November 30, 2011

Small savers will pay price if euro goes into meltdown

Posted in Irish Independent · 257 comments ·

This crisis is likely to culminate with capital controls re-imposed in Ireland, following a Europe-wide run on the banks. This bank run will be an accelerated and panicked version of what is already happening right now. Money is likely to leave all the major banks of the eurozone with the exception of German banks.

This is because savers fear the breakup of the euro will leave them with “cheapened” savings in their own countries. Obviously, the corollary of this should be a wall of money flooding into Germany because — whatever happens — the currency that Germany will eventually trade in will rise against all others.

And so we are likely to see a massive credit crunch all over Europe because without funding, lending will dry up.

As lending dries up, growth will plummet and the already fragile bond markets of the non-German members of the eurozone will close down. This means that the enormous redemptions which are necessary next year to roll over the huge national debts of Italy and Spain, together with France will not be financed. These countries will have to renegotiate their debts.

Yesterday, for example, Italy raised money but paid more for three-year money than for 10-year money. The three-year yield was 7.89pc while the 10-year yield was 7.56pc . This is abnormal because you should always pay more for money that you borrow over the longer term, not least because — based on the bird in the hand notion — the risk to the lender rises as the amount of time the lender has to wait to get his money back is extended. But in Italy, the risks are now accumulating in the near term as money leaves the country and the expected crisis comes closer.

The rest of Europe is now imploring the ECB to act and save the day. Who else will buy these bonds if the ECB does not? But it is quite likely that the European Central Bank will sit on its hands, hiding behind its limited mandate, which prevents it from financing governments. Maybe the reason the ECB is not acting is that it has misdiagnosed what is going on.

I speak now as a former central bank economist when I talk about the type of thinking that has taken over in the heads of ECB economists. In the 1990s, there was an obsession with government spending inside the heads of economists at the various European central banks.

This line of thinking saw “evil” governments everywhere and if the central banks financed these free-spending governments, it would lead to fiscal incontinence everywhere.

Possibly as a result of this thinking, the German faction in the ECB believes two evidently false propositions and because it has not diagnosed the problem correctly, it lurches to the wrong conclusion.

The first misdiagnosis is that the eurozone crisis is the result of too much government spending. This is patently not true. Ireland and Spain entered the crisis with budget surpluses and Italy has been running a primary surplus for years. Only Greece fits neatly into the “too much government spending” model. We all know that the main problem is excessive lending by private banks to the private sector.

The second canard held dear by the ECB economists is that austerity leads to growth. This idea is so silly that it is amazing time is still devoted to it. But here goes. Some economists believe that if a government cuts spending, the average citizen will conclude that his taxes in the future will be lower, which makes him feel richer today. As a consequence of this extraordinary insight, he will bring forward spending that he was going to make in two years’ time to today.

Can you think of anything more ludicrous?

This thinking leads to what I would call “policy vindictiveness”. The ECB sees the crisis now as an opportunity to teach governments a lesson and to drive home the point that the ECB has been right all along. Therefore, we get an element of vindictiveness in its overall approach.

But it fails to realise that it is maturity and wisdom and not small mindedness that is called for now. The ECB’s job is not to use the crisis to prove a point but to stop a dire situation becoming worse. However, while rhetoric is cheap, wisdom is — unfortunately — in short supply.

As a result, the central bank does nothing as the commercial banks experience a run on deposits. Bank runs happen quickly; that is why they are called bank runs, rather than bank ambles.

Here in Ireland, as savers’ money floods out of the country, the State will be faced with a choice. Does it allow this to happen or does it impose currency and capital controls to “lock in” money? We will not be the only country faced with this choice — all peripheral eurozone countries will be faced with the same dilemma as the citizens move to protect their savings.

Remember the citizens will be the last to “doubt” the banks. Shareholders have already sold, so too have bondholders, the final sources of bank funds are small deposits and, as always, they are the last to move. The big deposits moved a long time ago as evidenced by Siemens moving €6bn out of Soc Gen a few weeks back. This is a recurring pattern in financial history — the little guy always pays.

After the imposition of capital controls, the existence of the eurozone will come into question because it is hard to sustain the idea of a monetary union with capital controls. At this point, its strikes me that the most likely next move will be that the core countries, including France, will execute the plan they have been hatching for some time now, which is to move forward with a two-speed euro.

In fact, a move to a two-speed euro can only happen if capital controls are imposed. As these events tend to happen quickly, many citizens will not realise what is happening until it is over and done with.

The whole debate in Ireland about the next phase of the euro is reminiscent of the boom years where those of us who called the boom correctly as nothing more than a “vacuous confidence trick” and a “scam” were labelled unpatriotic, while those who ripped off the people with greed backed up by “quack economics” peddled by fully paid-for “quack economists” were treated as national heroes.

Again the temptation here with the euro will be to shoot the messenger. But that would be wrong.

Europe is headed towards a major policy shift, the most likely outcome is some type of two-speed euro but before that happens, the people will panic. And all the while the ECB, which could do something, does nothing because it wants to prove a point.

  1. msd

    I have had my savings in euros for a longtime. Im a back to education student so I dont have much. and few grand. will I be aloud travel with these euros to exchange them into deuchemark, when the euro goes. what is the best way to protect the value of my savings.

    • msd

      I need that money to emergrate when I finish my masters so, you help would be much appreciated. thanks

    • Tony Brogan

      Never mind currencies. choosing the best one is like searching in a barrel of apples for the least rotten one.
      follow the smart money and get silver and gold bullion. It will preserve your buying power like nothing else and is (gold) very portable. do not buy paper eqivilents but have in your hand the real money. The only momey that is no one else’s promise to pay and and cannot be devalued to zero like all the currencies you now contemplate

        • Tony Brogan

          your welcome. The world is a stinking mess of corruption and it is hard to sort the wheat from the chaff. Email me at if you would like more information

        • Boink

          Hey msd, Don’t believe everything that you read on the internet and certainly don’t be talked into investing in anything online. Tony- gold is only useful as a backer of currency so you can actually carry out trades in various necessities or luxury goods. You can buy gold as a short/medium term hedge, but its a speculative hedge like everything else. Why not buy moon rock then?- because that’s a high value and scarce commodity at the moment. Will you also be ready to give your internet financial advice when its time to sell gold when the bubble bursts? You are giving the impression that gold can never down in value in relation to the local currency from which it was purchased, and most importantly you can’t get an ongoing dividend(income which helps a little to offset inflation) from gold , you can only hope that like we all did with property that the price keeps rising and rising indefinitely. If msd plans to ultimately plans to emigrate I’m not sure Ryanair will accept bullion via there website. If in the mean time the euro is revalued or replaced you will have to convert your gold back to the currency of the day to buy your ticket outta here.
          A Gold ounce today is €1,300 the price of a flight perhaps to Oz , in a few years time when msd wants to cash in the gold he/she might get 13,000 Banana Republic Brown Envelopes ( our new currency post euro collapse- you heard it here first folks) , but poor msd finds that a flight to Oz in 2016 or whatever is 16,000 “Brown Envelopes”. Was Gold a good investment for msd for the intentions he/she wanted? You can’t tell the future. and past performance is definitely not a reliable guide when it comes to investments. Best thing msd should do is invest in his/her own education and see what happens at the end and what options are available then.

          • rincewind

            Once you have some spare money, you have to start asking yourself what to do with it.
            Is EUR1300 safer in the a deposit account with AIB, as USD1750 under the mattress, as 1oz of gold or 10 shares of Vodafone in the UK?

            The answer is a matter on where you see things heading.

            And maybe, just have a bit of all the above. It is all about expectations and cost.

      • abutler

        Well said Tony, the euro goes it will sink sterling as the UK biggest industry is the financial services industry in London, then the domino to New York….

        • Tony Brogan

          There is a web of debt. One goes down they all go down. currencies are in a competitive devaluation. compared to the eternal standard the US dollar has lost 98% of its buying power since the inception of the Federal reserve in 1913. And then we compare our currencies to that. The strong dollar policy is a lie ans a mirage.
          The answer from the Central banks is QE to infinity. Designed to protect the banks and ruin all else.We have to cast off the shackles and be free.

      • Tony, who will buy your gold or silver at market prices when the buyer knows you need a loaf of bread to survive and you cannot eat Gold or silver._

        • Adam Byrne

          Yeah, and who will guard it (assuming someone thinks it’s worth robbing), and how can you trust the security guard himself not to rob you?

          • I hope you have dried and tinned food put aside.

            You can’t eat gold but it will have value far beyond paper.

            So stock up on food primarily.

      • candles

        Tony for the ignorant like myself – how exactly do you go about buying silver and gold bullion ?

        • rincewind

          There are endless amounts of websites that will sell you physical gold and silver. Not as a recommendation, but you could start investigating at They ship to most places around the globe.
          Depending on how much you can afford, have a good few coins at home (burried in the backyard or so).
          Additionally, you could use something like, but you have to trust them, because typically, you do not see the bullion.
          Another practical idea is Bitcoin. You can buy them in small quantities using a creditcard and even use them for some online purchases. They should preserve value, when the Euro goes up in smoke.
          Of course, there are fees along the way, but you have to ask yourself how to best preserve most of what you have.

        • Hi,
          I’ve bought gold and silver from the following irish sites:

          All were very professional and delivered on time.


        • chickenlittle

          As Rinceweed said, there are countless sources out there to purchase. He mentions Ampex. They have a minimum order of $1,500 be it in silver or Gold. I’ll save you alot of hard work that I’ve put into sourcing Silver and Gold. The best source that I have found is Guernsey Mint. Firstly, If you buy silver, it’s not subject to VAT because it’s in the channell islands and it’s up to you to pay the VAT in your own jurisdiction. If you buy silver from any E.U mints then it’s subject to VAT. Guernsey mint in the channell islands is only obliged to charge VAT to UK custumers. By far, I have found them to have the smallest margins on their sale of silver bullion coins. The added advantage is that you can order as little as little as you want. You can order 1 silver bullion coin at a time if you wish but postage is £8.45 per package regardless if it’s 1 coin or 30. It’s insured postage. They sell Gold coins as well and ship free if you buy any of their gold products. Other mints in Europe are THESILVERMOUNTAIN in the netherlands. They charge VAT on the silver and their prices cannot compete with guernsey mint. I have a number of purchases from Guernsey mint and no problems other then waiting an extra week due to running out of stock. That in itself tells you something. There’s one mint in Ireland that I would strongly advise you to stay away from but don’t think I’d be allowed post here for different reasons. If you wish to email me, I’d be happy to tell you the name of the one to avoid. There premiums are high and their gold coins are very misleading and should be avoided. My email is

  2. Muddle Through

    The European Union will probably stick to a policy of seeking temporary solutions to its debt crisis in the coming weeks rather than move toward a fiscal union or breakup of the euro.

    If a company is generally performing well but bits aren’t, that’s a management issue. “That gives you a picture of 17 people sitting in a room pointing fingers at each other and not 17 people sitting in a room and creating solutions. So the crisis of the euro zone is very much one of management, of policy making, rather than the one of fundamental economic crisis.”

    Ireland is intact until 2013 .

    • Tony Brogan

      There is no muddle through. This is a systemic problem caused by the very same central banks that you are hoping will bail out the current mess.
      The central bank system is set up to issue currency as debt. This is added to the national dedt of the people. The interest and the principal repayments engulf the economy. It is done on purpose to enslave the people who to be saved cry out for help and more regulation. This is what happens when you cede your sverignty to a central source (brussels) and next is one world government. We must remove the central banks, eliminate fractional reserve banking and return money to the people as private property. Remove the tax on gold and silver and especially coin and see what money you would prefer to save in. I’ll bet on gold and silver.

  3. Lyndon Jones

    There will be no PIIGS euro what have we in common with Portugal, Italy, Greece or Spain ….nothing , it will be the punt for us .
    And it is too moch government spending thats causing the problem ….and the only answer is AUSTERITY. Many people accross Europe have had living standards reduced since the crsis began so why should governments continue to spend as before .
    Currently we are subsidising the public service while they enjoy a good standard of living the rest of us endure unemployment , emigration etc.
    David is a populist only peddling misinformation, he has got no concrete solutions he just blames “the authorities” when he was asked by Brian Lenihan to make a decision he opted for the bank guarentee remember , he is the ultimate “hurler on the ditch”.

    • stiofanc02

      Lyndon, you are a real misinformed complete and total asshole. Merry Christmas, I hope you dont choke on your Turkey. NOT!

    • abutler

      Agree 100% with you Lyndon, well said I am coming back with my own response to David in a few minutes.

    • Deco

      Now we see the power of IBEC.

    • molly66

      I never knew you where a fly on the wall in David’s house when Brian called,as I am sure you are aware there’s two sides to that story.
      My money’s on David because we know what a shower fianna fail where and still are.
      It’s dam easy for fianna fail to come out with there budget now when there sitting on the fence .

      • abutler

        Brian Lenihan was a man of integrity, courage and honesty within Fianna Fail.

        A true patriot that fought to the end for this country, everyone has acknowledged this across the political divide.

        • Deco

          He was also a lawyer trying to handle an economic crisis. How many times did he have to get it wrong before he got it right ? This is a disaster. Nobody is doubting his integrity. But he thought that Alan Greenspan (the master of subprime bubbles himself) was an excellent primer on economics. (Incidentally Gordon Brown recommended the same spoofer for a knighthood, which he duly received).

          There were no economists in the last cabinet – or to my knowledge, in any of the “drinks cabinet” administrations configured by Bertie Ahern to run this country. But there were PD ministers at the cabinet table available to push the IBEC agenda, when required – as Shane Ross indicated at the time.

          • bonbon

            I believe anyone who admires Sir Alan Greenspan needs a psychiatrist, never mind an oncologist. Greenspan was the lover of his mentor Ayn Rand. One read of Atlas Shrugged, and Greenspan’s anti-Glass-Steagall campaign over decades should ring alarms. The wreckage of the US economy and now European, is Rand all over. Did Lenihan “shrug”, or Greenspan sfter Black Tuesday, with the weight of the collapse on his shoulders. That shrug has done untold damage.
            Creative thinking replaced by a shrug. Mafia thinking.

          • Praetorian

            By his own admission he never read the full PWC report and to go on to make bombastic comments like ‘we’ve turned the corner’ ‘cheapest bailout’ ‘we all partied’ etc betrayed him but he did come across as a decent man just overwhelmed and not really too knowledgeable of where it all was heading, if he did have a sense he would never have made the statements above but the pressure must have been extreme and I doubt there was too much genuine support knocking around.

            In terms of cabinet decision making (a phone call in the middle of the night and a meeting the next morning), it all seemed rather haphazard, but the ultimate responsibility rests with Biffo, giving a blanket guarantee which the dog in the street knew the government couldn’t honour was probably what had the traders laughing. They were all out of their depth, years of nonsense caught up with them. Country melted like snow. I also agree that he should have stood down when his health problems materialised while annoucing he was running for the Fianna Fail leadership in a big hall with an large echo seemed hubristic but then that can be a characteristic of politicians.

        • TJM

          Brian Lenahan made a major mistake by staying on in the job after his diagnosis. A pilot would not be alowed fly a plane after a life treatning illness whatever the treatment outcomes. I belive that his diagnosis clouded his judgment and he never seemed to have a back up plan. This was evedent when OiLLie Ren and the G20 decided that Ireland was taking a bailout whether Mr Lenihan wanted it or not.

          • Deco

            I thought it was crazy of Brian Lenihan to continue working when he was diagnosed with cancer.

            I suppose when he looked around him, he did not see anybody else who would have been up to the job. Therefore he had to carry on. It was really sad, and he was heroic.

            But we are going to have to change our outlook and start electing people with economics knowledge to deal with these issues. And it seems that the big parties do not like this, as evidenced in the way that Paul Sommerville got saturated in Dublin SE with canvassers from the same party knocking on some doors three times.

        • molly66

          That’s what’s wrong with this country fianna fall still has support in this country.

        • molly66

          Not everyone

        • Harper66

          Brian lineman implemented policies that favoured the interests of the few over the interests over the interests of the Irish people. These policies ultimately resulted in the loss of Irish sovereignty.

          His actions were neither patriotic nor courageous. I still feel angry when I recall his interview where he announced “we all partied and now we must pay….”

          Shame on him for saying that.

        • Unfortunately his patriotism was attached to a band of gombeen criminals.

        • FSinnott

          Brian Lenihan was FF to the backbone. When it came down to it he shafted the taxpayer like all his treacherous predecessors. He applied the same solution that has always been applied when politicians f**k up. Hand the bill to the taxpayer. Don’t forget that he is also responsible for the developers own personal “little” bailout i.e. NAMA. These were all just stepping stones to the eventual and inevitable loss of sovereignty that began years ago when FF decided to skew the economy in favour of land prices, property and developer buddies. All to the detriment of what the real Celtic Tiger was built on – manufacturing and exports.

    • Thermus B. Airgetinin

      Advised his loyal readers to vote for Lisbon 2 as well!!!

    • Thermus B. Airgetinin

      On this forum, he also advised to vote for ratification of Lisbon 2 saying “just vote yes and get on with it”

    • Stiofan

      Lyndon, will you take Pound Sterling for an idea?

    • FSinnott

      David was not the paid economic advisor. Alan Ahearn was. What was his advice? was he not called on to give his opinion of bank guarantee? Or was the whole plot hatched out in Davids kitchen with no input from anyone else. How much did we pay Goldman Sachs for their advice which was not to give a blanket guarantee of everything (which amounted to a total of 440 billion).

      440 billion into 1.5 million (and falling) taxpayers does not go. It didn’t then, it doesn’t now. There is no point in bluffing when everyone can see your cards.

      Lenihan was out of his depth, plain and simple. It wasn’t as if he was the only person in the country that could take on the job. There is no shortage of spoofers in Dail Eireann. BL wasn’t the only one.

      • abutler

        As regards the famous bank guarantee everyone was out of their depths: Cowen, Lenihan, David McWilliams, Cardiff, Honohan, Alan Ahern and anyone else who had any input in its birth, design and implementation.

        Some have acknowledged the error while others have steadfastly refused any contrition.

        Understandable, as it’s clearly a cursed event where anyone involved has either had his or her career ended or is dead; hence why David McWilliams is so fearful of the bank guarantee curse, and why he was on the Cowen career synopsis TV program putting his side of the story so forcefully.

        Must say Gormley (on the very same TV program) with his phrase “we are going with the David McWilliams solution” did not help DMcW cause, especially from a friend.

        • Colin

          Didn’t know Gormless was David’s friend, how do you know?

          David had to put the record straight, gobshite hacks like that little twerp Harry McGee were tweeting recently that its all David’s fault.

          Gormless didn’t ask how much are taxpayers are paying David McWilliams for the David McWilliams solution, because David wasn’t paid a penny because it wasn’t David’s solution and he wasn’t asked for professional advice! Now can you get that into your head now boy? Gormless is an idiot, a dreamer, who didn’t even get out of bed on that night he got the call. I do hope David takes Gormless to court for slander!

  4. Praetorian

    Came across this, has to say, helps when I read stuff like this (always drink sensible especially after Budget-Austerity announcements). Maybe we can all meet for a Christmas drink in Doheny and Nesbitts and toast the madness!

    Keep the spirits up one and all, life always goes on!

    “Family owned since 1877, McWilliam’s is Australia’s most award-winning winery. The McWilliam’s family has premium vineyard holdings throughout the most prestigious wine growing regions in South Eastern Australia.”

    Interesting to see in the documentary about the PDs that their former headquarters is up for sale, barely a trace left of them as a party, but the consequences of their political ideology abound. Accoutability, yeah, a nice word over Sunday dinner with the folks.

  5. doc

    whats the best strategy if you have some savings? Pay off mortgage debt, Leave as is or open a foreign bank account in another country and currency?

    • Tony Brogan

      You are correct Lyndon. David Mc williams is a very engaging guy more interested in peddling his line and making money for himself than searching for a solution.
      Although the problem seems to be too much government spending , that is the simplistic answer and seems apparently the correct one.
      firstly the people are conned into thinking the government is the answer to all problems. politicians are elected on this premise. They spend according to their constituents wishes. government spending puts budget in to deficit. government sells bonds to the thrifty. Then there are not enough savers so the gov borrows offshore. Then that funding dries up and the Central bank monetise the loans.
      All through this process the central bank issues ever greater amounts of currencies and every one is an iou.
      Now the national debt engulfs the budget and the sovereign entity is bankrupt and the savers wiped out with bad loans and inflation.
      Ireland must stand on its own two feet and reclaim its sovereignty. If that means leaving the EURO, good riddance.
      The money must then revert to commodity money of intrinsic value that is not easily replicated. Gold and silver coin. Central banks must be closed and money revert to private property as it was for eons before the age of the central bank
      Read “Paper Money Collapse”, by Detlev Schlichter. All is well explained there
      David mcWilliams has been educated(propogandized ) as a Central Bank Economist. He is yet to think out of the box. Get your head out of the sand David. If you do you will lead the nation to Salvation. David ll slaying the Goliath of Central Bank chicanary.
      Note that the central banks are really only interested in saving the banks thenselves and desire to pauperize the people in the process. Indebted servitude slaves to the banks

    • Tony Brogan

      Hey Doc
      Buy gold and silver bullion. check out the 10 year charts at
      find a local dealer. do not buy paper gold exchange traded funds. They often deal in fractional reserve accounting and do not have the gold in hand they say they do. Email me at and I will send you a selection of places you can enquire. Do your own due dilligence and make sure you have bullion in hand.

      • Fergal73

        Look at 20 and 30 year charts. The only way is NOT up. Remember irish property prices rose for about 14 years and then…. This is where we are.

        If fiat currencies collapse, then of course Tony will be right, but in that scenario, we will return to the dark ages pretty quickly. Electricity will stop, no police, chaos. Gold won’t be much use. Steel in the form of guns, knives and manual farming equipment will be more useful.

        • rincewind

          I agree, in a total collapse, weapons and tools will be useful.
          I think this is unlikely, though.

          Let’s assume you buy gold now, at EUR1300 or so.

          Scenario 1: The Euro breaks up. The new Punt will devalue say 40%. Now you can sell your gold and get new Punts for it, probably giving you 30% gain or so.

          Scenario 2: The ECB starts printing. That will devalue the Euro. Depending on how much inflation will rise, you will probably get 10% gain or more in a year.

          Scenario 3: No printing and muddling through. In the worst case, gold price drops a bit in the short term and you loose 5% or so.

          Now it is up to you to decide which is the most likely scenario and balance your savings accordingly.

      • rincewind

        I could not agree more. Stay away from Wall Street creations like GLD and SLV.

  6. corkie

    David, I don’t know if you read these comments but various respondents have pointed out that the euro project is now just a Goldman Sachs plot device designed to wrest power away from the voters and into the hands of the ‘bankers’. I find your lack of any reference to the real players involved in these event a little surprising. You say we will get a 2 speed euro, so be it, but how does this suit or well heeled amigos? Is it what they want or what?

  7. stiofanc02

    @doc, Well if it is a tracker I think cancelling your direct debit might be a wise move, I mean, what the hell will happen if there is no euribor to link with? Are we on trackers fu€ked? I think the banks will welcome the PUNT back so they can finish off the economy with the crucifiction of the tracker crowd. I personally am going ot drink brandy throughout Christmas and do a Scarlet O’hara on the whole f’kn thing. “after all tomorrow is another day”

    • doc

      Oh Lord……..We’ll be linked to the Irish Central Bank rate…… estimates on what that might be?………20%?

    • abutler

      With trackers you have a legal contract that would be difficult to change, what could happen is debts remain in Euro while your savings get devalued in punts.

      Very worst case situation.

      • molly66

        Legal contracts are not worth the paper there printed on only the well heeled like the bankers ,government,the legal, and the civil servants will be looked after, this will stay this way unless we the working class and some of the middle class who are now the new working class can fight to change this.because the above are dumping allover us,surly the time is coming to stand up to the bully,I remember the school bully I do because I hated him because he was not there to learn rather he was there to cause fear like the now useless government.

        • Julia

          molly, I can assure you all civil servants are not well off. True, many of our jobs are safe, but they are not all well paid. At least half earn around E30,000 a year. If the average pay is higher that is because there are higher civil servants earning E200,000. Crazy money. However, E30,000, E40,000 is the more normal level that I see around me. The increments should be stopped now. I was amazed when that wasn’t included in the agreement. I think this whole thing is not about private sector/public sector differences. We still need services in hospitals, schools and Garda stations and these are all being cut. Divide and conquer. But you are right. Legal contracts are not worth the paper they are written on unless they are enforced and the government has no intention of enforcing any of them – unless they say you owe them money.

          • Perfectly correct Julia, increments untouched/not frozen while the country is facing meltdown.
            Why is the IMF not more proactive here? If they are bailing out the country surely the must implement rational policies where a weak government refuses to do so?

          • Julia

            I think an increment freeze is the very least of the cuts that will be coming to the public service and it may be sooner than we think.

          • molly66

            Good to hear from you ,I am only talking about the fat cats my brother works for the HSE and is behind in his mortgage he has four children and can’t survive ,I watched Vincent brown tonight on tv3 and Leo was on for the government to here him talk you would think fianna fall where still in charge under a different party name.

    • rincewind

      Very good point.

      My guess is that they will find a way to maximise screwing us. So yes, savings and salaries will be in Punt and tracker mortgages stay in Euro, and then interest rates hiked up.

  8. abutler

    I have been saying this all along; small savers will get screwed, however you are only stating it now after your constant weekly euro bashing articles the past few years.

    You were one of the 1st to encourage us to leave the Euro with all our problems solved, the “magic bullet” exodus; devalue to punts, exports cheaper, imports dearer we run a surplus, default on debts and trade our way out of difficulty. Never stating from the BEGINNING that this would ruin savers and those with no or minimal mortgage (the silent majority) only benefiting the entrepreneurs! (crooked builders, bankers and businessmen who go us in the s**t). Also since the now dearer imports are necessary to produce our energy your argument does not really stand up, coupled with no more cheap cars, TV and Ipads plus the existing export contracts being priced in euro, then renegotiated having a serious trading impact, would US FDI remain in secluded Ireland? I could go on…..

    A euro exodus or break-up will destroy savers, pensions (public and private), college funds, insurance policies (life, mutual, with profits…) and almost any financial instrument in the land.

    You may get what you wished for (I dearly hope and pray not!) and you now know you may have helped this euro confidence sapping scenario in some small way, so to remain blameless, you are now stating the dangers to savers (very late); sort of like the way you handled the bank guarantee. You are covering yourself with the ordinary folks with this lazy article that does not tell us anything new.

    Possible ideal scenario for you: the euro collapses in anarchy, EU destroyed, euro savers in Ireland get burned 50%, massive wealth and pension fund destruction, banks collapsing, protectionism, rise of nationalism, social anarchy, possible war and conflict and you will get a best selling book and TV show out of it, being able to state I told you so all along.

    Some economic commentators are wishing for anarchy so they can study its effects and make a name and wealth for themselves, is that your agenda?

    I on the other hand just want boring economics to work, of course that does not sell too many books.

    Dangerous, interesting times we live in.


  9. bonbon

    Right about some very large companies appearing to be becoming banks. Truth is they have had bank arms for quite a while and horrible but true, this may be the only division making a profit – from the bubble.

    The horrible fact is that some of these firms are physically in real trouble after peeling away this mirage. At the end GM’s GMAC was the only piece with a virtual profit.

    This might explain huge restructuring going on, bracing for the blow-out.
    Banking is so intertwined with what should be industry, the effects will tear the physical economy apart, a breakdown, not a depression. Which means production of all kinds will slow. Food has already slowed to just above famine breaking out in the so-called first world.

    We must separate this kind of speculative finance not only from normal commercial banking, but from agro-industry immediately.

    • bonbon

      Very worrying, the apparent “success” of Germany is based on some of these very large companies with investment arms, sometimes called holding companies. So anyone betting on monetary rate may get a terrible shock.
      The GDP calculations all date from the “boom” and are all suspect. For instance Obama’s job data from the BLS are inferred jobs – they do not really exist! They are inferred from apparent purchase of goods, or company profits etc, taken to mean someone must be have been hired. Virtual jobs!

      • Deco

        Unemployment in the US is calculated as the number of workers looking for work.

        Those who have given up are “discouraged workers” and are left out of the statistics.

        At the height of the UK’s spending boom in the middle of the last decade, there were almost as many people in various forms of sick leave, as there were on regular unemployment benefit. It was comical, but it kept down unemployment numbers.

        Statistics everywhere are fudged.

        I am sure that the Central Bank of Ireland, and Financial Regulator annual reports for the years 2002 – 2007 must be full of rubbish and dodgy statistics.

        • bonbon

          Right. But “emloyment” is also calculated as inferred jobs. I suppose if one added, unemployed plus employed, it would be greater than the US population!

  10. harryangel


    While I’m under no illusions you are a saint or oracle – nor did you ever claim to be – I am very grateful to you. You have some bravery, some honesty and I think you do want the best for us ‘regulars’.

    Sincere Thanks.

  11. bonbon

    The best time to do this would be the Christmas holidays – close down borders, apply capital controls, as openly discussed in Die Welt a couple of months ago in the context of issuing a new DM. They estimated cost and the time needed to do it, only a few days- they have the Euro rollout experience!

    A nice Christmas present.. Only problem will the financial system make it to Christmas? The schemers underestimated the tsunami effect, and planned in calm undulating waters.

    • Deco

      Actually, as somebody who works in IT, I have to say that the re-introduction of the DM, IEP, ITL, etc… will produce absolute chaos.

      Business will not be able to function.

      Software, and the mayhem associated with getting it right will prove difficult.

      As soon as the software manufacturers get told to address this issue, the news will get out, and the mayhem will start.

      • bonbon

        I posted in the last theme that ICAP had dusted off the old software and are ready, at least forex.

        One trick I heard was to use the “country alphabetic” code on the euro notes to temporarily play as DM’S for example. This was discussed at a bankers meeting in Freiburg.

        They are scheming. Reported recently is that the old DM printers are sitting still in some cellar. They calculated how long to run them up and print. All kinds of rumors are around. I think it would be like Y2K.
        We have mayhem already.

  12. Deco

    There were capital controls in the 1970s in Britain. And it was ridiculous. There might even have been an agenda to prevent British residents holidaying on the Med, and choosing old Blighty instead.

    I have resolved a way around this – though, I will not mention it until after the Budget, in case the option is levied.

    Though, if this becomes a big trend I can see Noonan bringing in a levy on money invested there also.

    Why don’t they levy the Bank Bondholders ?

    The secon factor that makes matters different this time is online organization of protests, and dissemination of information. This complicates everything for the authorities.

    We will also see limits on the amount that can be withdrawn per day, via ATM – especially, if walk up to an aTM in Switzerland, Norway, Australia, the US, or Canada.

    • bonbon

      I would not put it beyond them to shut the internet. There have been test runs on the Core units. The so-called cyberwarfare laws we see reported recently would serve nicely. Whether it would be done selectively on social networking etc, or hitting business trunks I do not know, but the laws and tech units are in place.
      Remember Britain put Iceland on the terrorist list when they burnt creditors. Some law allowed this.

      Britain telegrammed D.C. that any attempt to enforce Glas-Steagall would be considered a “hostile act”. That was when McCain’s bill was going through. Today Glass-Steagall could involve B2B intrusive monitoring. It will come to crunch time as to who can ram this through.

      My money is on the USA without Obama. One could declare the entire financial bubble a national security threat, use existing Homeland Security laws – it would be over faster than most would notice.

      • Deco

        Sarkozy was lamenting the fact that there was no regulation of the internet a few weeks back.

        • bonbon

          Maybe he meant no EU or French regulation. I do not think the Homeland Security would give a dime for what he laments.

          I am more focused on the derivative bubble threat than the technicalities of Euro/DM. I think that will be the focus of any action.

          The Euro will be collateral damage.

      • molly66

        Who owns the USA china

  13. These kinds of comments should come as no surprise I suppose. A few outraged johnny come latelys to the discussion and no doubt a sock puppet or two.

    Most of what you have to say has been well discussed here in the last three years, and its all entirely academic at this point. As soon as the savings of Germans and the pensions of the French became linked to the price of a field in Mullingar purchased by some Irish yahoo looking to make a buck, there has only been one question to answer: who was going to get screwed to pay for it all.

  14. Deco

    The ECB sees the crisis now as an opportunity to teach governments a lesson and to drive home the point that the ECB has been right all along. Therefore, we get an element of vindictiveness in its overall approach.

    The ECB is moralizing. And to be honest this is hypocrisy and bull. The ECB, and that clown Trichet, created the problem in the first place by not monitoring the capital flows into private sector banks in Spain, and Ireland, during a time period when they set their interest rates too low.

    The ECB are in no position to be dishing out morality to everybody else. The power that they have seems to have gone to their heads – with the result that they are not behaving responsibility.

    “with great power comes even greater responsibility” !!!

    An admission from the ECB of their role in this mess would be welcome instead of entirely blaming everything on the Greeks, the Irish, etc…

    I suspect that liquidity and low interest rates acting together in Germany will result in a asset boom with Germans either in the housing market, or possibly buying shares in non-eurozone countries. Which would defeat the objectives of current ECB policy.

  15. CitizenWhy

    Excellent comment on the two wrong ideas snaking through the heads of the EuroZone’s leaders and their shrill attitude of vindictiveness. They have chosen to be scolding school marms rather than problem solvers.

    If they had diagnosed the problem correctly they would have focused in on what to do about the banks, not what to do about governments.

    Just imagine if the EU let their banks go bankrupt, nationalized them, gave up on collecting some of the debts owed to the banks (normal write-offs to clean up a balance sheet), fired the top executives, guaranteed the savings of depositors, wiped out the equity of the owners (normal in capitalism), wiped out the debts of the banks to creditors, recapitalized the banks at a workable expense to the governments, straightened out the banks and then sold them back to the private sector. The amount of money spent by the governments would be relatively small, certainly far smaller than the endless “bailing out” of governments so that the governments could hand over the borrowed money to the banks mismanaged by the private managers (at the same time charging the governments onerous interest for the privilege of acting a conduit for the bank bail-outs and subsidies). The global bond markets would have applauded, and would have been eager to buy the sovereign debt of most European countries at conservative interest rates.

    Instead we got the never ending dithering and waste of money that we have seen.

    It’s too late now.

    Dither dee, dither doo, we are the EU, that’s what we do.

    History will look back at the so-called leaders of Europe and shake their heads at their stupidity and mis-governance.


    German may decide to send back the deposits in German banks of foreigners before abandoning the Euro rather than convert those deposits to Deutsche marks. With the collapse of the Euro Germany would then have a currency that would enable it to buy up very cheap companies and other assets in other EuroZone countries.

    • Deco

      Final point is interesting, as it hits on a very tricky point.

      The Bundesbank might decide that only German citizens/residents who hold money in German banks will be allowed convert to new DMs, and only electronically.

    • Deco

      Dither dee, dither doo, we are the EU, that’s what we do.

      Enjoyed that. Just about sums it up. Long meetings. Big PR statements. Usual cliches. And they keep drawing their big salaries, serving the corporate interests, and disregarding the common people.

      • abutler

        I cannot see a Euro break-up as envisaged in this thread not leading to the EU as a whole breaking up.

        Nationalist borders being raised, free trade abandoned and the very reason for US FDI being in Ireland evaporating: a launching pad into the EU free market.

        Anyone thinking the 2 are not intertwined is deluded.

        Remember EU membership coupled with globalisation made this country in the last 30 years. Its end will drive us back to a 1950’s style standard of existence; spuds and cabbage the stable diet, a barren, god fearing, ignorant, papist society.

        Plus the bit on the German banks handing back non-resident savers their dud euros; wars have started over less. Looney tunes stuff.

        • bonbon

          We had trade agreements with the DM/Punt,Franc etc, and never this unbelievable chaos.

          I firmly believe national economies have the insight and ability to deal with others for common good. That is not possible with the Euro. Whats important is to ban floating exchange rates, Bretton Woods, style. During that epoch the world boomed. Stable currencies enable longer-term thinking and massive projects. So the Euro, and EU will break and nations who learned a sorry lesson will work together, if certain measures are taken to never learn that lesson again.

      • CitizenWhy

        Thanks, I actually made that up myself to relive some of the frustration feel toward the EU.

  16. Adam Byrne

    subscribe (against my better judgement!).

  17. CitizenWhy

    Put your money entirely outside the EuroZone, primarily into dollars (US and Canadian) and gold. China and the US will act together to make sure that their currencies are not too severely injured by the Euro’s collapse. But you cannot trust the Chinese.

  18. Olli Oracle

    “The economic and monetary union will either have to be completed through much deeper integration or we will have to accept a gradual disintegration of over half a century of European integration,” Economic and Monetary Affairs Commissioner Olli Rehn told the European Parliament.

  19. Adam Byrne

    Blimey, you are not mincing your words in this article David.

  20. paddythepig

    David, I nearly choked on my dinner when you absolved Bertie Ahern of any culpability in the Irish crisis, telling us government spending was not a problem.


    The twin towers of excessive bank lending, piggybacking runaway government spending shafted us. How can you dismiss the latter at the stroke of a pen?

    It beggars belief.

    Telling us that the Government was running a surplus pre-crisis is the lamest excuse I’ve ever heard ; da Bert would be proud of that one. You know very well that such spending was a false, unsustainable and temporary byproduct of the credit boom. The fact is that the country was run on 33 billion euros in 2003, and thereafter Ahern and Cowen went on the more irresponsible, stupid, and short-sighted binge in history.

    I was finding your article interesting until I read that utter bilge.

    The reverse psychology you dismiss in your follow-on point makes perfect sense to me. I don’t think it is ludricous at all. What is ludricous is for countries not to be able to – at a minimum – bring their spending into line with their revenue. What is so wrong with this? Take the Italians – they should be able to close a 4% annual deficit overnight ; they have a huge economy against which to raise revenue, and 4% is a relatively small gap to fill. Are they so spoilt they cannot cut their binging by 4%?

    The one thing I do agree with you is in reference to the refinancing of debts accrued in the past for major world economies. Re-financing of maturing debt will come at a much higher price. I don’t know what can be done about that, as the liabilities have been accrued over a generation of irresponsibility and binging, so its hard to see anything other than a very unpleasant end-game there.

    • That’s an interesting point of view. In this case a different perspective bears examination. I seem to recall that the prevaling view amongst those outside of ireland, particularly those involved in international trade around the time that the “bailout” was being discussed was “cut the banks lose”. Nobody can deny that we have serious structural problems but we also had a credible plan for dealing with them (even if it was based on cuts rather than investment). What sank Ireland in the view of many was the bank’s debts becomming state debt and associated EU politics. I don’t find that view so hard to accept.

      If we could conjure up 47 billion for NAMA, what could we have done if we had decided instead to put that money in to something productive?

      • bonbon

        Good question – the problem is most people have no living memory of what a physical economy is. It is always mixed up with money and “what will it cost”.

        Let’s say I propose (others have done the hard work) a deep water harbor to access the opened-up Arctic and China for export high-tech goods and raw materials. It might cost 2 billion. Add a tunnel to industrious neighbor U.K, via Scotland costing lets say 10 billion. What would be the reaction? Then looking at the population density of Ireland, and a future growth, implying we need 10GW nuclear power costing 25 billion.

        We are still well below the toxic NAMA dump. But that’s the future, dumped into a toxic swamp.

        I hope I have shown what criminal negligence NAMA is.

  21. Julia

    Hi all, especially Georg, Dorothy, Malcolm or anybody with more financial wit than me. What exactly does a two speed euro mean? What will a German euro be able to buy and what will an Irish euro be able to buy? Will they look the same? If I travel with it hove will it affect my spending abroad? I live in the world of small savers and small spenders.

    Explanations in plain Englis please.

    • Julia

      lol, sorry English.

    • bonbon

      Have a look at a 50 or 100 Euro, and the serial number – the first character is the country code of the issuer. You have already a potential multi-speed euro. There is no reason they could not be either scanned or stamped.

      Problem is circulation – how to separate the stuff.
      Bankers already discussed this as a stop-gap months ago.

      • abutler

        Here you go an the serials:

        Just checked my wallet, Have 2 50′s and 2 10′s

        2 50′s have X serial (Germany) and 2 10′s have T (Irish).

        Must save them 50euro German notes, looney stuff, to assume the T notes wil be blackened and can be seperated in a Euro breakup.

        God this forum is descending into farce next thing we will be reopening who shot JFK?

        • bonbon

          Anyway soon those notes might be worthless with Bernanke hyperinflating starting today.

          So a worthless x plus a worthless t will not buy a coffee.

          Seriously this was discussed in Freiburg, with some very famous names present. They tried to make it sound like a joke on camera. We know these bankers are looney already, look what they have done. Why doubt further proof?

    • I spare you my own views, expressed them often enough here.

      • You are listening to opinions from:

        Stephen King, Group Chief Economist, HSBC Bank Plc
        John Jungclaussen, London Correspondent, Die Zeit
        Paola Subacchi, Research Director, International Economics, Chatham House
        Petros Fassoulas, European Movement UK
        Chair: Stephanie Flanders, Economics Editor, BBC

        • bonbon

          I thought the moderator would cite Schäuble, but so far I have not heard him. He is a monetarist that is only held in check by 9 judges in Karlsruhe, but the FED pumping now has skirted even that.

          Interesting the Royal Institute for International Affairs is at it again.

        • Julia

          Thanks, will listen when VB is over. Joe Higgens is busy letting the left down and being incomprehensible.

    • Dorothy Jones

      Hi Julia
      On a personal note, thank you for making me smile on this otherwise pretty grim day! I am afraid I have very little financial knowledge, but I like puzzles. Many things in life can be solved with an empirical approach, but this crisis is not one of them. That may be one of the reasons why there is a mismatch, perceived or otherwise, between the Angela Merkel approach and the ‘right’ solution.
      At the moment, I can’t figure anything out at all to be honest. Everything is really ‘up in the air’; a bit like when shaking one of those snow globes. The issue seems to simply be one of control at present. There is an almighty struggle between Politic and Bank, but at a huge scale. It’s batten down the hatches time for sure.
      The psychology behind the struggle is well depicted in the Merdle story in Dickens’ Little Dorrit.
      However, in answer to your question, there is a very good analysis by Cliff Taylor of the Sunday Business Post of the various options and their possible impact.
      It is a good place to start and there is a fair bit of detail in it.
      I work for German clients but own my property in Ireland, so the theme is of interest to me.
      Reading German papers [FAZ and Handelsblatt] which are free online gives a good perspective on German views. Derek Scally of the Irish Times is in my humble opinion excellent.
      Again…thank you for making me smile.

  22. Adam Byrne

    Anyone know what the collective noun for economists is?

    Might be ‘tribe’ or the somewhat obscure ‘clashing’..?

  23. Adam Byrne

    One of my economics lecturers says that one should cross out every second sentence when preparing an economic report.

    ‘It’ll give it a vibrancy’ she says.

  24. Adam Byrne

    If David is correct in his assertion that the House of Cards is about to crumble then how can another journalist in the same newspaper (Irish Independent) make a statement like this:

    “Benedict Brogan: Global move by top central banks a defining moment that will save Europe”

    People need to start telling the truth. If David is right (and I have no reason to think he’s not given past experience) then clearly this other geezer needs to be sectioned under the Mental Health Act immediately.

    How can a society function when we cannot believe 90% of what the government and the media states?

    • Dorothy Jones

      Banks, injection only equivalent to doping. The patient is still critically ill. So it’s not a solution, but it does afford traders an opportunity to sell stocks at a profit and ‘get out’. I don’t think that the article in the Independent you refer to is well-informed, I dont think that you do either?

      • Adam Byrne

        No, course not Dorothy, it’s just outrageous how many blatant lies are told nowadays without hesitation or conscience.

        Keep up the good posts from Germany!

        • Dorothy Jones

          Adam, if it’s any comfort and it’s not I’m sure, media can be pretty awful everywhere; DD no exception there!!
          [working in a Coruna, Galicia last week....bumped into Joseph Stiglitz at the breakfast buffet....working in S William St this week....most NAMA'ed street in the is very surreal isn't it? Trick is I think to cherrypick out the nuggets which make sense....if any!!!!]

        • Tim

          +1 Adam. Outrageous.

  25. Peter Atkinson

    If anyone has ever been lucky enough to possess a €500,€200 or €100 note have you ever tried to change one.I always wondered why such large notes were ever printed as nobody ever seemed willing to change one for you.Can anybody tell me why these large denomination notes were ever printed in the first place.Was this some sort of forward thinking on behalf of the ECB or am I being too generous in my thought patterns.

    Slightly off topic, can anyone see the irony in the Treasury Holdings portfolio, under the control of NAMA, the very body whose HQ is based in Treasury Buildings whose former owner was Treasury Holdings.I assume in this case that NAMA are now collecting rent from themselves.I wonder do they impose the upward-only rent increases on themselves.The mind boggles.After all it looks like NAMA will be here for some time to come.

  26. bonbon

    David is correct, the timing may be off somewhat…

    Media are allowed free-rein. Better to quote that ridiculous headline back to the journalist a few weeks later. With murderous cost cutting in health there are no beds for the journalists.

    To get a paragraph in a mass tabloid, costs thousands. Who has the money I wonder.

    As Lincoln said, you can fool all of the people some of the time, some of the people all the time, but not all the people all the time.
    Nonetheless the financial elite is bankrupting itself to disprove Lincoln. Unless 24x7x365 media is pumped out, the natural thinking mind goes to work. Might be a good idea to turn off the TV!

  27. Germany 11/2011

    6.7 million on Hartz IV
    3.3 million on slave minimum wages with no social protection
    7.2 million on 400 Euros Jobs
    1.0 million pensioners on Hartz IV pension

    Cost for Health is exploding, system at large in a state of slow collapse.

    Debt to GDP >80%

    2011 trade surplus is the highest since October 2008!

    Anything wrong with this picture?

    People are being forced to eat a shit sandwich of austerity and propaganda lies.

    More and more people are falling through the net, silently. Poverty increases on all fronts, and the rich are getting richer, much richer!

    At some stage, people might want to start to define the term DIGNITY again and relate it to his/her own life.

    over and out

    • P.S.

      It is war on the cottages and peace to the palaces.

    • bonbon

      There are reasons for all this – mostly the Schroeder 2000 Red Green New Economy, the New Middle. This manifesto was actually written in London, in English, and gushes from the same Fabian source as both Blair’s and Cameron’s policies.
      This must be stated loudly and clearly.
      It does not stop there. Look at the CDU more green than green, killing the vital power backbone of the country.
      A combination of bubble and green destruction of a powerhouse.
      I pointed out in another paragraph here as DMcW referred to above Siemens and SocGen – the large companies are in reality only banks, making profits, exactly like GM’s GMAC in the end, from financial operations.
      I think this is a ticking bomb. Now EON etc have to exit nuclear and will sue for lost revenue, likely dumped on the taxpayer.
      Systematic take-down of the worlds 3rd economy. The only result can be depopulation preceded by poverty.
      Dr. Schellnhuber, CBE, Merkel’s “scientific” advisor says it all openly touting a decarbonized transformation from industrial back!

      This is why the unbelievable cruelty is going on.

      • Once and for all, I have no time for fascist larouchepac crackpots.

      • bonbon

        Just in case some do not know what Hartz 4 is, it is worth looking it up, in case it comes to a center near you, a present from Schäuble.

        If one pulls the economic, high energy-per-capita basis out of an industrial economy, unheard of pain results.

        Being silent about it is not acceptable, even in the face of smear.

        The policy is better described, following Blair’s example, fascism with a smile.
        Austerity with a smirk, in good old Dublin English.

  28. DarraghD

    David, Ireland might have entered this crisis with “a surplus” as you’ve put it in this article. But in all seriousness, was it really a surplus in the normally understood meaning of the term, when the revenue behind the “surplus” was based on a giant government led ponzi scheme that you yourself correctly identified and were ridiculed for exposing?!? Ireland entered this crisis with all the credibility that you would normally attach to a chronic heroin addict, who was after downing 2 litres of vodka from his local Molloys liqueur store.

    I agree with the thrust of the article, obviously though with the qualification I’ve added above…

  29. DarraghD

    And for the avoidance of doubt, I’m withdrawing my 5k on deposit from AIB in the morning and securing it in a private safe, I’ll be fucked if I’m getting caught up in this shit with capital controls and the rest of it.

  30. DarraghD

    @RinceWind, it’s well known in accountancy circles that AIB hasn’t a cent to lend to any small business customers, they are blagging the whole thing, fobbing companies off and spoofing their small business customers, in an attempt to see out the next 3 months in the hope for an “improvement in market conditions”.

    People need to snap out of it and get real, if you have any deposits in AIB or other basketcase banks, get them out and protect the little that you have. For fucks sake folks, the clue is in the article title.

    • rincewind

      Agreed. My AIB balance remains at about EUR300 in a current account to keep it somwhat alive.
      I closed all other accounts with Irish banks.

  31. conordineen

    I have savings and moved them into a sterling holding account with Investec. Is my money safe? Is what I’ve done called moving my money OUT of the country? If it isn’t how do I do it?

    • rincewind

      If you do not know exactly where your money is (and with what potential consequences), I would guess that at some point somebody will screw you out of your savings.

      Nobody else can tell you that your money is safe, because there is no safety.

      In my opinion the GBP is just as troubled as the EUR or USD, so no safety there.

      • bonbon

        Exactly. Without a hermetic seal between commercial banking and investment/insurance/hedgeing you can be sure of only one thing – its gone, in the USA, UK, EU.

        Where is it gone to you might ask? Why into the international financial system of course! But that itself is utterly and hopelessly bankrupt, unable under any circumstances to continue. It reacts and we see the consequences.

        The concept of the FDIC, Federal Deposit Insurance, to secure customer deposits cannot work when money flows this way. First the institutions must be separated, separate buildings, separate boards, no overlapping interests, then deposits can be protected.

        UK talks about Ring-Fencing, but not touching the bailouts already in play! Absurd swindle.

        This is why I am filling the airwaves with Glass-Steagall – nothing in banking can function in any normal way without this. All arguments presented here fail – people sense they are on a rollercoaster and cannot get off.

        • CitizenWhy

          Glass-Steagall was wonderful way to control the excesses of the banking system. It was designed to make sure the banking industry served the rest of the economy (without overemphasizing real estate development).

          But both the UK and The US have since developed a huge financial sector dependent on speculative trading while letting other parts of their economies deteriorate. Real estate was dragged into being a branch of trading. So too with the insurance industry.

          Both the US and the UK, to protect its trading industry (weirdly called the banking industry) will vigorously fight any restrictions on derivatives and trading. The provision in the weak-too-begin-with Dodd-Frank bill to make derivative trading transparent has already been gutted by the lobbyists.

          The upper 20% of incomes in the US and UK are dependent on a huge and lightly regulated trading industry. Sad, but true.

  32. Citizens of Prisons

    Some people like to set the alarm in the morning to an earlier time to the time they like to get up.Sometimes its because to remind themselves that they are still alive from the night before .Sometimes to give them time to think.And sometimes both.Either way it gives them the opportunity to do better in their lives.

    Our Prime Minister denies us our rights as Irish citizens to be informed in good time and to suffer the intransigence of misinformation in our lives when he is already priviledged with information that matters to all of us.

    His earlier miscalculations in his political decisions since his leadership have caused him a heavy personal loss of respect within his own party and now he is in the throes to repeat his mistakes again but this time we as citizens are going to become poorer and very poor as a result.

    His State of The Nation Address is a public stage play within his department that seems to be lacking proper choreographic style and presentation and shows all the signs of another ‘ditherer’ , but this time , procrastinating in private within his inner circle in his hairdressing salon.

    His mantra is ‘systemic ‘ to a foreign tune and delivering a veiled message to way lead us to a void that we are suppose to believe is not possible to discuss or explain or at best to understand and worse still that he is failing once more that he is a leader .

    So on this forum many readers have little choice but to panic and asked pertinent questions on line to seek hope for themselves and their families .

    The Prime Minister and his ailing Finance Minister continue to slurp from the EU what is publicly regarded as tenth hand dossier from the mandarins in EU and while they both stand with their tails between their legs .

  33. roc

    Nonsense, David.

    WE live in a much more technologically and politically advanced economic environment than the ones you are basing your conjectures on.

    All banks accounts in the EU and indeed in the rest of the ‘first’ world include details of citizenship and domiciliation. Of course conversions would have to occur on this basis.

    Aside from anything else, it would be an unacceptable eventuality to allow a sizable proportion of citizens to remove their money from their home country and thus increase their spending power in their home country by significant multiples on a forced conversion.

    Such a scenario would increase the impoverishment of those who didn’t remove their money, and further harm the week economy.

    If the flock of sheep try and run for cover, those in any sized sub-herd at all will be chased after, rounded up and brought back to the pen.

    Fait accompli.

    • roc

      Anyway, you shouldn’t be fanning the flames of a bank run. It is grossly irresponsible and not your place as a journalist and ‘light-touch’ economic and political analyst. As I said in the comments of your previous article, we would be much better off in this country pushing ourselves to try and live up to a ‘strong’ currency like the Euro, rather than having a weak currency that we can just periodically devalue to account for the gombeenism and our other habits and social institutions that still plague the business life of this country.

      • CitizenWhy

        Live up to a strong Euro rather than down to a weak currency. Interesting position that in a normal political situation could be developed into a political point of view that could rally the support of the people to a “program of national salvation,” as the French might put it. But living up to the Euro would require, as you note, confronting head on the reality of gombeenism and its injuries to Ireland. It’s hard to see this happening.

        Live up to a strong currency, develop a political and economic system that makes Ireland truly progressive, now that’s a message.

        This kind of message

      • abutler

        Agree entirely, banking is based on confidence and when that leaves a bank is BUST, this is a banking run type article, DMcW should know better.

        All we need now is Joe Duffy on the topic.

        As an interesting side note I was reading the financial times and the Germans themselves are not preoccupied and worried about the euro; its not even in the top 2 stories on the current news, they are just getting on with Christmas shopping, as we should be doing not engaged in the usual Irish doomsday scenarios.

        Link below:

        You may have to register to read.

        • bonbon

          Funny to consult London’S FT on German concerns.

          The deep anxiety over the Euro is palpable, just look at Die Welt all this week. But mostly the press is out of touch with what is really being whispered. For that you have to go out in the streets. The contrast is shocking.

          That is why not a single EU treaty was put to any kind of a public referendum, never mind a debate. So the shock of Der Spiegel’s magazine cover is a surprise to most.

  34. Morning,

    Thanks for all the comments – the good and the bad. It seems to me that this is what markets are all about, there are sellers and buyers. There are those you believe one thing and those who believe another. Thats the way the world works. So thanks again.

    Just to clarify on government spending, I believe that countries, like individuals should live within their means, but they should do this over the business cycle. As a result of this logic, I was the most vociferous critic of the credit boom because it was amplfying an already growing economy, guaranteeing a bust. Similarly today, when there is too little private spending, we should realise that austerity right now will make things worse.

    In fact, there is such constant logic between my views in 2001 or 2006 and now, that I fail to see why it is prompting such outcry from some posters.

    Maybe if you read the archives on the site you will see the twenty year cycle framework within which I am working.

    A lasy thought on the views around the Euro. I was listening to the radio today and the preseneter was talking to someone about the “future of the euro” and he repeated something I have heard alot these past few weeks. He said “a year ago talking about the future of the euro would be unthinkable.”. This is simply not true. This column has been questioning what happens to the Euro in a crisis for years.

    In fact, in two books and two documentaries, I have contantly argued that the Euro was no good for us in either the boom or the bust. These ideas were put out in public before it was fashionable because that is what economists should be doing – seeing things before anyone else.

    Indeed many so called “serious” people laughed and mocked me for doing so in oredr to belittle and undermine me – including very publicly, it must be said, Brian Lenihan.

    Sticks and stones and playground behaviour come to mind.

    For everyone, it is time to forget name calling and get serious about your personal financial futures, stop believing the propaganda and look after yourself. The shooting the messanger is exactly what happened to me between 2000-2010. See beyond it. It solves nothing.

    All the best and thanks for making the site so lively,


    • roc

      Well, I don’t see how looking after one’s very own ‘personal financial future’ is what we need right now. We are all interlinked. My action affects my neighbour in the broader scheme of things.

      And David, your contributions have always been much appreciated. In particular for how you pushed as hard as you could against the huge wave of prevailing consensus (inherently pathological as theory says it should be) throughout both phases of the cycle.

      However, separate to that is your view on solution to the Euro crisis. First, it is a crisis. And in a crisis, you act in a different way than you would in a period of non-crisis. Secondly, this crisis MUST be viewed in a context wider than purely stop-gap economic survival. The European Union is a political project, and the Euro was always conceived as a tool of integration over and above anything else. There are many and deeply worthwhile reasons for this integration which I won’t go into here, but which encompass the historical, political, economic, cultural and social.

      Now, here we are in a crisis, and the degree of integration and union that has thus far been achieved is to be tested. Personally, I would be very disappointed if we were found wanting in this country.

      Just to point out too, that the fears that have been stoked in this country about European bureaucracy and centralisation are misplaced. The EU is about SUBSIDIARITY. An markedly different phenomenon. It is worth pointing out too that it was an Irish business writer and philosopher, Charles Handy who has been the foremost advocate of this idea over the last few of decades.

      We need to think clearly and act with as much integrity as we can muster. Not act like headless chickens.

      • roc

        Just to clarify my opening sentence above, take any crisis you care to and see what happens when each only takes heed to look after themselves. Certainly, it is incumbent on each person by themselves to think independently and decide what their best course of action should be. But a stoking of herd hysteria along the lines of ‘every man for himself’! is beyond the pale. We have more than enough herd behaviour as it is.

      • CitizenWhy

        Subsidiarity is the official interpretation of Catholic Social Justice theory but it goes off in many directions, one to the Anarcho-Sydicalist/Distributionist realities of the worker-owned businesses in Mondragon, Spain (initiated by a priest), one to the untra-right wing Catholic position in the US that wants to do away with Social Security and most or all forms of government assistance to the poor.

    • Nono

      You have been my beacon of light for the past 10 years and I thank you for all that you’ve done. I am a French national and I’ve been living in Ireland since 2000. I’ve always thought the way the country was run was a joke and when I came accross your program “Agenda” in 2003, I could see you were a cut above the rest on Irish television. I have followed you ever since and I have never regretted it, as the advice and analysis you give are spot on and great insights (bar the Lisbon 2 vote but nobody’s perfect!)
      Thanks to yourself and some people on this forum, I have been able to protect my savings and my family’s. I am taking steps to keep my family as secure as possible for the very uncertain times ahead. You are not alone in the economists world to think the way you do. There are for instance a few voices rising in France against the economic madness we’re living. People like Paul Jorion and Jacques Sapir. They too are ridiculed and vilified by the mainstream media as no one likes to be told the truth. I just hope the turmoil ahead will lead to a fairer and more democratic system and not war and fascism like it did in the 30s. Time will tell, but 2012 will very a very interesting year indeed.

      • Praetorian

        2012 will mark stage III of this crisis, 2011 was always going to be the year where it kicked in, businesses closing, unemployment rising, change of government, that was all pretty predictable, now we are entering more uncertain waters, this government looks like it will run into trouble, the political class still don’t get it and even when that woman on Frontline courageously said to the Labour TD that you can’t go back to the well, the well is dry, she was virtually dismissed with platitudes and ‘ould palaver’, to use one of Rabbitte’s terms, about Labour not getting a majority which was never on.

        I don’t think this government will be able to keep it together, not with the pressures both internal and external building each day.

    • Cheers David. It gets a bit fruity in here sometimes alright, but at least for me its an interesting barometer of what is going on back home. This is a great resource, never mind the moaners, they don’t have access to a crystal ball either. The most hilarious thing is that they expect you to have one though!

  35. CitizenWhy

    By now the Irish media will be talking about the recent concerted action by the ECB and the central banks of the nations with large economies. This consortium action caused the major stock markets to rally.

    Some thoughts on this action.

    Here’s what informed media in the USA think this concerted action by the major central banks means:

    1. A European bank was about to go under and this coordinated gave it access to capital to get through this and any new crisis.

    2. This action gave the ECB greater access to capital to provide credit when needed to the EuroZone financial institutions. It also arranged for the ECB to swap the risky sovereign bonds it is acquiring, that is, to insure them, and/or to distribute them to the other central banks (later on). LaGarde was probably instrumental in getting this act together.

    3. The ECB may more easily start printing money (QE — Quantitative Easing) to unlock the European economies and investment situation. In other words, it may more easily do what the US Fed has been doing. The US QE has been the main reason the US stock values have remained high.

    Any or all of the above prop up the Euro and send the message that we will not let Europe drift into a deflationary spiral (a recession possibly leading to a depression). It also signaled that we will support the Euro and any replacement currencies that may or may not develop. For this reason the fear that the EuroZone troubles (and the seeming impossibility of acting effectively against them) will not be allowed to contaminate the US, the UK, Japan, China, etc. As a result investors and stock markets are more confident about investing rather than hoarding capital.

    Whatever the reasons, this consortium is now in place and may even be used should any nation leave the Euro or the Euro collapse altogether. That is, any formal, crack in the EuroZone, and certainly its collapse, will partly or wholly freeze the European credit markets, denying needed credit/capital to businesses outside the financial sector, causing chaos and multiple bankruptcies unnecessary under normal conditions. This facility/consortium will be able to unfreeze EuroZone business credit by making lendable capital available to banks in Europe when there is a credit freeze.

    The consensus in the US is that the Euro should survive but that political ineptness just may defeat it. Either way this new credit facility will help the EuroZone get through. And makes it more likely that the Euro will survive. But it also makes the ECB ready for a Euro collapse should that ever happen.

    So you can see why the stock markets rallied.

  36. IMF

    They opened the taps again, pushing liquidity into the markets. There are some rather informed rumors that in the Night of November 29th one of the big banks in Europe was about to go belly up, and a couple of coordinated emergency phone calls were setup.

    Well, perhaps we will never find that out to the full extend, but I would not be astonished if the story has grains of truth., a couple of shovels full of grains.

    The logical next step in this war is to increase the speed now and prepare for the major strike force to enter the theater. From there on, everything will happen really fast.

    You will wake up one day in the not so far future and realise that the world around you has changed dramatically, literally in a matter of hours. This is the nature of such events.

    For many, this already is a reality.

    The shit-sandwich of austerity and propaganda is forced down your throat, while private corporations stand ready to step in, just like it was in Iraq, only there, bombs and boots on the grounds were required.

    Financial fascists take over the world. Global domination is the game, and it is in full swing.

    War of words emerge on the fringes. China stands ready to enter World War 3 to defend Iran, the U.S. missile shield in Europe has infuriated the Russians, and more frictions will start to heat up.

    Propaganda is hammered down the channels.

    The IMF, chief executives of Globalisation, they prepare for the final strike.

    Empty your pockets and cough up….


    • The main players are sitting down playing chess and jostling for strategic advantage. Russia has gone cool on the US and their response is worrying because it shows that they are not going to be intimidated

      It’s interesting that Clinton is in Burma right now as Burma is controlled by a military junta who have an appalling record on human rights but hey what do you know Burma is one of the few arteries leading into China. This should make China nervous and they would be quite right to view this as US intimidation

      It looks like the dogs of war in Western nations are going for it and there is plenty of evidence around to suggest that we are being controlled by Zionist crazies and other factions who would be happy to start WW3 just to prove a point

      We are entering a dark period and the forces of Fascism are closing in day by day. These forces are at work here in Ireland and one day soon we will see their true colours

      It’s sad that so many people are espousing the fuck you jack I am alright mentality and only care about themselves and their savings. Anyone who is lucky enough to have savings that is

      And DMcW is happy to focus on the individual, like all selfish capitalists do, and spread Fear Uncertainly and Doubt (FUD). It reminds us that when it comes to the crunch we are not all in this together. Sad stuff and not very nice reading

      There is a bigger game going on here that will affect everyone and not only selfish types who value their own interests above those of their communities

      People’s basic rights are being stripped away all the time and one day soon they might waken up and realise that a pile of savings is of little comfort compared to the loss of those basic freedoms we take for granted today

      Russia and USA on verge of another Cold War

      American Censorship

      • bonbon

        The only danger of WWIII is Obama. This is what people still refuse to see. His record up to now is blatant evidence. He will go for it unless impeached. Never mind some worn-out theories – Obama is now. His psycopathy should be evident to anyone who wakes up from the Tiger fog.

        USA has legal impeachment methods applied to Nixon, suddenly and effectively. There was no 10-month process. Amendment 25-4 works this way.

        It is insane to even think of using nuclear weapons to settle some feudal score. The world has changed folks!
        The entire bailout disaster under Obama far-surpassed the already idiotic Bush, and DID NOT WORK. It could never work. War was the old way to go.

        All through the Tiger Epoch (history books reference) no matter how DMcW for example, tried to show what was going on, were ridiculed. Are we going to start that game again?

        Obama met Cowen, learnt Irish, and came to a pub for a pint. What a spectacle! Those photo’s tell it all.

        This is even worse than barstool politicians…

        • Obama is only a mouthpiece but a dangerous one. The recent slaughter of 24 Pakistani Military personnel and Clinton’s current visit to Burma tells us that the US Govt is stoking up more tensions in the region but if it comes to the bit they will back down

          A lot of the sabre rattling is done to be appease voters at home and create widespread fear. They like us to be afraid

          Personally I do not expect a world war (because sanity will prevail) and I am not going to lose much sleep over it. I just watch all the pawns in the game and the the cheeleaders who are egging them on from the sidelines

          Obama to N.Y. Jews: No ally is more important than Israel

        • CitizenWhy

          I am no fan of Obama but it important to state what, in his mind, he is doing.

          Obama believes that the US cannot afford more wars with “troops on the ground” in a permanent occupation. He also believes that other countries must step up and be militarily active in causes/wars they believe to be just and necessary (of course no one else is obliged to agree on the justice and the necessity).

          In brief Obama wants to replace occupying troops on the ground with special ops, no fly zones and drone attacks. Much more affordable, hands off, allowing for quick switches in strategy, no big supply lines and logistical problems. In brief, elegant from an engineering/technocrat point of view.

          Libya is an example. NATO fights, US provides intelligence and air support. Then the US is out, except for business contracts with the new government. But there were many lucrative business contracts with the old government, so nothing new is happening on that score.

          Next up is Syria. The plan, described in the US media, is for a no-fly zone in northeastern Syria where dissident Syrian military can group, be supplied from Turkey, and march forth to protesting cities and eventually the capital. The planes being flown would be Turkish and Saudi, with the US supplying intelligence support and political backing. This action helps to contain Iran’s expansion of influence, removing it as an influence on Syria and eventually Lebanon and tempering its designs on Iraq. At the same time Turkey works amicably with Iran on economic isues, positioning itself as the logical Muslim style intermediary counselor between feuding Iran and its implacable foes, Saudi Arabia and the Gulf States. This action also positions Turkey to make a deal with the Iraqi Kurds to protect them with a no-fly zone in case the government in Baghdad turns anti-Sunni and pro-Iran. In turn the Iraqi Kurds would agree to stop backing the armed rebels in Turkey’s Kurd region, which just so happens to border on northeast Syria. In general the Turkish Kurds have grown far more accepting of Turkish rule, especially since Turkey is completing five dams in the arid Kurdish region, making the Kurdish region fertile and spurring economic growth and jobs. But lo and behold those dams are also able to cut off the fresh water supply to both Iraq and Syria. That’s some serous leverage for Turkey since, in the future, water supplies will be more important than oil supplies.

          So, in Obama’s mind he’s working with regional countries to solve regional problems without the US making a massive and expensive military commitment. As a war monger, if that is what he is, he wants to be frugal about it. In brief he is re-instituting a policy of containment rather than pre-emptive war. and trying to resist Republican pressure to go to war with Iran, with troops on the ground, stuck in occupations for many many years.

          The Republicans are poshing for war with Iran and Pakistan, with massive troops on the grounds and massive and lucrative contracts for private companies in what would be a huge endeavor.

      • Eireannach

        DMcW isn’t just a capitalist, individualist, self-confessed Atlanticist (as he defined himself in a correspondence to me once on this blog).

        He isn’t just doing what culturally Anglo-American or “Atlanticist” types do in a crisis of this kind – telling the public how to fiddle with their savings to protect their own petty interests while Rome, so to speak, burns.

        No – it’s worse than that.

        At this moment in our history, with everyone’s life and livelihood on the line, he repeatedly quotes himself and his previous articles to defend himself, how he has remained consistent throughout his “business cycle”.

        DMcW lick-arses would be better served reading about Peak Oil and natural resource depletion for a more detailed, comprehensive model of the way the twenty-first century will develop. Google videos the following:

        End of Suburbia – Oil Depletion and the Collapse of the American Dream
        Richard Heinberg
        Jim Kunstler (esp. his blog ‘’)
        Rob Hopkins
        Transition Culture
        Dmitri Orlov
        Daid Holmgren and ‘Permaculture’

        That’s a start

        DMcW can stick his ‘business cycle’ up his Harvard MBA.

        The TRUTH is….Malthus is back. We have an exponentially expanding global population and an exponentially depleting base of non-renewable natural resources. Our complex industrial society is going the way of the Western Roman Empire.

        Perhaps some readers of this blog find that a little too dark to take. Well it’s the truth!!

        I particulary recommend Joseph Tainter’s “Collapse of Complex Societies” for a full exposition on the principle of diminishing marginal returns on societal complexity.

        Soon, in a few years, oil will be so expensive that things will really start falling apart. But forget about an economist explaining it to you – they only study the business cycle, not the human-natural resources cycle.

        This is much, much deeper than the celebrity economists and their weird, deluded cheerleaders think. Much, much more serious.

        Google it for yourselves. Or don’t!! Just clutch onto DMcW’s apron.

        • Delusion is all around us.
          So is ego, pride and selfishness.

          We are living in the age of mass media communications and there is no excuse for being lazy, ignorant and stupid any more.

          DMcW is just some home grown entertainment and you should not be too hard on him. There are far bigger and much more interesting fish to fry

        • stiofanc02

          You once again have proved you are an A#1 asshole and a loser no doubt. How much do you make a year? 25 35K maybe. Once again you expose your self as a jealous self hating creep with pock marks from bad acne as a kid. Do you live in the Mothers house still? What a wanker you are. Oh and Im sure your breath stinks too. You are a giant turd. And as for search engines? Google? God you are stupid. Ha Ha ha ha ha ha ha………Peak Oil?? hahah ha ha hahaha ha ha!! ha ha!!!

          • What’s wrong with making 30k a year?

          • Look at you!

            What lies lurking in the dark?
            Look at YOU!

            What lies beneath the thin crust left after the social contract was broken?
            Look at YOU!

            What feeds on anger and hatred speech?
            Look at YOU!

            Who stands ready for a bloodbath anytime?
            Look at YOU!

            Who is this grey mass that enables tyrants and kills with our raising an eyebrow?
            Look at YOU!

        • Eireannach

          So did you all Google videos “End of Suburbia” or had you something more important to do?

        • Colin

          I thought you announced you were leaving this site a few months ago with the promise you wouldn’t return, yet here you are again.

      • bonbon

        Unbelievable ranting! Ye are not looking at the evidence. Trying to “read the mind” is a complete waste of time – simply projecting personal hopes on someone else.

        Obama has a finger on the nuclear button, has said he will rule by fiat, and going by his healthcare policy of Orzag etc, is pure T4. Look up what T4 means quickly – it is being applied in Eire and U.K. What more proof do ye need? If T4 is applied with a smile, ye should shiver!

        Obama is right now an extreme threat to civilization on this planet. Thermonuclear weapons must never be used, and the moves by Russia into the Med are a clear warning. I posted here Medvedev’s live TV broadcast. Anyone that laughs at that needs a psychiatrist.

        We are being ratcheted to an unbelievable conflagration, all because the financial system, (Euro included) is dead and cannot under any circumstances be rescued – see Bernanke’s 24-hour “rescue”. They are going for war.
        This is not made in Dublin, I do not know if the Dail has any inkling of what’s going on – maybe they were all at the pub.

        DMcW has opened the door to this discussion, have any of you? That results from personal experience being smashed in public. For that he has my full support!

        Turkey fired the entire general staff a few months ago and now pursue a policy AGAINST Ataturk. Iran will hit NATO Turkey on any move. Ye are misreading the situation! This is a ratchet to WWIII, and that means inevitably thermonuclear. This is Obama, he must be impeached immediately or all talk of “T” and “X” euro bills is pure
        literal vapor.

  37. gizzy

    Euro or no euro I do not think the present government understands the dynamics of a recession. Firstly people in very vulnerable companies or in companies looking to take strategic cost cutting decisions lose their jobs. People in frontline sectors construction car sles etc lose their jobs. Their missed spending power and that of those who are afraid of losing their jobs impacts on small businesses. Small Business owners put all built up savings into the business in the hope the tide will turn. When savings are used they go to the Bank to borrow,(now not an option).They stop paying themselves. U.k. business survey found that most smes give up for the reason they get fed up paying everyone ahead of themselves. They then use vat and other creditors as a cashflow source. This is very short term again in the hope that the tide will turn. They then give up.They close their businesses and make their employees unemployed and so the cycle continues with businesses deemed viable this year not viable next. It passes from frontline to services onto professionals and finally and it will happen public sector.

    On the ground a lot of businesses are not paying any or all of their rent, their rates their vat.

    That is the cost of austerity. Austerity in tough times to fix the ills of overspending in the past is the flawed thinking of politicians and advisors who have no imagination or energy to increase income. Cost cutting is easier for them.

    It requires less initiative and brain power. It does not affect them directly see Monday’s derisory pension cuts for our former senior politicians.

  38. McGoo

    Ok, like alot of people I’m trying to find a quick, easy, safe way to protect my life savings from a possible euro break-up.

    My big idea is to simply walk into my bank and use my savings to buy a bank draft made payable to myself.

    The draft will specify that I am to be paid in Euro’s (not Punt Nua or whatever).
    I could hold it until the economic mess end-game is all over (admittedly earning no interest).
    If it turned out that Germany was only allowing residents to convert to New DM (or whatever) , I could move to Germany before cashing in the draft.

    Can any of you see a problem with this plan?

    • Big Problems

      In the Ministers surprised pronouncement and you are listening to the early morning news on radio it will be stated ‘ that the Minister has replaced all existing denominated euros in Irish Banks & Financial Institutions and those in circulation with the letter ‘T’ have been replaced with a new currency called ‘Yoyo’ and that unit will carry a value of 50% of the Euro market value .All savings accounts will be frozen and foreign exchange controls brought into force with immediate effect until further notice.

      At that point stop your car ………and think.

      • bonbon

        The pile up would be catastrophic. So to get things rolling would good old FG of blue shirt fame call out the army?
        Think that this could never happen? Think again!

        When no spark of creativity is evident, at least now, they are headed this way. They will bungle any kind of 2 speed rollout.

      • McGoo

        Yes, that is exactly what I’m worried about, and is exactly what I think a bank draft might work around:

        1. A bank draft is effectively a cheque written by the bank. When the draft is cashed, the money comes from the banks own money, not from my account. I understand that depositors money would be instantly changed to devalued “yoyo’s”, but the banks own money? I suspect not.
        2. The money won’t be in my saving account any more, it will have been trasferred into the bank’s own account, so it won’t be frozen.
        3. If I go to another country and cash the draft, I won’t be transferring my money out of the country, I’ll be transferring the banks money. I assume that the exchange controls will not apply to the banks own money.

        It’s just an idea.

  39. uchrisn

    It seems that we will have fiscal integration over the next couple of years which will entail controls on government spending, common bonds and a common treasury. There may be some more private write downs of bonds ala Greece.

    Scenario 1: More bank failures. There is a large sell off of the the Euro – answer – it almost crashed in 2001 and the other countries central banks intervened to buy it up to make sure it didn’t. That would happen again if it was going down too much too quick.There is a backstop there. Prob the max the Euro could fall in value against other major currencies is 20-30%. Hence the reason for buying commodities.

    Scenario 2: Ireland decides to leave the Euro, then yes peoples savings may be lost into a new devalued currecny. This decision would not be forced on Ireland. If Ireland decide this it will be perhaps at the next election when people are fed up of austerity not working for anyone except the debt collectors.

  40. bonbon

    Very good to go against the arrogant boom popular opinion. I fully sympathize. You have strength of character. I’ll bet some of the opposition came from very close not just press and public figures.

    You mention the idea of “amplifying” in numerous places.

    There is something in the financial system, not just Euro, that does this. It produces bubbles, housing, .com…, which have shorter and shorted lifetimes, but each time bigger. Bernanke is known as Bubbles Ben, and he just produced a 24 stock rally bubble. I’ll bet they were going to IPO Facebook then, and now hold off ’till the next. The nominal value of this IPO is somehow so unreal, it defies any logic.

    If the bubbles are down to 24-hours, the amplifier is broken. QE is a mild term for this. I believe the amplifier is a derivative process being turned on.

    And all of this would be instantly stopped with Glass-Steagall.

    • bonbon

      DMxW, you rightly point what economists should be doing, forecasting :
      1)Looking at trends extrapolating what will happen
      but more importantly
      2)if that looks like doom, the radical sudden change necessary now to change the course set in motion by precise causes
      Very quickly the economist must deal with epistimology, how we know something, and why the path to doom even exists. Suddenly one is confronted with human creativity, something economists never mention, and then one finds it actually banned from all taught theories.
      Economics as taught never even mentions human creativity.
      Is it any wonder then doom is regularly forecast, and is actually happening?
      A lot of comments seem to imply we are a doomed trajectory, that cannot be changed. Well it cannot within the given parameters.
      But creative change is human, in fact uniquely human.

      Reactionary radicalism is easily identified as it has no creativity, so only accelerates the doomed trajectory.

      Glass-Steagall is the best example of a createive principle at work that abruptly stopped the trajectory all trends pointed at. I am pushing this for this reason.
      It is attacked because it is creative!

      • bonbon

        Reactionary radicalism is what Bernanke just did, and also since 2007, and every time he makes it worse. Berlin tried to block this radicalism, and the 2 are locked in a place creativity never existed.
        I think this why people just cannot understand the various positions – there is not the slightest hint of a creative move out, which ordinary people instinctively expect from the elites. The horror of an entire elite with no trace of a human spark I think is what stuns Ireland, who just elected a president talking about exactly this!

        • gizzy

          well put bonbon. what happens in tough times is the accountants,conservatives and autocrats use a risk agenda to get control when it is creative and imaginative leaders that are needed to turn it around.

          • bonbon

            And creative citizens to demand the turn around. After all the elites should be of the people, from the people, and for the people.

            Waiting is a Tiger luxury, now gone.

        • To be creative we must go back in time and that time was when Lenihan gave it all away and Kown buried his arse on a bar stool .

          The time we have now is destroyed and in tatters .

          How do we regain that time if we can and if we do will we do anything and behave like sheeple as before ?

          If a new time were to happen we also need Trust and we don’t have that either.

        • bonbon

          Trust human nature confronted with this. And put the banking institutions through the ringer. I thing the so-called boom was not creative, rather the exact result of radical anti-human culture which elects anti-humans on bar stools. Bubbles instead of growth.

          Would DMcW have been elected?

          We need to go back and look at 1932 very urgently. The difference between FDR and Europe. I know Ireland somehow insulated itself then, but not now.

          Loudly, with perseverance, against all boom opposition bring creativity into the discussion.

          You will get a good surprise!

  41. molli

    John Lowe moneydoctor on Joe Duffy a few mins ago telling everyone to leave their money in the banks and he’s not taking his out and more or less that people are panicking over nothing

  42. piombo

    Greetings to all from Italy,
    Much as I agree with David’s hypothetical analysis of what could happen to the “little guy”, I cannot really convince myself that the Euro will just disappear over night or rather there will be a break-up of the euro currency.
    Rather, as the attack is not on the currency (evidence the fx rate vs the dollar is stable) but rather against the government debt, it is logical that from the December 9th summit there will emerge two classes of euro-denominated government debt post December 9th. One will be free-standing such as the German government debt, whilst the other one will be back-stopped by the ECB. The former will enjoy lower yields whilst the latter will pay 200-300 bps more. The ECB back-stop will halt the attack but not the pain.
    The pain for the countries who are not able to convince lenders that they can do without the ECB will derive from the budgetary discipline they will all sign up to at next week’s summit, and let us make no mistake, all countries will sign up to the what Draghi called “fiscal compact”. In essence, Draghi who is a very intelligent and cautious person, is offering the carrot to all euro countries to accept the centralised budgetary control which Germany demands in exchange for funding of their Public Sector Borrowing Requirements.
    Paradoxically, if what I espouse above occurs, Irish and Italian government debt would become very profitable investments.

  43. Philip

    I do not believe there is anywhere to run in a global financial crisis like this.

    Here is the thing: The mechanics of what we do to do work and provide goods and services is working well. What is broken is the system of payment for each unit of service/ good delivered. The paper we use for tender is now turning into ar$€paper. This is happening everywhere.

    So let the accumulators accumulate. 10 x zero = 100000000000000000 x zero. It does not matter. And if you think the the manufacturer nations have an advantage…think again, who is going to be buying.

    The real value we have is in your heads and what you can render with your skills.

    The only way out is a global reset all debt to zero or grab the lot and stick 10K USD (I think it amounts to about 70Trn USD globally) or whatever into everyone’s account and leave it at that. Everyone starts today with 10K and no debts. A bit like the Philip Jose Farmer’s Riverworld series…

  44. Reality Check

    David McWilliams called Gold “a useless metal” in a recent article.

  45. tony_murphy

    “Can you think of anything more ludicrous?”

    Well yes I can! It’s called Central Banking and creating money out of thin air and paying some rent seeking, globalist banker interest on it, who in turn goes off and pays some mercenaries to destabilise countries in the middle east in the hope of starting WW3

    Money/Currency is the root of all evil, especially the paper and electronic varieties

    Don’t expect something for nothing.

    It’s about time irish people woke up to these facts

    • whirmark

      Try to imagine a world of barter-only, and then try to imagine why money was created in the first place. The Mesopotamians managed to work this out 3000years ago, maybe if you think very hard you’ll get a light-bulb moment.

      If you have genuine problems with aspects of the Financial System, you could maybe do better to educate yourself and come up with some workable alternatives and solutions. On the other hand if your aim is to come across as a total moron on these blogs then keep up the good work.

  46. Reality Check

    Warren Buffet dislikes Gold.
    Buffett says “he’d rather bet on strong businesses instead of something “that doesn’t do anything.”

    As far as he’s concerned, the only thing you can do with gold is admire and “fondle” it.

    Would it not be wiser to invest in strong World beating companies that pay dividends similar to the kind that Buffet likes e.g. Intel, Pepsi, McDonalds, etc?

  47. Dorothy Jones

    Request to the Moderator:
    Dear Moderator
    Would it possible please to have the post above at 8:05 from 30 November from @stiofanc02 addressed?
    This is my own personal opinion and may not be shared by other posters on this blog. However, if the use of this type of language describing fellow posters is acceptable, then I feel that the site is greatly devalued.
    I may be on my own here but I find it offensive.

  48. bonbon

    Iceland President on Crisis: “We Allowed the Banks to Fail, and in the End, We Were Blessed with Our Own Currency.”

    The Icelandic people are getting through the crisis by not bailing out the banks, but putting them into bankruptcy – a report from Swedish public TV2 network news, on Nov. 28th, in a news installment including interviews with both the Iceland President Olafur Ragnar Grimsson, and an ordinary family, Eydis Hentze Petursdottir and Gudmundur Bjarni Sigurdsson. The father, Gudmundur, says in English: “What got me through the crisis was that, the country is still the same, but it is only financial. It is very narrow. Through all of this, I actually thought that, financial markets and that stuff, it does not matter all that much in the big picture of life.”
    President Grimsson also said in English: “It also carries on very interesting lessons why Iceland is coming out of the crisis earlier than many other countries. Because in some ways we have done things differently…. We allowed the banks to fail. We did not pump a lot of public money into them. We devalued the currency. We were, after the collapse of the banks, blessed with having our own independent currency.”
    Asked “what can Europe learn from Iceland,” he answered: “The lesson, in my opinion, whatever the country, if you want to bring a country out of a deep financial crisis, you have to do it, also by strengthening the democratic will and the social cohesion of the people. If you look at it, as primarily as a problem for the markets, I believe, you will ever succeed completely.” The subsequent part of the coverage shows footage from the protests against the Icesave law to allow billions of kronur in payments to bail out the losses of the U.K. and Dutch banks, and describes the courageous decisions by the President, which made him into a folk hero, to allow the people vote in two referendums to refute that law.
    The President then says: “I came to this crossroads, that fundamentally the choice was simple: On the one hand, there was the democratic will of the people, and on the other the financial demands of other foreign countries and the European market. And my conclusion was, that democracy was a more fundamental part of what we are, not only in Iceland but in Europe, than the free market.” It is all available at: from 20:15 to 26:50. The spoken English starts off from 21:41.
    The President overrode the parliament, which did not express the will of the people on the bailout, and Iceland was put on the British terrorist list!

  49. molli

    this probably sounds naive but what would the situation be if you were holding cash in German denomination only? would this be of use if the two tier euro went ahead?

You must log in to post a comment.
× Hide comments