January 30, 2012

Who's the mad borrower now?

Posted in Sunday Business Post · 153 comments ·

Water into wine? I think not.

Rather than talk about who went ‘mad borrowing’ last week, let’s focus on why it happened, because I want to explain what is happening right now in the financial markets. I would also like to make the point that central banks are becoming – yet again – instruments of leverage, rather than guardians of prudence. This looks good now, but will cause more problems in the years ahead.

In the past few weeks, the world’s central banks, led by the Fed and the ECB, have opened the floodgates with cheap money. This is driving up everything from European bond markets to commodities and stocks that, last year, people wouldn’t touch with a barge pole.

The reason for the mad borrowing is that money is now cheaper than ever. In our boom, the maddest borrower wasn’t the Irish citizen, but the Irish banking system. In the case of the two biggest banks, they doubled their borrowing in three years. It took Bank of Ireland over 100 years to borrow €60 billion (from depositors); it doubled that in three years (by borrowing from German, French and British banks).

Why did our banks do this? Because they could, because they were allowed to and because they thought they could make a fortune doing it.

When money is made available cheaply, it is borrowed. This sets off an endemically short-term cycle, where the game is to buy whatever asset is moving upwards sharply. The trick is to sell before everyone else.

When the rate of interest is forced down to excessively low levels, the incentive to save disappears because the returns to savings are minimal and the incentive to borrow increases dramatically. We are
seeing this carry-on now in global markets.

Politically, the result of all this will boost significantly Barack Obama’s chances of being re-elected as US president. Research in the US shows that one of the key determinants for presidents getting re-elected is the direction of the economy in the six months leading up to election day. For example, Ronald Reagan won re-election in November 1984 when unemployment was at 7.4 per cent. This was the same rate as when he was elected the first time four years earlier.

Unemployment had been much higher during his term, but he wasn’t punished for that. What counted was the economy on the day. Obama might be similarly lucky if the economy moves in the right direction, at the right time.

Of course, the president is being helped enormously by the Fed’s promise last Wednesday to keep interest rates below the rate of inflation for the next few years. Interest rates below inflation means that people in America will be punished for saving. They will lose money if they save, in real terms. Their savings will be eroded by higher prices. Taking their cue from the Federal Reserve, global funds are borrowing and placing bets with the borrowed money on the world’s stock markets.

The same is happening in Europe. In mid-December, the ECB, under pressure from Nicolas Sarkozy, decided to fund the banks of Europe and give them the wherewithal to buy government bonds. The ECB is making €450 billion available to the banks at 1 per cent. With this they are buying bonds yielding 5 per cent or higher. This is bringing down yields.

This is what the NTMA was playing at last Wednesday. The NTMA was using money borrowed by the bust Irish banks at 1 per cent from the ECB to lend on to the insolvent Irish government. The manoeuvre gives a “carry trade” of a free 5 per cent to the banks. This is the financial equivalent of turning water into wine. But, unlike in Cana, someone has to pick up the bar bill.

You see, this is great for the banks because they can rebuild their balance sheets with the free money. But when you follow the money, you see who pays. You do, of course, yet again.

Let’s follow the money and explain the cash-for-trash scheme in Europe. The banks have managed to give the ECB dreadful collateral and, in return, the ECB gives them real money for 1 per cent, which they then lend to the government at 6 per cent. But someone has to pay the money back. And that is you.

So not only did the banks destroy a generation by borrowing and lending hand over fist, but they have their claws in the next generation by loan-sharking to the government which will use this money to pay today’s bills while giving the tab to the next generation.

Let’s see if all this is sustainable.

First off, are European countries more creditworthy this week than they were last week? Without growth, the answer must be no.

But even more pressing is whether this immediate growth in the western world can inflate another bubble, even for a short while, at a time when it is supposed to be deleveraging (paying money back) not leveraging (borrowing yet more).

Last week, there was a lot of talk about deleveraging. McKinsey Global came out with a widely cited report on deleveraging. It’s well worth a gander, if only for the chart on Ireland’s position.

In the report, the point is made that all western countries will have to go through a prolonged period of paying back debt. McKinsey believes that we are only at the start of this process. But, in fact,
if you examine the data, we have not even got there yet.

Look at the chart. It shows the gross government debt of the major OECD countries. As you can see, the government debts of the western countries are rising rapidly. This is because the private sector pays money back and saves – which it has been doing since the crash – as the government has been taking up the slack. If the governments were not borrowing, the collapse in the economies would be even greater.
(2011-2014 OECD forecast)

So the process of deleveraging is only just beginning.

This means that the short-term boost to stocks and bonds can only be just that. These market rallies, which are real and can allow people to make money if you are clever and get your timing right, should be treated carefully.

As the Canadian economist David Rosenberg – one of the best in the business – stated: “These rallies should be rented, not owned.” Succinct, don’t you think?

Longer term, this age of deleveraging will come to dominate our world. When the magic spell of bubble stock and bond rallies wears off again, the underlying position of too much debt and not enough growth will reassert itself.

Yes, the water was turned into wine for one night only. Next day, we are left with a hangover. No miracle.

Debt to GDP Ratio

  1. DMcW:
    This means that the short-term boost to stocks and bonds can only be just that. These market rallies, which are real and can allow people to make money if you are clever and get your timing right, should be treated carefully….

    I call them Idiot Rallies, and by all means a chart is required to show the tiny percentage of the population in Ireland and OECD who can and who are making money in this casino of bullshitters and gangsters with no ethics.

    Perhaps, then it becomes more clear what small quantitative fraction of society is responsible.

    The people who are suffering by the policies forced upon them, the majority, they certainly have no opportunities at all to gain profits there.

    • I agree with you Georg and I think it is impotant to explain to people why things are happening rather than just what is happening.

      Best, David

      • As an indictor, and according to some DAI data (Deutsches Aktien Institut) [url]http://www.dai.de/internet/dai/dai-2-0.nsf/dai_startup_e.htm[/url], in Germany not more than round about 3%-4% of the population have a vested interest in stocks. Adding bonds, the total increases to around 7%-9%.

        General trend is declining, in Q4 2010 alone 0.6 million left the market behind.

        I guess one could obtain similar Irish and/or OECD data to create that chart on purpose to highlight it to the public.

        I would guess the overall picture is pretty similar to the German data. It is only a fraction of the population that has a) the means, b) the knowledge and c) the peer group contacts to make that really work for them. “Cleverness” is only one ingredient required in any case.

        • bonbon

          I’ll bet that in Germany there are far fewer stock believers after the Deutsche-Telekom IPO.
          One would think that after the Eircom fiasco, the same would be true in Eire.

          The house Bubbly wine caused a much worse hangover!

          • pauline

            Irish people are more worried about their cash at the moment rather than any extras ;0 Stocks have already been wiped out. If the meagre savings they have isn’t protected they have nothing.

      • Malcolm McClure

        David: I think you may have got hold of the wrong end of the “why” stick by addressing an effect of QE rather than its rationale.

        As you point out, the market is being flooded with cheap money. This has the effect of pushing up the prices of stocks and bonds and pushing their yields down. Everyone at the party is making whoopee, so few pause to wonder if there is a global pattern in all this.

        I think there is a pattern in the way exchange rate fluctuation is being balanced between the major currencies, and that this has been achieved by agreement between the top level Central Banks.

        Their objective (the real why) is to mask the inevitable inflation caused by QE through deliberate, no-holds-barred manipulation of exchange rates. It is though this mechanism that QE enters the market and its purpose is to prevent any of the top half dozen currencies becoming excessively dominant, or weakened sufficiently to generate a “run”.

        Trillions are available to achieve these ends. The purpose is to keep our old, outmoded capitalist show on the road at all costs.

        • Grey Fox

          Anybody got number of the ECB lending dept, I will gladly take 10 billion @ 1% unsercured to lend on to the Government at 6% guaranteed, I am sure I can carve off a couple of hundred million somewhere along the line Pour Moi. and sure I won’t have to pay any off it back ‘cos joe public will do it for me, this is the life….. maybe we could open up a certain courtyard in Kilmainham, doesn’t seem fair to leave it dormant when we have so many worthy candidates and seeing as it is a museum it is already set up to charge the public to get in.

        • bonbon

          They are desperate to mask hyperinflation, at least until they force Berlin’s resistance off. Then they will not care and go into a mad Weimar 2.

          The motive has nothing to do with capitalism or economics, it is a pure reflex to save an outmoded financial system even if it kills banks and the economy. It is an irrational, non-thinking, programmed-in automatism that reason cannot change. Which is why the same recipe always appears – they have no creativity whatsoever. Carry-trades as a solution? As such it is entirely predictable.

          It is like a warm-blooded mouse trying to tell a cold-blooded T-Rex it is finished, at the KT mass-extinction. The T-Rex had no inkling of why it was doomed.

          But doomed it was.

    • redriversix

      Hi Georg R.

      Max Keiser talks about these “idiot Rallies” in episode 242.fed lends money to Europe at almost zero percent,IMF / ECB lends out cheap money which,to simplify can rally markets and commodities.

      Its all false , of course

    • pauline

      The question is how do we get our population out of this destructive cycle? It was the same during the Fake Tiger.. the first part of the Tiger was real till 2001 then we went the wrong direction rather than building an indigenous industry and use the wealth for that. After that people were telling me I was mad because it didn’t feel real and it obviously wasn’t.. To be really prosperous we need to create real things whether physical or IP… we can’t rely on the government so we need to succeed despite them then perhaps we can deal from a position of strength with the problems left to us. We need our bank, our investment funds to create real wealth… I believe that we’re flexible enough to use the disapora to rebuild so everyone who wants to can go home.. but we need a structure outside government….

  2. Realist

    David, nice article as usual.

    Removal of money printing press from the state (government) hands and influence through the central banks is a must.
    The ability for banks to (ab)use system in according to the law (fractionl-reserve with central banking) and even expand (non)real paper (fiat) money through credit expansion must stop.
    Central banks play with interest rate leading to the credit expansion must stop.
    Bailing out (pouring more wealth) dodgy banks, governments and companies should stop.

    Printing of money is just benefiting first users, banks and governments and their sponsored companies, while last in chain suffer from the so called inflation tax.

  3. bonbon

    Draghi is doing stealth QE. Berlin will react to this.
    Meanwhile the coup against President Wulff, meaning Merkel, to break resistance by Germany, goes ahead.

    The ECB is printing money, not any state – the EU is not a state. An independent central bank, like the FED, both flooding the banks totally out of control.

    No government benefits from this mad new round yet again.

    • bonbon

      In fact Gov’t get both the hangover and the wine bill and pass it onto their voters!

      • Mark Walsh

        bonbon…therein lies the next mega bubble, US Treasuries and worldwide sovereign debt.

        It continues to amaze me that allegedly smart institutional investors are fleeing to US Treasuries when the Fed has all but declared a policy of dollar debasement to inflate away their debt and to assist US exports.

        It’s one of those close your eyes, shake your head moments, WTF moments….. it beggars belief.

        As Jim Rickards points out, in his now best selling book ‘Currency Wars’, it’s a three horse race between the dollar, euro and yuan in a race to the bottom to see which currency will first implode.

        • bonbon

          I begin to think this is a reaction to the FED, an old story. Should one abolish the FED, go back to the Treasury and a 4th National Bank?

          Could this be on the table? I think it is inevitable.

          • Mark Walsh

            I’m not sure it’s inevitable as the FED, as you well know, is private. Not so sure the private owners will give up their licence to print money out of fresh air and charge interest on it. If it were me, I wouldn’t. :-)
            That said, should the Treasury ever have lost the sole right to issue & control the money supply? No, never.
            Should they get these sole rights back? An emphatic yes.
            Should the Fed be abolished? Yes, completely. The US has the ways and means to issue & control the money supply via Treasury. There is no need for the Fed to be in existence.
            Remember, it was established by two remaining senators voting in favour of its introduction, Dec 23rd 1913, when the rest of the Senate was gone home for Christmas believing the Senate had closed its session for the holiday period. Talk about cloak and dagger stuff; CJH must have been envious of that stroke. :-)
            A 4th Central Bank? Yes, but under the wing of government. State owned, in fact.

          • Realist

            “Should they get these sole rights back? An emphatic yes.”

            They never give it to anybody. Treasury and the president always had/have their back entrance to the printing press.
            Every war in 20th century was sponsored by printing a lot of money, 1st, 2nd, Vietnam, Korean, every modern financial bubble, ….
            Just look all countries around the world and tell me that their central banks are independant or private.
            You need to live in a dream world to imagine such.

            Having the printing press in government hands is not going to change anything as they still believe printing a lot of money is the way to drive economy out of crisis, while not understanding how any boom coming into the existence.

          • bonbon

            There is evidence the FED is covertly running at least 2 of the TBTF derivative monsters. With a Glass-Steagall cutting right into that mess, the FED’s existence would immediately be a public issue. The 12 are likely totally bankrupt if the off-balance.sheet laundry were aired.

          • Mark Walsh

            Realist, your points about funding wars via money printing is valid.

            “Treasury and the president always had/have their back entrance to the printing press.” – True to a point.

            On June 4, 1963, President John F. Kennedy signed Executive Order No. 11110 that returned to the U.S. government the power to issue currency, without going through the Federal Reserve (US Central Bank). Mr. Kennedy’s order gave the Treasury the power “to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury.” This meant that for every ounce of silver in the U.S. Treasury’s vault, the government could introduce new money into circulation. As a result, more than $4 billion in United States Notes were brought into circulation in $2 and $5 denominations. $10 and $20 United States Notes were never circulated but were being printed by the Treasury Department when Kennedy was assassinated.

            With the stroke of a pen, President Kennedy was on his way to putting the Federal Reserve Bank out of business. If enough of these silver certificats were to come into circulation they would have eliminated the demand for Federal Reserve notes. This is because the silver certificates are backed by silver and the Federal Reserve notes are not backed by anything. After Mr. Kennedy was assassinated just five months later, no more silver certificates were issued. The Executive Order was never repealed by any U.S. President through an Executive Order and is still valid. Why then has no president utilized it? Virtually all of the nearly $6 trillion in debt has been created since 1963, and if a U.S. president had utilized Executive Order 11110 the debt would be nowhere near the current level.

            John F. Kennedy, Executive Order 11110. The American Presidency Project
            “By virtue of the authority vested in me by section 301 of title 3 of the United States Code, it is ordered as follows: The authority vested in the President by paragraph (b) of section 43 of the Act of May 12, 1933, as amended (31 U.S.C. 821 (b)), to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of any outstanding silver certificates, to prescribe the denominations of such silver certificates, and to coin standard silver dollars and subsidiary silver currency for their redemption”…JOHN F. KENNEDY, THE WHITE HOUSE, June 4, 1963

            Food for thought.

          • Mark Walsh

            “Just look all countries around the world and tell me that their central banks are independant or private.
            You need to live in a dream world to imagine such.”

            There are three state owned central banks remaining in the world. The North Korean, Iranian and Cuban central bank. The Central Bank of Lybia was state owned until very recently, as in, until The Colonel was taken out.

            All other central banks are privately owned but are licensed by their respective nations/unions.

          • bonbon

            On JFK, the FED and 1110, what is forgotten is the commitment to credit for essential national projects, like NASA, NAWAPA on the model of FDR’s TVA. This Order was in the context of Glass-Steagall and Bretton-Woods, and still it seems JFK had to move against the FED to issue credit for these missions. This is the essential point, that monetized credit was prevented by Glass-Steagall from going into bubbles.
            We need now to issue massive credit to repair and jump to the next economic platform, and not bubbles. This is the reason gor Glass-Steagall.

          • Realist

            “We need now to issue massive credit to repair and jump to the next economic platform, and not bubbles”

            Massive credit without previous savings means another credit expansion.
            Also using money given to banks as deposits, for keeping it only, should not be used for investments.
            This is pure fraud what is going on at the moment.

            E.g. if I have 30k saved in a bank, I think of it as my money to be used to buy something.
            Bank expands the credit to somebody based on my saving on 30k or more with multiplier, to say 150k.
            So now 180k of money that both me and that borrower have compete for some good, either present or future good, making that price of good growing more than it should. This what happened to the house prices.
            More money from thin air causes overpricing in that sector.

    • Realist

      “No government benefits from this mad new round yet again.”

      What buying of government bonds means to the government ?
      Unlimited salary increases and bonuses for politicans till it last.
      Various projects helping pro-government sponsored companies doing whatever public work, supply or whatever is needed.

      Last year bond market outperformed any other asset class, I am curious how :)

      As less money government receive through taxes, money printing (inflation) or bond buying is better for the mankind.

    • bonbon

      The last round left Eire with no option but default, as DMcW pointed out in the previous thread.
      I do not see how that is a benefit to a state or its Gov’t, even if some get fat paychecks.

      It is insane to focus on a few 100,000 Euro’s when a country has been looted of 100′s of billions for a generation.
      While some target a few fat cats, Round 2 has begun.

      • Realist

        The same way you see problems with ECB and EU, I see with national (central) bank and Irish government (e.g. Iceland fiasco).
        I am looking from 1 person perspective so seeing any kind of centralization as loss for me and my fellow citizens.
        I want myself to decide what to do with money directly by buying products and that is all I want and need.
        How complicate is such proposition ?
        Should we say that we are stupid, little people without knowledge, and that our great government (with impecable record) should know better ?

        I hope default happens, but again who will get wiped out ? Who owns the most of government bonds ?
        Banks are nationalized in Ireland, so who will loose.
        I currently do not own too much bonds in my pension, but I am sure a lot of people do.
        Bonds were considered the safest ever investments by majority.
        Also my hopes are useless as ECB and FED has so many ways to continue this bad habit and not seeing anybody stopping them, as the ones who can also benefit in large and do not care about us, people.

        • bonbon

          To stop that mighty (bankrupt) financial engine, who else but gov’ts for the Common Good. No private citizen, even if wishing, could possibly do this?
          The denizens of that system will never move to change it. Self-regulation is proven not to work.

          This was the very reason for people to organize – the common good won’t just happen. It must be sought after.

          • Realist

            You mean the same way it was sought last 100s or years ?
            If better, how we can do that when we release power to a half a dozen people ?

          • Realist

            Also how government is going to change something that they do not understand and rely on their economists.
            They think whatever money is spent on them is useful as they cannot see anything wrong spending too much money.
            By current economists (mainly sitting in central banks) spending is good, saving is bad, more debt is good, especially if of government origin.

          • bonbon

            Looking over the last century – 2 World Wars, essentially about the common good. WWI an aristocratic fiasco, WWII neo-feudal, both regressions.

            We, the people give to ourselves a constitution, of the people to be realized.

            It is a cultural question, one’s role.

          • bonbon

            Gov’t consists of people, and true, money has become an obsession. Monetarism, my wallet. This is an ancient oligarchical trait going back to Babylon, Rome, Delphi.
            At least today everywhere one looks, one is confronted with “money” so it is not hidden anymore. In that way everyone squabbles about the “best way to deal with money”. Totally forgotten is creativity, the physical economy. Multiplication replaces growth.

          • Realist

            That is exactly the point.
            Who should own the printing press ?
            What about central bank and their interest play ?

            It just never worked and this is why I do not see the government and central banks being the main piece in the economy.
            It should be distributed model and not centralized at all.

          • bonbon

            The model Central Bank is the Bank of England, a historic theme. The FED is an attempt to break the Treasury into 12 central banks, on the British model.
            True they do not work, and lead to these bubbles.

  4. bonbon


    “Taking their cue from the Federal Reserve, global funds are borrowing and placing bets with the borrowed money on the world’s stock markets”.

    This is precisely what Glass-Steagall will instantly put an end to. Let them bet with their own money, if in fact they have any at all.

    • Realist

      The key reason for financial instability is the existence of the central bank and not the repeal of the Glass-Steagall Act as such.

      Glass-Steagall would help us to not have the crisis now but rather in 10-20 years.

      The central bank enables banks to practice fractional-reserve banking and thereby pollute the economy with money created out of thin air.

      • bonbon

        I must say I fundamentally disagree. Keeping 2 pieces seperate was the diagnosis after 1929 and it worked wheneve it was enforced. Investment banking must not have access to FDIC insured deposits, and must not be able to generate “money” of their own. The Dodd-Frank bill in 2000 claims to do this but is known as the Swiss Cheese bill – mostly loopholes.
        The entire derivative mountain of $10**15 on the world GDP of $40-60 x 10**12 cannot continue and must be written off.

        • Realist

          Two main issues are with having central banks.

          1. The separation of money issue from the state is a must.
          With central banks that is not really possible. Just look what ECB is doing at the moment. 1/2 trillion of euro in Dec-2011 and 1/2 trillion is coming in Feb-2012. They are buying bonds directly, I bet who has the last word in that, Markozy or ECB :)

          2. Interest rate and credit expansion through fractional-reserve banking. Central bank kept the interest rate for so long too low. Now is what, 1% ECB and 0% FED. That means cheap financing for so long.
          This all causes malinvestments and booms as we had away more money than we should through the normal savings. Just think of our Irish housing issue, it has nothing to do with derivatives, nor other abstracts.
          It is pure problem of credit expansion and fractional-reserve banking being able to push more money then it was saved.

          How you will tackle ability of banks to expand credit ?
          How you will tackle current fraud of current account money put into banks as safekeeping and not investment ?
          How you will tackle bonds being deposited as collateral for credit expansion ?

  5. bonbon

    Very interesting note on the carry-trade. There was a Yen carry-trade a few years ago, followed by the Brazil carry-trade recently. Looks like they have europeanized it.
    I wonder if Brazil is still being looted? This was the BRIC idea from Goldman Sachs.

  6. AngryJay

    Can someone please explain why the Banking ‘elites’ seem to hold such power over the Political ‘class’. It seems to me repeatedly that the people’s interests are relegated in face of large corporate/banking interests. Have they been bought? Are there some dirty secrets?

    It is quite grotesque that our representatives have an almost contemptuous regard for the people whose interests they are supposed to champion. All the recent public gaffes by Noonan, Kenny, Varadkar et al only reflect their true opinions IMHO. According to them we are a bunch of mad borrowers who can’t be trusted to vote on anything important and who at the least sign of trouble abandon our country to improve our lifestyle.

    Crony capitalism is dying. At some point it was decided corporations are more important than citizens. Any system this corrupt and dysfunctional is doomed to fail. Nothing lasts forever, if you could, you could ask the Romans or Louis XVI for some advice!

    • Deco

      FG sober are turning out to be as useless as FF drunk.

      • bonbon

        I think Edgar Poe described a battle between 2 drunks – the wonder they were still standing explained by each propping up the other.
        Or the outcome of a furious fight was the opponents had simply exchanged jackets.

    • bonbon

      Very good question!
      You have to ask how “money” exerts total control on the thinking not only of elites, but citizens too, how this control runs through history unbroken for at lead 3000 years, at least 4 empires.
      What is the “whisper” that controls thinking? How does a tiny group hold sway over once mighty economies?
      How does this group move to make sure no breakout occurs?
      We are talking about “oligarchy” well known to the Greeks. How it operates is also well known.

    • Mark Walsh

      1st Question) Yes, bought and paid for.
      2nd Question) In the Irish context…is it not odd that not one banker has been imprisoned nor has any legislation been enacted to imprison a banker?

      IMHO the Irish bankers have the pols by the short hairs on a personal level. Any talk of changes to the legislation (prison time for bankers) would be met with media leaks about ‘brown bag’ payments/loans given to FF, FG and Labour Pols.

      • gizzy

        The permanent governemnt will be very nervous about court cases because you can be nsure a lot more people knew what was going on than have admitted to same. So if Seanie had permission ois he guilty of a crime

        • Mark Walsh

          Exactly right gizzy, there are too many skeletons on each side of the divide. The trade unions (private & public), permanent gov, sitting gov, bankers, media (print & broadcast), developers, city & county planners, solicitors, estate agents…none of them are crying foul.
          Neither legislator (Permanent & Temporary Gov’s) will lift a finger to expose their own cosa nostra (our thing).

          • bonbon

            And from this Private Vice, magically appears Public Virtue, according to Bernard Mandeville, the idol of a gaggle of economists. Spontaneous economics?

            This mantra is why action is not taken – the free-market.

  7. Deco

    Fantastic Article. Some day undergraduates will be reading it in university, and trying to get to the bottom of how the ECB created an asset bubble for no reason, which crashed, and then responded with the same techniques that created the mess in the first place.

    I have just realised the whole thing is a web of deceit. The “leadership” of the West have been lying and deceiving for decades. Since 1971 (Nixon abandoned the Gold Standard, because he could not pay for “Johnson’s Wars”) in the case of the US. Since the early 1960s in the case of Britain, with a temporary relapse due to North Sea oil, and financial deregulation, which popped under Calamity Brown. Since 1990 (the start of negotiations for the Maastricht Treaty) in the case of Europe. Since 1992 in Japan (when the BoJ decided to tackle deflation with bond issues to the Japanese government). And in Ireland, since CJH. Since 2007 in China with the massive stimulus programs.

    Institutional lying, as measured by a phony inflation rate.

    The media is making sure that whatever outrage happens, it not change anything in any serious or consequential manner.

    “Please support our advertising sponsors”.

    • bonbon

      1971 Nixon killed the Bretton-Woods (a gold Reserve, not simply gold-standard) under various pressure from Britain.
      1990 German re-unification, 1992 call for the Euro by thatcher/Mitterand to “limit Germany” with Maastricht.
      1999 Glass-Steagall repealed – door open for monetaristic hell.
      This is more than deceit, it is financial war by “other means”.
      Parallel to this was the murder of JFK, Vietnam, which rendered the entire transatlantic culturally incapable of progress, optimism. It is very hard for OWS to conceptualize a strategy.

      This, just to be truthful. And what must be done is not just financial, but cultural.

  8. Deco

    It certainly is “cash4trash”.

    It is also a Ponzi scheme. Except now, for lack of willing volunteers queueing up to rush in at the bottom of the ponzi scheme, we have state pressure being forced on the banks to get involved in preventing the unravelling of the State financing ponzi scheme.

    All in an effort to “stimulate” a confidence trick…..

  9. Deco

    The Fiscal Compact.
    The government do not want a referendum.
    In fact, no government in Europe wants a referendum.
    And they certainly do not want a debate. Because a debate will flesh matters out into the open. And that must not happen.

    The Fiscal Compact will fix nothing. Spain came closest to obeying it’s limitations in the years 1997 to 2007. And now Spain has the highest unemployment in the EuroZone.

    Despite this Lucinda Creighton talked this morning about how the Fiscal Compact would provide a framework for tackling the crisis, and for preventing future crisis like the current crisis.

    I don’t know if she really thinks this to be the case. But she certainly is trying to make us think that this is the case.

    The Fiscal Compact is an attempt to sell DE/NL/FI/AT on the idea that they can keep financing the mess.

    The intellectual leadership of the West is in serious trouble. There used to be a time when the people elected some stooges and some people of principle and integrity.

    Now, everywhere, we select whichever stooges annoy us least. Nobody is actually impressed. And nothing ever gets fixed. Instead it is “kick the can down the road”….until you run out of road.

    • redriversix

      Good Points Deco

      Lucinda Creighton on radio from Brussels this morning claiming Fiscal compact would assist our negotiations on reductions on promissory notes re Anglo.

      I tried to point out that last Tuesday,her party leader,our Taoiseach insisted They,our Government would pay its way and would repay all debts that were agreed and that he would not have defaulter written”across his forehead”.

      So any claims by T.Ds our Ministers to the contrary must simply be untrue


    • bonbon

      The Compact will replace Gov’t with “governance” a Blair and Barosso favorite. In 1933 Germany said it does not matter, we’ll get them out in the next election. There was none.
      Today it is rigged even with elections, just look at the entire US gaggle – every single one will wreck the economy. Not one wants to regulate finance. Of course this could change. Newt has discovered the Moon- but he does not have any idea of what economics are needed. Paul is for various things but economically a radical Austrian school-er.

      • bonbon

        Here Michael D, could send this to the Supreme Court. SF is seeking legal advice. Tremonti says it is a declaration of war.
        Berlin will take the rap for the result of this. Meanwhile someone is out to remove the president to enable hyperinflation (already stealthily).

        This is “raw conflict”.

        • Grey Fox

          The best way to defeat an adversary is to Co-Opt them, the banks did it to the general public from ’99 to ’07 in order to gorge on borrowing cheap money and they are doing it again now to lend on to governments.
          no Adversary – no Problem! the banks can let the good times roll again -FOR THEM !!!!! and if this is allowed to continue for an extended period, the only solution will be revolution and THAT!! will as plain as the nose on anybodies face.

      • Deco

        Some of them will at least wreck the economy – they want to wreck entire countries as well, in the name of “World Peace”, and “spreading democracy”.

    • rebean

      It seems to me its all about debt,debt,debt …..
      But surely not our debt. Someone elses debt for sure. We have all worked for what we have more or less. This is Govt debt and fiscal debt. Its political debt and its bank debt and its the result of greed. Now we have to stand up for ourselves and we need to kick these people and their debt into the black hole they have created. Stop their pensions stop their lifestyles and stop their passing of the poisnous chalice.

  10. Deco

    Pass it on. Protect Internet Privacy. 76,000 signatures.


    We need to keep the internet intellectually free.

    • Realist

      I signed myself.
      I am sick of somebody telling me what I can and cannot do.
      Like we do not know ourselves what is good and what is bad.
      Government privileges like this or any other (like in financial sector) are helping big businesses to benefit.
      Any business that government put their hands on is just destined for ruins, it is either overprices, or overprotected to some companies, or just wasted money.

  11. Adam Byrne


  12. Malcolm McClure

    A ‘blue scene of death’ scenario has been narrowly avoided several times in the past month. –Mixing metaphors, I once built a house of cards to the 13th floor level.
    Central bankers are enjoying a similar frisson of achievement and trepidation as they build towards QE floor 14.

    In London, they may find that the ‘Shard’ becomes a monument to vainglorious ambition shattered by hash reality.

  13. Treason!!!!
    Cardiff meets with Anglo’s Tiernan O’Mahony four days before bank bailout is decided on!!!


    The longer we wait for revolution the bloodier it’s gonna be!!

    Josey :)

  14. Adelaide

    WHY OH WHY is there no PUBLIC SEVICE to inform the public about how money is created and how this relates to our present predicament?????

    Can RTE not air an educational program about how the present world economy works from banks to bondholders???? How WE fit in to this mess?????

    I hear soundbites and drivel and plain ignorance about actual economics aired by our politicians and talking heads on radio/tv/newspapers etc which has zero information/education worth for the last few years.

    It really boggles the mind how ignorant the vast majority of people are about these issues, the same issues that are paupering them. I mean, ignorance is bliss, but for heaven’s sake, take an interest in your own ruination, at least what is the cause of your own demise. At least then you can start to address the problem. Leave it to other ‘people’ and you end up where we are, and forevermore.

    • Grey Fox

      Subscribe Adelaide…
      This country managed to get circa. 700k people out on the PAYE Marches in the ’80′s and the problems people face today make that pale into insignificance by comparision, what is missing is “the leading light” their is no leadership in any corner of this country, everybody is too busy looking after no 1, and thats how the puppetmasters want it. DIVIDED WE ARE EASY-UNITED WE ARE INVINCIBLE but I don’t think we will ever see the likes of 700k on the streets in this country again.

      • Adelaide

        It is so disheartening to see the collective ‘shrug of the shoulders’ of this country.

        I heard a theory the other day to explain this ‘non-action’, due to generations of Irish emigration that the calibre of the present gene pool is now that of the village idiots as they were the only ones to remain, we’re all now ‘genetically’ village idiots (due to the ‘flight of the fittest’ over he course of our history.)


        • Malcolm McClure

          Rubbish Adelaide. Ulster lost ‘the cream of the crop’ of its able young men at the Somme. A generation later, exam results throughout the province were outstanding. Thanks largely to the efforts of a generation of spinster teachers, who had lost their intended fiancés in battle.
          Anyway the famed Irish ‘gift of the gab’ reflects high practical intelligence, and is a useful survival trait. Faction fights are the rule in Ireland, not threatening political demos as you will never get more than a dozen Irishmen to agree overnight about anything.– Look at the GAA. Great organiser, but politically useless.

    • Mark Walsh

      If ignorance is bliss, why aren’t there more happy people? :-)

      On a more serious note though, I concur with your sentiments.

      However, no government in the world wants a fully informed public. I challenge anyone to contradict me on this front.

      RTE is a State owned broadcaster and as such are subject to the whims of the government of the day. Intrepid investigative journalism of their paymasters is not in their DNA.

      In fact RTE personnel, in my experience, look down upon the people, in the same way the government, banking & civil service elites do.

      The RTE route would be a Sisyphean task.

      • straboe1

        It suddenly occurred to me that instead of concentrating on the problems of rural septic tanks, that the we should consider the countries problem as if it is a septic tank that has gone wrong. The solids have all come to the top. We badly need fresh air to be introduced everywhere so as to insure that the solids no longer run and pollute our country.

        • redriversix

          This crisis has nothing to do with our Country , Brendan.

          We are a casualty in a major Financial War,a remote foxhole in the Hurtgen Forest , Deep in Winter wondering if our pals have forgotten about us……….

          Politicians lie or renegade on their commitment to new Government……….no reaction

          They cut and slash the most vulnerable people and services in Society…………no reaction

          They continue to waste vast sums of your money………no reaction

          A toothless Media with no moral strength………no reaction

          Banks continue to dictate terms to Governments throughout the World , primary culprit being the IMF……………..NO REACTION

          A gormless generation enslaved to debt and consumerism , willing to work for a pittance , no full-time jobs , only 9 or 12 month contracts…………No reaction.

          Please do not respond telling me about how many people are “reacting” around the Country and around the World , their is no reaction because no T.D , backbencher’s , Minister or Government leader is reacting , they still spit lies , deceit and falsehoods.

          If their is a reaction , clearly it is not going in the right direction.There fore…………No reaction

          The only group of people in Society who achieved anything in the last 4 years were the elderly when they demonstrated against cuts Fainna Fail were introducing and defeated the Government.

          Dmcwilliams could achieve in a week what would take a group of people 2 years ! with his profile , knowledge and the respect he garners.Perhaps David could make a difference aside from his writings…..is it possible ?

          This War has moved on about 6 weeks ahead of this post.The Senior Civil Servants who run this Country are at least 3 months ahead of us in terms of planning , if you think they are too incompetent to be that organised , they don’t care what you think…… and that suits them.

          This Financial War is about the top 1 percent and they could care less about some damp rock of the coast of Europe.

          It is about enslavement , debt upon debt , a reduction in civil and human rights.

          To get Countries to relinquish their State and Natural Resources.It is a crisis of morals as Countries promote and seek Military War , not for freedom but for control of Oil , minerals , Gas etc………..

          Government as we knew it is Finished……..Elections no longer are relevant..you can see plenty of evidence of this in Ireland over the last 11 months and across the World in the last 4 years.

          Senior Civil Servants call the shots………from here to L.A.from Brighton to Beijing….

          Over the next 5 to 10 years you will witness the collapse of the West and the Rise of The East , those left with power and resources in the West will negotiate our freedom away so they may benefit from this cyclical Change of power.

          Our wages will decline , working and middle class shall be destroyed in favour of a classless society,We will have enough to get by……not enough to live.

          This entire present system is a scam and the time for debating it is over.

          If we are not going to do something at least protect yourself and your Families.

          Best of luck , Gizzy

          The last post………….


          • bonbon

            Hey, it will be the Last Post for the dead financial system. I can hear the music in the distance already…

          • bonbon

            May I suggest Dvorjak’s New World. There is a distant trumpet if you notice it, from far away, yet unmistakable.
            Still I think the most important instrument there is the triangle, and the audio must be good. I heard it live recently and they did it right.

    • coldblow


      Here’s a recent letter from what appears to be a serial correspondent to the Indo with some good points:


      The example of music can be extended across the broader cultural spectrum. However there is another side to the issue, which is that of popular demand. Just taking music and an example the fact seems to be that most people not only don’t ‘get’ music, but actively dislike it. I went to a new cafe last year where they were playing some middle of the road ‘classic’ hits of the 60s and 70s. Nothing special, very run of the mill in fact, but nice to hear. But if I’d met the owner I’d have advised him to change the music. I think the way it happens is that people feel a vague reluctance to go somewhere. They can’t put their finger on it but it’s a real feeling, some deep dislike or other. That feeling is a dislike for good music. This probably applies in other areas too. It’s hopeless I’m afraid, but RTE don’t make any effort to even try to swim against the tide.

      Agree with Malcolm about the gene pool. From reading Lee’s history of Ireland you understand that it was the cleverest, the cutest who managed to secure a livelihood for themselves in Ireland.

  15. gizzy

    The Irish are not on the streets because no one is coordinating such a protest movement. In all other countries including Belgium it is the trade unions who are organising the movement but they have being well and truly paid for here.

    You have to give that to the goverment they seem to understand the dynamics at workon this one at least. Keep Croke Park no protests, fleece private sector no protest too many diverse constituents.

    • pauline

      Yep.. but things change… MoveOn America, GetUp Australia, Avaaz International.. the whole of Ireland top level are culpable and will hopefully be disposed of…
      but really they problem is the same one that I had to grow out of.. the ‘who are you? to be talking?’ .. Protests don’t work because their is no-one else to vote for.. Unfortunately David and all the others who could have co-ordinated a new political movement lost interest after the last election, now they have time they’re oh yeah.. well people didn’t vote for independents last time. Now is the time to build these people with a clear and open agenda that they implement.
      Almost everyone I know in Ireland has enough intelligence to understand and contribute to a common agenda to get us out of this mess. We need to do it. But it needs co-ordination by people like David Williams that Irish people trust.

      Put it on TV3.. choose a budget element each week and discuss it.. then rotate until we have a full policy that we want to implement. This includes not paying advisers a fortune and possibly not frigging having them. The budget is clear.
      Page by Page..Week by Week.. Chop the fat and save the lean… ;)
      Of course with the top 1700 getting combined paid as much as the lower 105,000 we know where the fat is. What does that person do.. why do we need them.

  16. Peter Atkinson

    I was contemplating the notion of “the Irish on the street” protesting when it came to me.All protest marches to be held between the hours of midnight to 04.30 am Saturday and Sunday.Starting point Temple Bar for a march to Krystle’s Night Club.Should take at least 4 hours to complete, not putting anybody out of their busy schedules as they will already have made their way to the city centre at an early hour.And sure if they can’t walk the distance they can always get a taxi.The days of the 80s protest marches are long gone.
    Honestly folks, the only thing that seems to worry the under 35s in this country is wheather they have enough left in the pot for the latest gadget.I reckon the Apple store sold more tablets over the Christmas than all the pharmacies in Ireland put together.The cost of the iPad and the iPhone would feed a family and pay towards a mortgage for the month.

    Even in these straightened times it seems to be more important to have credit in your phone than food in your belly.I’ve never tried to take a bite out of an iPad but I doubt they are very nutritious.

    I still think the crazy spending on technological consumables is rife out there.I noticed the Apple Store in College Green didn’t have one sale sign hung in the window or a promise of 50% off.In fact the irony of it all is that the Apple Store doesn’t actually sell Apple iPhones.Apparently they have to be bought from one of the big 3 mobile operators.

    It will take another generation of poverty and austerity for protest in this country to kick in.The public are not hungry enough yet.There is no bread yet the people can still eat cake,even the expensive greasy ones out of the forecourt delis.

    • rebean

      If you dont have a mortgage you can afford gadgets and all the other extras that seem to be doing the rounds. You can do alot with a grand a month extra.Its easy for people who dont have kids and all the other expenses to buy an Apple IPod or a new comptuter. Spare a thought for the poor people who bought houses way above their value at the height of the boom. Its really all down to luck. As it says on the back of the matchbox “Better to be born lucky than rich”

    • Steaf35

      Two difficulties; As indicated already there is no banner to unite under; A new politic is required to challenge the established incumbents; there are enough intelligient and educated individuals on this site and elsewhere to recognise that economic independence is now of primary importance; An information / awareness campaign would be an initial step perhaps with an outline of agreed objectives….only an idea!!

      The second difficulty exists in the fact the generation that are leaving feel betrayed and many dont really care as a consequence; A younger brother living in NZ recently declared in a fit of anger that he “couldn’t give a f*** if Kenny sold us to Britain”

    • gizzy

      Peter young people all over the world are the same and they are meant to be young. They are meant to have fun before they take on the responsibilities of later life. I am in my late forties. My generation and the one ahead of it made a balls of it not the young people there is no doubt about that. Now you want them not to be young so they can suffer this depression with the rest of us.

      Also a lot of 25 to 35s bought houses at the peak having being conditioned by older generations that it was the thing to do. They are now debt laden when they should be enjoying life and their kids.

      • bonbon

        “Meant to” by whom exactly? Never forget that all major revolutions for the good were won by people in their 20′s. Not exactly the “fun” identity of the typical Tiger. Lafayette at Yorktown, Hoche, Carnot…

        The oligarchy fears nothing more than a determined educated youth. Which is why so much money is spent to corrupt them from believing in ideas.

        • gizzy

          Meant to Bonbon by life do you remember beer music and riding. I do from the 80s. They were the staples of life with some work and study thrown in just to piss us off. Have you some more recent example of youth uprisings? Waht did you rise against in your early twenties.

        • bonbon

          After what is happening, do you still believe “meant to by life”?
          Is it just spontaneous?
          Do you see the difficulty Occupy has?

          • coldblow

            The extravert mind seems prone to accept that the idea of the teenager, rock n roll, the revolting student etc are immanent, universal human characteristics and not merely recent post-WW2 phenomena (ephemera?) in the Western world. Pre-1945 the extravert mind would surely have agreed with your point seeing as life was different then. The extravert mind (half the world, including your missus if you are married) identifies with its environment and accepts it on its own terms, rather than with its own sense of self, and will accordingly probably regard you as a fruit cake.

            Many, some by their own admission (eg Cbweb here), don’t seem to like history as a subject.

            I might just clarify that some of my best friends are extraverts.

          • coldblow

            By the way, have you noticed how “(young) people all over the world are the same” is a recurring trophe here? And how such sweeping statements, can be unselfconsciously used alongside injunctions against the use by others of generalizations (whether judged to be insulting or not)? (Touché, Gizzy!)

            I could tell you a lot about extraverts from what I’ve picked up over the last few years, so I could.

  17. Dorothy Jones

    New Punk Economics video gets the prize this week…its brill!

  18. Mark Walsh

    “Japan went to its zero interest rate policy 13 years ago and began its quantitative easing campaign almost 11 years ago; news of their successes should be arriving any day now.” :-)

  19. rebean

    Would there be any chance maybe some of us mere mortals might borrow some money to pay off our mortgages and maybe we could spend the money left over repaying the ECB and spending money in the local economy. The answer is obviously no . Its only the banks that will get the cheap money just like they got bailed out by the taxpayer recently. As far as I can see we need we need another war in Europe to drag these towers of Babylon down and crush them.

    • bonbon

      The last war to destroy fascism almost destroyed us all. The problem is if fascism was removed, why do we have it again? What is happening now is simply fascism with a smirk.

      After Hitler made German fascism look bad, Churchill preferred English-speaking fascism, the Anglo-American establishment went right ahead to continue the project culminating today in the radical irrationalism of academic theory (unknowable spontaneous growth) and political action. After, all fascism ala Nietzsche, Schumpeter, Sombard is pure irrationalits, the pure hatred of human creative reason.

      Add in Ayn Rand’s wildly destructive shrugging, well imitated by Sir Alan Greenspan, and the spread in the culture of dionysian radicalism, and the seeds of a Jacobin mob are sown.

      Still, it took 1 London trained operative of the 3 (Danton,Marat,Robespierre) to tip it over the edge.

  20. Alan42

    If the Irish people are happy to pay and endure austerity , what excatly is the problem ?

    • pauline

      Yep.. the Irish are really happy.. I think King George said something similar…

      Irish are a slow burning fuse that never forget…

      • Alan42

        ” Irish are a slow burning fuse that never forget ”

        Rubbish . The Irish are paying the Anglo bonds and enduring austerity because not to do so would open up the festering wound that is cross deposits and naked criminality in the Irish banking system at the time of the guarantee.

        Any write down of debt or getting the bondholders together in a room and telling them that we can’t pay and then negotiating a write down is not on because it would require a full investigation of the Irish banking cartel , the central bank and the government at the time of the guarantee .

        No business when it goes bust agrees to pay all crediters 100 % . Yet the Irish government is agreeing to it and is more than happy to .

        Look at it like this . Ireland is more than happy to pay faceless bondholders . They are also more than happoy to do it by cutting services to its own disabled children .

        They would sell their own Mothers rather than risk a full investigation of Irish banking / government in 2007 / 08

        Europe is not the enemy , its your own government .

          • pauline

            Never said they were just mad at Europe ;) Though I have to add a ++1 Cos I totally agree with you. And Irish have this stupid need for a “Superman” as Michael Collins said. There is no “Superman” at the moment, but if one came along…

            But at the end of the day – the mad Bank Guarantee was signed off by Europe.

            Why? Not to save Ireland but to save their banks.

            If borrowing to put a roof over your child’s it’s madness, then borrowing from France and Germany to pay back French and German banks is insanity.

          • bonbon

            “Superman” is Nietzsche’s “man as a super beast”, notoriously low-tech.
            A certain Royal visited and was gushed over by a Taoiseach, as “whom we all aspire to be” not too long ago. Problem is that Royal’s father declared “man is a higher ape” and founded the WWF.
            What then does that say about the son, and the the Taoiseach?
            I wonder was Collins warning about this?

      • bonbon

        Spot on. Some may seem totally zombie-like in the present looking for the next gadget, but appearances always lie. People have history, animals do not.

        Every now and then we, the people, declare not to be animals for some king, stooge, bankster, or especially academic theory, or other. These latter are totally unable to comprehend what happens then.

        This change is never predictable for these Dino’s but they live in a kind of primeval terror of being replaced, so react viciously, like a T-Rex swinging its tail, fighting a shadow of something they just cannot understand. They even try to look modern, imagine a cold-blooded Raptor mimicking a warm-blooded mouse?

        I think no-one is fooled.

        The mouse may be small; the Dino’s are no-more.

        Huge changes start small.

        • coldblow

          Yes. David has been saying this all along.

          • pauline

            Yep.. an http://www.NotOurDebt.ie/ is a start..

            The first green shoot…

            The problem with democracy comes when there is no one in politics who you can vote for that represents you.

            Since Irish people have a inherent need to respectability, they couldn’t vote for their current interests by voting Sinn Fein who might actually burn a few bond holders.. “the easy way or the hard way” …

            So what are we left with.. no-one. Fine Gael and Labour just look like a less corrupt version of Fianna Fail…. So next election we have no choices unless FG and Labour patiently patiently approach pays off..

            Iceland said no and they’re doing fine now.. The ECB is as messed up as any bank so we can just dump them and borrow from China like anyone else.

          • bonbon

            “Need for respectability” translates to “frowning for the Squire”, Beal Bocht, nothing else – the mark of Empire. It lurks in Corca Dorcha, and FG/FF.

            Arthur Griffith had a totally different approach, it is essential to read his United Irishman on what economics is all about.

            Beal Bocht now for the Troika, lads? Put on the face, walk the walk, talk the talk (at Davos).

            Forget the Squire!

        • pauline

          This is why I really believe we need to remove the Irish people from the mess and this requires money. This we have through our disapora, though no one is stupid enough to fund the government! Create an independent well regulated good bank that funds Irish businesses and buys Irish mortgages as Fire Sales and sells them back if they people are considered credit worthy. Move good money and good mortgages there. The bank can allow accounts in different currencies removing our dependency on the Euro and bring back all the cash that is in Switzerland. Create our own safe haven… then when Europe goes.. where are you going to fund your state. We’re already ready. We can keep the nurses, good consultants, garda etc and dump the fat. Whatever we say about this world, it does run on money so we need an institution that can be trusted.

          We are sill if we think we can completely ride the crash but by using the fact that united Irish people can create wonderful things.. we can actually get our way out of this. But perhaps we should use the Salmon as our new symbol, it’s Irish, lean, flexible, strong and wise ‘)

  21. The Field

    In the absence of an Irish Monarchy the Irish revere in The Board of Directors of Banks and allow them spend as much as they like.

  22. Colin

    Great article David, and it’s a great headline too. Kenny’s credibility is shot to pieces. We all know it’s Fianna Fail’s fault we’re in this mess, and we won’t forgive them (well I certainly won’t), but Indakinny is in POWER now, and is destroying the country with the notable exception of those sheltered by the self serving Croke Park Agreements.

    Lookit Inda, if you haven’t got the stomach to tear up Croke Park Agreement, if you feel powerless to stop paying unsecured bonholders, then will you ever take yourself off on your horse and ride into the sunset and let someone else take over who has the stomach for taking REAL tough decisions?

  23. Reality Check

    +1 Colin, Nail on the head.

  24. Adelaide

    Easy 2-step Mutual Credit solution for a fair future

    1) Establish a new political party. Its one singular objective – Mutual Credit. Call it the Mutual Credit Party.

    2) Upon election, establish a People’s Bank and a New Irish Money (Nim) currency. Each citizen is given a bank account, zero balance, with a credit cap of 10,000 Nims. The People’s Bank can only increase/decrease the cap in proportion to the amount of savings held by the participants.

    Read/google Mr E.C.Riegel for his convincing arguments of such (similar) model.

  25. BrianC

    Hi David

    The video is brilliant. Great job and the artist is fantastic.

    Sal Khan would be proud of you.

    • Grey Fox

      Hear Hear BrianC,
      Khan Academy is absolutely brilliant, recommend it to everyone, what a service Sal is providing, I could not congratulate him enough nor wish him more success.

  26. Philip

    Fantastic Video. But the people in Ireland will not be rioting simply because the Croke Park Agreement is there to defuse any large block discontent which would surely be triggered – if the Gardai, Nurses, Teachers and Army are told to take a haircut.

    The nitro glycerene concoction of Croke Park Agreement will be avoided like the plague to try to maintain some level of status quo.

    • coldblow

      Just thinking
      Gardaí – used to be dog licences and lights on bikes now it’s breatherlyzers
      Nurses – we’ll put manners on ya!
      Teachers – I have some sympathy, it’s a difficult job
      Army – what do they do?
      Still, they are all better than the faceless bureaucrats. The phrase “frontline staff” has a ring of sanctity to it.

  27. Philip

    We need to get a number of things straight. Germany and France are doing well from a devalued Euro. Were they on their own currencies, they’d be wiped out. These are not the powerhouse economies we are led to believe them to be. They are slightly modernised capital intensive traditional industry driven economies with out moded and inflexible labour and business laws – it sickens me to hear these countries preach austerity and the need to me more competitive when they forget where their competitiveness came from over the last 10 years.

    Anyway…it is a banking mess and there is no leadership. These guys have wrecked the union in their arrogance and the dark clouds of regionalism are swiftly closing in. We’ll be very lucky if it just amounts to a few riots.

    • bonbon

      Germany and France’s economies are the motor of Europe, and believe me it is not the industrious workers who are preaching anything, just the same financiers and corrupt political class who have lost all connection with rare exception to a productive economy.
      It also not even the managers, but when they follow the Holding Company model preached by Britain they simply do not understand the consequences.

      To protect the economy from this incredible financial debacle of the Euro, and derivatives (which holding firms are addicted to) must be priority #1.

    • bonbon

      This rubbish about “on their own” is Euro-babble.
      Stable Bretton-Woods style currency regimes work.

      Nations are never on their own, always form relationships with a common principle, which is inherently anti-imperial.
      Imperialism knows no national boundaries, is inherently pitted against nation-states.

      No-one is doing well from the Euro, not even the Davos denizens, especially London/WallStreet.

  28. bonbon

    Behind all the whoopee, hoopla is this :


    Jan. 30 — The majority of the $1.5 quadrillion or so in global financial derivatives contracts are held in banks in the City of London — although now 97% of the REST of the world’s derivatives are concentrated in a handful of big TBTF U.S.-based banks.

    (Remember at least 2 of these TBTF’s are under FED tutelage).

    Now a Bloomberg News analysis of reports to the Federal Reserve by the five big U.S. “derivatives banks” — JPMorgan Chase, Citigroup, Goldman Sachs, Morgan Stanley, and Bank of America — concludes that THESE banks now have well over half of their derivatives exposure and operations in their foreign branches; principally their European branches; and most particularly in their London branches. The share of these “overseas derivaties” are: BoA, 50% of $125 billion nominal “value”; JPMorgan Chase, 59% of $188 billion; Goldman Sachs, 62% of $134 billion; Citigroup, 53% of $122 billion; and Morgan Stanley, 77% of $101 billion.

    The banks are lobbying intensively that derivatives in their foreign branches should be subject to no U.S. regulation at all; but a Glass-Steagall reform will prevent the commercial banks from even trading in them.

    Meanwhile, to no surprise, the latest report suggests the MF Global’s lost money customer funds are locked up in London. The {Wall Street Journal} learned, from sources involved in the MF Global trustee’s and regulators’ investigations, the following: $.9-1.2 billion in customer funds appears “lost” for good; most of it appears to have been transferred to JPMorgan Chase to eliminate overdrafts caused by MF Global losses in Eurozone sovereign bonds; AND “The money wound up in the `MF Global UK Ltd. account’, according to a copy of the letter reviewed by the Wall St. Journal” [Oct. 29 JPMChase-to-MFGlobal letter].

    Thus, another financial firm blown to bits by its London office, a la AIG, LTCM, etc. MF Global’s U.K. subsidiary is now in a legal battle with MF Global, and under British law the “missing” billion, if not simply wiped out in trading losses, is inaccessible for a long time.

    • Realist

      So, what about fractional-reserve banking ?
      Is this not what caused housing boom in Ireland ?
      Credit expansion in Ireland has nothing to do with derivatives and we still suffered all fashioned old-style :)

      I am of course to stop a lot of lunnacy around derivatives, but not all of that stuff is wrong, at the end it is just zero-sum game where you have loosers and winners.

    • bonbon

      @Realist. Good question. Here is a clip from jun-2003 on how derivatives and housing bubbles overlap (US model followed everywhere including Eire).

      Freddie and Fannie function to buy housing mortgages from mortgage lending institutions. By doing so, a mortgage lending institution, which has just issued a mortgage, can sell that mortgage to Freddie or Fannie for cash; it can then use the cash to make a new mortgage, and sell that mortgage to Freddie and Fannie, and so on, in the same manner several times over. During normal times, this activity would be merely liquefying the housing market; but since 1995, it has been used to allow mortgage lending institutions to make mortgages to finance the sale of houses priced up to the current limit of $310,000; the mortgage lending institutions sell the mortgage to Freddie or Fannie, and then make another mortgage loan for up to $310,000, etc.

      This mechanism is crucial for the perpetuation of the housing bubble, providing lending institutions the vast scale of liquidity needed to provide households the financing to purchase vastly over-priced homes.

      As a result of this process, Freddie and Fannie have become gigantic. In terms of asset size, the four largest financial institutuions in America are: 1) Citigroup, $1.1 trillion in assets; 2) Fannie Mae, $822 billion in assets; 3) JP Morgan Chase, $720 billion in assets; and 4) Freddie Mac, $708 billion in assets. Thus Fannie and Freddie are two of the top 4 financial institutions in America.

      Freddie and Fannie can carry out this operation by issuing three types of highly risky obligations: 1. corporate bonds that Freddie and Fannie issue; 2. Mortgage Backed Securities (MBS), in which Freddie and Fannie pool a group of mortgages together, put a guaranty on it (for which they earn a fee), and then they package these MBS to insurance companies, pension funds, international investors; etc; and 3. outright derivatives, which Fannie and Freddie have.

      Derivatives Holdings
      Fannie Mae Freddie Mac ($ billions)
      1997 161 96
      1998 188 313
      1999 275 424
      2000 320 474
      2001 533 1,052
      2002 657 NA
      Table shows the domain where the highly leveraged housing bubble and the highly leveraged bubble of derivatives intersect. Freddie and Fannie have turned to the use of derivatives to manage the housing bubble, to prevent it from exploding. Between 2000 and 2001, Freddie Mac doubled its derivatives holding to above $1 trillion, as it aggressively turned to derivatives. Freddie Mac has delayed the release of its 2002 annual report, but it is believed that its derivatives portfolio exceeds $1.3 trillion.

      Federal Reserve Board chairman Alan Greenspan is the other key ingredient to the housing bubble: he has used his power at the Fed to lower interest rates so that the rate on a 30-year mortgage hit 5.32 percent, the lowest rate in four decades. However, the success of this whole scheme depends, among other things, upon continuing to keep interest rates low. Were interest rates to spike up, this would convulse the MBS market, and the derivatives market of Freddie and Fannie. In 1994, a half percent increase in interest rates blew out the MBS market, which was then far smaller. Further, the derivatives market in general, is alreay producing instabilities. An interest rate increase would serve as a trigger to de-leverage the hypothecated $11.2 trillion U.S. housing bubble.

      • Realist

        So, you are saying Ireland housing bubble is due to derivatives and not pure fractional-reserve banking supported with ECB low interest rates ?

        I do not think so. It was purely due to credit expansion where builders could not finish their expensive projects due to house inflation and price build up due to at least 10x more money than the society saved. It was all nicely helped with Ireland debt build up and bonds being used in ECB as collateral for even more credit expansion.

        Every price will be bid up if you have 10x more money than you should. Derivatives did not create more money in Ireland that I know, it was all Irish banks running for profit.

        • Realist

          “It was all Irish banks running for profit.”
          And of course entrepreneurs (builders) running for profit encouraged with cheap money on low interest rates and previous successes at the beggining of boom cycle.

        • bonbon

          But as I point out the (virtual) credit expansion only occurred using derivatives. Put these out of business first.

          • Realist

            What derivatives exactly you are talking about ?
            It is overly complex area.

            For me derivatives are mostly zero sum game as you need counterparty meaning somebody will loose and somebody will earn.

  29. Afternoon all,

    Glad you liked the video. I am in Italy for a day or two. Will write about my impressions when I get back.



    • Malcolm McClure

      David: Someone tweeted today that Italian bonds are a market ‘bellwether’ apparently. A ‘bellwether’ it turns out is a castrated ram used to lead sheep to the slaughterhouse.

      Seems you are going to the right place a the right time. Bon voyage.

    • bonbon

      Very nice video.
      As far as I can see the vindictiveness is to be expected – the euro is an evil construct from the beginning to corset Germany after re-unification.
      France led this egged on by Maggie (and Conor Cruise).

      I think Berlin is saying to the EU – dump this. Berlin is unable to shake itself free. France is in a horrible situation, let’s see what the election brings.
      Berlin will have to shake the mess off even if a faction brings down Wulff and Merkel.

      But the public behavior of Merkel makes sure Berlin takes the rap for the British, yet again.

  30. bonbon

    Some here know this already, but it must still be reported. Never forget German citizens never got a SINGLE chance to vote on ANY of the EU Treaties. Eire got TWO chances on 1 treaty.

    If someone has the sheer brazen neck to blame industrial workers anywhere just try posting it here.

    72 Percent of Irish Want Referendum, Sinn Fein Threatens Legal Action

    Jan. 30 –No less than 72% of the Irish people want a referendum over the Eurozone austerity treaty changes according to a Sunday Business Post-RedC poll.

    Citing the poll Sinn Féin spokesperson on foreign affairs Padraig Mac Lochlainn TD, said “Sinn Féin will actively consider a legal challenge if the government refuses to hold a referendum on the treaty. Sinn Féin believes that the government must hold a referendum on the Eurozone austerity treaty irrespective of the legal advice given by the Attorney General. We believe this because the treaty, if ratified, will have a profound impact on the Irish economy and Irish people for decades to come… If the government refuses to hold a referendum Sinn Féin will actively consider a legal challenge in order to ensure that the people have their say. When the final text of the treaty is available we will consult with our legal advisors to determine the best course of action. If a credible legal challenge can be mounted then we will actively pursue that course of action.

    “It is clear that the people want to have their say on this matter. The government does not have a mandate to sign up to a treaty that will have such serious implications for the future. They must do the right thing and hold a referendum. We in Sinn Féin will do everything in our power to secure this outcome.”

  31. redriversix

    Crotty High/Supreme Court judgement 1987

    Legal precedence set , all issue’s went to referendum after this.

    As far as understand , they have to have a referendum which hopefully will be soundly defeated………….


    • pauline

      And then they’ll threaten people with the ATM’s running dry and make them vote again. We need a people’s bank ‘)

      • bonbon

        Money terrorism works for money adicts.
        Will they try to say the Fiscal Compact is Euro-membership?
        It would be a howler, if Greece defaults and leaves just after Eire votes to stay. As DMcW graphically showed, then a domino will fall. The Compact tries to make default threats punishable.
        So in a way the vote will not change the outcome, just prolong the agony.

      • redriversix

        Hopefully Pauline ,
        the people will be far more awake to this
        corrupt worldwide scandal and will be more willing to act……..



  32. rebean

    I have finally discovered a solution to all our problems and gripes. It is a general election every year.Yes things are changing so fast right now that it seems we need a general election. Think of it would you be inclined to vote for the same person you voted during the last election.Lets be honest Fine Gael /Labour are a huge disappointment. They have achieved nothing really . We need a few strikes, a few pickets, alot of change etc. If there was an election in the morning I would vote Sinn Fein. I voted Fine Gael / Labour the last time out. We have these people for the next three years. God I wish I had Gerry Adams out in Europe. Christ if nothing else they might take us seriously. An bhfuil thu Buddy buddy Enda nuair a bhi thu igonai Sarkozy.

    • redriversix

      I think martial law would be cheaper !!!!!!!!!!!!

    • bonbon

      I heartily concur – the discussion between Merkel and Adams would be extremely interesting – Friedrich List’s economics, after all the foundation of modern Germany, and Arthur Griffith’s discovery.
      With Sarko, we have common history too. Not known how that chat would turn out now.
      At Davos I would expect something very different.

      In D.C., well that would be something to behold.

      We will need urgently diplomats well educated, to open doors.

      The only problem I expect would be London. We need to construct tunnels and transport corridors to the U.K, a second Chunnel to the mainland…

      • redriversix

        If the British system is as corrupt as you have suggested in older post’s BonBon ,not sure if opening a tunnel to them would be the best idea , considering their debt ratio may be worse than Greece with all the Euro junk the City of London hold’s……..!!!!!!!!!!!!!!

        • Grey Fox

          will only become a problem if all that junk in shitty of London is nationalised and after the disaster they have seen here I would be astonded if they were that stupod.
          Just noticed former head of Royal Bank of Scotland Fred Goodwin is no longer a “Sir”, here we just give them huge payoff’s and a pat on the back for trying what a joke we must look to the rest of the world.

        • bonbon

          The City is not the UK, an industrial economy, a partner in any such projects. The British Empire (do not try to tell me it does not exist) while totally global, in every corner of the globe, has its seat right now in Britain, a global financial empire, with sway over Obama (who likely has no idea how), the Euro. Its derivative mountain is finished, impossible to be “nationalized” – how could an empire be nationalized.
          FF/FG’s attempt to nationalize an empire is ridiculous – like the Mad Hatter stuffing the Dormouse into the teapot at the Party.

          The physical economy needs this corridor, marine routes have choked, and with the Arctic opening up, large container increases are expected with Shannon as a very large deep-water harbor. All of this is well planned, not funded, a trifle compared to the bailouts.

    • Mark Walsh

      I believe we need one of two things.

      First, Direct Democracy…Switzerland works a charm under this electoral/legislation system. Should some elected muppet/s try to enact crazy bills the Swiss people can sign petitions to defeat said crazy bills. Thus, the true power lies with the people.

      Second, given our current plight with FG/Lab (being a direct substitute for the FF/Green Gov) ignoring the peoples wishes to not repay unsecured gambling loses I believe we should have a National Executive directly voted into Ministerial Office by the people.

      An example of this would be the Irish people electing predetermined candidates for say Minister of Finance. So, let us say 15 candidates put their names forward for the job, and only that job, a simple majority vote would have that person elected to the position. In this way we are not hood-winked by insider party loyalties/favours etc.

      We the people vote for our preferred Taoiseach, Tainiste/Foreign Affairs, Finance, Health and so on down the line ministers.

      Should the positions be filled by numerous persons from the FF, FG, Lab, Green camps or indeed a cabinet of Independents, so be it.

      Our track record to date in trusting our political parties, or combos thereof, has been less than stellar. At least with this method no one can be appointed to an office because of rota, vote gathering and all the other disgusting ways these pigs ply their craft.

      I wonder what suggestions people may have on this forum for the top people for the various jobs
      would be? Suggestions welcome. :-)

      Taoiseach: __________

      Foreign Affairs:__________




      etc, etc.

      • pauline

        I’d actually go further and write the laws for them and just have a vote to go..


        Basically Bertie went through our laws and removed all traces of “Englishness” from them but most likely all traces of responsibility as well..

        We’re an educated population, we have lots of people who care and understand how law works so can advise on issues with wording/implications…

        The politicians have to work within the system.. the system has been created by the politicians. we need to fix the system.. then the politicians since we so far have very few people in our government i would trust..

        i wrote to Enda Kenny before the election saying that we should have a multiparty debt renegotiation team so that politics stayed out of it…
        and face it who wouldn’t want Gerry Adams on your negotiation team ;)

        He said his party was well capable.. doesn’t look like that now..

        Funnily enough I can’t think of one person in the government who I could put on your list that would change anything.. sad isn’t it.

        • Mark Walsh

          Pauline, one of the reasons I proffered the 2nd option is to highlight our inefficiencies of our government.

          I have spent approx 13 yrs in DC working in the Gov Relations industry. It always amazed me how a population of approx 321,000,000 only had 535 (100 Senators, 435 House of Representatives) elected/voting members of Congress.

          This is not to say the US is perfect, far from it. It is as cumbersome as any bicameral legislature in the world.
          However, the facts remain:

          Elected US Politicians/Public ratio 1:600,000
          Elected Irish Politicians/Public ratio 1:27,000

          One could argue the Irish voters have greater influence on their TD’s than their American counterparts.

          This prompts the question; what forms of influence? From the fiscally malevolent to the pothole restoration or lost passport projects?
          Outside of cabinet our TD’s are simply local councilors & the best paid local councilors with Rolls Royce pensions to boot.
          (They could as easily attend to potholes & passports within their constituency without the need to travel to and hang-out in the Dail bar.)

          But I digress. Back to the mathematics. Let us look at the numbers if the Irish system is better than the US and vice versa.

          Ireland Is Better (1:27000)- The US would have 9629 House of Reps & 2222 Senators. Total- 11,888 elected politicians. (Mayhem, the same mayhem we have in Ireland)

          USA Is Better (1:600,000)- Ireland would have between 7-8 TD’s

          I think 8 is too low, but I know that 166 is obscene.

          Thus, my idea for a National Executive, directly elected by the people, with 15 cabinet seats available.


          • Malcolm McClure

            Mark Walsh: Thanks for a thoughtful analysis of one aspect of the problem.

            I agree that 8 TDs is to low and 166 is obscene.

            May I suggest about 1 TD for each 100,000 of population assigned as follows:

            TDs Population
            Dublin 6 1,270,603
            Cork 4 518,128
            Galway 3 250,541
            Kildare 2 209,955
            Limerick 2 191,306
            Meath 2 184,034
            Donegal 2 160,927
            Tipperary 2 158,652
            Wexford 2 145,273
            Kerry 2 145,048
            Wicklow 2 136,448
            Mayo 2 130,552
            Louth 2 122,808
            Clare 2 116,885
            Waterford 2 113,707
            Kilkenny 1 95,360
            Westmeath 1 85,961
            Laois 1 80,458
            Offaly 1 76,806
            Cavan 1 72,874
            Sligo 1 65,270
            Roscommon1 63,898
            Monaghan 1 60,495
            Carlow 1 54,532
            Longford 1 38,970
            Leitrim 1 31,778

            Totals 48 4,581,269

          • bonbon

            Odd : a total overhaul of a republic’s structure, rather than simply voting for the oldest party.
            Weird to claim “inefficiencies” caused this debacle.
            And how exactly would a total overhaul prevent a financial disaster?

            We nearly elected an “entrepreneur” president, but were saved at the last second by the TV denouement.

            Confront the no-growth policy at the root of the disaster and see then what needs to be done. Obama is the instrument for this destructive policy in the US, and the entire gaggle of candidates are either in hedge-fund pockets, or have not the slightest idea of growth economics.

          • Mark Walsh

            Malcolm, many thanks for your breakdown by populated areas and 48 sounds like a good number to begin whilst reserving the right to pare back to a lower number should the people see fit to do.

            I still like the idea of voting ministers directly to their portfolio though. It would eradicate the school teacher pathway to power. Instead we would have a selection of industry experts putting their names forward for their respective areas of expertise.

            This approach would negate the notion of an accountant/barrister as Minister of Defense, a barrister being Minister of Finance, an school teacher being Minister for Foreign Affairs…I could go on and on.

            Bonbon, I didn’t mean to imply that this new structure would prevent a financial disaster.

            That said, I do believe it would mitigate one in the future. What we had with Bertie and Biffo was a total denial and abdication of responsibility. (Lehmans this and Lehmans that, global financial collapse etc.)

            In regard to the Sean Gallagher/Michael D race, who cares? It’s a seven year ride to nowhere.

            In relation to overhaul- yes, I firmly believe it needs to be done. Iceland have shredded their constitution and now their people are creating a new one; moving into the 21st century learning from the mistakes of the 20th century.

            Are we more wise to stick with our constitution that essentially denies individual voice, that someone like David Norris has to scramble around the Dail/County Councils in order to get on the ballot? If I wanted to vote bonbon for the Aras I could not do so as you were not nominated by a political party or combo of county councils….madness.

            As for Obama…you know what’s going on in the US. It doesn’t matter if it’s Mitt or Barack, the shadow government in cahoots with the shadow banking system dictate everything to the President elect a few weeks before he takes the oath of office.

          • coldblow


            I agree with your point about structures and inefficiencies not being the root cause. I used to think that the old British state machinery was to blame (Michael Hennigan on irisheconomy.ie seems to imply this too when he refers to outdated ‘Victorian’ structures) but really I think it’s all a bit of a red herring.

          • bonbon

            In Iceland, their constitution saved them – the president exercised his option against the corrupt parliament. In the US the corrupt Congress has not the guts to impeach Obama for NDAA, Libya, Obamacare…

            A presidential system is quite different from a parliamentary (British model) one. Separation of powers, checks and balances must function, or unfettered financial power will always find a way to “shadow” everything.

            The west has been at this for over 250 years – I think Franklin understood exactly what to do.

        • Mark Walsh

          bonbon, when citing “inefficiencies” my intent was to highlight the lunacy of having 166 sitting TD’s.
          Our parliament is essentially a talking shop, save for those in cabinet. The remaining deputies are excess fat in my opinion.
          We have a fully stocked civil service to pamper/beat-up our cabinet, so I see no justification for the rest of the TD’s hanging out in the Dail.
          I reserve the right to be wrong here. I would like for someone to convince me of the return on investment the public gets for sending these folks to Dublin to enjoy €100k pa + the Rolls Royce pension scheme.
          Could they not better serve their constituents by being in the constituency every week?
          Surely Ivor is example enough of this political orgy.

          • bonbon

            Fair enough. Any changes should show how they would deal with the banking crisis, EU breakup, economic recovery.
            Simply pulling seats or paychecks, cars, expecting spontaneous improvement reminds me yet again of Mandeville and Hayek.

      • bonbon

        Switzerland has a famous system, but still insanity can grip elected minds. For example the hysterical German atomic exit tsunami washed over the border to Bern. The Greens, and the green party elements are the root of this, which is linked to the no-growth financial elements.
        Bern is dealing with this now.
        Still they were not crazy enough to join the EU/Euro – the population discussed it and points were well aired. You can imagine what they say now!
        They have the United Banksters of Switzerland, a world player in the worst financial cellars.

        Anyway all of this with a different system. Unless the no-growth/green ideology is confronted, no system will function for long.

  33. Grey Fox

    Text from IT this morning:
    “We drafted the text for the treaty so that it has a chance to avoid a referendum,” this from a nameless, faceless and unelected official in Brussels,
    Asked whether the authorities in Brussels believed a referendum was likely, the official said it was more a matter of hope. “It’s not in terms of likely or not likely, it is hopefully or not hopefully, so we’d hope they don’t need to go to a referendum.”
    Do the people of this country believe the more power that is devolved to Europe will mean the greater the protection for democracy? HA!
    These people are trying to take away our democreacy even before they have the power! think of what the future holds if we give them any power.
    INDAKINNY is dancing to their tune make no mistake, but in the name of God can he not see how scared they are, they are petrified of us Irish people and that is our strenght to bargain for a better deal or simply decide not to bargain, take their stick off them and give them a few cracks of it across the back of the legs and maybe just maybe we will get the message across and a little of our Sovereign dignity back at the same time. What a history we have with Treaty voting, fool me once etc.. if we let them fool us twice then the game is over and it is time to head for a country which tells you up front they they are going to trample your Human & Civil rights, where we actually know the face of the devil we are dealing with, and they don’t pretend to be a Democracy.

    • bonbon

      It is necessary to say clearly what this Compact is – it is fascism. Tremonti of Italy pulls no punches in his new book, posted here, labels the Compact an act of war. They have declared war on democracy, national sovereignty. This is a regression to “governance” – a gang.

      Austerity as law will destroy the economy. There is no mandate for this whatsoever.

      To counter fascism, pull out the Nürnberg code – do not flinch. Anyone in their position who COULD have and SHOULD have known what their policy did will be judged at the next Tribunal. We are headed directly there. Signatures on Bank Guarantees, health-care cost cuts, will be evidence.

      This is why they are desperately trying to be “NAMELESS”, “FACELESS” bureaucrats and set the local political fools up for a tribunal. They instinctively know there is a tribunal in their future, and cannot change the 16-wheeler truck’s direction.

      They have an appointment in Samara.

    • bonbon

      The nameless Fiscal Compact planners have shown a black sense of humor – Jan 30 is the anniversary of Hitler’s power grab, and is worse than Brüning’s austerity.

      • Grey Fox

        Also the anniversary of Bloody Sunday and the most terrible attck on Civils rights this Country has ever seen, also a clear idication of how scared an establishment can become when the people rise up in search of truth and justice.

  34. coldblow


    It seems like they are building a desperate last few yards of road for the can kicking finale.

  35. bonbon

    Austerity Merkel Earns “Frau Kommissar” Title

    The alleged “German victory” at the Brussels EU summit, where 25 governments signed on to a drastic austerity regime called “fiscal compact,” will soon prove to be a Pyrrhic one: Most of the rest of Europe has been rallied against “Frau Kommissar Merkel,” and the hug which the German Chancellor got from Britain’s Prime Minister David Cameron in Brussels indicates a British interest in this German-made insanity.

    Cameron, by the way, declined to sign on to that pact.
    The summit yesterday gave the go-ahead for a new austerity pact, which is not only to implement a “debt brake” (total budget balance) in all 25 countries whose governments signed the pact, but also a rigid supervisory fiscal regime short of imposing a real EU proconsul for a “problem country.” The EU Commission is given the right to sound the first alarm over “violators” of budget discipline, so that some, as yet unappointed authority (either the government that has the half-year rotating presidency of the EU, a group of select governments, or another new body) can take that violator to the European Court, which then can rule in favor of fines and sanctions.

    Any new bailout is made strictly dependent on utmost budgetary discipline of a recipient country (the banks there, that is). Furthermore, the signatories want the ESM to go into effect on July 1. Its leveraging capacity is still to be fixed by the big EU Summit in March, but it certainly is above EU500 billion.

    But under the sarcastic headline, “Alles Klar, Frau Kommissar,” Germany’s weekly {Der Spiegel} already hints that the fiscal compact package will run into enormous roadblocks — because of the arrogant conduct of Merkel. Ratification of the agreement, which is required, because the pact changes aspects of the existing treaties so that more fiscal sovereignty can be transferred to the EU institutions, will meet strong opposition in several of the signatory countries.

    In France, for example, Socialist Presidential candidate Francois Hollande has declared that he opposes the “debt brake” of the pact, and if elected President, he will not introduce it in France. Even if Sarkozy were re-elected, he would depend on the Socialists’ votes to get the pact ratified. Ireland will have a referendum and not just the parliamentary procedure.

    And the unpopularity created by Merkel’s obsessive pro-austerity drive throughout the rest of Europe, will make the ratification of this “pact,” which is widely seen as a “German dictate,” difficult in Italy, Greece, and other countries. The Greek news daily {Ta Nea} has a cartoon showing Merkel acting as a puppet master, with the banner headline: “Nein! Nein! Nein!”

  36. bonbon

    Austerity for Governments but a Trillion for banks. Nice deal eh?

    The EU/Eurozone summitry, including the flood of media “soundbites,” is actually being made totally irrelevant by the banks’ own steps to secure the money they urgently need right now, rather than wait for some summit decision to come at some time: as leaked by the FT, particularly the bigger European banks plan to borrow EU 1 trillion from the ECB’s special window at the end of February.

    And the word is already out among bankers that this will naturally not be the end of borrowing, that more money will be required soon. None of that money will reach the real economy, of course: already, the EU500 billion special loan which the ECB granted the banks in December, is being parked in the overnight accounts of the ECB, to be speculated with during the day, only to be parked away again the next night. And that is being done at constantly rising volumes. At the end of last week, it was already EU528 billion.

    This freshly-printed money is already in the hands of the bankers, whereas the money promised by the IMF, EFSF, and ESM, does not even exist yet, except on the paper on which the summiteers wrote down their commitments.

    Therefore: Why only borrow EU 1 trillion at the ECB, why not EU 2 or EU 3?

  37. fod

    Economic Terrorism
    The term economic terrorism is strictly defined to indicate an attempt at economic destabilization by a group. More precisely, in 2005 the Geneva Centre for Security Policy defined economic terrorism in the following terms:
    Contrary to “economic warfare” which is undertaken by states against other states, “economic terrorism” would be undertaken by transnational or non-state actors. This could entail varied, coordinated and sophisticated or massive destabilizing actions in order to disrupt the economic and financial stability of a state, a group of states or a society (such as market oriented western societies) for ideological or religious motives. These actions, if undertaken, may be violent or not. They could have either immediate effects or carry psychological effects which in turn have economic consequences.[1]


  38. Thanks David

    This is all smoke and mirrors. It is election year in America and the media are keeping people stupid with the presidential circus. It takes their minds off reality

    Politicians are there to put rules in place and in Irelands case there were no rules and regulations keeping the banks in check. Mama Harney and crew are to thank for that. Enda Kenny’s remarks are sickening but they only show us the true allegiences of our politicians. They are sleaze merchants and it sickening to think that this guy would still get elected if there was an Irish election in the morning. Mad they are I tell ye!

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