December 12, 2011

A bad deal for Ireland and a bad deal for Europe

Posted in Euro · 196 comments ·

The deal signed last Friday is the beginning of the end of Europe as we know it. The shift is on from a family of nations, with checks and balances, to a German Europe where diktat triumphs over dialogue, and the interest of the strongest wipes the floor with the concerns of the weakest. Luckily for us, the deal looks unlikely to work because they haven’t been able to come up with enough money to prevent another bond crisis early next year, as more than €1 trillion of bonds in the eurozone come up for refinancing.

But we should take a long look at this deal to see whether this is a place we want to be. Make no mistake, the EU is now a very different beast and, when this deal fails, something more extreme will take its place. So what might the new Europe look like?

It looks like Germany.

This is a place where, if you don’t like something, you declare it illegal. Last Friday, Germany said it didn’t like the business cycle, which is as natural as night following day, so they made it illegal. I don’t like heart disease, but it won’t go away if I declare it illegal.

Similarly, you won’t get rid of the business cycle by saying it doesn’t exist. The world doesn’t work like that. Let’s have a look at the world as it is in Ireland, rather than how the people in Brussels might like it to be.

Ireland, unlike any other European country, is suffering from a severe balance sheet recession. This is not a normal recession. A balance sheet recession means that the nation’s balance sheet is broken because, on one side of the balance sheet, there are houses and land bought in the boom and these are falling in value. On the other side of the balance sheet is too much debt, which is rising in cost as interest-only loans ratchet up to full repayment. And the income or the take-home wage of people is falling as taxes rise and the cost of servicing the debt (in terms of how many hours you now have to work to service the debt you took out in the boom) is rising.

In a situation like this, people do not spend, they save initially and then they dip into their savings to survive as their income falls. We have seen this development in Ireland. From 2007 to 2010 the savings rate rose rapidly as a terrified population retrenched. Now we are seeing a modest fall in savings, yet we are not seeing an increase in retail sales, so what is happening? People are dipping into their savings to pay the gas bill.

If the people are saving and no one is spending, how do you maintain even modest activity in the economy? Someone has to spend. If the government doesn’t spend, who will? The huge current government deficit is a reflection of the government spending to replace the money that has been taken out of the economy, as people are saving because they are scared.

This is called “counter-cyclical fiscal policy” in economics and it is the basis of modern economics. It is just what happens when people stop spending – the state steps in. If the state steps out now, people don’t simply spend again to replace the state.

That is why contractionary fiscal policy is called contractionary, because the economy contracts when the state cuts spending and increases taxes. We all know that a state can’t keep spending indefinitely, but when no one else is, the economy would just collapse if the state didn’t take up the flak. That is why the deficit is high. It is an automatic reaction.

This is what Germany wants to make illegal. It wants to make illegal an economic phenomenon which we have seen in every country over decades. This is a German fiscal union. It penalises rather than helps countries in trouble when they most need help. Now contrast this with an American fiscal union.

Our cousins in Boston had a mad property boom in the late 1980s; then, like the Irish boom, it crashed. Automatically, the unemployed Bostonians paid less tax to the American government and received more federal transfers. That is how a fiscal union works. In good times, boom regions pay more and in bad times they receive more. This smoothes the business cycle, and the depressed region has a chance to recover.

If Boston and Massachusetts had been in a German-style fiscal union, it would have been punished, not helped, and its post-boom depression would have gone on for years, rather than the quick recovery, which it experienced because the rest of America helped it out.

Without this aid, how do we tide ourselves over periods when we are trying to rebuild our balance sheets, which can only be done through debt repudiation or economic growth? What we have signed up to says that there will be no debt forgiveness, so we can only rebuild balance sheets through rapid economic growth. But where will that growth come from?
The government and Germany say it will come from a positive balance of trade because we will export our way out of this. Ok, let’s see if this is feasible.

The balance of trade of an economy is nothing more than a reflection of the balance of savings in the economy. If the punters are saving, then the government will have to spend to offset this saving, otherwise the economy will contract.

The only other way to maintain demand is if we can persuade foreigners to buy stuff from Ireland in huge quantities. But why would they buy stuff in Ireland that they can get at home?

According to our financial plan, we are going to bring the government deficit down from 14 per cent of GDP to 3 per cent in three years. So where will that missing 11 per cent of GDP come from? If government spending isn’t replaced, the economy has to shrink by the same amount – unless, of course, the trade surplus can increase dramatically, which would mean that our savings and government savings were offset by the purchase of Irish goods by foreigners.

But the simple back-of-the-envelope calculations would mean that, for
the economy to stay stable, the trade surplus would have to increase by at least 11 per cent of GDP from here.

The trade surplus today is €2.8 billion. But, given that our GDP is about €170 billion, our trade surplus would have to move sharply from €2.8 billion to €21.5 billion in the next three years to keep the economy stable.

Our main export markets are the US and Britain, followed by the EU. Whatever happens in the US and Britain, we know that the Germans have the rest of Europe signed up to austerity and we know that austerity makes the economy contract. Europe is already in a recession now and austerity will make it worse, so who will buy the extra €20 billion of Irish goods?

This deal is bad for Ireland. It is also bad for Europe because it turns the EU from a family of nations into a German protectorate, I’m not too sure I’d vote for that. Would you? But then again, I mightn’t be asked.

  1. When will the Teflon personalities finally acknowledge that traditional economic theories are a massive failure!

    Let me spell it out again, traditional economics has failed to deliver! It is as simple as that.

    Financial markets are supposed to allocate capital and manage risk, and the system produced nothing but cataclysmic failures, on both accounts!

    The reason for the build in design flaws never were more evident. They exist for a reason, to allow for the financial oligarchy to exist. The legions of Harvard educated Teflon personalities that make up the governments consultants and infested the building with their ideologically founded theories from a distant century, they are the high priests of the status quo to be maintained at all costs.

    Really, all costs!

    Social genocide, austerity, is an acceptable collateral in their world of spreadsheet schizophrenia.

    Make no mistake, this was always a banking crisis, I call it heist, that was talked into a sovereign crisis, but still is nothing but a banksters heist.

    The real crisis is purely political, as captured politicians are unwilling to solve the problems at the core, in the banks. They are part of the status quo that has to be maintained.

    The distance of the political class from the people, the democratic deficit, it could not be any greater.

    We so very much need a functioning Europe, but the Euro is going to be the main destructive force that brings the political project of Europe down, at unbelievable human cost.

    The consequences will be horrific.

    • Deco


      Is it correct that the current Bundesbank head is driving Merkel’s agenda ? maybe there is something in the German-speaking-internet-community ???
      I bet that is all one word in DE :)))…..

      Nothing against a sound currency, but that clown Trichet was the Eurozone’s Greenspan. Low interest rates and loads of bubbles everywhere, while cheered on by the media – which is taking instructions from “our advertising sponsors”.

      The damage to Greece is too much. In Ireland, we are not serious about austerity. A certain segment of the population is banjaxed. But we do not see the prices on ticketmaster getting to anything near the levels in the UK yet, for comparable events. There is still a stable level of discretionary spending on items that are far from necessity items…

      • CitizenWhy

        The New York Times had a substantial article about a year ago on how Merkel consults the CEO (Ackermann?)of Deutsche Banc on everything, before making any move or taking any stand. He is in effect her one-man Parliament. The new slogan of Euro democracy is: “One banker, one vote.”

        • Deco

          Unbelievable. This is a disaster. How do we cope if yer man gets it’s spectacular wrong ???

          • bonbon

            Do not be too sure about Ackermann. He has legal trouble again, and Deutsche Bank is sitting on trillions of Derivative off-balance-sheet toxic paper. It is a world-class casino.

        • Deco

          The Bundesbank is accountable to the population of Germany. But DB are accountable to large shareholders, and their own management hierarchy. This is a disaster.

      • Julia

        ‘Deco, a certain section of society is banjaxed’. 1.8 million people at work. More than 50% of those earning around 35,000 or less. They are banjaxed. Nearly 500,000 unemployed, they’re banjaxed. Countless pensioners, children, disabled, all banjaxed.
        Incredible isn’t it?

    • wills


      I think it is the case that David knows this. But, what is the point highlighting this stuff when he clearly carries the analytical skill to be able to follow the events from the front and define its realities as it gallops along and so take the spin out of the misreporting by Insiders.

    • berenice

      I couldn’t agree more: the clique elite create the boom and bust the world over and those who pay attention will also note that they control all the strings. People just don’t realise what’s happening behind the scenes.

  2. Louis Hoffman

    And where do we end up if we opt out?

  3. Deco

    +1. Excellent synopsis of the present situation. “We are where we are” to qupte the fatman in the Finance Ministry during the “drinks cabinet” era of governance.

    The British have realised that this deal is an exercise is meaningless fantasy. It would seem as if the Swedes have also recognised this.

    “He who pays the piper, calls the tune”. Germany and the Netherlands pay for the EU Institutional structure. Without the taxes of workers and businesses there would be no funding for the nonsensical edict making machine that is the EU. So the institutional culture is ultimately in a crisis about obedience to whoever controls the money. Merkel, and the Bundesbank head Weidemar know this.

    And the pigs with their snouts in any part of the EU trough, are all grovelling to the tune of Der Swillmeister.

    The EU is a complete farce, with a highly successful propaganda machine behind it. It is successful because it knows how to sway the idiots behind it. I don’t care how powerful it is, the dissenting voices concerning it will be proven eventually, by the results that it gives.

  4. CitizenWhy

    Excellent short piece by Tom Palley identifying neo-liberalism as at the heart of the EuroZone crisis.

    “Euro lacks a government banker, not lender of last resort”

    FT Economists’ Forum on December 9, 2011
    Copyright Thomas I. Palley

    In his novel, The Jungle, the American muckraking author Upton Sinclair wrote about the horrendous work and sanitary conditions in the Chicago meat packing industry of the early 20th century. It is sometimes said Sinclair aimed for the heart but hit the stomach. That is because he aimed for progressive social and economic change but instead prompted the founding of the Food and Drug Administration.

    The same problem of aiming for the heart and hitting the stomach confounds current discussions of the euro zone’s problems. What the euro lacks is a government banker, not a lender of last resort as is widely claimed.

    The euro has a lender of last resort in the European Central Bank (ECB) which has dutifully performed that function. Lenders of last resort provide liquidity in financial panics, which is exactly what the ECB did in the financial crisis of 2008-09 and has continued doing via its Lombard lending facility. According to Bagehot’s rule, lenders of last resort should lend without limit, to solvent firms, against good collateral — though Bagehot also recommended lending at high rates whereas today’s practice is (sensibly) to lend at low rates.

    The euro lacks a government banker, like the Federal Reserve or Bank of England, which helps finance budget deficits and keeps rates low on government debt. This explains why the U.S. and U.K. can borrow at low rates and remain solvent, whereas Spain, which has a roughly similar deficit and debt profile, is under speculative attack.

    The lack of a government banker reflects the euro’s neoliberal birthmark. Neoliberalism aims to diminish the role of the state and enhance the power of the market, and this goal is reflected in neoliberal monetary theory which guided the euro’s design. The theory argues central banks should control inflation, but there should be complete separation between the central bank and government finances.

    By adopting this theory, the euro’s architects intentionally changed the monetary/fiscal balance. Whereas previous national monetary systems ensured “fiscal dominance” as central banks served governments, the euro instituted “central bank dominance” by stripping governments of access to central bank help managing public finances. This was done by creating a “detached” central bank that is prohibited from buying government debt. This is fundamentally different from an “independent” central bank which distances its decision making from government, but is allowed to purchase government debt. The Federal Reserve and the Bank of England are both independent but they are not detached. The ECB is detached by design.

    The consequences are enormous. Prior national banking systems made governments masters of the bond market. The euro’s architecture makes bond markets master of national governments, and that is the problem.

    The solution is to create a European Public Finance Authority (EPFA) that issues collectively guaranteed debt on behalf of euro zone governments which the ECB is allowed to buy. That would enable the ECB to manage governments’ interest rate via open market operations, as does the Federal Reserve and Bank of England. Proceeds from EPFA debt issues would be distributed to countries on a per capita basis so that national governments would control all spending decisions. Country liability for EPFA debt would also be on a per capita basis, and EPFA decision-making would be governed by member countries with voting rights again granted on a per capita basis. That would render EPFA democratic.

    The critical feature is EPFA’s power to issue debt would be used immediately to finance the roll-over of existing debt at lower rates, and it would also be used on a permanent basis to finance current and future budget deficits. EPFA would therefore be a solution to both the current crisis and the euro’s design flaw regarding absence of a government banker.

    The great psychoanalyst Sigmund Freud claimed everything we say has psychic sense. That holds for economics too. Characterizing the problem as lack of a lender of last resort obscures the euro’s fundamental neoliberal design problem regarding lack of a government banker and subservience of fiscal policy. That is a structural flaw which creates financial fragility and permanent budgetary pressure that shrinks social democratic policy space. Failure to frame the problem accurately blocks identification of the proper resolution, so that policy reform – the intended solution – misses the mark and hits the stomach instead of the heart.

    Thomas Palley
    Associate, Economic Growth Program
    New America Foundation
    Tel: (202)-667-5518


    This article was posted in the FT Economists’ Forum on December 9, 2011 at

  5. Deco

    Well, the way the EU works – either they do not ask you at all, or else they keep asking you, until you agrre with the saturation level propaganda, and consent to responding as instructed.

    The principle of consent is gone. The option of dissent is met with loads of abuse and being told you are “isolated” and “marginalized”.

    This project, of European power centralization, is intellectually going to the direction of turning Europe into an absolute hellhole. Just look at Greece to see where things are going.

    • roc

      The project is not of European ‘power centralisation’. It is a project that aspires to union and federalisation and subsidiarity which are very different things. The whole aim of the European project was to make the interests of European countries convergent (and the Euro played a very large part in that). It is this convergence of interests that constitutes the bigger European picture in many terms, historical, economic, fellowship and more. This bigger picture will drive the smaller picture of monetary device imo. It pains me that this country and particularly this forum is going down the road of lowest common denominator anti-European populism. I might have expected it of Britain, considering some of the social remnants that exist over there and their sensationalist press. But not of here. How wrong was I.

      • Eireannach

        +1 Roc

        One of the truths about life is that most people are good people. Only perverse institutions, economic circumstances and social dynamics make them bad, and even then the bad only lasts for a time. It does terrible damage during that time, of course, which successors recognise.

        The people of Europe all know they have a problem with banks and corporations having too much power. A federal European superstate will give some businesses even more power. We are all suffering because of the injustice of these inequalities.

        But the European people, together, want to improve things. European health care is social and inclusive, education more or less too. What Europe isn’t is feudal and nasty. Only a nasty Tory would attend a Nazi stag party in a French ski resort to piss of the French because to do so is a crowd-pleaser for those who have anachronistic believes in the ‘British/English bulldog spirit’.

        Pissing off the French is their aim because they want to atavistically drag Europe back to a condition of national rivalry and “competition” between different economic models – the AngloSaxon liberal model, the German federal manufacturing-driven model, the French statist-bureaucratic model, the Scandinavian social democracy model, and so on.

        What Europe is trying to do is put all of these systems in the pot and reach a collective agreement on how to live, how to make life better for ourselves and our children. Make no mistake, we are open to being manipulated each against the other by outside powers who wish to see us weaker for their advantage – an element within Tory Britian, the US, Russia, maybe even China spring to mind.

        As you say, the people of the EU will address the issue of unwaranted power to European banks, once the situation is stable. The Tobin tax is just a start, and the write-down of Greek debt.

        What DMcW and Deco and the usual Europhobes are proposing here is nasty – if we say no to this treaty and leave the eurozone we’ll return to their beloved Anglo-Saxon model, but instead of an austerity budget of €4bn we’ll have a terrifying austerity budget of €30bn in one years!

        That would destroy families, shorten lifespans, etc. It’d be a tragedy. The people who promote this just because of their aggressive, ideological drive to “burn the bondholders” are, at this point, dangerous propagandists.

        Germans and French are not unreasonable people – the way their education and health care systems function testify to that. They are also willing to be our friends and help us. They know our bank guarantee is hurting us, and they will try to help us when the situation is more stable.

        Destabilising seperatist zealots are not the voices we should be listening to right now. We are not ready to leave the euro and experience an austerity budget of €30bn in one year. We need more time to prepare ourselves whilst remaining in the euro for now, giving more time to prepare with our European partrner how to manage the complicate europe-wide debt issue.

        • bonbon

          More time? Was not 2 years enough? There is no more time. Stability? The entire financial system is at an unbelievable implosion point. A Plan B? Italy’s Tremonti had a Plan B, to dump the Euro as I posted in the last theme, and was fired. Exactly that will happen if Kenny tries this. So no FG Plan B !

          We have an outspoken opposition with a very clear signal, and after each new failed “treaty” doubles votes. Just let the EU try to send a Monster Monti to Dublin! This way Kenny likely knows he is in fact protected by SF. But not for much more time.

          Seems to me FG/Labour cannot survive without SF, and cannot adopt that approach, yet…

          We Europeans, are ready to address the unwarranted power of the banks now. We know what to do. We have no time to “give” any partners.

          A push is much better, it works wonders with timing!

        • redriversix

          This has got nothing to do with German or French people , it has to do with Government’s.

          I do not care who says what, this is not a complicated issue,you cancel all debt as it was built on fraudulent, unregulated economic’s with the goal to swap natural resources for debt that sovereign nations could never pay.

          There never will be agreement because they prefer unelected technocrat’s to make decision’s when we do not make the right one.

          This is a coup d’etat…

          not a fear of a federal Europe

          not a fear of a fiscal union

          a coup d’etat

          and we would be well able to survive without a Euro.

          Fear is not a fact,but people seem to treat it as such.

          Nothing is the be all and end all..,life goes on.and it will,just like it did after WW1 , WW2 ,Cuban missile crisis , Cold War etc etc….

          Sometimes it CAN be as simple as telling someone to go fcuk themselves..

          The constant analyses of individual Banks and players is distracting from the bigger picture.

          There are merely playing for time to see who are weak Government’s and who are weakest.

          Protect your families first

          Financial strike now



      • CitizenWhy

        Nothing wrong with an increasingly united Europe politically. But the structure has to be right. But with the neo-liberals having the most say in economic policy, the united EU could work very badly indeed. We in the US have seen the mischief neo-liberals (led by Greenspan) can foist onto an economy.

        Wynne Godley in his 1992 essay on why the Euro would not work also cited neo-liberalism (built into the ECB by a panel of bankers) as the cause of future crises. But he also said that those crises can be mitigated with an executive authority as described by Palley above.

        The Euro van be repaired. There are sane voices out there on how to do this.

  6. Jimmy R

    i have been wondering lately about the functionality of the euro, especially in the run up to, and throughout the crisis with a specific focus on the ecb setting rates to suit/ boost germany while the rest of the continent ended up booming with disastrous consequences. Normally, if a country was booming they would raise their rates to curb their boom, and vice versa. This of course was not possible in the eurozone for individuall countries.

    My question is, while interbank rates were set by the ecb, what effect would it have had to allow individual country’s central banks control the captial requirements and leveraging limits of their banks and thus the flows of currency inside the eurozone area. If, when ireland was starting to show signs of an overexuberant construction boom through cheap credit, the financial regulator insisted on irish banks increasing their capital requirements from the ludicrously low single digit percentages to higher levels, could such a move have served the eurozone well in soaking up some of the cheap money flowing around or at least diverting it to countries with lower growth (and thus lower capital requirements)?

    would such an arrangement be the equivalent of the transfer union David mentions above or would it expose some other systemic problem? It would at least allow a country some sense of fiscal sovereignity.

  7. IcelandicEcon

    Spot on: you cannot simply make a private debt bubble illegal, you have to fight it with government spending!

    Further on the same note, hope I’ll be forgiven for linking to my own blog:

  8. martino

    We in Ireland haven’t a clue what austerity really means but I’m afraid if we keep going down the raod we are we’ll know all about it soon enough. What we call austerity is ‘normal’ in Germany. Go shopping in an Aldi or Lidl in Germany and you’ll see what austerity is. The German discounter stores here are luxury emporia compared to the domestic versions.

    It’s a cultural thing. We’re ‘flaithuil’ when it comes to money and will never be able to compete with the hard-nosed Germans. Time to get out before they have our pensioners looking for empty bottles from bins to cash in the deposits to buy food, or have the unemployed working for one euro an hour.

    It’s a grim place Germany-I don’t know how they put up with it to be honest. The only happy ones seem to be the Turks. The Germans work themselves to death for low wages and pay loads of taxes: there doesn’t seem to be any breaks there, unless you’re really loaded. Rents are always going up, health insurance always going up, but wages never go up. But if you don’t like it they’ll have a third world immigrant working in your stead.

    You won’t hear anybody on the radio there talking about special needs etc. They’d be laughed out of it! The Germans are funny that way, they have this masochicistic streak whereby they’ll work themselves to death and think they’re heroes for doing it. Mad!

  9. mmclo

    But over 20 states could ave gotten together and said no. Germany and france are not in charge. Others stepping back, letting them lead and then agreeing with it is not the same

  10. Juanjo R

    This very clearly isn´t simply about economics – its about sovereignity, and it has been since at least the EU constitution was rejected by the French and Dutch and also since no votes were overturned in Ireland.

    Its out in the open now for all to see, no one has any excuses.

    What will the populaces do?

    • bonbon

      Right. But ask yourself, who and why take away sovereignty? Why even attempt this? What remains if it is removed? What is that structure then called? How many years has the planet had even the concept of sovereign constitutions, and which was the first?

      In one sentence then sovereignty v. Empire. Empires never spread industrial progress, sovereign nations did. So it is about economics, modern agro/industrial progress, and spreading sovereignty.

      • redriversix

        They are only interested in Empire and what can be stripped of land’s within.

      • Juanjo R

        The absolute economic choice of a populace follows from its sovereignty, its not the other way around.

        This was the case through from the most basic tribal populaces through to organised city states of 5-3000 years ago to modern nation states of the last 5-100 years, and almost every variation of kingdom empire or state that has existed inbetween.

        For Ireland, a supposedly highly-developed educated democratic nation to just give this sovereignty way without even a force of threat, but through a process more a like a series of conjurors acts, is simply nothing short of unbelievable.

        • bonbon

          My point is only empires existed to 1783, when the first sovereign nation state was founded. Empires always followed economics that lead to collapse. That is why in 1783 things were changed. By definition an empire has to keep people limited in number and only a small elite educated, the very opposite of a society dedicated to progress. A brief look at the declaration of independence and the economic woes imposed should be clear enough. When in the affairs of men a government or power repeatedly imposes collapse, it is a duty to replace that oppression.
          I post here Arthur Griffith’s economics and the reason independence was a duty to survive.

          No way to separate economics from society or sovereignty. Empires will allow sovereignty but keep fiscal powers directing economics – how generous indeed.

          • Juanjo R

            I never said that it was impossible to seperate economics and sovereignty.

            The rest of your reply is utter inaccurate rubbish.

            What is the US but an Empire by another name? What of slavery – the blacks being ignored as animals not men? And the continuing explitation and deep racism of the US of them? What is the Monroe doctrine from the early 1800s which STILL dictates US foreign policy in the western hemisphere?

            And write in full sentences for gods sake it difficult enough to understand your ridiculous logic as it is…

    • CitizenWhy

      There are two consistent trends in commentary on this blog:

      1. The Euro and the EU represent a loss of sovereignty for Ireland, and this is a bad thing. But gradual surrender of some sovereignty was always openly part of the EU “project.”

      2. Ireland is governed by a venal, corrupt class of politicians, a hopeless bunch, not to be trusted, but the Irish people will not toss them out, ever. In effect, Ireland is incapable of competent and fair self-governance.


      • Juanjo R


        1) I never mentioned the EU or the Euro in particular and you have pulled 3 things intogether in your point. I agree with Morgan Kelly in this his pivotal second Irish Times article when he said that a ireland had ceased to be a sovereign entity when the bank guarantee became permanent and we agreed to cover their debts. It is now in the open what has occured.

        2) Again, like bon-bon above make unconnected jump in your ‘logic’. Also you throw in emotive comments and predictions into what you pose first as cold thought.In between the first and second statement you should have said that venal politicans cannot possibly govern fairly and well. This is not proven as not all – venal politians have got everything wrong all of the time and personally I’d prefer the devil I knew to the distant foreign devil I don’t.

        Thats, at a minimum, what was fought for from 1916-1921.

        Its not contradictory its not a logic gate answer – on or off left or right. I’d like to see the Irish electorate wake up. Difficult but not impossible.

        • bonbon

          Actually from 1902-1921. Arthur Griffith, the first Irish President said :
          I am in economics largely a follower of the man who thwarted England’s dream of the commercial conquest of the world, and who made the mighty confederation before which England has fallen commercially and is falling politically–Germany. In Ireland his name is unknown–I refer to Fredrich List, the real founder of the German Zollverein.
          “Brushing aside the fallacies of Adam Smith and his tribe, List points out that between the individual and humanity stands, and must continue to stand, a great fact–the nation.

          There is no disconnect between sovereignty and economics.

        • bonbon

          Further, Griffith said :
          “With List I reply (to the British): `A nation cannot promote and further its civilization, its prosperity, and its social progress equally as well by exchanging agricultural products for manufactured goods as by establishing a manufacturing power of its own.’”

  11. bonbon

    As DMcW points out the “deal” will fail as the Jan 2012 debt refinancing cannot function. Cameron distanced the U.K. from this looming disaster.

    Some seem to look to the FED desperately as a model of what the EU should do. Look again before jumping in Bubbles Bernanke’s helicopter!
    FT only wants money printing, and Germany cannot under any circumstance allow this. Geithner has 3 times tried to strong-arm Merkel, and failed. Sarkozy also failed. Obama personally pressures Merkel, to follow Geithner’s Goldman Sachs line.

    Germany has only one viable option, a new DM. This will work if the banks including Deutsche Bank are split. I would not at all be surprised if “Zikzak” Angela did a sudden change of direction – again. For once it would be a good surprise.

    “$29,000,000,000,000: A DETAILED LOOK AT THE FED’S BAILOUT BY FUNDING FACILITY AND RECIPIENT” is the title of a new study produced by the Levy Economics Institute. The report’s conclusions were summarized by columnist Barry Ritzholz in The Big Picture blog Dec. 9. They show that the facilities that played the biggest role were the Term Auction Facility, Central Bank Liquidity Swaps, and Primary Dealer Credit Facility. This is a blockbuster, which is already stirring things up. More to come soon.

  12. Lyndon Jones

    This is DMcW practising Joe Higgins economics again , just where do we get this new money from? We are in an IMF/EU program .
    Growth is not important , it means nothing , AUSTERITY is the only answer. I have cut my spending by 40% gone is the drink and the car , I now shop in Lidl . I will pay off my mortgage in 6 years and then the pressure is off . We must tighten our belts for the next few years by doing the very opposite to the boom …..deleverage and save money.
    If David accepts the cycle then he must agree that cutting the deficit to 3% of GDP by 2015 is the correct way to go .
    Dont worry about having less money , it feels good to be more prudent, more in control.
    Austerity => balanced budget => repay debts …problem solved.

  13. CorkPlasticPaddy

    As I keep on maintaining Merkel and Sarkozy should be told in no uncertain terms to FOXTROT OSCAR!!! The sooner this is done the better it will be for everybody.Look what happened with the Nice and Lisbon Treaty referendas. The people of Ireland rejected them, but then our cowardly and self serving politicos put the ‘frighteners’ on us and low and behold both referenda were passed at the second time of asking. If the Irish electorate do get the chance of voting in another referendum relating to this new ‘understanding’ then it should be rejected out of hand and if our politicos don’t like the answer and they try to get us to vote the way they want us to vote we should just keep on rejecting it until they understand that we don’t want to be ruled by Germany. And that’s what would happen if it were to be passed. Napoleon and Hitler tried to impose their ideas on the countries of Europe by military means, but it didn’t work. Germany is now trying to achieve the aims of those two despots by financial means with the help of that French bastard Sarkozy. Vote NO and keep on voting No for our own sakes and for the rest of Europe!!!!

    • mediator

      I think that horse may have bolted, We voted in Lisbon II and many of my friends and colleagues didn’t give a hoot when I talked about how it was undemocratic because it suited their views. We are a confused rudderless and valueless people. The things that gave people a compass have been steadily stripped away and now our lack of wisdom is being exposed.

      If there is a vote on another treaty it will be passed because we have no backbone and will vote out of fear / propaganda.

      No easy way now.

  14. Deco

    Well, Bertie Ahern has made it clear as to what he sees as the cause of the recession. “It was all Lehman’s fault”.

    From reading the EU Deal, and it’s deliberations, it seems as if Sarkozy, von Rompuy, Merkel, Barroso, GSuck’s man in Italy, etc.. are on much the same wavelength.

    It is like as if there are a collection of Dithering Berties running the EU.

    Small wonder then at the level of fudging the critical issues that we see, and the level of commitment to pretend that everything is doing fine.

    No acceptance of the responsibility of the ECB. No admission that the save the bondholders philosophy is killing the PIIGS. No acceptance that apart from Germany, most of Europe has become reliant on asset bubbles for growth. No acceptance of the level of corruption and lobbying that exists in Brussels, and this being at the root of the problem. No acceptance of the wider implications of the austerity on Greece or Portugal.

    And no acceptance of the common people having any say on any critical matters, as exemplified by the way Merkozy and the EU Commision moved to shaft the Greek for having the insolence to suggest asking the Greeks for their opinion on matters concerning them.

    Intellectually the EU is waist high in delusional nonsense, and fully committed to implementing compliance in it’s these pointless edicts that amount to steaming BS.

    • Deco

      Meant to say.
      And no acceptance of the common people having any say on any critical matters, as exemplified by the way Merkozy and the EU Commision moved to shaft the Greek Prime Minister for having the insolence to suggest asking the Greeks for their opinion on matters concerning them.

    • bonbon

      Instead of dithering Berties, how about Dotism, the mental disease of connect-the-dots? GS is spreading this virus.

      Before Lehman was LTCM which “caused” Lehman, “caused” HypoRE, “caused” …
      Oh forgot ENRON, AIG, maddog Madoff.

      Bertie’s friends are doting…

  15. Adam Byrne

    I disagree profoundly with this sentence David:

    “In good times, boom regions pay more…”

    You are making a correlation between the words ‘good’ and ‘boom’.

    The ‘boom’ we had (or you plural had, I was overseas) here wasn’t good; it was FAKE. You might think it’s good to get a new car and over-priced house, but if you are paying for it with money that is not yours; that you have borrowed irresponsibly; that you should not have been able to borrow in the first place; and will spend the rest of your life slaving away to pay off, then there’s nothing really ‘good’ about it after all.

    Being good is not being masochistic and starving yourself, but it’s about modesty, responsibility, hard-work, humility and respect for others, your community and the environment.

    It’s not about accumulating material rubbish and splurging your money down the pub bragging about what a great little country you live in.

    If you happen to earn a little more than you need during some sort of economic ‘good’ period (not a boom) then put it away for yourself for a rainy day, or for your kids or grandkids.

    Being ‘good’ is nothing to do with booms.

    • Eireannach

      +100! about the social catasrophy that is a “boom”.

      The Japanese now see the 1980s as the decade that ruined their country, not the so-called “lost decade” of the 1990s.

      For the Japanese the “lost decade” was in fact the found decade!

      DMcW has it all wrong when he thinks boom=good, austerity=bad.

      He’s only thinking about money flows, not the spirit and soul of the community.

      The rethink about what on Earth we were thinking during the Celtic Tiger is the profoundly GOOD part about our current slow economy, which gives us time to digest and change our ways to build a better country based on better values.

      • Dear Eireannach,

        Why do you try to mangle my words and my writing to suit your narrative? Regarding the boom, if you can find me a commentator who did more, in public where it counts, to highlight the stupidity of the boom in Ireland, I will take my hat off to you. You have the archives here on this site. Have a look.



        • molly66

          David please give us your views on what path you think this government and Europe are trying to bring us on.
          I can’t help thinking that we are being brought down a cul de sac because I know that savings have to be made but I think the unfair pain being dished out is hurting the wrong people.

      • coldblow


        I was searching for “Aristotle” in David’s articles and got the following:

        As he says himself, he was saying a lot of what you want said a long time ago. But the stupidity of the boom/ bubble years isn’t the important thing right now.

    • bonbon

      Bubbles and Booms are not the same thing. A Boom, as in the 1960′s is good. We have had only Bubbles since then. Even a partial export-driven Boom in Germany is temporary in a Bubble world.

      We replaced Booms with Bubbles, each one exponentially bigger – dot.communism, housing, green energy, financial instruments like CDS – Derivatives.

      A real boom is good for you. Most have never experienced one! That’s the problem. To get a Boom started is impossible for Bubble people with Bubbles Bernanke at the helm.

      Germany’s manufacturing economy reacts against Bubble-ism. Ireland’s total lack of high-tech manufacturing has no backstop to rely on.

    • Adam Byrne

      Or invest an affordable sum in a worthwhile local business that does something useful for people.

      Or make a donation to a legitimate charity or your local library.

      You might as well talk to the wall though. A lot of people would rather go on a four day bender or fly to the Canaries when they get a little extra cash.

      • Eireannach

        Agreed Adam, but as our changed circumstances become a somewhat permanent feature of life, peoples values gradually come around to what is really valuable, like good education and healthcare, protecting our heritage, as you say helping charities, the homeless, libraries, inclusiveness.

        All that stuff is “social capital”, social stores of wealth. It’s a sign of maturity.

        However, the Celtic Tiger bubble was extraodrinary here and with it the growth and lifesytyle expectations of people. It will take a long time for values to change back to what is good for the long-term. The transition will be a bit painful for many.

        For the unemployed, learning a language or a new skill or craf, helping the homeless, these give meaning and value to life. There are no regrets investing in these things, whereas squandering can lead to momentary pleasure followed by remorse and a feeling of emptiness.

    • Fair point Adam, sloppy on my part, but I’d venture that the point remains valid and the nature of a true fiscal union.


  16. Bernard

    I’m not even close to an economist, but I always go with Facts and Logic! I remember what the Ancient Greeks said and what we tell Children…. Beware of strangers bearing “Gifts” As a lay person, I predicted the gist of what has economically and otherwise recently happened. I said all this 10 to 15 years ago, based upon this logic and seeing the EEC change bit by bit into what is now an effectively German run state with countries that are effectively local provinces. Is it time for a Re Boot of a 21st Century “Halls Pictorial Weekly”

    Anyway even as recently as 5 years ago, to suggest you were against the EU Concept (not the EEC concept, which I fully support) got you labelled as an out of touch crank… and we were not allowed even dare to say that the Germans were taking over the running of Europe! Third emmmm sorry, Third Times a Charm!

  17. I concur with most of what you say here, David, but can’t agree that an economic depression such as this is simply part of the business cycle, “as natural as night following day”. A little defeatist, n’est-ce pas?

  18. Philip

    “Germany said it didn’t like the business cycle, which is as natural as night following day, so they made it illegal. I don’t like heart disease, but it won’t go away if I declare it illegal.” – If there is one country that could declare heart attacks illegal and then cure them for once and for all, Germany would be the one I’d pick.

    I detect a slightly anti-teutonic air in some of the messages and in this article. I am still laughing at someone saying how Germans work themselves to death. In the bostononian lubbers part of the world the typical number of vacation days in 10. Germany – 30. The comment about the Aldis and Lidls etc is total nonsense. They are cheaper and better appointed in Germany. Germans like their time off and they insist on reliability and doing things right and they do not buy bling. They buy cars for a decade – not for a 2-3 year lease. They have real skills and apprentiships. They make the bits that everyone else needs to finish off their own products.

    They are long term thinkers unlike the anglo saxon types. Britian, US are spent economies that have destroyed their own foundations.

    Am not sure if Germany’s narrative is austerity. There are many who want to believe that. If it is austerity for those who have spent their time learning to be leaders and survivors in an anglosaxon world…great. I am all for it. Breaking bad habits means a bit of pain.

    Germany’s plan is simple. Get people working habits aligned and functioning well for society. Get a correct quotient of people up to a level where they can properly contribute to the real economy…not simply selling on others people’s stuff but making stuff that keeps working.

    Business cycles are normal you say? You really mean boom and bust. What is wrong with steady solid growth where the cycle is not being caused by speculative nonsense of intelligent idiots (highly qualified hi achieving physicists and engineers working for City of London ) using the algorithms of their original trade to monkey with savings of real people to take advantage of the weaknesses of stupid sovereigns. There should be a law and code of ethics which locks up these fools for irresponsible use of their education just as there is for medical Doctors and those who provoke environmental disasters.

    UK walking away is a very telling signal. They are a destroyed and hollowed out economy whose real industry would need to grow 10-15 fold to balance out their banker zombie economy. The US current generation of people are poorer and less educated than those before them. And we want to emulate this?!

    Let’s verify the narrative. DOes Germany really want to have zero growth? Let’s put it another way…does +ve financial growth real mean social growth. JHand on hearts…looking at dead celtic tiger…was there any real growth beyond the new coat of paint?

    • bonbon

      If I may add a few observations : Aldi and Lidl keep their prices down with vicious blackmail of local producers for example, so much so that Bavarian dairy producers went on strike recently. Their other products are mostly globalized items, he so-called anglo-saxon model gone wild.
      The Mittelstand, small-to-medium firms, are 82% of the workforce, but the huge multi’s have become banks, just like GM. They sway policy to the detriment of the Mittelstand. The multi’s like the Euro, are rapidly becoming holding entities, following exactly the anglo-saxon process.
      Now the traditional CDU, conservative industrialists have killed nuclear power. Not the Greens. Fukoshima hysteria and party tactics – devoid of principle, exactly like D.C., or Dublin, right in the heart of the Motor of Europe. The consequences of this insanely destructive move will be catastrophic. Example is building huge solar farms in Greece for export power only, while Greece becomes 3rd world.
      Desertec, solar power from Morocco set up by Alianz (what is an insurance firm doing in energy?), is an obvious attempt to create a huge green bubble – here we go again!

      • CitizenWhy

        You are correct on Aldi and Lidl. You might also have added that the cheap prices imposed by Aldi have led to very poor food quality. This has been commented on in the US press when there have been food poisoning incidents in Germany. Not a system to be emulated.

        I do not know of how Germany came to eliminate nuclear power. I think this decision is based on bad science. The french have improved the technology of nuclear plants to the point of eliminating almost all of their negatives. The older plans are dangerous and produce huge wastes. The new plants are not dangerous and produce very little waste that has to be stored safely somewhere. Perhaps Germany, obsessed with exporting, did not want to be in a position to export expensive items from France. Cheaper to import solar from economically devastated countries?

        • bonbon

          My point is that Aldi, Lidl… are the so-called anglo-saxon model, already operating in Germany. In fact repeatedly I heard Ireland (or Letland) propounded as a model for Germany!!! If I could find those bigmouths now, they are hiding under stones somewhere.

          Germany has the best designs for modern nuclear power stations, such as pebblebed etc. It cannot build one at home, and Siemens has given up even exporting.

          Bad Science! You bet. The entire Green energy dictum, is utterly incompetent, but most cannot counter the error because of the “cheap”, “expensive” monetary nonsense.
          Merkel has a Ph.D in Physics, and has not the slightest comprehension of what she has done. Never mind “von und zu Gutenberg’s” plagiarized Ph.D, even a “good” one is a disaster. Nobel prizes are given to Black, Scholes for an incompetent theory based on physics, which gave us LTCM nearly destroying the financial system overnight as Greenspan himself soon after admitted.

      • Deco

        Concerning German discount retailers, there was a controversy over a chain with many outlets in Ireland, and the fact that they inserted cameras into the toilet to measure the amount of time different employees were spending in the toilet, back in Germany.

        Of course, the assumption being that they would not get caught. Except they did.

        I presume Georg has already heard about this.

        Now you have a choice with regard whom you bring your custom.

  19. EGB

    To: Constantin Gurdgiev , Brian Lucey , Karl Whelan , Morgan Kelly , David McWilliams


    beyond doubts. you are best positioned to fill a small database with text that operates as an EGB:

    “Economic Bullshit Generator”.

    How about it? It might just find approval in the highest ranks, perhaps even trigger a nobel price, who knows.

    Need ideas?


    • redriversix

      WTF Georg ?

      are you losing it or have I lost it…..? I know the present situation is mindbogglingly annoying but is that the commentators fault or the EU Governments/Kabal’s insistence on leading us down a path of destruction……?

      Every civilization ends in Disaster , unless their is a huge global event,we will be no different.


      • Evening RR6,

        It is double irony if you will…

        First, my suggestion to create an economic bullshit generator and present the output to policy makers is aimed at showing that you will find a phletora of politicians picking it up, it is a safe bet, and such is the level of politicos governing countries in Europe and the European Union.

        Second, economists are a major part of the problem, while they are engaged in an academic orgasmatron, none of them is willing to admit that the ridiculous clutching at the bibles from past centuries has caused this situation to evolve.

        Economics is taught in certain ways RR6, and you might have noted the recent Harvard walk out, where exactly this kind of teaching was opposed to, much more interesting however than the walkout itself was the reaction of the academia.

        The influence of major investment banks and other vested interest groups on economics can not be disputed at all, they generated a system that creates thousands of “Teflon-Personalities” every year, yes-men and swamped the system with this particular type of economist. If you want to know how they look like you might want to have close look at the recently establish Irish Fiscal Council.

        Essentially, this is a major political crisis, much more than anything else, and this makes it so extremely dangerous.

        The economic systems are flawed from the ground up, and it is by deliberate design, deliberate to be able to justify and continue an established financial oligarchy. I mean come on, look at other sciences and the way they advanced in the past 150 years, and in Economics, they essentially still preach Smith, Hayek, Friedman, Keynes etc.

        You know how economist operate do you?

        It always starts like this,

        Under the assumption that….….now _____fill in a million models and theories, and 100x that many papers and dissertations….

        and it always ends like this:

        No one could have predicted THAT!

        LTCM is a striking example, just google it. They got the Nobel prize!

        Of course, on top you have this ridiculous cartesian attitude of a self referential quotation orgy and paper publishing. – I publish, so I am! –

        What we also can observe as a result of the above is the selective choices politicians are making to bolster their activities and decisions, why do you think that certain people are promoted to become economic government advisors, and others not? Why is it that bastards like Sutherland, Dibelius, Ackermann etc are literally writing laws themselves?

        No RR6, economists have to get their act together and expose the system for what it is, a major fuck up designed to serve a global financial elite and enslave the rest. In other words, I’d say….trickle down my arse….

        Hope that makes it a bit clearer.

        • redriversix

          Very clear , Georg

          I agree,science has progressed continuously yet economic science appears to stand still.

          But my fear is, for every major change we have had throughout history,their has been a major conflagration.

          I am sorry,but I cannot see this crisis being solved without some kind of “major upheaval”….


          • bonbon

            In the good old stone-age before thermonuclear weapons like Zara Bomba, things were “solved” consuming population in war. Things then quietened down, less people after all, leading to the next crisis.

            Einstein changed all that. Obama still lives in that feudal fantasy of his dear Queen. This “logic” would kill us all. Their game is up. For the first time in history the elites have to think!

            And Ireland is the only country AFAIK that elected a President that mentions ideas!
            Argentina’s President is also at the same level.


        • bonbon

          Very good example, LTCM which used the Black-Scholes formula for derivative wealth extraction, by 3 Nobel prize winners, and is used all over the place in high frequency trading.

          Mathematically a diffusion equation!

          Today broad daylight robbery is called wealth diffusion (from the economy to the hedgefunds).

          Piracy nothing else.

          One has to tackle the error in this theory to really see how to counter it.

  20. caoimhin3210

    As in America, the greedy and corrupt 1% in Ireland protected by the then and now Irish establishment & governments. Given billions of Irish citizens hard earned Euros are on a reposition binge and show no mercy when grabbing people’s homes and means of make a living. Shame on them, they can’t blame the British, German or French this time, although the established media in Ireland are doing there best to blame others especially Germany. Least we forget in 2006 at a financial gathering organised by the German embassy in Dublin. It was attended by both Fianna Fail & Fianna Gael and heads of business, and during a speech by a German economist when he urged caution to Ireland on its spending he was heckled from the floor lead by none other than Fianna Gael’s Gay Mitchell, shouting at the speaker to be quiet, he said [read this] “Germany was jealous of Ireland’s prosperity. And that donut wanted to be Ireland’s next president?

    • Deco

      That donut wanted to be President. But the electorate decided that regardless of the massive sums of money being spent on his campaign, that he was not up to the job.

      There were ballot boxes in the West and South West where Mitchel did not get a single solitary vote.

      Where is he now ? Oh yeah – looking after Dublin’s interests in the European Parlaiment. And he actually topped the MEP poll last time around.

    • bonbon

      I would be grateful to know which German economist that was. Is there a Youtube video maybe?

      • coldblow


        I think it was the German ambassador.

        I can’t get into the Irish Independent these days(something with my computer) but this is the speech.

        This is one of the memorable ‘moments’ from the Tiger years. (Another one is the infamous “Mr Paddy” letter to the Sindo from, I think, a French woman. Declan Lynch called it “tough love” without the love.)

        This is the kind of thing they should put on Reeling in the Years if they have to persist with that montrosity (sic).

        • coldblow

          That’s if the Mr Paddy letter was genuine – doubts have been voiced about that.

        • Louis Hoffman

          The German ambassador was telling the truth. We’re just not great taking digs about Ireland from foreigners.

          Maybe we would be better off with the Germans running our economy!! They can’t be any worse than the bunch of Muppets who have been for the last 25 years?

        • bonbon

          Got it! Thanks. I just wonder who the “business leaders” were attending? How many of them and the Ambassador himself knew what was up with Ormond Quays, SachsenLB,LBBW while he leveled criticism?
          I found this which shows the Ormond-Lehman link and the incredible nest of financial experts involved, including German banksters beyond belief.
          Irish self-flagellation while this is going on, is simply idiotic, cowardly, Beal Bocht in the extreme.

          • coldblow

            Interesting. I read it quickly, but it seems this is another German bank operating out of Ireland (and losing billions) apart from DEPFA? What a shower of fools. See what they get up to when left on their own.

            “Hat der alte Hexenmeister
            Sich doch einmal wegbegeben!
            Und nun sollen seine Geister
            Auch nach meinem Willen leben.
            Seine Wort’ und Werke
            Merkt ich und den Brauch,
            Und mit Geisterstaerke
            Tu’ ich Wunder auch.”


            The béal bocht is making out you are poorer than you are and so it’s a rational strategy, but it’s surely the opposite case in the present circumstances. Ireland came clean(ish) about their own banks and this sunk the sovereign. I can’t remember the details but the French banks now aren’t to be cleaned up at the expense of the French taxpayer but that of the wider EU – or something like that…

          • bonbon

            Beal Bocht is looking for favors from the Squire with hat out. The entire Kenny/Noonan strategy is straight from Corca Dorcha. Noonan is running now to Cameron to save the FSA.

            I wonder why he is so worried about Financial Services? It is just an extension of the London Square Mile in the Euro – is it operating as some kind of inside-outside agency? A kind of offshore haven?

            What has Dublin been up to?

            What poses this question is the Inter-Alpha Banking Group. Some of the biggest Euro banks are in there, Banco Santander for example, nominally Spanish, in reality British.

          • bonbon

            and the “Spruch” against these amateur magicians is the old Master Franklin Rooseveldt’s Glass-Steagall.

    • Dorothy Jones

      It was not a German economist; it was the German Amabssador; the Independent article is still online

      • Dorothy Jones

        retaliation he received a rap on the knuckles from the Department of Foreign Affairs who branded his speech “inaccurate, misinformed and inappropriate”.

        The Article is titled:
        Lost in translation . . . envoy refuses to back down over remarks
        From 18 Sep 2007; Irish Independent. Extracts include:

        Christian Pauls is embroiled in an embarrassing diplomatic row over comments he made about Ireland at a gathering in Dublin’s Clontarf Castle over a week ago.

        The envoy last night admitted his talks can be “provocative” but said that many of his comments were “lost in translation” because the interpreter could not keep up with his words.

        He said he would apologise for any “misunderstandings” due to misinterpretation but intended to use the same speech in future — although he would be less “blunt, loud and fast” in his delivery.

        He said his “one mistake” was that there was no question and answer session after he addressed an audience of potential investors to “soften the initial impact”.

        Mr Pauls was accused of putting Ireland down after he made a series of jibes during his speech. At one point, he described the country as “coarse”.

        The ambassador was said to have been heavily critical of the Government’s immigration policy — saying Ireland had learnt nothing from Germany’s experiences — and of our “chaotic” hospital waiting lists.

        He also criticised high wage demands here and criticised the former dominant position of the Catholic Church.

        In his speech, Mr Pauls pointed out that junior ministers here earn more than the German Chancellor and that 20pc of the Irish population are public servants. He later referred to consultants’ description of €200,000 jobs as “Mickey Mouse” money.

        According to weekend reports, the ambassador’s words were greeted with a roar of laughter from the audience.

        The ambassador was severely reprimanded by the Minister for Foreign Affairs, who phoned his embassy to condemn the “unbalanced picture he painted of Ireland”.

        And MEP Gay Mitchell, who spoke after the ambassador at the gathering, said he was shocked at the ambassador’s comments, which he described as “somewhere between resentment and spite”.

  21. Johno

    Think this highlights just how crazy people went in the Celtic Tiger

  22. wills


    I think if we separate spending from wasteful consumption we may break the tyranny of boom and bust.

    I think the economic cycle is not doomed to boom and bust, spikes and spirals and peaks and troughs of savings and spending.

    But, your article is dealing with what we are dealing with presently and defining the sequence of events accordingly.

    Keep up the fine work.

  23. tony_murphy

    No, you won’t get to vote on it David. That’s the future.

    Malachi Martin book, Windswept House will tell you all about the EU and the Evil that is behind it

  24. Dorothy Jones

    There we go….
    Commerzbank in State-Aid talks

    • redriversix

      Dorothy Jones,

      I also believe that French Banks will be the greatest calamity facing the EU in the New year.


      • Dorothy Jones

        New Year? Not before? What do you think?

        • redriversix

          Hi Dorothy

          They may use the holiday period to announce the collapse of German or french Bank’s but I am not sure if that gives them enough time.

          Time for what ?

          time for Merkel and Sarkozy to decide which of their relevant Bank’s they should sacrifice , let’s say Societe Generale and Commerzbank.As you know the amount of on and off sheet balance debt of these and many other Bank’s is unsustainable so if these bank’s fail and their is no bail out fund for them,does that improve the balance sheet of these nation’s ?..thereby through fancy accounting ,having a indirect default….i.e both nation’s absorbing the losses for the greater good..?

          They would obviously use far more complex language than I to “sell this” but you know what I mean..I think

          Does this allow France and Germany to show the World that they are “suffering too” and that the rest of Europe must sign up to a “new treaty” ASAP to “save our savior’s”

          Why are the rating agencies not being more aggressive in downgrading European Debt/Bank’s as the keep hinting at…?

          Are they being promised more “direct” target’s in the New year,than a broad sweeping downgrade which is less effective..?

          Will the “death”of these two Bank’s allow Merkel and Sarkozy to claim they have “cut out the cancer”in this economic war and , in there Countries paying such a heavy price for finally achieving “stability” in Europe once again,that they insist/Demand they be allowed to set up a “Supercommitee” that will oversee budget control’s of every Nation in EU.

          No treaty required/suspended during emergency Q.E 1.2.3 whether in bonds or cash.

          This buys say,6 month’s max so they can monitor progress with “EuroAsia” and China and get through their election’s.

          Germany to launch new trade agreement with China..exporting to China at “cost”and using high interest rate loans to weaker EU countries to offset difference..?

          1 trillion Euro of EU debt due to be ?

          I could go on,but the above won’t work as it would just be a ploy to buy time…., for what, I am not sure as when you look at our present situation from a business point of view,it has not made sense for a long time,therefore , the solution will hardly make sense either.

          New conflict in Mid-east to disrupt Oil production…

          “just a hunch”

          All the Best Dorothy


          • Dorothy Jones

            I think this Treaty thing is a ruse of sorts RR6. Likely to be way taken over by events anyhow.
            Goldmann advising shorting on the Dax on Sunday, so that means they’ve already done it. Deutsche Bank ‘doth protest too much’ : says it won’t need capital as it tries to offload some asset portfolios to an already overcrowded market. That old chestnut. If thery cry help before year end; I win a fiver.
            Lot of Irish money being deposited in German Banks now….all very surreal…

          • Dorothy Jones

   add to the fiver I just won on Commerzbank

  25. Garry

    Personally, I like the German attitude to money, and understand why they are so reluctant to sign a bunch of blank cheques and leave them in downtown Athens, Dublin, Rome, Lisbon, Madrid, Paris etc. Particularly when those who are demanding it are also saying “Well ye were stupid to hand over blank cheques to our banks over the last 10 years, take your losses”

    Just ask yourself one question “Would you invest in a Greek bond?” If not, why are you asking someone else to….

    Anyways, I found myself in Frankfurt airport Friday waiting for a flight…

    Obviously, this gives me a unique insight into the German psyche and makes me the expert on what our continental friends are thinking.

    While sitting in McDonalds in the airport, I happened to glance at the TV, which was on some kind of news channel… I dont speak a word of German but saw Merkel looking serious, a group photocall with all the leaders, Enda looking to squeeze in… and then it cut to a slide with 3 or 4 bullet points

    The first point was German for “automatic sanctions”, i couldnt be sure what the others were… but the overall tone was clear

    Anyways, the point of this little essay is to say I was suprised when I got back to Dublin to discover a totally different summit had taken place…. oddly enough with people that looked similar… but definitely the outcome was different… Make of that what you will…

  26. Colin

    Yes David, your analysis is perfectly rational and logical. From my own perspective, I have been unemployed for two years prior to about one month ago. I had some savings, not much, but together with some redundancy money and cutting out needless expenses like buying coffees and take-aways, I managed throughout that two year period. I did use my credit card to finance things I felt I needed to help my job search. I travelled abroad looking for work, I bought a new suit, enrolled in a few courses, and lo and behold I found employment again. So, now I’m earning, I can pay back nice chunks of credit card debt that I racked up in those two years. Its perfectly logical and rational thing to do. And I’m not going to have an extravagant Christmas.

    My childhood Christmases always fell short presents-wise of my peers, I never got a new bike, no computer game console, no gadgets everyone else seemed entitled to, no fancy toys. I got board games alright and ones I never asked for. Looking back it was austere, but it taught me how shallow the herd was, valuable lessons learned. I don’t understand why every child in Ireland has to have what he/she wants for Christmas. All these do-gooders trying to make ordinary people who are struggling feel guilty, need to get a life.

    • Colin

      Delighted to hear about your new job. Well done. I have enjoyed your contributions over the last few years, so brilliant news.


      • Colin

        Its been a pleasure and an education reading and learning from you and many of the other contributors, even those I do not agree with.

    • Adam Byrne

      I was going to say the same thing myself Colin but David beat me to it.

      Best of luck in the new job (London, I believe?) and I hope you get back home to Limerick for Christmas if that is what you wish for.

      Would you mind sharing what you are working at?

      • Colin

        Hi Adam,

        Thanks for the best wishes.

        I’m a civil engineer, so not much hope of work in Ireland. I’m working on a new building in the city of London, very close to the Bank of England. It’s due for completion in 2014, and it has already got a nickname, the ‘walkie talkie’ because it gets bigger the higher it rises, which is unconventional. Its official name is 20 Fenchurch Street. Irish contractor PC Harrington are on site now managing the slipform construction of the central concrete core. Its a 24hrs operation now, and I’m working nights now. I enjoy the work, and like London a lot, but also looking forward to going home to Limerick for Christmas.

        • Adam Byrne

          Fascinating, you must be enjoying the challenge and the feeling of being employed.

          I’ve had a look at this page, they even have an artist’s impression:

          Best of luck,


          • Colin

            Yeah, its interesting work, and there’s a great atmosphere at work. Being employed makes a huge difference, that’s why I’ve argued here for unemployment to be made the primary issue in Ireland. Ireland needs to improve its infrastructure further. Cork to Limerick road for starters is embarrassingly substandard.

            Memo to Enda; Start creating jobs now!

    • CitizenWhy


      As for childhood Christmases my mother would give us a little money to buy something practical to wrap and put under the tree (obtained near midnight Christmas at a rock bottom price or free). lol. Yet she was capable of hosting a wonderful Christmas with neighbors coming in, tales, jokes, wacky dances, poems recited in a ridiculous fashion, fun. In fact I thought Christmas was about visiting neighbors and not about presents.

      I was the youngest. When the brothers and sister got jobs they were thrilled with the idea of buying me something for Christmas. When asked what I wanted I honestly answered nothing. That’s because a group of friends and I would decide on what we wanted, save the money that came our way, and buy things ourselves. We really enjoyed the toys (mostly for building things), sports stuff, and items we got for our odd little projects for the year. And we shared our things with others and often gave them to other kids when we moved on to something else. We spent most of our time exploring the city by subway, going on adventures, having the kids on the whole block reenact movies, playing a wide variety of street games, playing in the back yards, playing outdoors. We were what you might call upper poor but we had an incredibly rich block and neighborhood culture that included art, music, poetry, song, and drama. The adults were usually amused by our antics but sometimes, for good reason, upset or outraged.

      Parents weren’t for presents. They were just good people to have around. Firm, fair, and fun.

      Most of my very prosperous relatives now give only one present at Christmas. Other presents are allowed to be given one day at a time during the twelve days of Christmas, but not every day. To avoid excess, some presents are put away (still wrapped) for opening later in the year.

      I thought what we were doing was an Irish customary way to celebrate Christmas. That’s how naive you can be when you are young.

      • Colin

        Thanks Georg. I’ll always make time to read your posts.

        • redriversix

          Best of luck Colin.

          Worked in London years ago for a company called NORWEST HOLST,not sure if that’s the right spelling.

          Enjoyed your blog’s [sometimes] !!!!

          Enjoy the City !



          • Adam Byrne

            That’s funny, I worked for Norwest Holst in the Isle of Man for 6 months at the age of 17 in 1989 as a ‘chain lad’ – assistant to the site engineer; holding up the staff; hammering wooden stakes into frozen ground in sub-zero temperatures. Character building I tell you!

            Wonder if Norwest Holst are still going?

    • Dorothy Jones

      Congratulations Colin; great spirit!

    • Deco


      Best of luck in your new job. And best of luck as you master the learning curve that is involved. It is important to manage your energy as well as your time, and your concentration to succeed at work. Positive news, and you deserve it !!

  27. John Sullivan


    As a long time supporter of your views it’s difficult to say but it’s easy to sit on the sideline and comment on how bad our various governments have done, even when taking your advise as the last FF gov did. Honestly, you never had a better chance to make a real change than at the last election, yet you sat on the sidelines and let other Independants put their country before personal fame. It’s the Donelly’s and Ross’ of this country that have put themselves before the people that we should be listening to. I would never aim to speak for the majority of posters here but I feel the only true voice you should have should be made from the Dail chamber to the nation and not on your superb blog

    • Colin

      Every citizen has the right not to stand for election, including you. The government did not take David’s advice, and certainly didn’t pay David, so get your facts right before you become emotional about political representation.

    • H John,

      I am sorry to disappoint you but politics really isn’t for me. I don’t have the tempreament at all.

      The last FF govt did not take my advice, they took an idea which has been successful in countries around the world – in fact one third of all banking crises according to the IMF used bank gaurantees – and turned it into their own monster and then tried to smear me when their game didn’t come off. They implemented and stuck with it even when it was apparent they’d been lied to. Indeed, the original idea was to be temporary, to stop capital flight and then to deal with the creditors in turn.

      I thought about politics long and hard and realized that I would disappoint too many people.


      • Adam Byrne

        I think you were dead right not to get sucked into the impotent Dail, with all the charlatans therein.

      • bonbon

        I can well understand that, but most who can see the disaster clearly, and what to do about it shy away from the big fight. Result, well, the bankster’s servants occupy the seats.

        But, we just elected a President, a thinker! Who could have foreseen that the corrupt, greedy, grovelling Tigers could manage that? SF is part of this.

        As this crisis hits, really crashes, people will be capable of thinking thoughts and doing things they themselves simply do not believe. That’s what is important.
        Think about politics in that soon-to-come time.

    • Deco

      Before the Minister for Finance, Brian Lenihan, asked David for help, Minister Lenihan was reading Alan Greenspan’s book. And he was the finance expert in “the drinks cabinet”. The politicians in our current era are not into solving the problem. They are interested in deploying themselves in such a way as pleases the vested interests.
      If the goverment did the intelligent thing, they would have offended elements in our society who are very good at hitting back via the media – like IBEC, and ICTU. And that would be the end of that.

      The moral of the story – run your our affairs intelligently, and do not be led astray by the herd, do not be influenced by the media (whose modus operandi is to take money out of your pocket and get it to “our advertising sponsors”) and do not expect the state to keep it’s side of a deal to ordinary people. (Though, it goes out of it’s way to please the rich).

  28. Peter Atkinson

    All the writings and analysis are now futile as we enter a Europe where the one outweighs the many.The Germans Federalists are calling the shots and they are not listening to anyone outside their borders.The French are like a mouse to the Germans.Sooner or later when they tire of pretending to be its friend, they will flick them up in the air, take them head first and squeeze the life out of them.

    Sooner or later this party was bound to end.From the days of Regional Funds and Structural Funds cheap or free money is no longer.We have the roads and the ports built now and to all intents and purposes we are on our own.

    We had the golden 10 years and in hindsight if we had known what was coming down the line any houseowner during this period would have off loaded their house, squirreled away the cash and rented a home or, even better, moved to Germany and rented there, banking their stash.Well funny enough we did but we chose not to believe the people who preached “the end is nigh” just like nobody ever believes the guy carrying the sandwich board.He’s always an extra in the film with a walk on part but nobody ever remembers him.

    Forget about fair from here on in.Its kill or be killed.Its going to get a lot meaner out there folks.All we can hope for is a little bit of humanity between each other in a week where the Archbishop has stated that he wished that the lapsed Catholics who use the Church for trophy days would hand in their notice so to speak.

    Just when people who are down on their luck the Catholic Church would like to put the boot in too.

    Bring it on.Batten down the hatches.The storm is blowing hard,but like all storms it will pass eventually and maybe the skies will become clearer.Just because you can’t see the sun behind the clouds it doesn’t mean the sun’s not shining.

  29. flowerofthemountain

    ‘What Anglo-Saxon economists need to understand is that the Germans and the ECB really, really don’t share our worldview; they really do believe that austerity is all you need. And all indications are that they will cling to that belief, even as the euro falls apart – an event they will insist was caused by the fecklessness of the debtors. Given a choice between saving Europe and remaining righteous, they’ll choose the latter.’

    Krugman is ignoring the complete picture, which is of a German schizophrenia, a “do as I say, not as I do” hypocrisy, which needs to be kept firmly in focus.

    Germany allowed its’ banks to gamble pension funds in the derivative casinos of Canary Wharf/Dwarf whilst pontificating against ‘Anglo-Saxon capitalism’. Ireland was lucky to unload that bomb just in time:

    Balancing this: ‘Ireland Inc’ gambled on winning the Globalisation / Financialisation Lottery. And lost.

    ‘Ireland’ as a Sovereign Nation is an irrelevance to Merkozy. All that matters is how much they can limit the losses to their banking systems / corporate overlords. They are being sober, sensible and strategic. Ruthless.

    I’m not clear what ‘Ireland’ is doing/planning. FF are now called FG, etc.

    Ireland has massive debts to not only Merkozy but also to the UK banking system. It has ‘decided’ to side with France and Germany, even though it is more dependent on trade with the UK than with the Eurozone. The UK cannot afford a Tobin Tax just as Ireland cannot afford a level playing field for corporation tax.

    Of course, the UK is dependent on trade with the Eurozone to avoid oblivion and ensure that Ireland can continue to repay it’s debts to the UK via the IMF or ‘special bilateral loan’…..

    This is such a mess. I can’t see how it ends happily for anyone involved.

    • flowerofthemountain

      correction: Krugman hasn’t ‘ignored’ this schizoid Merkozy character, just doesn’t emphasise it in this brief blog post. regards

    • bonbon

      Excellent link on Depfa. And people want to hand control over to such banksters?

      It is childishly silly to insist “our corrupt” are worse than “yours”.

      The devil you know is better than the Devil you don’t!

  30. CitizenWhy

    A rich American explains that the rich do not create jobs, and how jobs are created. By implication this explanation also would apply to the myth of austerity as the sole way to fix an economy.

  31. Paris75013

    I don’t understand why day in day out we have to talk continuously about austerity in Ireland, and feel sorry for Irish people. In France, it’s been austerity for many years now. Look at the facts. Half of French people have an income equivalent to €1000 per month! And a 60m2 apartment in Paris in an average area will cost you half a million Euros! I remember during the boom some Irish people telling me that they felt sorry for me living in a shoe box in Paris (yes, just a 60m2 flat!). I don’t find it normal that a primary school vice principal in Ireland is on roughly €65.000 a year (2 lovely paychecks every month), and a teacher in my son’s primary school here is in Paris is on about €1500 per month. Why should the rest of us subsidsize the public sector in Ireland? As a Irish person in Paris, I disagree with the corporate tax rate in Ireland. It would be fairer if each EU country had the same corporate rate. Some of the international companies in Ireland might even come and set up here in France, and I know plenty of unemployed and very qualified people here who would be delighted to get a job.

    • Paris 75013

      Nice address btw:)

      Thanks for the comment. I think there are many Irish people living abroad who feel the same way. Please keep comparissons coming as they put things into perspective.

      Best and welcome to the site,


    • coldblow

      Ok, but don’t forget that the cost of living is much higher in Ireland. And also, I understand, the size of the average Irish house is quite a long way below most European countries (according to Finfacts).

      • MA

        David/Paris 75013,

        You are right on the mark. Most continental countries (I live in one) have much higher taxation than Ireland (even now) so people have a lower paycheck…but they get better health care etc!

        Looking at the EU27 AIC (an alternative measure to GDP which incorporates health eductaion etc I understand), Ireland is at the same level as Italy and Greece…so we’re not really richer than the european average, it’s just that we less tax and expect EU service levels….and that public servants in Ireland do better than elsewhere.

        David – I have one question for you – if ireland votes no to the new treaty and we are then politely asked to leave the euro, doesn’t this mean that mortgage payments will go through the roof? This will affect alot of young people. A bit of a conundrum?

        Paris 75013 – don’t think Paris is a good comparison with the rest of the continent (most EU property is relatively cheap, even if the local property taxes are not)…and where’s the 13th (republique?, not that posh david)

  32. gizzy

    We are a great race for an island of nation of 4 million people we are now even responsible for French woes. We almost single handedly brought down the European banking system aswell and must now be punished for it.

    No we didn’t and we aren’t. We made two mistakes in Ireland or our politicians did. We let our Banks fill thrir boots with property devepopment and then we used windfall property income as an excuse to burden ourselves for the future with benchmarking.

    For contributors here to try and portray the current economic problem as being caused by consumer madness is off the wall. People may have overspent but not enough to even be a main contributor to this. Excluding mortages our levels of personal borrowing are low and our behaviour with credit cards even during the good times was conservative.

    If this was an economic dip caused by consumer overspend then consumer austerity probably would solve it as suggesed in contributions. But it is not it is a recession/depression caused by other factors Financial Institution Recklessness, Market Greed and the failure almost all governments to regulate the above behaviours and the failure of some goverments to manage their budgets and I would put the causes in that order. Consumer overspend and behaviour does not even make my list.

    So if you believe austerity will solve this problem please reply with numbers to counter David’s numbers to explain how.

    Also if one man gives up his morning coffee to save a few bob that is ok. If thousand do it, it is closed down coffee shops, more people out of work depending on social welfare. So we then give up fruit so the fruit shop closes and on and on. that is what the level of austerity we are being asked to take will do.

    If the current economic crisis only means to you the loss of your latte well done for others it is lost jobs,lost homes and tears at the airport.

  33. Malcolm McClure

    We hear various estimates of our current national indebtedness including Eireannach’s recent €328 billion.

    Does anyone know what was the sum in our national reserves that was contributed to the ECB at the formation of the Euro?

  34. On a side note:

    Today is the CERN press conference, here the time table:

  35. Banjaxed@Julia

    Recently this year young pupils in Primary Schools have been learning about credit cards and minding their money and basic household budgeting .During one of these sessions the local priest Fr. O’ Connor arrives and gives a talk on religion.

    During the class he spoke of that God is everywhere .A disgruntled pupil at the back of the class rose to ask a question to the priest .He said : is God in Murphys back garden ? He responded : of course HE is .To which the cocky pupil replied : Murphy has no back garden. And everyone laughed .

    The priest looked straight into the cocky pupils eyes and said : HE is in Hell too .The pupil retorted saying : He cannot be in Hell . And the Priest responded : Isn’t HE in Ireland ?

    Then there was silence .

  36. Paris75013

    Hi David,
    Thanks for the welcome. Yes, a lot of Irish people abroad (the forgotten ones, who don’t have a ‘voice’) think the way I do. The room was full at Colm McCarthy’s conference at the Irish college in Paris last week.

    Thanks Eireannach (I appreciate your posts on this website) for clarifying the location of Paris 13th. It’s the ‘nouveau quartier latin’ at Bibliothèque beside Bercy Village.

  37. France

    Has anyone heard of ‘ The F in PIIGS’ ?

    • bonbon

      Quel cochonnerie!

    • Eireannach

      Well you’ll have to add ‘UK’ and ‘B’ for Belgium as well as ‘F’ to the PIIGS.

      The anti-French bias of most commentators on this blogroll is indicative of the extent to which Irish public opinion has been Anglicized.

      How did that happen? I blame too much watching and listening to Sky News, reading British newspapers and journalists, and strangely identifying with the English non-regulated, low tax “business model”, even though it is precisely this business model for the Irish imported from the US and Britain in the 1990s and went on the totally ruin our country.

      The (formerly) Catholic Irish are temporamentally closer to the (formerly) Catholic French than to (formerly) Protestant Empires of Britain and the US, as any Irish person who has lived in France and gotten to know the French can attest.

      • Eireannach

        BTW for a brilliant exposition on how the underlying cultural values of countries should be the basis for their economic models, might I propose “Ireland’s Malaise” by Michael Casey.

        Casey points out than when it comes to the upkeep of our National Parks, tidying the gardens and renovating the interiors of Manor Houses, OPW visitors sites, the whole tourism and hospitality “industry”, the Guiness storehouse, our National Museums and Galleries (all free of charge in Dublin) … in all these related areas, Ireland is truly worldclass.

        Why? Study our underlying cultural values and you’ll see that our culture gives us strenghts in these areas.

        Play to your strengths and your passions – this is Casey’s advise. It’s like wearing an item of clothing that suits us – texture, colour, shape and so on.

        Again, I’m repeating myself now, but the Irish have a national brand mixture of Kerrygold, Baileys, Guinness, Jameson, Crystal, Beleek China, Aran knitwear, romantic old ruins from Dún Aengus to Glendalough and the post card image of cosy pubs and cottages with turf fires perfect for fishing and rambling holidays.

        Foreigns can see we are strong in all of this, and we are correspondingly crap, overeager, naive “capitalists” – say, property investors. We treat it like we were winning at the races and buy pints all round when we win – and we go again!! The dopamine and the Guinness start flowing!! It’s truly embarassing.

        We must allow our economic life to grow naturally from the soil of our cultural values. The Celtic Tiger failed because it was imported from Thatcher’s London, in the same way that Irish pubs can be bought in flat-pack-kits from London.

        • How can Dreams Grow against the background of corruption in Irish Banks and pillaging by the Insiders and inept Irish Politicians and No Leadership and in a Crime Lawless society , while we allow ourselves as a national culture to continue to become diluted in a sea of a new cultural diversity and language ? Who are we and what do we become anymore ?

          When we changed our currency we changed everything we once were .When we devalue the new arrivals will change everything that is left .

          • Eireannach

            How many of these bankers have been arrested John?

            If you want to make Ireland a better place, then it would be wiser and easier and more likely to succeed to focus attention and energy on bringing these banksters to justice, rather than wasting time attacking the French or even the Germans.

            Being in the euro is not our main problem. The total lack of “oversight” as its known these days (should be “supervision”) led to predatory lending and borrowing.

            But the public wanted the money! They were delighted when banks were giving them 100% mortgages and the rest of it. They didn’t put much aside for a rainy day, SSIAs notwithstanding. The foolishness was homegrown.

            During the Celtic Tiger we were ‘nouveau riche’. a nice phrase for people who’ve never had money who suddenly have money, and don’t know what to do about it.

            The golden days of Ireland in the punt never existed, because there was always a stupid naivity under the surface ready to wreck everything once it got its hands on some money. That’s what happened – the euro-driven boom simply allowed inherent characteristics and qualities in our culture and society to express themselves.

            We are wiser now…I hope!

            So while you may love the old punt days and regret the Celtic Tiger boom of the early euro years, I suspect that the eurozone will hold together and that’s the reality we’ll all have to adjust to.

            We will live in the United States of Europe and if you want to be ahead of the curve best think about the new opportunities and possibilities this can offer. Every East European worker in Ireland knows what I’m talking about. They just adjust to the new reality. Meanwhile the Tories and their Irish cheerleaders want to go back in a time machine, presumably to before their world empire fell apart in 2007.

          • Deal or No Deal

            We are left to our own intuitions .

  38. ON DEADLOCKS, LIVELOCKS & MURPHY’S LAW: Shut down the markets!

    A deadlock is a situation where nothing progresses due to two or more parties not being able to make a move. You all heard about it with different descriptions before, Catch 22 comes to mind.

    Now, does that remind you to something else? Politicos, banksters and markets perhaps?

    I just finished writing a few pages when suddenly…ZAPP, power cut. Seven cuts in 90 minutes and counting make it impossible to do any computer work.

    Normally that would not be an issue for me, I am well used to the “dirty power” supplied in rural Ireland, hence I run my studio gear and computers over a small army of considerably expensive uninterruptible power supply units, only this time, from the seven units I have in use, the two most important, backing up my Mac Pro, the attached Monitors and Raid hard drive subsystems failed to kick in. That’s Murphy’s Law in a real life situation.

    When I called ESB, I was greeted with a minutes lasting pre recorded message where else in the country the power systems broke down, only my area was not listed yet, so I waited to speak to a real person to report it. Later this afternoon a chap from ESB came down the driveway in his expensive SUV and he explained that they can not find the fault, as it is not local but would be on the main lines and intermittent, so this can go on now for quite some time until they get this sorted out. I was laughing when he said intermittent, and remarked that I would not call the regular winter show of power cuts intermittent but systemic instead. I have yet to experience a single winter in rural Ireland without power cuts. I have a couple of minutes left to write on my laptop instead.

    The global situation in the financial industry equally is not intermittent either, it is systemic.

    x x x x

    A “livelock” is a somewhat special case, and those who studied computer sciences – Coffman Deadlock – are well aware about these special cases that are very common in multiprocessing situations. One of the reasons I prefer to use Macintosh, after 20 years of frequent fixing sessions of ‘Mickeysoft’s’ Registry terror system, is the superior underlying Unix Operating system. Unix has built in deadlock detection mechanisms for example, apart from being a much more mature Operating system per se.

    There are multiple strategies to deal with deadlocks in the computer realm, but they don’t apply in real life.

    Imagine two people in a narrow corridor trying to pass, but permanently stepping sideways in the same direction, going in sync from left to right, they can not progress, this is a typical lifelock situation.

    The same lifelock can be observed in the attempts of the never ending crisis summits, they are stepping sideways together with the banksters, performing their by now regular summit dance of cheating the public, and naturally there is zero progress.

    At the same time, fanatic reactionary forces in the EU are transforming the political landscape, and the cronyism knows now boundaries anymore.

    Theodor Guttenberg, the ex german defense Minister came to this position only by the nepotic ways people are being promoted into ranks, a spineless and incompetent but aristocratic member of the political class. Karl Theodor Maria Nikolaus Johann Jacob Philipp Franz Joseph Sylvester Freiherr von und zu Guttenberg now joins the ranks of the EU commission. He was dismantled from his post as defense minister a few months ago after he was exposed for plagiarism, having falsified his PhD, he just wrote down what others already had written and now is back in town.

    It is a good example for the impotent and nepotic political class that are making up the Institutions in Europe.

    x x x x

    Shutting down the markets is the only way to flush out the system that is infected by legionnaires disease. The years lasting jabber and lies of the politicians and banksters that are deceiving the public are evident. We saw plenty of it presented on the small and the big stage, from ‘we turned the corner’ to the ‘big bazzooka’, they did nothing to sort out the problems.

    Why would they?

    This situation is of great benefit to them, finally they can dismantle democracies and implement their totalitarian wet dreams, using their technocrats and programs, new laws and regulations, protocols and guidelines, establishing institutions that are not accountable to no one and are equipped with unlimited power to confiscate more wealth from citizens and burden them with ever greater private debts of banksters and a financial oligarchy of rich and super rich investors. Their governors will bow to no one, they are above the law, this is the ultimate crime.

    To break up the biggest banks is not an option, it is a necessity, there is no sense in having a Deutsche Bank with a 2.5 trillion portfolio being able to squeeze the lifeblood out of the the real economy at will. There is no sense in the continuous bailing out of zombie banks and guaranteeing the investors, the gamblers profits by shifting the losses of a handful of people and banks to the society at large.

    Letting these banks fail, and shutting down the markets for a period of time to fix the system requires the coordinated political will and some balls. It has not happened, but instead you are continuously bombarded with further lies and propaganda.

    Whether in Ireland or in the EU, the political class has lost all their legitimacy. They act against their own citizens, it could bot be more obvious.

    Implementing social banking and social finance requires to shut down this mass and start from scratch. The losers will be bankers and private gamblers, so what? The winners will be society at large, take your pick.

    Problem is, you won’t be asked to make that choice, but you will be asked to pay insane taxes on property that you own and already paid stamp duty on, water charges, stealth taxes and more, while at the same time hospitals are closing and the IMF Mafia in conjunction with the unelected people of the European Institutions continue to tighten the grip, and implementing structures and laws that will allow them to shift losses whenever they see fit.
    You will wake up one morning and find yourself living in a totalitarian system of technocrats, your rights dismantled, your privacy gone, freedom will be nothing but a distant memory, and your yet unborn children will already be indebted.

    It is crystal clear what is happening here on the big stage. Bankster together with politicos and their economic consultants are in cahoots and they will continue this coup until the take over is complete.

    • redriversix

      I agree Georg 100 %

      That is exactly how I feel things are going,however you seem to write better than me.

      I still think, given your location that you are really Jason Bourne…!!!!!

    • bonbon

      Personally I prfer RCU mutexes and spinlocks. I had great damned fun with these recently….

    • 33square

      a totalitarian technocracy with digital currency and a UUID for every man woman and child? sounds beastly ;)

  39. caoimhin3210

    Look deeper into the Irish Bank guarantee and the gangsters that signed the 99% of Irish people to a life of misery for the next 20 or maybe more years, were first and foremost protecting there 1% sponsors here in good old Ireland were the bullshit and lies flow like an Irish river in winter. The goons never taught of the consequences from Europe and the rest of the financial world and the power they can yelled.
    So here we are on the eve of 2012 and who do we have representing us, another bunch of Pension grabbing liars and bull-shiters. They got a mandate from the Irish people and they reengaged on that mandate. Life is extremely difficult for most decent Irish people, including myself, but the only wee-bit of comfort [in my mind] I have is that I was not conned by there charade and did not vote them into power. On the other hand it’s sad and mind-boggling that so many Irish were conned yet again, and the rest of us sods have to live with the consequences. Please for all our well-being and sanity please think hard and look into there eyes, wallet’s and heart before you vote next time.

    • 33square

      the one who sold us all out wondered why economic naysayers didn’t just commit suicide. he exited stage left before the faeces hit the fan (due to his exceptional psychic abilities) and now lectures with the Washington Speakers Bureau.

      i can think of a certain outcome for this character that would provide the ultimate in ironic karmic fulfillment…

  40. Yanis Varoufakis is one of the few economists around that are not to bedescribed as Yes men. I follow his writings since more than two years now.

    Refereshing to sse Fintan offering some form of support to him:

  41. gizzy

    @Eireannach You constantly bring this back to which side are peple on when it is the game itself that is wrong. Taking sides now until the rules are changed will make little difference. Yes as a nation we have made mistakes and are bad at government but have the Germans or French a good enough track record for us to follow without interrogation.

  42. Paris75013

    The Germans and the French have always been the major decision-makers in Europe. Some Irish people seem to have realized this just recently. Let’s face it, Ireland is a small country. It’s easy to question the track record for the Germans and the French. We all know our history. From my experience living in France, I can at least say that most things are FAIR. Children’s allowance is means tested, everyone is entitled to health coverage …

    • bonbon

      This is dynamite. Huge.

        • bonbon

          An uninterrupted bailout from Bush to Obama. And how much went to the Euro, I do not yet know. And since the FED is shredding, there must be more.

          Very hard to grasp the sheer scale of this, but $29 trillion is still nowhere near the 4 – 14 quadrillion off-balance-sheet liabilities. The slightest unwinding or deleveraging can destroy a country. The entire thing will destroy the whole financial system unless quarantined. The USA itself is in mortal danger.

          • 33square

            and what will take the place of “the whole financial system”?
            is cash/cheque too much of a burden for banks to deal with?
            is it too costly to trace its source, count, print, distribute, secure?
            what might solve these issues?


            what events might precipitate a move to such a currency?
            does such a currency already exist?
            who controls it?
            from what country?
            do mobile phones have anything to do with this?
            do SIM cards uniquely identify their user?
            do they provide security via a PIN?
            might it be possible to use a phone in conjunction with a distributed digital currency to negate the need for a traditional bank?
            what role would phone companies/service providers play?
            can phones read barcodes?
            can phones read RFID chips?
            what is NFC?
            might it be possible to walk out of a shop carrying your products without having to queue at a till?
            what consequences do such transactions have for an economy?

            is true political dissent possible in a society that uses a digital currency?

            might it be that the only ones capable of political dissent will be those with access to cryptography good enough to withstand decryption by the government for a reasonable period of time?

            am i a paranoid android or is the above feasible?

          • bonbon

            The RFID technology and payment by waving the handy (mobile) are all running now. The PDA just needs an extra chip already patented, and a secure key management.
            99% of all financial transactions are already digital. Millisecond trading is run-of-the-mill and Bush’s Plunge Protection Team is there to stop LTCM’s happening by shutting channels.

            That is not the real problem. 99% of these so-called flows would not be allowed under Glass-Steagall. Then ordinary purchases would function.

            By implosion of finance I mean sheer chaos. Normal commercial transaction would freeze. Nobody, not even the bad guys want this. Nothing effective has been done since LTCM – the Dodd-Frank bill and Volker Rule are exposed as leaving the door open. Glass-Steagall was repealed in 1999 to do this. There could be a LTCM at any moment. The Plunge Team clearly did not stop Lehman, BearStearns, etc..

          • 33square

            they’re gonna put it in SIM cards…

      • You know, in my personal opinion THIS is the level of information and discussion we would need here, instead of self serving re-heated pizzaz from the past 10 years. Then again, only my opinion.

  43. gizzy

    Sorry Paris this is not about comparing and France which is irrelvant but about us all questioing governmen motives amd expecting them to answer to citizens. Are u happy to follow Sarkozy without question

  44. I don’t disagree Adam, but its also true of government as it is for individuals. in Ireland taxes were slashed and developers and banks were given an unrestricted licence to print money. In effect the state promised beyond its ability to deliver economically, acting in the irresponsible manner you describe. All else flowed from that. Wherever you go, people are people, boom bubble or bust.

  45. A Bad Deal For The Men of Ireland and a Bad Deal To Find Work

    I propose that all women should be made redundant and allow more men work again to restore the integrity of the Nation once more .

    As it is said , Adam was very happy until Eve arrived .

  46. David, “It looks like Germany” is an insightful perspective, from my point of view with a few months experience living here in Berlin. This is very much (but certainly not universally!) a rules based society. There is a high value placed on order. I have listened to how the debate is framed here in the media and in private and the discussion always ends up with a commentary about the Greek system’s disfunctionality. This is of course a complete red herring, rather like the silly comments about Ireland’s corporation tax rate. Its as though people have convinced themselves that if only the Greeks would do things ‘our way’ they would be much better off. Rather than being outwardly anti-Greek, the attitude seems to be paternalistic.

    Of course the latest deal is another piece of theater, nobody who’s opinion counts seems to believe it, but it appears to have a fair bit of popular appeal. Rational argument is as lacking in the popular debate here, as it is in Ireland.

    • bonbon

      What most Germans and Irish simply do not see is the population density difference. The Ruhr and Holland are some of the highest densities of industrial activity world-wide (Berlin used to be industrial until the RedGreen turned it into an Avatar Pandora).
      Ireland, never having recovered from the Famine-Genocide of 1846, simply has no experience with the concentration of rules needed. Tokyo, in a highly industrial society, is the same.

      The best cure for the dislocation after splitting the EU will be to bring Ireland up to Ruhr density with the latest technology – no need to burn coal!
      Fill Connemara after Cromwell cleared it!
      The rules-book will get more complicated – sure.

      The rules book for banks will get more simplified to offset this chore!! Simple rules to put banksters in jail, and complex rules for intensive industry.

      That’s the deal!

    • coldblow

      Does anyone remember the young Norwegian economist who posted here a few times in the past? She once admitted to feeling ‘a strange kind of joy” when following rules and regulations.

      I visited Trier in Germany nearly 2 years ago and it was incredibly irritating walking into town from our hotel. It was only 100 yards but you had to wait for ages at about three crossings for the little red man to change colour. And the road empty. And this is ‘logical’? Not quite the word that sprang to my mind…

  47. Paris75013

    I don’t agree when you say that this is just about questioning government motives amd expecting them to answer to citizens. This is called only looking at what has happened in the past. The boom and the getting banks away with it, is all part of the past. What is more important now is looking at what will happen from here on. You mentioned Sarkozy. If you read the newspapers (and I don’t mean just the Anglosaxon newspapers), you would know that Sarkozy won’t be around for very much longer (yes, in case you didn’t know, there will be elections next year in France).

    • bonbon

      And Sarkoleon convinced Merkel to hold the new Treaty in March after the election in France.
      I would call that foreign interference in a domestic election.

    • Paris75013

      John Allen,
      Your comment “all women should be made redundant”, I’m not really sure what planet you’re living on. You should read the article in the Irish Times which states that in Ireland
      “Research now shows that among younger couples, the woman is increasingly better educated and more likely to be a higher earner than the man.”

      Change can be a great thing, can’t it? The same goes for the political and economic environment we live in.

      • You are exactly correct , it is a comment .Had it been anything else or that I was on another planet , I promise you Dorothy Jones would have made it known in no uncertain terms.

        Nevertheless , some cultures embrace it and by implication do increase the density of male employment.This was practiced in Ireland during the 50′s 60′s and 70′s .

        • I love France and in 1980s use to have a practice in ‘cours de vincennes , then in Nation and followed up in Le Defense that has since passed on .Now I feel I live in Nice and work in Ireland.As you know philosophers are prized there and accountants and economists are not.It seems to maker perfect sense to me.

        • Dorothy Jones

          Ah John!!!

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