the greatest turmoil ever witnessed by people of our age (mid 40s) people looked to the Economists for answers and they found none

      Uncertainty is the enemy of Conservatives and that is why Ireland is now behaving like a frightened animal cowering from the hounds out there

      As for fear, well, it is everywhere. It spreads like cancer and is contageous. The great news is that our minds and bodies can only take so much of it and then one day you wake up and notice that you are not afraid any more. It feels like a miracle and you wonder wtf just happened and why have I changed

      When that day comes you are free and you are free to question things and speak your mind without fear. You become the warrior you were meant to be and you feel like a man

      Keep the Faith Everyone

  35. bonbon

    DMcW,

    Thank you for the calm words.

    No need for anyone to leave this lively blog, even when sparks fly.

    Keep up the good work.

    Bonbon.

  36. When Normal Economics Break Down

    Least we forget the above is the caption of this article so that is the subject to write about here .All Political Leaders are repeating in past few days the endgame and all are frightened .So must we.

    • bonbon

      And a very good title. This is an economic breakdown, not a recession or even a depression. As such it is not even precisely a Euro crash.

      Spot on.

      But, to use again an American phrase, if permitted, the only thing to fear is fear itself. It may not seem like that when the mortgage cannot be payed, job gone, neighbor’s house empty. This is not a joke.

      But sometimes all that is left is humor, the way to finding a creative way out of this. The normal rules do not apply, and I do not excuse Enabling Laws to crucify the people.

      Photo’s of NY with mile long soup queues and the utter despair on the faces, compared to 2 years later with people very busy, is the result of Glass-Steagall.

      Some of those faces were Irish.

      • Why is Kenny having second thoughts not to make his State of The Nation address prior to the Toy Show as originally notified to the Public by the Party FG ?

        Why are they considering a time after the Budget ?

        What are the implications of his change of mind ?

        • bonbon

          This from IT :
          TAOISEACH ENDA Kenny is to deliver a “state of the nation” address on television shortly under the terms set out in section 122 of the Broadcasting Act 2009.

          The legislation empowers Minister for Communications Pat Rabbitte, to direct a TV station “to allocate broadcasting time for announcements for and on behalf of any Minister of the Government, in the event of a major emergency”.

          To be the sixth only.

          Well we have a major emergency, and it has got only worse now the FED has opened the printing press “to save the euro”.

          The Euro might not survive until this Address!

          No crystal ball will work now. That is what disturbs many with talk of WWIII. We are on the verge of this. I do not know what Kenny thinks, but the smell of war is in the air. All the indications are there and changing fast.

          What is really worrying is in the event of a complete blowout, will “emergency powers” be attempted. Greece has preempted this, Italy also.

          FG has a “blue shirt” history. Is someone playing for time?

          It would be great if Kenny announced an emergence bank breaking action, reclaiming debts, a moratorium. That would get votes.

          Instead of waiting with bated breath, fill the airwaves with Glass-Steagall to avert complete catastrophe. This is much better than financial terrorism.

  37. goldbug

    ->PEOPLE

    IF SOME OFFEND YOUR CULTURAL IDENTITY & POLITICAL BELIEFS

    WHY NOT USE FACTS OR LOGIC TO REFUTE? WE ARE NOT BABIES.

    AND WE CAN ALL USE A SEARCH ENGINE…

    NOBODY CAN SAY THEY KNOW EVERYTHING.

    THE BLOG IMPROVES WITH TRUTH -> NOT HURT EGOS

    AD HOMINEM IS A FRAUD

    http://plover.net/~bonds/adhominem.html

  38. gizzy

    I agree with John some very credible people who don’t seem to be extremists or nutjobs are definitely very worried. Everyone seems to be looking to someone else to sort it out.

    What we do know for sure is that there is too much of an imbalance in the wealth distribution in the world.

    We know countries and citizens willingly over borrowed.

    We know banks willingly over lent.

    We know the system has tried to fix this by protecting the lenders first and foremost and in doing so furthered the imbalance of wealth distribution.

    We know the markets which were set up for job and wealth creation have become more and more self serving.

    we know people fear change so will change as incrementally as possible.

    I think we will find out that long term austerity does not work.

    I know we know lots of other things but we do look to government and leaders for answers. They now seem to have none except to take actions that preserve the status quo as much as possible. So people are now venting their fear in marches protests blogs etc and some of that will be irrational and highly emotive. But most of the actions and decisions of governments, financial institutions and markets in the past few years were hardly rational and well thought out.

  39. bonbon

    The extremists are those who put $80 billion and rising on the working people’s backs. Who want to print trillion of worthless paper, now, to save their fellow extremists.

    If one says they should go to jail for treason, who is the extremist then?

    Glass-Steagall is a clear-headed rational and effective response to a massive murderous injustice perpetrated by calm well dressed extremists like Monti, Papademos, Cowan, Lenihan. This is not a rage response, that is why it will work.

    It is also not some magic bullet pulled out of a hat at some circus. It has a proven record, unlike a lot of whizbang wingdings Geithner, or Soros, propose.

    No need to be afraid to be called and extremist by the extremists whenever an actual proven workable solution is proposed. We are beyond that fear tactic.

    It may seem the politicians are not listening. Who cares? Propose it anyway, repetitively, clearly. Spread the message.

    • Some of the real extremists are inside the Irish Government and the Troika. As David says the Euro is doomed but they insist on flogging this ideological dead horse at the expense of society. They are fanatics and fundamentalists who are causing widespread destruction to society as we know it

      When the budget is announced we will soon see who the real extremists and nutjobs are then!

      • bonbon

        Right. Throwing out FF did not affect these fundies.

        When a supernova leaves the neutron core exposed, these fundies will be visible. It is not a good idea to be anywhere near, but we are right in it.

        As DMcW says, it has gone nuclear, and that means nuclear reactions.

        Glass-Steagall is a boron moderator to slow down any runaway disaster. Any good economy should have some!

        • The checks and balances were removed in the interests of financial institutions and corporations and now we are watching a mushroom cloud of debt expand skywards. We are suffering from the fall out of 40 years of incandescent greed egged on and abetted by right wings corporate sponsored politicians

          People have learned nothing. Instead of taking two steps back and asking how it came to this state of affairs they blindly carry on hoping it will just all go away and are all set to have a spending splurge in the corporate holiday known as Christmas. There is no sense of personal responsibility here

          People will spend a fortune in the next month buying crap they don’t need and all the money will flow across to the economies of those whom we import from. Crazy

  40. State of The Nation Address

    We are led to believe that our national leader is commencing delivering the above on Friday night .We expect his words to be heart warming and convincing and that as a leader he is doing all in his capacity ‘to fix’ what the previous government ‘damaged’.

    This propaganda exercise puppeteered in front of a national audience has the blessing of Merkel & Sarkozy .Mr Kenny is a debased politician now just like the currency our Central Bank issued and as such his words are without clothing to show.

    His choice of timing to make this delivery is prior to ‘The Toy Show’ when most of us will have kids all around us and in the midst of noise .Is he serious ?

    Like the ECB Kenny will devalue the electorate at that moment and whisper the death camps against the background of titanic music as our dreams drown in sorrow.He will not extend election rights to those who emigrated but he will dip deep into their families pockets and take lots more and sometimes with the threat of criminality .

    We will not be reminded of what Haughy said when he made his statement ‘ we are all living beyond our means ‘. Instead Kenny will assert with his upright hands and pointing fingers and nodding his head to affirm his destabilising demeanour that we can make progress by paying taxes beyond our means.And from this will follow bequething to The State all your assets .

    • +1 John

      we will be reminded of Olli Rehn’s article/statements that appeared just in time in the Cork Examiner – What a choice to publish it there! –

      Ireland is on track…. sorry we have to be so harsh on your guys, but austerity works… exports…. solidarity…. future…. growth…. FG…. merry christmas

  41. bonbon

    I wonder will he propose the referendum that he threatened Merkozy with, when they demand Treaty changes?

    Would I be correct in estimating FG/Labour’s chances in any referendum or election as being dismal?

    Fear was used to push through the Lisbon II the second time. More fear can be applied to squeeze even more out of people. “Financial Armageddon” if we do not print?

    It is clear who wins in all this – Sinn Fein, not afraid.

  42. The most likely effect of strengthening political union in the eurozone would be to give Germany the power to control the other members’ budgets and prescribe changes in their taxes and spending. This formal transfer of sovereignty would only increase the tensions and conflicts that already exist between Germany and other EU countries. – Martin Feldstein -

    http://www.project-syndicate.org/commentary/feldstein42/English

    • bonbon

      Very useful site – there are lots of syndicated reports there that otherwise are locked away, just for example Roubini’s (on GS).

  43. Afternoon,

    I have been watching what is playing out and talking to alot of people I trust and I can sincerely say that we are watching the debt house of cards crumbling, not just in Europe but all over the world.

    Watch for Japan next (debt ratio of 200%) and then the big one USA which will need to refinance 40% of its totaly debt in the next 18months.

    Best,

    David

  44. bonbon

    A must see : the cartoon on this now, The miraculous multiplication of money, just as Geithner, Barosso et all. demand.

    http://www.handelsblatt.com/

    Imagine Geithner’s face when some Obama aide pushes this note to his desk.
    Just in case they pull it from the web, its a donkey, well, producing golden coins.

    Wonderful insult!

  45. bonbon

    So that house of cards crumbles even after the massive secret bailout that Bloomberg reported (posted above).

    The bailouts did not and could not save the system, so the entire unmerciful punishment on ordinary people is to no avail.

    When this intensifies, and it will, as DMcW rightly just pointed out, the entire reality will change – what people thought they could never do, suddenly becomes possible.

    Of course the other side, those most threatened by this will drop all limits on any action they will unleash.
    So it is extremely dangerous, and at the same time a huge opportunity to move. Fear becomes irrelevant.

    • 33square

      guillotines will soon be back in fashion

      • bonbon

        If London trains another Marat or Robespierre, yes. That’s how France was wrecked.

        I mean cowardly politicians who now see only a brick wall in front and cannot act, will reconsider, and are already starting, impeaching Obama for example. The “Draft Hillary” motion right now in the USA is exactly this.

        This crisis will not wait for the next election.

        Let’s hope there are elections!

  46. Louis Hoffman

    What will happen to foreign currency accounts held with Irish banks if the Euro breaks up? We do a lot of business with the US and hold in Dollar account with BOI.

  47. Next suggestion to come to your screens….

    ECB to lend to IMF, this is the ultimate nightmare scenario!

    • bonbon

      Desperately trying to get around German opposition to Wundersame Geldvermehrung, hyperinflation by another route.
      ECB would use Article 23 to lend to the IMF, which then bails out the banks. Problem is the U.S. Congress will get on it and so they want the FED to buy EU bonds with no Congressional authorization, using a swap agreement.

      So we are led back to the USA again.

  48. Just in case… I know I posted it two times already since I am here, but there might be still some people around who did not see this and who still are puzzled as to how we came here, everyone can understand this, no financial latin or habilitation in economics required.

    http://crisisofcredit.com/

  49. Colin

    “In reality, the political irony is that a two-speed Europe will not be instituted to save Italy, Greece, Ireland or Spain, but to save France. Plus ça change, plus c’est la meme chose.”

    Looks like the Brits were right to be suspicious of the French over the last few centuries.

    • bonbon

      First I would not bet on any multi-speed wingding.

      Second the Brits have been instigating wars in France for more than a few centuries – look at Jean D’Orleans by Schiller – a 17 year old girl threw them out!

      Third Maggie “supported” Mitterand in his Ridley-like frothing germanophobia, resulting in the Euro.

      Fourth Sir Conor Cruise betrayed his London Foreign Office service, ranting about a 4th Reich after Re-union, exactly like Ridley, and Maggie.

      Imagine that, an Irish-speaking historian, servant of the Crown, Sir Conor implying Kanzler Kohl was a Führer?

      What insanity!

      Have we seen this somewhere before, I wonder?

      • Malcolm McClure

        Have we seen this somewhere before, I wonder?

        Yes, bonbon, your anti-Brit tirades are becoming quite familiar.
        We all know that demagogues need a scapegoat tribe to vilify, so that they can unite supporters to their cause with distortions and deceit. The use of such propaganda in the last century is too familiar to be easily forgotten.

        Give it a rest, bonbon.

        • bonbon

          Precision is always helpful to clear the fog.

          The good people of the U.K, industrious, are suffering also from the “Brits”. I have repeatedly posted here some of the Fabian ideologies now perpetrated by the current U.K. Gov’t on ordinary people. As usual in Dublin, such currents “are copied”, an unfortunate holdover from the last century. This Fabian clique is also a holdover from the last century, and is causing untold damage.

          Simply put feudal economics is totally out of tune with a world of 7 billion, huge industrial economies, and 2-3 billion in extreme poverty which can only be remedied with much more industry, research. Applying that feudalism can have only 1 result – massive depopulation, death on a scale never seen.

          Just to put things in perspective.

          • Malcolm McClure

            Okay, bonbon, as you are now prepared to discuss the aspects of British politics you dislike with precision, perhaps you would explain why you think recent Fabian policies are causing untold damage.

            Fabian Ed Balls advocated the independence of the Bank of England from political influence. This was done by Blair and is widely regarded as a success.

            Fabians proposed that UK national Insurance be increased to cover NHS spending. This was done and clearly improved hospital services in UK beyond current levels in Ireland.

            Fabian stated aims are to promote: greater equality of power, wealth and opportunity; the value of collective action and public service; an accountable, tolerant and active democracy; citizenship, liberty and human rights; sustainable development; and multilateral international cooperation.

            To dispel the fog entirely, perhaps you would tell us precisely what you object to in these policies?

            Incidentally, the current Tory government would be appalled to think that Dublin people believe (as you suggest) that they are following Fabian socialist policies.

          • bonbon

            I posted in the “Grim” theme blog the details of Philip Blond’s Fabian manifesto for BOTH Blair’s New Labour, AND Cameron’s Progressive Conservatism. The Demos think-tank adopted Blond who now heads up ResPublica.

            To put it in a nutshell both policies are derived from medieval thinking resussicated by G.K.Chesterton Distributism – see Blond’s 2008 “Medieval Thinking,” “Updating and recovering this earlier medieval model for the modern age is of course the task.”

            As I point out here such pre-industrial fantasies not matter how much lipstick is applied cannot possibly function in a world of 7+ billion, except to massively depopulate, to feudal levels.

            And Cameron’s policies are wrecking the U.K.

            A Fabian theme is to burn down its own house so others follow.

            Bad for the U.K, bad for Ireland.

      • coldblow

        I didn’t know CCO’B was an Irish speaker, although his wife certainly is. I once heard a story about a party at his house where someone started singing in sean nós. After a hundred verses CCOB remarked that he’d call in the IRA if that’s what it took to shut your man up.

        He was badly wrong in his doomsday forecasts about the Northern peace settlement.

        • bonbon

          My point is that CCO’B's public statement added to Britain’s chorus to dump the DM. So CCO’B is perfectly responsible for the current debacle, among others. He sang in tune with Mitterand, Thatcher, a horrible cacophony, to pressure Kohl.

          CCO’B penned this on Oct 31,1989, Times of London article : “Beware of Reich Resurgent”, screeching that a reunited Germany will lead to a Fourth Reich modeled on NAZI Germany. “German re-unifcation is now inevitable. We are on the road to a Fourth Reich, a pan-German entity, commanding full allegiance of German nationalists and constituting a focus for national pride”.
          London’s Sunday Times Nov 12,1989 : “…the first step towards creating a 70 million strong Fourth German Reich… the Fourth Reich is set to boom becoming Europe’s economic superpower in the process”.

          Such insane games, only in part above, have let to this mess. Damaging modern industrial economies, for some medieval “balance of power” as Thatcher’s “Downing Street Years” amply documents is incredibly destructive. Sir Leon Brittan’s line of playing the Euro against the Dollar only adds to the madness.

          Ireland, which should have had no part in this insanity, evidently did, played along to get along, to Hell.

          • Malcolm McClure

            Ah, yes, I get it now; the fog is clearing and the mist dispersing– CCO’B, Maggie Thatcher and Leon Brittan were all closet Fabians. They, together with GK Chesterton who (died in 1936 &) famously informed us that “The rolling English drunkard made the rolling English road” were largely responsible for our current problems.

            Ireland’s road to economic hell was of course paved with their good intentions.

            Hard to cap that, but it certainly brings out bonbon’s natural colouring.

          • bonbon

            I think it must be disturbing to see the Fabian hand in both Blair’s and Cameron’s willful wrecking of of the U.K. economy, for others to follow suite. Schroeder’s New Economy manifesto was written in London in 2000.

            Playing along with this is not a good idea for the U.K. or Ireland, or Germany.

            Why in the name of all that’s English, is Philip Blond’s feudalism even tolerated today, never mind the 1930′s?

            Glass-Steagall changes the rules, abruptly, suddenly, a very sobering experience for those drunk on the new money Niagara just unleashed today by the FED.

  50. LASERBOY147

    I say we (All except France & Germany) should divorce ourselves from “MERKOZY” and wipe the “SARKY SMERKAL” of their faces. “The waters might be MERKY and full of ShARKS but no-ones sitting COZY”

    Just transfered all my pocket money from Permo to Barclays , Sterling idea???? hope so

    • Deco

      Britain’s debt figures went ballistic since 2000.

      Phony Tony lost the plot over the “Mellinium”. And Britain went on a housing boom to nowhere, all over again. When it was finished, RBoS (remember “Fred the Shred”) and Northern Rock – two New Labour Banks, if ever there were any, went into state ownership.

      Britain was sunk by New Labour.

      The con-dem coalition are condemned. There is nothing they can do except inflate sterling.

      Personally, I reckon that was not a good move.

      Though, to be honest, I am scratching my head trying to figure out what is a good move.

      I am watching the current crisis, and waiting for the “inflection point”, before they start electronic money creation to fill asset holes. Yes, them asset holes are the source of the problems we all see in the financial system. A collection of asset holes.

      Anyway when the inflection point comes, then your finances can be invested, at the bottom of the market in certain areas.

      And then you are waiting for the drive upward. And this is based on demand.

      choose carefully. Analyze methodically.

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