February 20, 2012

Why make a drama out of a crisis

Posted in Sunday Business Post · 193 comments ·
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When the left and the right are at one about something, you know there is something odd happening. Both the left and the right believe that Greece should not be lent any more money and, interestingly, they both see the banks as the only real beneficiaries.

For right-wingers and those who, in economics terms, believe broadly in what is called the Austrian school, lending to Greece is plain stupid. They say that lending to any entity that has a debt-to-income ratio of 160 per cent and an income that has just contracted by 6 per cent is lunacy. Would you lend to someone with that type of profile? The right believes that bankruptcy is not just unavoidable, but essential. For them, bankruptcy is a crucial part of capitalism.

When they see French and German banks – which have been defaulted on already by the first Greek haircut – negotiating to give the Greek government yet more money, they despair. They see the Greek people being put on the hook for the profligacy of the Greek government.

Because they believe in the notion of small government (the smaller, the better), they see little connection between what the government spends and what the people receive. If you believe that the government is an illegitimate oligarchy lining its own pockets, then putting the average citizen on the hook for the oligarchs is a scam.

People who believe in the Austrian school of economics also believe in something called “creative destruction”. This means that, when companies go to the wall, they more or less deserve to. More importantly, you only prolong misery by keeping such companies alive.

They therefore contend that many banks in Europe should be wound down. In fairness, this might yet happen if you think about what is happening with Greek debt and what might be next.

Initially, the banks that lent to Greece said they would not accept any haircuts on their loans. They insisted on being paid in full. Then they said they’d be willing to accept a 30 per cent default. A few months later, they are now saying they would be prepared to accept 60 per cent. If you are a true capitalist, the banks should accept 100 per cent default and, if they have to be put into administration, so be it. Creative destruction will take its course, and other banks – new banks – with new capital will emerge.

So, for the right, keeping Greece in bonded servitude with yet more new loans and no full debt default simply keeps the banks open to keep financing a corrupt oligarchy.

For the left, the conclusion is similar: the banks are being protected at the expense of the citizen. But they come to it from a different angle. The left (broadly) sees the citizen being asked to suffer austerity, yet there’s no austerity for the banks. The left also see the default of the banks as essential, not so much to teach the banks a lesson in capitalism, but because it is not fair to reduce public expenditure on hospitals and social welfare, and pay the banks in full with scarce money.

They also see what is going on, which is that the next bailout of Greece will extend money to the Greek government, but that they will use this money to pay the banks. Now this means that, gradually, the EU is socialising the banks’ debts because, if you’re using public money from Germany and France to bailout out Greece again, what are you actually doing? You are putting the average German taxpayer on the hook for the mistakes of French banks and others that are up their necks in Greek debt.

So both the left wing and the right wing are in agreement – that plodding from one crisis to the next is the wrong thing to do. So why is it happening?

Maybe what we are seeing is an unholy alliance between the interests of the financial markets casino, mainstream politicians and permanent bureaucracy, all of whom are interested in stability – more of the same.

The casino is interested in this because it makes money. The more the game goes on, the more money the casino makes, and the more the crisis is prolonged, the less it affects the short-term needs of politicians to get re-elected. The reason bureaucrats like stability is because they have created the status quo that we describe as political and institutional stability.

Consider the reaction of these three crucial players at the end of the week to the news that, after a bit of haggling, Greece will get another chunk of money to pay the banks next.

The financial market experienced mini-euphoria. The Greek debt mess is to be ‘resolved’ for another couple of months.

Greece will continue to limp on, it seems, with unemployment at 20 per cent and rising, collapsing economic output, widespread social unrest, rising poverty and inflation running at 5.5 per cent on an annualised basis. This is not good for Greece, but it’s good for the markets and the banks.

The politicians avoided a big decision, and the bureaucracy got more of the same. All the while, the rules of capitalism are mangled, yet the people who are supposed to be über-capitalists on trading floors and in investment banks cheered. The people are being asked to put up with more austerity, yet the social democrats in Europe hailed more money for the Greek state as a victory. And all the while, the enormous European machine demands more centralisation, which will create an even bigger bureaucracy to be nourished.

There has been a lot of talk these past few weeks about the “squeezed middle”. Well, what about the “bloated middle” – the comfortable “insiders” in the financial markets, the banks and the political bureaucracy who, in the face of difficulties, never get fazed, never change and never pay? After all, why make a drama out of a crisis?


  1. Lius

    But what can the average Citizen do, we carry-on with our daily toil to feed our family hoping that our job does not go next. We are afraid that if we protest we will either make things worse or be singled out for sanction (especially the Public Sector employee).

    It is now safer and less painful to look away and get on with our increaslingly desperate lives, that’s what the insiders want, they have beaten us hands down.

    • atchman

      Spot on – to quote Upton Sinclair

      “It is remarkably difficult to make a man understand something when his salary depends upon his not understanding it”

  2. Malcolm McClure

    David: I respectfully disagree with your analysis. Creative destruction can have unintended consequences. An economic war in which devil takes the hindmost can be just as debilitating as a hot war.

    The Greeks are real people who have suffered greatly in a multitude of wars. Their experience cannot be judged from the vantage point of Ireland, which hasn’t been invaded since the 12th century.

    And don’t talk to the Greeks about Drama: after all, they invented it.

    • 34m0

      Malcolm, I don’t think David necessarily agreed with with the creative destruction argument. He merely stated the Austrian view point.
      What he did neglect to mention was the other school of economics on the right: the Kensian one.

      • Deco

        I suspect you are correct.

        Keynesianism, as it is currently practiced in the West, since the 1970s, makes a promise to the left, and engineers a result that seems to save the rich.

  3. Adam Byrne

    subscribe.

  4. Tony Brogan

    David, why do you devide us in to left and right. i see both sides of your described view points. Banks are private businesses that should go to the wall like any other business when they make bad decisions.
    why should the taxpayer pay to support these business failures. That makes me a split personality by your reckoning.

    you still do not arrive at the only solution. You can not see it or you will not believe it. Revert to sound money. Revert to honest money. give the people back their birthright of comodity money.

    Commodity money protects against bank induvced inflation by acting as a storage or wealth. Commodity money is not easily produced and so is not inflationary.
    commodity money gives the people something worth saving. Monetize a one ounce .9999 pure silver coin. Fire the central bank, what has it done for the people lately.
    commodity money can’t be spent into huge deficit financing like paper computer money. It keeps government spending under control . It disables funding for wars and wild schemes.

    give the people a solution David. You have planty of questions but no answers. you are a Keynesianist. As susuch you are a part of the problem. I do not know if that makes you left right of centre but it doed make you wrong. Deadly wrong, debilitatingly wrong.

    When are you goung to see the light and get it right. At the moment you are left behind.

    If you want a solution to have a plan to monetize a silver one ounce coin I have such a plan. when I politely email you I get no reply. So far you are a complete failure as an advisor as you have no solutions yourself and you will not discuss potential solutions from others.

    Ireland and its people need answers not inumerable questions.

    • Hi Tony,

      Isn’t this similar to the situation we are in now: a currency that is pegged to an artificially high value? Whether the pegging is to a bar of gold or silver, or to the German economy, it still means the govt has no room to manoever in terms of monetary policy, and hence prolonged crisies like this one.

      To be honest, I’m still trying to wrap my head around that one. Its not at all clear to me that a commodity-backed currency is better than a fiat one.

      • Tony Brogan

        Hi Liam
        First of all I sujested just allowing the poeple a chance to save in silver coin.I am not prposing at this point to disband to current fiat system. As an initial step add silver coin to the option. It will be a fixed weight and purity. Point 9999 purity of fineness of silver and one troy ounce weight.
        It’s monetary value would be set to be at least 20% abouve the spot silver price. It would have no printed denominated value. It would simply be a weight and fineness of silver.
        Ona weekly bases the monetary value would be set by treasuery, as follows
        Using euros at present but it could be in any other currency of your choice.
        The current spot price of silver is E25.40. Plus this by 20%(There is a cost to minting and production and distribution and a seigniorage for profit to the treasury)= E30.48 Round up for simplicity of adjustment to the next multiple of 4 =E32.00
        so the monetary value of this coin would be 32 euros and the treasury policy would be for it to never drop regardless of what thge spot price does. So the world spot price of silver falls to 28 euros and this has no effect on the monetary value of the coin.
        BUT as the market spot price of silver rises then the monetary value of the coin adjusts upward.
        Imagine the Spot goes to E27.50 plus 20%= 33.00 move to the next multiple of 4 to = E36.00. This monetary value is reviiewed every weekend and only adjusted upward if required, but it can never fall.
        What would you prefer to save in. Paper money constantly devalued by inflation or a silver coin that can only increase in value and so protects you from inflation.
        In addition this coin is always money in any currency around the world as it has become legal tender, and it is a commodity money that will always retain it’s intrinsic value which in this case is the worlf spot price for silver.
        your Euro bill is not able to be spent for goods and services outside the euro zone but the silver coin will.
        this coin is nothing to do with a gold or silver standard. It is simply sound money that is not a debt , owes no one anything and is not backed by a counterparty who may fail and is not a worthless irredeamable bank note.
        given the choice you would choose to save in silver coin rather than paper money.

        To grasp the concepts of the benefits of commodity money, Read “Paper Money Collapse” by Detlev Schlichter. It is brilliiant in is explanation.

        The reasons why the governments have no room to manouver today, as you put it is for another reason. It is the debt trap. As an individual you know the following. If you spend more than you earn then you must borrow. borrowing must be repaid. Ignore interest even, although interest exacerbates the problem. The borring must be repaid either in a series of payments or a lump sum. Either way it comes out of current income. If your situation is still the same and you are spending more than you earn then of course you have to borrow more.
        Well, quickly this gets out of hand and either you radically cut back on your expences (personal austerity) of nobody will lend you any more money and you are forced to do without whether you make the choice or not. you have entered the debt trap. Soon you are borrowing just to pay the interest on the loans and you will never get out of debt. This is where all governments have arrived and no matter how much new money (debt) is added to the system we will not recover. Default by nullifying the debt or by inflation or the choices. governments will choose inflation which will get out of control and result in hyperinflation and there will be a depression at the same time. you feel it already in ireland.
        toi protect yourself personally is to acquire commodity money, gold and silver and hatrd assets like farm land to feed yourself.

        Hence my suggestion of the government providing the monetization of a silver ounce silver coin that will protect the people from inflation and give them a money supply useful in the comming collapse.
        All taxes should be removed on the purchase of gold and silver as it is really a tax on the acquisition of money

    • onq

      Tony,

      You seem to be suggesting that we go back to the Gold Standard (call it Silver, whatever). Creating an absolute reference point doesn’t seem to be a way to solve economic problems. Its an island in the stream.

      If you’re going to go down that road then you need to stop trades in money and fix all currencies relative to each other.

      If not, surely the strength of the local economy will be reflected in the relative values of currencies.

      But Europe’s problem is that it is composed of not just currencies, but economies – economic areas, political areas – entire regions where the way peoples taxes are gathered is questionable.

      You have the little guys running black markets to avoid tax. You have the big guys with companies getting preferential tax rates. You have the biggest guys becoming registered in some flyspeck country and paying no taxes at all.

      All of this distorts the tax regime and means that the people actually making most of the money are not paying their fair share of taxes, which are paid by the self-employed and P.A.Y.E. workers who are inescapably scrutinized by the Revenue Commissioners.

      We need to take a view on tax evasion and avoidance and ensure that people who make money over and above a minimum level – pay their taxes.

      • Tony Brogan

        onqsays:

        February 20, 2012 at 12:16 pm

        Tony,

        You seem to be suggesting that we go back to the Gold Standard (call it Silver, whatever).NO THIS IS NOT ANY GOLD OR SILVER STANDARD. iT IS SIMPLY A WAY TO USE AND ENJOY REAL MONEY, HONEST MONEY, SOUND MONEY.SEE MY REPLY TO LIAM ABOVE. Creating an absolute reference point doesn’t seem to be a way to solve economic problems. Its an island in the stream.

        A GOLD STANDARD IS THE ONLY WAY TO WORLD PEACE AND PROSPERITY. NOT A BOTCHED UP HALF ASSED PART GOLD SYSTEM OFTEN MISDESCRIBED AS A GOLD STANDARD BY THOSE TO LAZY TO FIND OUT WHAT A GOLD STANDARD IS AND SPOUT OFF AS IF THEY KNOW WHAT THEY ARE TALKING ABOUT. I ENCOURAGE ANYONE TO CHALLENGE MY STATEMENTS AND TO DEBATE AND WE ALL LEARN. I AM A HOME SCHOOLER AND I THINK I KNOW WHAT MAKES THINGS TICK BUT I COULD BE WRONG.

        A TRUE GOLD STANDARD MEANS THAT ALL CURRENCIES AND GOODS AND SERVICES USE A ONE OUNCE OF PURE GOLD BULLION AS THE STANDARD. AS THE MEASURE. ALL THINGS COMPARED TO GOLD. NOTHING IS IS FIXED TO GOLD AS A STATIC AMOUNT. THEREBY LIES THE PROBLEM IN FIXING THINGS TO GOLD. IN ANCIENT TIMES IT DID NOT MATTER WHICH VILLAGE ,TOWN, OR COUNTRY AN OUNCE OF GOLD WAS AN OUNCE OF GOLD. THAT IS THE STANDARD. IT IS MEDDLING AND INTERFERENCE BY GOVERNMENT AND THE BANKS FOR THEIR OWN BENEFIT THAT THEY SCREW UP THE SYSTEM.
        YOUR IGNORANCE IS FOR THEIR BENEFIT. THEY HAVE YOU WHERE THEY WANT YOU AS A DEBT BURDENED SERVITUDE MONETARY SLAVE. GOLD STANDS ALONE AS THE MEASURE , THE ABSOLUTE STANDARD. MESS WITH IT AT YOUR PERIL.

        If you’re going to go down that road then you need to stop trades in money and fix all currencies relative to each other.NO ALL CURRENCIES AND ALL OTHER THINGS FLOAT AGAINST GOLD.

        If not, surely the strength of the local economy will be reflected in the relative values of currencies.

        OF COURSE. YOUR AN INEFFGICIENT, LAZT SOB YOU’LL HAVE A LOWER VALUED CURRENCY AGAINST GOLD. IT WILL TAKE MORE OF YOUR CURRENCY BUT THE SAME AMOUNT OF GOLD TO BUY THE GOOD OR YOU WILL RECEIVE THE SAME AMOUNT OF GOLD FOR YOUR GOODS WHEN YOU SELL THEM AND THE REQUISITE AMOUT OF CURRENCY.
        THE GOLD STANDARD IS EQUAL OPPORTUNITY NOT EQUAL RESULTS AS IN SOCIALISM

        • onq

          I don’t know what a “home schooler” is Tony. Deos that mean you didn’t attend school much when you were younger and you’re self-thought subsequently via books and online sources based on the home? Good for you.

          Before suggesting a monetary fixed point as a solution, you should the research the failure of the several kinds of Gold Standards, which was brought about by Word War and market speculation.

          http://en.wikipedia.org/wiki/Gold_standard#The_gold_bullion_standard_and_the_decline_of_the_gold_standard_.281925.E2.80.9331.29

          The same forces which engineer war and shortages also cause runs on currencies of any sort and forces currencies to leave the Gold Standard.

          There are other issues with the Gold Standard, but the one I’m focussing on is that its been undermined before and there is a historical file on this. Its not invulnerable or a solution to our problems.

          Only be addressing and limiting the power of market speculators for the common good can we approach any sort of stabilization in our economic system.

          That, plus taxing those who avoid tax at the moment

          - the Inter Bank lending market

          - the Over The Counter Derivative Market

          - the Offshore Account Holders and Tax Exiles

          - the Low Corporation Tax

          Only by limiting Pirate Speculators and Cowboys who don’t pay their fair share can we return the world economy to health.

          The Gold Standard (reprised) won’t do it.

          • onq

            Word War — > World War

          • Tony Brogan

            Hello Onq
            how’s your day??
            Yes basically I could not understand the opinions of the financial writers and I finally through circumstance and persistance figured out a few things.
            There is no system that will not fall prey to corruption. The true gold standard can be and as you note has been subverted by politicians at the urging of bankers. a war can not be propogated without money and there is not enough money under a gold standard to stimulate the economy into a war without destroying the rest of the economy. So the PTB go off the gold standard in the national interest and besides the devastation there is the inevitable inflation and the attendant national debt and interest charges.
            It is a matter of education. If the population understood, it could not happen. Ignorance allows it to happen.
            The internet is a great educational tool and hopefully one person at a time will see the light. Our job is to educate the next who will pass the message.
            In the meantime protect youself with your own gold and silver stash, and a piece of productive farmland.

    • redriversix

      Here is the solution,cancel all debt and start over , yes.their will be problems but can they be any worse than what is in store for us ? because it is going to get worse………….

      • molly66

        Yes that would be the way forward but Greece like Ireland is being run by a bunch of self serving puppets all I hope is when there elections are held ,the Greek people might turn this scam into the grave where it belongs.
        Why is it always that the wrong people get hurt through no fault of there own,is it Greece or Ireland I am talking about ,kenny has a real puppy now beside him lUcinda c she really believes all that spin waffle she comes out with so with people like that running the country what chance do we have,I got the leaflet in the post the hundred euro one ,I use it to light the fire .

        • molly66

          530 tv3news Irish government say greece needs to return to growth what planet are they on,let’s kill the country and it will return to growth what waffle and spin.

    • Jimmy

      Hi Tony,
      The last paragraph in this article reads
      “This probably is not going to stop until there is massive world-wide outcry and political change, a “black swan event,” or both. Let’s hope the first gains steam along with some long-overdue accountability for fraudsters before these nefarious banks destroy the body politic with their hubris and greed.”

      http://www.zerohedge.com/news/guest-post-counterfeit-value-derivatives-follow-bouncing-ball

      David,if you have time to read this. I would love to hear your thoughts about it.

      Well worth a read.

      Jimmy

      • Tony Brogan

        Well Jimmy, get some gold and silver befroe it goes out of sight in that script you call money.gold will be the last man standing and silver his bride.

  5. Lyndon Jones

    The ECB made its decision that it would protect the banks at the expense of the citizen, look what happened in Ireland , 70 billion of bank debt now sovereign debt.
    They chose to save the banks at the expense of the sovereign, this was Trichets legacy and Brian Lenihan carried out his order and now Noonan is doing the same .
    The banks have had all this cash and they just carry on as before in terms of salaries and bonuses, very few bank workers have lost jobs .
    Why they chose banks over the people is anyones guess , it doesnt make much sense to me.

    • Plutonomists prerogative.

      It is a world of major resource scarcity on many levels, where the priests of inflation together with their disciples of economic growth are the dominating force since the 70s.

      In former times, textile mill workers in the U.S. stood up against the oppressors that controlled labour by brute force and at gun point.

      The tools of control changed when David Rockefeller established the Trilateral commission in 1973, at the very beginning of the neo liberal agenda.

      • redriversix

        Nelson Rockefeller was Vice-president to Gerald Ford from Dec 74 till Jan 77.The former Governor of New York became VP to Ford after Nixon,s resignation………….

    • From Spiegel Interview:

      Why does Europe insist on the bailout packages for Greece?

      Prof. H.W. Sinn: This is not so much about Greece.

      This is about financial Institutions and Banks, from Wallstreet to London and Paris. They took the Greeks hostage to force this never ending flow of bailout packages, not towards Greece, but into their own pockets.

      In German:
      http://www.spiegel.de/wirtschaft/soziales/0,1518,816291,00.html

  6. cooldude

    David that is a good and fair synopsis of the Austrian viewpoint of not only the Greek situation but the whole banking system in the western world. What we have now is nothing whatsoever to do with capitalism. It is a crony fascist version where the banking elites are actually the ones really in charge and are dictating the policy through their unelected officials like Von Rumpoy. What we need to return to is an actual free banking system where there is ease of entry for new participants and failed entities are allowed to fail when they make stupid over leveraged decisions. We need to separate banking from the state and let them operate with the clear knowledge that if they mess up they go under. This would stop the ridiculous situation we now have in London where these failed entities are once again paying massive bonuses to their top staff for gambling with tax payers money. Unfortunately the only solution will probably be a collapse of the entire banking system. We have not even mentioned the $700 trillion global derivative market. This is all just another form of gambling and is the real reason Greece is not allowed to default as that would trigger massive payouts in the credit default market and would bring down the major US banks. To get some idea of how dangerous this market is total global GDP is $56 trillion or only 12.5% of this off balance sheet gambling market. This system is failing and will result in a currency crisis through debasement of paper currencies. The only protection against this is through owning assets that cannot be debased such as gold, silver,land etc.

  7. Philip

    I wonder if what is playing out is just a social phenomenon that needs to be properly engaged rather than distracting people with the notion that it is down to plain old economics and book balancing.

    It seems to me that what we are lacking is a professional distance among the specialist groups. We have half hearted attempts at purging conflicts of interest. But there is still too much opportunity to game the system to keep it stable for these groups (bankers/politicians/public servants). For example, there are very clear codes for maintaining professional distance in areas of accounting, law, medicine, policing and even in buyer/ seller relationships that prohibit any form of informal off the record exchange.

    This is the real sickness. Conflicts of interest that seek to maintain stability for the “in” few at the expense of the increasingly anxious “many”

    • Philip

      I give one example – Iceland. The professional distance of the president relative to the cabinet was very clear (either he was courageous or was forced to be distant – another story).

      A lot of the rubbish we are taking about with banks enlarging soveriegn Debt etc is oxymoronic. The sovereign makes money and by the power of the central bank can turn off same and wipe debts and reset the system according to the dictat of the people wjho perscribe the means of this reset (left or right wing or whatever). The very idea that a banker can be socialised is a joke to all ideolgies – unless something less than professional is going on.

      • coldblow

        Re the Icelandic Pres. I remember Colm (cbweb) once holding him up on irisheconomy.ie as a hero. Michael Hennigan (FinFacts) responded with an earlier quote from the man exhorting his country’s financial mini-tigers to be bold little Vikings and go out and conquer the world.

  8. spawny

    Can anyone tell me what would have happenned to the money that savers had in the banks if they had been allowed to fail? I agree that they should pay the consequences but when the investment and savings arms are one and the same and as a saver there is no way for you to see what they are blowing your money on, where do you keep the nestegg?

  9. goldbug

    IT CANNOT GO ON FOREVER…IT WONT

    WHEN THE CRISIS ENDS.. WHAT NEXT?

    WHAT WILL HAPPEN TO THESE BANKER-POLITIC-beuroCRAT BUNCH?

    INVESTIGATION -> PROSECUTIONS.

    HA

  10. CitizenWhy

    There’s High/Main Street capitalism and Bog Banks/Wall St capitalism and agribusiness capitalism and crony capitalism. Big banks/Wall St capitalism is a menace to High/Main Street capitalism. Big Banks/Wall St capitalism has bought the governments of the US and Germany/France, and the government bureaucrats now work for the banks’ best interests, that’s crony capitalism. Agribusiness, which has bought governments all over the world, is a threat to human existence.

    So what are those who want capitalism to work to do at this point?

    And what are those who want to replace capitalism to do at this point?

    • CitizenWhy

      In the long run agribusiness is a greater threat than the big banks and their turning governments into mere tools to cover up their incompetence or criminality.

      If you want to learn more about one US agribusiness giant and efforts to combat its evils, follow Occupy Monsanto on Facebook.

      http://www.facebook.com/occupymonsanto

      • Deco

        Citizen why.

        There is a documentary somewhere about the power of certain big agri groups in the US, and how they effectively control parts of the supply chain, squeezing the producers/workers at one end, and the ordinary shoppers at the other.

        This is the real long term affect of the Reagan revolution in the US.

        People are waking up to what is going on, and how it is restricting the choices of ordinary people, and slowly squeezing society to death.

        No doubt, the big bosses there have a “philantropy” policy, to effect PR stunts while the squeeze people all over the place, and lie and deceive.

        Business operations like this are more prone to interfere in the political process because they are in the process of dealing with a non-level playing field. Their whole business model is designed around it.

        • redriversix

          I think its called “Thrive” Deco

        • CitizenWhy

          Agribusiness in the US is even worse than you might imagine. The leading figures from this industry are the multi-billionaire Koch brothers. They have formed a “leadership grioup” that funds phony think tanks and “citizens” “reform” organizations that are steadily taking over state legislatures by buying off the politicians and writing anti-labor, anti-enviroinmental, and pro-agribusiness laws. Wall St, of course, is cheering them on. All in the name of making America more “competitive.”

          President Obama appointed a Monsanto lobbyist to head the Food and Drug Administration.

      • redriversix

        Hi CITIZEN WHY
        Monsanto, “the Company that gets to patent a corn seed” !!!

        Only in America !

        I believe 19cents of each bail out euro going to Greece is for the “State”

        The balance for repaying debt which is repaying the debt which is repaying the debt before that debt and not forgetting the original debt that started their debt crisis by not having their debt down to the agreed debt level prior to joining the debt ridden euro which Goldman Sachs sorted for them by cooking the books and making the debt look smaller than the debt was…see,its all about debt and of course any business knows you solve a liquidity problem by heaping more debt upon the debt that they said they didn’t have…..

        !!!!!!!!!!!………..now , where was I ? oh yeah …….

        its the debt sea”

        simples !!!

  11. StephenKenny

    Last time round (e.g. Iceland, and several hundred US banks) , no one lost their savings when banks went down.
    All European countries have systems in place to insure savings, up to a maximum amount. The maximum varies between countries.

    When the US Prime Dealer MF Global went down, something like $1.2bn in client account funds vanished, and the financial services sector being what it is now, no one even got their wrists slapped.

    • CitizenWhy

      Savings in certain institutions – those chartered to take savings accounts – are insured by most governments up to a certain point. In the US these banks include svaings and loans institutions, commercial banks (which in almost all cases also operate a consumer/savings bank), and credit unions.

      Investment funds such as Global MF are not banks and their deposits are not insured. Investment funds exist to give much higher returns than the returns from the modest interest payments offered by savings accounts.

      Some investment funds are conservative in their investments. Others are big risk takers. MF Global, as a hedge fund, was a big risk taker and any investor in this fund would know about the risks and the lack of insurance.

      Much of the current financial crisis was caused by investment banks insuring their risks (credit default swaps), that is, exempting their hugely speculative behaviors from any consequences. In the US, when the swaps were too excessive to be paid, the government in effect paid them. Between the US government and the Federal Reserve bank over 16 trillion dollars went into bailing out the big banks. The US government and the Fed contributed to the bailouts of some European banks as well as its own Wall St banks.

      • StephenKenny

        I agree.

        What was interesting, and symbolic, of the MF Global situation was that this missing money was in the regulated client account, and therefore, in principle, not invested and out of reach of the operational side of the company.

        It seems that the rules were just ignored.

  12. coldblow

    Good article but I think the right wing, ‘Austrian’, interpretation, is quite mistaken (I support the ‘left wing’ view as outlined, although otherwise I have big differences of opinion with that world view and am appalled/ entertained by some of their wilful delusions).

    As I said last week, I see the Austrian approach as utopian, even more so than the believers in globalization, who at least could argue for a few years that they were right. I am persuaded by Polanyi (who wrote his Great Transformation (about 60 years ago), I think, largely to refute Schumpeter, whose policies he believed reduce economies “to a heap of rubble”). Using ‘hard’ commodity money and abolishing central banks would bring us back to the time where the latter were brought in to protect societies (including, and in particular, their businesses, which under the gold standard faced far reaching distruption from relatively minor trade and currency fluctuations) from the hugely destructive consequences of the unbridled business cycle.

    I sympathize with some of the concerns I seem to see articulated by the Austrian apologists (in particular the role of the state – in my view there is an unholy alliance between bureaucracy and pc piety) but I share Bonbon’s view that ‘creative destruction’ was always more than a simple description of capialism at work but rather a justification for radical oligarchic intervention. (I think Naomi Klein (Shock Doctrine) goes over the top about this though.)

    By the way, Polanyi seems to have seen ‘pure’ capitalism, such as reigned briefly during the 19th C, as a fundamentalist system which was highly destructive of society. The emergence of central banking, trade unions, protectionism etc were to protect societies from destruction. To seek to return to some pure capitalist state of nature appears naive and utopian in the light of the history of the last 200 years. (As it happens, Utopian is the word Malcolm introduced to this blog in response to historical and philosphical-grounded criticisms of the current set-up.) The ‘Austrian’ contention that capitalism cannot be said to be unworkable because it was never actually tried has even less conviction than those who even now pine for ‘genuine’ communism.

    I don’t know about David’s ‘bloated middle’. The politicians and the bankers seem to be joined at the hip and to share a similarly childish self-centred view of things. I don’t know about the senior bureaucrats – they are probably junior partners only. I dunno, I’ll have to think about it. (Philip has an interesting take here but he’d need to go into it in a bit more detail as I don’t think I quite get it.)

    I mentioned this book before, written by Robert Michels in 1911:

    http://en.wikipedia.org/wiki/Political_Parties_(book)

    Click on the words ‘iron law of oligarchy’ – Michels argued that all pol parties and other organizatins were destined to end up the same way and that rule by the elite was impossible to avoid.

    In yesterday’s Observer Nick Cohen sees the problem as reflex Europeanism on the continent, but I still fell it’s probably just the same old money-politicians thing (without the Opus Dei angle and the other wild, albeit entertaining, stuff).

    http://www.guardian.co.uk/commentisfree/2012/feb/19/nick-cohen-greece-european-union-crisis

    • cooldude

      I just want to clarify a few of the points you have made coldblow. If you go on a fixed inelastic money supply you eliminate the business cycle completely as these booms and busts are always brought about by excessive printing of unbacked money in the form of easy credit which naturally leads to misallocations of this money. You are right that this has never been tried 100% in a modern economy but the closest example we have is the US during the decade after 1879. From 1861-1979 the US went off the standard to initially pay for the civil war and then because there were conflicting opinions as to whether they should return or not. In 1879 they reintroduced 100% exchange of paper for gold. The next decade was the most prosperous in the history of the US. Real wages rose, unemployment was almost nonexistant, prices for goods and services fell at around 3% per annum thus giving savers a huge benefit as the value of their savings was increasing every year. This period has never been matched and is still by far the period of greatest prosperity in US history. JP Morgan and the other major bankers and businessmen hated this because this period brought huge competition in all markets and all businesses had to constantly drop their prices to reflect new competition and new production methods. The facts on this are quite clear but they don’t suit the pro central bank crony fascist business crowd who detest free markets and like to operate cartels in league with government. The modern Austrian view is to allow gold and silver to be allowed back into the monetary system side by side with existing currencies and let the people decide which they prefer. This is quite easy to do and there would be no fixed value on the coins. They would be allowed to appreciate in value as the paper currencies are being debased. Their price could be set every so year or so and be reset as they appreciate. This system gives people the choice to use whichever system they want and eliminates the CGT tax bias that exists against people who hold a portion of their savings in precious metals. Ron Paul is a good proponent of this type of system.

      • Tony Brogan

        Good shooting Cooldude. As a sharp shooter you get 9 out of ten. (there is always room for improvement)
        In the commodity currency the government adjustment may be done as often as necessary to keep the monetary value at least 20% above the world spot price. Adjusting once a yaer might be too little too late if the price of silver doubles again in one year.
        Once the coins start to circulate and are not used just for savings, that will be the time the silver price has stablilized, and the monetary value of the coin will be set by the market and the government setting the price will be superfluous.

        viva Ron Paul

      • coldblow

        Hi cooldude

        Re US prosperity in the late 18th C what is the evidence for this being cause and effect as you argue This is what Polanyi has to say (just happened to come across this bit):

        “There is a sense, of course, in which markets are always self-regulating,since they tend to produce a price which clears the market: this,however, is true of all markets, whether free or not. But as we have already shown, a self-regulating market SYSTEM implies something very different, namely, markets for the elements of producgtion – labour, land,and money. Since the working of such markets threatens to destroy society,the self-preserving action of the community was meant to prevent their establishment or to interfere with their free functioning,once established.

        “America has been adduced by some economic liberals as conclusive proof of the abilitiy of a market economy to function. For a century,labor, land and money were traded in the United States with complete freedom,yet allegedly no measures of social protection were needed, and apart from customs tariffs, industrial life continued unhampered by government interference.

        “The explanation of course was simply free labor, land and money. Up to the 1890s the frontier was open and free land lasted; up to the Great War the supply of low standard labor flowed freely;and up to the turn of the century there was no commitment to keep foreign exchange stable. A free supply of land, labor and money continued to be available; consequently no self-regulating market system was in existence.”

        Michael Hudson takes the view that a move away from free trade to planned production (or something along those lines) accounted for the huge industrial growth in the US in that period.

        No doubt there are other views and probably none of them completely right.

        Sometimes these arguments (not necessarily this one of course) resemble those with Bible fundamentalists. All the answers are to be found in the sacred scripture and none outside of it.

        • cooldude

          You make some interesting points coldblow and it is difficult looking back on history to pinpoint the exact reasons for certain events. I tend to take the views of guys like Polanyi and Hudson with a pinch of salt because these are just their personal views and who knows what their agenda is. I tend to just look at the facts and come to my own conclusions as most of these guys always have some agenda and if the facts don’t suit it then they look for obscure reasons. I don’t want to bore you or any of the other contributors but here are some interesting facts from this era and you can make your own conclusions. The decade from 1869-1879 which was off the classical standard (ie. you could not bring dollars to the bank and exchange them for gold) saw barely any increase in the number of businesses created in the US. The decade from 1879-1889, which coincided with the reintroduction of the standard, saw a massive increase of 39.4% in the number of new businesses created. The GDP went from $11.6 bl (average per year) to $21.2 bl. This percentage jump decade on decade has not even been close to be matched in any decade since. The guys you quote would probably argue that these extraordinary figures are just a fluke but I tend to disagree. Sound money brings stability to business and security to savers and people on fixed income. We have been led down a very dangerous path over the last 100 years with this worldwide experiment in unbacked paper money. My view is it will end badly just like every other single attempt in history and there have been many. The only people it benefits are the people who have been given this extraordinary power to create money at will from paper and the greedy politicians who support them. We have gone so far down this road to insanity it is going to be difficult to get back. The only chance is give people the choice to use sound money again and to remonetize silver and then gold.

          • coldblow

            You are right to take everyone with a pinch of salt. Polanyi was I think a Hungarian Jew and shows a great understanding of history. I tried finding an article by Hudson focussing on his period in US history but i was taking too long. However, this article from Hudson is one of my favourites:

            http://michael-hudson.com/2010/05/neoliberalism-and-the-counter-enlightenment/

            This quote caught my eye before:

            “How the Left lost its way

            “One can understand why right-wing parties avoid making a value judgment between earned and unearned income or acknowledging wealth addiction, predatory behavior and privatized rent-seeking monopolies extracting economically unnecessary charges.

            “But why have the Labour and Social Democratic parties dropped the value judgments and scope of classical economics that made it so effective a force for reform and so empirically and scientifically realistic?”

            Mind you he doesn’t really give a good explanation for why the Left lost its way. I find it a very interesting question. I think it’s largely psychological. Also, I find that the Austrian style values seem to appeal more to intraverts with its eye for an eye emphasis on justice. Extraverts seem to be inclined more to the left wing model (“what’s yours is mine (and what’s mine I keep)”), very likely because this just happens to be the dominant view nowadays.

    • Realist

      Hi coldblow,

      Would you put 2-3 main utopian ideas from Austrian economics so we can discuss it clearly ?

      I want to hear about economic arguments you are calling utopian from Austrian standpoint.

      If your only argument is that the state will always exist and be there to “protect” their citizens as we (people) do not know what to do with our own money, fair enough. Not that I agree with this argument but if that is all I can understand you.
      We will see in the future how it goes as it looks democratic systems are utopian too as they are leading to socialism/fascism at the moment.

      As Austrian economy is based on deductive logic (similar to geometry and not physics observational, inductive logic) starting from “human action” I believe it should be trivial to understand Austrian views.
      I believe that people are hearing wrongly many things about Austrian economy.

      • coldblow

        Hi Realist

        I was expecting you…

        Re your last sentence, that might indeed be the case. I can’t debate details with you, however, as I know little about it. In the same way I wouldn’t (couldn’t) debate the finer points of Marxism with a communist for the same reason. In neither case would I make it a priority to do the study as you have to prioritize and make a decision as to whether the likely rewards merit the time. Also not sure how deductive logic is better in this case.

        I look at your posts but have not been persuaded so far.

        Re your comment about the state – my earlier post links to Michels’ book about the inevitability of oligarchy, so I’m probably more in agreement with you here than you might think. As to the best way to deal with the problem of the State in the middle of a massive deflationary crisis, that’s another matter.

        • Realist

          Thanks Coldblow for your honest opinion.

          I also have no time reading everything neither, especially that economy and politics is not my primary business. And I know politics will never be my business ever.

          I have two main reasons why I invested a lot of time in finance and economy (that is again related to politics even I did not want to go there): I want to know the concepts and basics of every aspect of life, in simple to know what I should do with earned money. The second reason is that I have the most important project bringing my 3 sons and educating them what schools are not going to teach them. I do not want them waste time I needed to, nor wait late 30s to understand many life stuff.

          Deflation is caused by prolonged inflationary period.
          My only worry about all David’s posts and everybody’s discussion is about fixing the mess we are here.
          But the whole point of Austrian economy is to explain basics why booms happen, or to say why inflationary credit expansion is bad.
          Imagine 10x more money fighting for houses around Ireland in 2006/7 and obviously that inflated prices.
          I looked 2 days ago horrified into the unfinished buildings close to Beacon hospital in Sandyford.
          It reminded me of the war in my country where I saw such building after heavy fighting.
          Abandoned 10 or more story buildings ….

          As professional in my business I always focused on concepts and basics, and that is what is missing in economy at the moment.
          Even I did things in mathematics many never heard of I think too much mathematics and natural science in economy brought us to this mess.

          The only proper explanation how things work I found in Austrian economical books and this is why I am frightened when people who never read any book are writing about Austrian economy and what it is.

          Deductive logic is almost abandoned in modern economy by usage of statistics and inductive logic.
          Postivism and natural sciences prevailed into the social sciences too and even I am coming from the natural sciences, physics and mathematics background, I recognize big failure.
          Nobody is thining is what I am saying logical and how I know that. From where is my knowledge coming from and such.

          • coldblow

            Realist

            I understand what you are saying and I agree about working it out for youself, which is what I do and I think most here on this blog. They seem to teach everything these days except the most important things! Hudson looks at the reasoning employed by the Austrians in some of his articles, but draws different conclusions.

          • bonbon

            Logic needs axioms. And all axiomatic systems are incomplete РG̦del. Proven.
            As to axioms, that of “spontaneous unknowable order” is the key element of the Austrian School. It is reductionist, and positivist, and in fact the key statistical axiom. This was very clearly identified by Hayek himself in his Mandeville Lecture at the London School of Economics, as well as by Simon in his obituary.
            This “spontaneous order” is supposed to be unknowable because of its “complexity”. That is an oxymoron. And to protect this spontaneous ordering it must be free liberal unregulated economics. So the intentional order of science-driven economics is “enemy numner 1″.

            So we get to the conflict – an intentional national mission to bring creative order to the economic catastrophe must not be allowed – it might stop “spontaneous” recovery spring from people doing what they want in a complete breakdown as in Greece.

            This is obviously insane.

          • Realist

            Coldblow,
            I will always agree to the proper argumentation.
            This is why I always ask: give me the arguments, not just statements.
            The last thing is for me to think I am correct just because other people cannot tell me the simple explanation why is something wrong.
            I never heard about Hudson, but am always interesting to know more.
            Do you have the links to those articles ?

          • Realist

            Bonbon,
            I am curious how is your brain working, based on what ?
            How am I to conclude what you said is correct ? Based on what ?

            I see nothing wrong with spontaneous order and that markets will function better when left without state interference:
            http://en.wikipedia.org/wiki/Spontaneous_order

            You are pure statist where you believe people will be like atoms and your observational science together with statistics will make us live better.
            We are seeing your ideas failing at this moment in time where economy driven by mathematicians and central bankers (your favourites) are breaking this world apart.

            And we obviously are totally different.
            you are pure statist probably from socialist or communist liking and I am for less state and less government.
            Of course that does not mean banks should behave like this as I am for full reserve banking without central banks and the state influence.

  13. gizzy

    No matter which wing you play on certain fundamentals must be honoured.

    1 If you make an investment and the vehicle for your investment devalues you lose money.

    2 If a Bank loans money unsecured or its security falls in value below its loan you write off bad debt.

    3 You restructure overdrafts and short term facilities with long term loans not as is now happening with overdrafts being given to pay off maturing term facilities.

    So for a solution to this across the Board you need to apply the old basic rules not the ones that have somehow come into being and are being put forward as good economics or banking which they are not.

    1 The investors lose money (write down)

    2 The Banks write off and if they have to write off more than their balance sheet can suffer they are wound down in orderly while savings are transferred.

    3 You then restructure the outstanding national exposures over thirty years. You stop taking this view that you can only lend for the life of a government. Most countries in the developed world operate two party systems and their policies do not differ too much as we have seen.

    4 Once the above steps are taken then you look for balanced national budgets and that may require austerity in some countries.

    To start with the budgets and austerity is morally ethically economically wrong and is just plain stupid. especially when the cut backs are gone beyond anything that the word austerity covers.

  14. RapidEddie

    As always, follow the money. It isn’t the Greeks that are being ‘bailed out’, it’s the European (primarily French, UK and German) and US banks that lent to them. The money goes into Greece, stays there for a moment and then immediately flows back out again to the bondholders.

    in any business activity, there is a notion of co-responsibility. If I’m a billionaire and I choose to invest in cars made out of jelly in a company run by field mice, then the failure of the company may solely be down to the field mice and their unsuccessful product concept, but as an investor it is my own stupidity that is responsible for ploughing money into the company. They go bankrupt. I lose my money. Silly company. Silly investor.

    France and Germany were only too happy to have Greece in the eurozone so long as it meant that they could indulge in profitable lending and have another quasi-domestic market into which they could sell (how many Mercedes would have been sold in Greece if it were outside the eurozone?). They were delighted to make money when the going was good, but don’t want to take a hit now it’s not. The real world doesn’t work like that.

    • Deco

      +1

      The media and the EU are completely complicit in fibbing about what is really going on, when they use the term “seeking a resolution to the Greek crisis”.

      Really, they are preventing a resolution to a bad debt problem in certain banks.

      They are making a crisis for the Greeks, and every “rescue package” only makes it worse.

      Incidentally, Sarkozy’s long term objective is to move the liability from the Greek taxpayers to the EU taxpayers.

      And nobody in the media dares comment about it. Even worse, polticians in The Netherlands or Finland who state that this is the case, are anti-European. Sounds to me, more a case that they are simply opposed to a scam.

      • gizzy

        Main stream journalists in a lot of cases do not seem to dig too far just attend the latest press briefing

      • RapidEddie

        Your point about liability being shifted is well made. At the moment, the French, German, US and UK private banks are on the hook for the intemperate loans they made. Greece defaults tomorrow, they take the hit, they don’t get paid.

        The new bailout will ensure that they get money back. The new bailout in turn is financed by monies from the IMF, EU etc, all funded by sovereign states, which is another way of saying funded by their taxpayers.

        So private European banks get paid. The inevitable Greek default then happens with EU taxpayer money and EU taxpayers getting burned. But that can’t be true can it, because surely those smart people in the EU, IMF, World Bank can see such an obvious ruse a mile off? Maybe not.

  15. Deco

    Excellent article in the sense that it is mentioning things that nobody else is mentionining.

    However, I would not describe the Austrian Economists as the right, or those who are concerned about the citizens taxes as the left. Because neither have much in common, or would claim to have anything in common with the right and left. The left and right as a spectrum for policy analysis is essentially failing to grasp what is happening here.

    Both the Austrians, and groups who are against waste of tax money are essentially on the same point on a different spectrum – both are opposed to crony capitalism. In contrast the institutional left, as exemplified by the British Labour Party, or the US Democrats, is very capable of serving the bankers. The institutional right, as exmplified by Merkozy, or the current Italian government is also very good at looking after the interests of bankers and business.

    Basically, there are alternatives to the mainstream Tweedlee-Dee, Tweedle Dum parties who are therefore described by the media as “fringe”, outside the pale etc… because they are not beholden to the business interests who dominate the dialogue about these issues. It has been the case since the 1967 revolution in Europe, and the US. Basically, the old left used to regard business and people in the pay of business with suspicion. However, a new cadre of well to do socialists managed to take over the left, and make it very pliable indeed to the needs of business, while being able to talk the rhetoric of the left. The right acheived the same thing with the accession of Reagan, when corporate puppets learned how to talk the language of the common man, while scelping him.

    A good example of the Austrian perspective on the crisis is found in the commentary of Marc Faber, or Jim Rogers on the internet. Both are saying that the West is doomed and controlled by vested interests who are protecting themselves from their own ineptitude by exerting power over the state system, and thereby accessing everybody else’s bailout.

    A good exmaple of the social justic critique of the way the crisis is being handled is Joe Higgins, TD.

    • Deco

      The strange thing is that the Austrian school and the ‘on the streets social justice school’ of public expenditure actually both are highly concerned about the misallocation of resources, and both of them can see business interests having a malign influence on public policy.

      Given the power of business to get what they want from the political and media establishments, I expect to see both these competitor forces in the public discussions routinely and systematically attacked in the mainstream media.

      Here is an excerpt from the commentary by American commentator Andrew Napolitano that had him sacked….

      http://www.youtube.com/watch?v=fOaCemmsnNk

      He poses the question about the two party system being a load of phony nonsense, which essentially enforces an oligopoly on choice democracy, with the objective of controlling the people.

      In the media we see the same coverage of all the failed attempts to “solve the Greek crisis” when really it is a case of the EU trying to solve the bad debt crisis of a big banks. Because it is evident to me that they are willing to make the crisis worse at every opportunity for the Greeks. They are not trying to solve the Greek anything. They are only trying to fit on a new straightjacket onto the Greeks.

      As we watch the FG/LP coalition imitate the FF/GP coalition, we can see the relevance of this in this country. They both represent a different alignment of proxies for IBEC, ICTU – a realignment of the lobbying – with the IFA replacing the CIF, and SIPTU replacing IMPACT.

      The Austrians, and the Social Justice fringe both represent an opinion that is outside of the oligopoly power share out.

      As such they are a massive danger to the system.

      Watch the mainstream media go into action, undermining both, as they know they must do.

      • CitizenWhy

        You put it all in a well phrased nutshell:

        “In the media we see the same coverage of all the failed attempts to “solve the Greek crisis” when really it is a case of the EU trying to solve the bad debt crisis of a big banks.”

        In the US some media do report thhe crisis accurately. Ironically it is some of the business press and an occasional article in Bloomberg.

        • Deco

          The language that is used is often aligned to ensure a consistent level of bias. Deliberately scripted to ensure deceit, and fear – when often the thing to be feared is absurd. Billionaires losing their billions is nothing that should be feared, but this is exactly what we get from the media – a frenzy with the words “panic” “billions lost” “wiped out” when it occurs. It makes no difference to somebody on McJob wage levels. But the media whips up a frenzy to make people who have nothing left over at the end of their paycheck frightened about “systemic risk” etc…and obsessed with an injured puppy seal in a zoo…or the latest finalists on X-Factor/the world cup.

      • Tony

        Deco, at the risk of defending Fox and Fox Business, Napolitano has stated that his show wasn’t cancelled because of anything said on it, but rather that the ratings were low. Here’s his Facebook message on the subject

        Judge Andrew Napolitano
        Dear Friends–

        Many of you are not happy with the cancellation of FreedomWatch, and you have sent emails to my Fox colleagues expressing that unhappiness. In television, shows are cancelled all the time. Two of my former shows have been cancelled, and after each cancellation, Fox has rewarded me with more and better work. This cancellation–along with others that accompanied it–was the result of a business judgment here, and is completely unrelated to the FreedomWatch message. It would make a world of a difference for all of us, if you would KINDLY STOP SENDING EMAILS TO FOX.

        I am well. Your values are strong. I will continue to articulate those values here at Fox. But the emails many of you are sending are unfairly interfering with my work and that of my colleagues here. The emails even violate our values because they interfere with the use of private property. I have accepted the cancellation decision with good cheer and a sense of gearing up for the future. You should as well.

        As a favor to me, and as I have asked this past weekend, PLEASE STOP SENDING EMAILS TO MY COLLEAGUES AT FOX ABOUT THE CANCELLATION OF FreedomWatch; and please stop NOW.

        All the best, apn.

    • coldblow

      Deco

      I agree that concepts of right and left wing are of little use here. Fennell argued some 20 years ago that they were now meaningless (I mentioned it to a couple of people who dismissed it out of hand). I think a lot of the disagreement is down to individual temperament and there’s a big psychological factor. Meanwhile the oligarchs just carry on.

      I’ve looked on a couple of occasions by an old article by Nick Cohen (I think) from the Observer,about how the Labour and lefty luvvies in London were dining and socializing with the very wealthy, got stars in their eyes and ended up believing that they, too, were entitled to their share.

      There’s a lot that could be said about this, starting perhaps with Happy Gilmour and the bit of land.

      Just to mention David’s article, when this analysis of the bailout being there just for the benefit of the banks rather than the recipient country, when this analysis first emerged (from David first I think in the Irish media) I doubted if it would go mainstream. But watching Newsnight etc recently I think we can say that it has. That’s some progress at least.

  16. Deco

    Iceland is the evidence of how to resolve the crisis.

    Life might be tough in Iceland, but Iceland can get out of the mess. We are going the same way as the Greeks, deeper and deeper into the quagmire.

  17. molly66

    Greece better get it’s self into the export market because they are like Ireland there domestic Market is screwed like Ireland ,the Irish government is only interested in exports and they don’t care about our domestic economic society witch use to be the back bone of Ireland ask anyone n the services sector.

    • RapidEddie

      For a while now, I’ve been talking to people running shops, restaurants, wholesalers etc and I can see nothing down the road this year except a retailers’ bloodbath. Businesses are going from month-to-month, week-to-week, hoping against hope that they can just tough it out until an upturn.

      The problem is the upturn isn’t coming any time soon. Tax receipts from exports may make the government look like the star pupil in the EU’s remedial class, but it doesn’t help retailers trying to sell to customers with no money in their pockets. I expect a lot of companies to go under this year, which in turn will further depress domestic demand.

  18. wills

    ‘So, for the right, keeping Greece in bonded servitude with yet more new loans and no full debt default simply keeps the banks open to keep financing a corrupt oligarchy.’ – DMcW

    Says’ it all.

    Question is so who are the oligarchy.

    Where did they get all this power to be able to put a banking system and govt treasuries to work to fill their boots with endless swag?!

    • redriversix

      The Carlton Group , The Bildenburg Group , Rothschild s , Rockefeller ,JP Morgan I am sure there is a few more , but that is all I can think of now…………….

      • cooldude

        The Trilateral Committee is another one, the IMF is definitely involved and behind it all are the obscenely rich banking families. These guys are running the whole show and are grabbing as much power as possible before the inevitable collapse arrives. That is what the ESM really is… just another transfer of power to these unelected henchmen for the above groups. A stint at Goldman Sachs is always a good sign of involvement.

    • bonbon

      Oligarchy is another name for Empire. Add up all those funny “secret societies” and the Privy Council. As I joke, if you write them all down you get a list the length of your arm.
      And still people refuse to see the Invisible Hand!

      Cultivated blindness? Dogged refusal.

      Empire is an intangible, not a “resource”, or “money”.

  19. stiofanc02

    I know this is unrelated but did anyone see the model who drinks pregnant women’s piss and eats only 500 calories daily, but get this, claims it is the piss that is keeping her slim?
    €200 a week for 14 drops of the piss. Im in the wrong business.
    And the £60,000 sterling on the fight in last nights knuckles doc?
    I’m definitely in the wrong business.
    And last but not least Joan the Moan saving us €645 million in FRAUD! Those rotten bastards who lost their jobs. Criminals, the whole bloody lot of em.

    • redriversix

      its all related ,Dumb models… fraudulent fraud figure’s.Gene kerrigans article in Sunday Independent points out the real figure’s of social welfare fraud.

      It is a huge insult to the intelligence of staff in the Social welfare department that they would be so incompetent as to allow a huge “fraud” like this to go on and not be spotted considering the huge scale being alleged by Moan Bruton.

      The only fraud being perpetrated is the one on the Irish people.

      This scale of fraud being sold by Burton is a lie………….its a smokescreen , a distraction , a tool used to divide the social classes

      • Deco

        People who are taking money out of the social welfare system, and people who are doing nixers are the evildoers. Really it is just small scale stuff.

        And it is quickly pumped into the economy somewhere.

        Look at the billions pumped into Anglo which will never come back. Now that is “Fraud”.

        Again, the scale of the two are massive. In terms of economic effects, it is even worse.

        And they have done nothing about the waste coming from hundreds of useless, pointless quangos. Nothing. Some will be fused together. Look, they all need to be abolished, and start again with what is actually needed. They are staffed with insiders and careerists in the business lobbying and union sectors. They are doing nothing for the people. Get rid of them.

  20. redriversix

    Hey Cooldude ,World Bank another also ,as you say,the IMF as well

    • cooldude

      Here is a very detailed and well researched report which is a who’s who of all these guys and how they are connected. Knowledge is power and these guys like to stay secret.
      http://divinecosmos.com/start-here/davids-blog/1023-financial-tyranny

      • Crystal

        Hi Cooldude, I have been following Divinecosmos blog for months -first time I’ve seen it mentioned on an Irish platform! Was praying that it might start getting some media coverage as have been initially terrified, then amazed at the extent of David’s research and now somewhat hopeful the at last the truth is beginning to percolate into the mainstream! The thrivemovement.com site is excellent as gives an overview of the ‘big picture’, the film Thrive is being shown in the Sugar Club in March & I highly recommend it not least because of it’s optimistic conclusions & suggestions as to how we can all help to raise awareness of the truth of what’s gone on for last 300 years!
        Another interesting link : divinecosmos.com/start-here/davids-blog/1026-financial-tyranny-final?start=3 It lists all the banking resignations around the world lately & links to Berlusconi trial-see post of: Nancy2/20/2012. Finally a very important site linked to Divinecosmos is Benjaminfulford.net -his blog posts are, shall we say illuminating! A friend of David Wilcox & ex editor of Forbes magazine, he is based in China & is working in tandem with David & thousands of other good people all over the world including in China, Korea &Japan to expose what he calls this ‘satanic cabal’. It seems to me that everything he & David have predicted in the last 6 months is coming true & that gives me cause for optimism!

  21. AndrewGMooney

    The cat-fights between various castes of the economic priesthood are certainly fun to behold, but they fail to address the underlying issue.

    The banking systems and bond holding pension funds of mature industrial/post-industrial economies such as Germany, France, and the US-uk foolishly lent vast sums to laggard states such as Greece and Ireland: assuming that these countries would join the party and generate profits through growth to service and repay the loans advanced. Then reality intervened.

    Debt is a claim on future work. Work is dependent on current and future energy resources. Energy is going to get exponentially more expensive, thus frustrating these delusional debt claims. Greece exemplifies this dilemma. Greece doesn’t have a problem that can be solved by austerity, it has an energy dilemma whereby it cannot afford to fuel any future growth…..Ireland and Portugal are next. Then everyone else, including the uk, the US, China and Germany. Peak Cheap Oil.

    All these Austrian, Monetarist, Keynesian explanatory models of ‘capitalism’ are hilariously redundant. They were all predicated on endless abundance of cheap energy and commodities which are now revealed to be finite. The ‘apocalypse’ is the literal unveiling of this morbid reality.

    Expect ever more frantic exhortations to believe in the ‘one true Capitalist religion’. It will amount to nothing. Get ready for un-growth, de-growth and the ecotechnic response to collapse. That’s the optimistic option. If you’re a depressive realist: get ready for global war.

    nice macro article David, last one was a bit wonkish….*smirks*

    • Malcolm McClure

      AndrewGMooney says: “They were all predicated on endless abundance of cheap energy and commodities which are now revealed to be finite.

      This just repeats the old tired argument that the world is running out of resources. People who have studied the matter know that this is a very distant perspective, as there is plenty of energy and all other key mineral resources for at least another three generations.

      The problem is greed and political obstruction, not resource availability.

        • Malcolm McClure

          Ah. Yes. Novelist Kurt Cobb promoting his books predicated on peak oil disparages Oil Optimist Daniel Yergin for promoting his new book that demolishes Cobb’s peak oil thesis.

          What a load of cobblers.

          • AndrewGMooney

            ‘what a load of cobblers’

            such insightful deconstruction! i’m so reassured by your dismissal without analysis…

            peak oil is a geological fact. the trillions of barrels of shale oil and tar sands (kerogen) can NEVER replace the cheap oil that built our current civilisation.

            EROEI.

          • Malcolm McClure

            You conveniently ignore the matter of greed and political obstruction. Take for example the situation in Balochistan

            http://bit.ly/zUgrqz

            One of the poorest countries in the world but it will stay that way so long as greed and politics intervene to obstruct rational development.

          • Malcolm McClure

            Regarding Balochistan fiasco see also
            http://reut.rs/z2H5NN

      • AndrewGMooney

        Enjoy your cornucopian worldview!

        90% of large fish are extinct.

        Suggest you swot up on EROEI: it’s irrelevant how many resources there are if it takes more energy to retrieve them than they deliver to the economy.

        Who are these ‘people who have studied the matter’? The same boomer economists who failed to see the current crisis?

        The laws of thermodynamics cannot be set aside by magical thinking:

        http://jayhanson.us/NewSynopsis.pdf

        ps: ‘there is plenty of energy and all other key mineral resources for at least another three generations.’

        gosh! that’s what i call long-term thinking. no wonder human industrial civilisation is doomed. the sooner is goes under: the better.

        regards
        AGM

        • bonbon

          Quoting Limits to Growth and the 2nd law of Thermodynamics! Wow what learned ignorance in the silliest of terms.

          You echo Prince Philips exactly, who would like to be reincarnated as a deadly virus to “do something about the population”.

          What a genocidal squire you are indeed!

          Now court jester Obama wants WWIII with thermonuclear weapons to reduce to 1 billion as Dr. Schellnhuber (Merkels “scientific” advisor) considers optimal.

          What a circus!

          • AndrewGMooney

            @bonbon:

            I did not reference Prince Charles and I do not ‘echo’ him other than in the recesses of your mind.

            I did not reference Barack Obama.

            I did not quote Limits to Growth.

            The laws of thermodynamics will not defer to your magical thinking.

            And the human population die off will indeed take place with the exhaustion of the petro-chemical fuels feeding the so-called ‘green revolution’.

            The collapse of industrial civilisation will hit the richest countries the hardest: they have the furthest to fall. The lifeboat societies will be those which still have a functioning ecological land-base.

            I would be genocidal if i wanted to cause a collapse that need not happen. I don’t want it to happen. Unfortunately, the collapse is unavoidable, despite my desires: and there is no amount of economic theory or political action that can prevent it.

            A nuclear war is quite possible as the ‘developed’ nations fight for the last of the fossil fuels.

            @malcolm mcclure

            i do not ‘ignore’ greed and corruption. our whole civilisation is based on greedy, corrupt squandering of the planet’s fossil fuel endowment.

            The energy corporations have been dragged kicking and screaming to face the reality of peak oil. They will insist finite resources are inexhaustible: until they run out.

            The ‘point’ of the exhaustion of fish stocks is that it is purely as a result of human greed and arrogance. 99.99% of fish stocks weren’t wiped out by one predatory species call ‘homo sapiens’.

            Nothing would make me happier than to have the facts of peak oil, peak soil and peak water debunked. I’ve yet to see any credible riposte to these analyses.

            best
            AGM

          • bonbon

            This is Malthus all over again, dressed up in modern attire. He was wrong then, and there is no chance you are entirely wrong? Seems you have revelation to go on.

            Malthus boils down to what Hobbes described man as a type of animal. Hobbesian economics became Mandeville’s thesis dressed up in Austrian School garb. So basically you presume man is a beast, as the Royal says a “higher ape”, to be culled. This equates economy to ecology, what Al Gore does (with more money).

            So start by identifying why Malthus made a fool of himself.

          • AndrewGMooney

            @bonbon I am not expressing a personal opinion or a ‘revelation’. There is an irrefutalbe body of evidence with regard to the triple crises of ecology, energy and economy.

            You ask if ‘there is no chance you are entirely wrong?’ Sadly, I am not entirely wrong. How Collapse unfolds is open to interpretation, but the reality of it is beyond question. You previously said ‘What a genocidal squire you are indeed!’. Tosh. The genocide was set forth when Ronald Reagan tore down the solar panels from the White House.

            Any chance of a scalable ecotechnic civilisation was lost in the orgy of ‘peak credit’ that was ‘morning in America’.

            Hobbes was correct. Man is an animal. Man is a primate, but no ‘higher’ than the bonobo in my opinion.

            I do not know why you keep referencing Charles Windsor. I am not interested in his opinions and theories, he just won the sperm-wars. Why should i even read/listen to such a personage? I don’t care if he thinks he’s some sort of ubermensch or if he’s part of some ‘lizard illuminati’. I have more important things to ponder.

            Ecology, energy and economy are the same thing, intimately interlinked. All economic activity is based on using energy to transform finite raw materials, no matter what superstructure of economic theory is placed above it.

            Malthus did not envisage the next stage of the fossil fuel pillage which allowed our turbo-charged growth of the last 150 years. Industrial Food is oil turned into calories. There is no plausible way of this continuing, never mind expanding to feed the overshoot population growth which is no inevitable.

            regards.

        • Malcolm McClure

          AGM: Don’t get me started.

          Just view Andrew McKenzie’s Shell lecture last December to the Geological Society.

          http://www2.geolsoc.org.uk/presentations/111214Mackenzie/

          Consider his arguments as related by one of the leading global experts on resources, then we can have a debate based on facts, not doom-mongering.

          • Malcolm McClure

            AGM: Regarding your fish-mongering comment:
            99.99% of all the fish species that ever existed are extinct.
            So your point was….??

  22. Solutions anybody?

    I’m not a great TV viewer but I must confess to being a bit of a Channel 4 News anorak. Tonight the great Yanis Varoufakis did a turn on Greece and the whole Euro-crisis. But he didn’t just give us an interesting perspective…….He also offerred the simplest of solutions. Enjoy;

    http://www.channel4.com/news/the-eurozone-the-ant-and-the-grasshopper

  23. Great article David. You are on the ball today bonnie lad

    “The reason bureaucrats like stability is because they have created the status quo that we describe as political and institutional stability”

    They love the stabilty of permanent chaos. Cruel sociopathic Fiedmanite bastards

    The banker always wins and that is why we must get rid of the bankers. Skint banks borrow at 1% and lend to governments at 5%. Where I come from that is known at ‘taking the pish’

    Get out of the Euro, go back to punts, devalue and recover.

    Athens is on fire. Guess what?

    Dublin is next

  24. redriversix

    Bank of Ireland reports losses of €190 Million euro and a “impairment” of almost €2 Billion ! Today B.O.Is dear leader Mr Boucher states the Bank is willing to lend to viable , strong business only………!!!

    Good job the Government didn’t take such a view on B.O.I with “our” bailout for him or “his” Bank would have went down the toilet………..where it belongs.

    Who deserves more to be marched off to Kilmainham jail ? Mr Boucher or the Auditor who came up with the spin that is “impairment”………

    Impairment = non-functioning or not working fully……impaired.The Bank cannot get repaid on €2 Billion worth of loans and this is going on so long that it shows up in accounts , but instead of calling them a loss , it refers to them as impaired !!!

    Spin Doctors……. don’t you just love them !!!!

  25. Malcolm McClure

    Europe seals new Greek Bailout
    So, ‘Plucky Little Greece’ survives to fight another day.

    • Grey Fox

      Are ya kidding me!!!
      We just witnessed the death of a critically ill Sovereign Nation.
      Mark this day on your calender!!! with a big black mark!!!

      • bonbon

        Correction : murder of a Nation on TV.

        We are being led to expect/await the thermonuclear incineration of an entire culture. It is being paced. Slowing it will in itself not stop it.

        Obama must be impeached away from the red button immediately!

        Ron Paul complains and describes the descent to fascism but will not IMPEACH Obama.

    • Philip

      Another litre of cortizone for Zobra.

  26. bonbon

    Wonderful article, DMcW. In a concise piece you take on the Austrian School, Schumpeter’s “Creative Destruction”, and the Oligarchy. Then the Bureaucracy of the EU machine, the Right and Left.

    When Right and Left agree, something owns both.

    It is but an infinitesimal step to Empire, a small step for some, a giant leap for most. Empire always needs a “permanent bureaucracy”. Even the giant EU machine is a satrapy of Empire, all governments replaced by “governance”, itself not a state.

    There is only one Empire – the British Empire, reaching into every corner especially the Oval Office now. Is species perceives itself as threatened and is reacting in its only way, for war.

    • bonbon

      And “unholy alliance” catches it perfectly. This is indeed Mandeville’s alliance of Private Vice, from which spontaneously Public Virtue is expected to spring. How this happens is unknowable according to Hayek and to make sure it happens Hayek proposes a world police force – totalitarian liberalism.

      Now picture “Keynes”. His General Theory could only be executed by a totalitarian (German) regime in 1936 as the original Preface states.

      Anyone who says we have been in a Keynesian binge, is being somewhat sideways.

      • Realist

        You admitted to never read any book on Austrian economy, so who you are to judge ?

        You are just pathetic bonbon and my only task on this forum is to stop your nonsense.

        • bonbon

          No chance.

          Everyone is onto the Austrian gimmick now.

          Mandeville’s swindle produced this mess.

          • Realist

            You must be joking.
            Is it not your central bankers ?
            Is it not your beloved state with such debt ?
            Is it not your beloved money printing ?
            Is it not Keynesian economy ?

            If you are putting austrians with keynesians then you are wrong like usual.

  27. Steaf35

    The next payment from Ireland is due on 31st March….are we all going to watch and talk rhetoric again…!! Maybe if the relevant office recieved a few hundred thousand e-mails every week??
    One wouldn’t even have to get out and walk…!!!

    • redriversix

      That’s right Steaf35,

      We wont lift a finger.People do send emails but it is a token gesture………….maybe we should ring Joe Duffy..!!!

  28. Deco

    Latest update from the Greek Drama.

    Europe agrees to second Greek bailout

    http://www.marketwatch.com/story/second-bailout-agreed-for-greece-reports-2012-02-20

    1. Under Tuesday’s agreement, European member states will lower interest rates on their loans to Greece retroactively to a margin of 150 basis points from 200 basis points.

    2. Private-sector bond holders will take a haircut of more than 53% on around €200 billion worth of privately held Greek government debt.

    I get the sense that what we will see from the clowns in Kildare Street in the coming days will be more unbearable nonsense.

    More new taxes coming your way to pay the Anglo Bond holders. And besides they are for your won good, you need them. Lots of FG/LP canvasssers need state jobs for commitment down the years to the cause of the clowns that are the Irish political class.

    The rest of us get stuck with the bill, or deprived of something that we have already paid for like healthcare or old age pension, in order to make room for such nonsense.

    • Dorothy Jones

      Agree politicians incapable of grasping the opportunity which now presents itself. Prefer to stick to the ‘poster boy’ approach in the vain hope that this will serve them well……but…….
      ..it doesn’t work out that way…misplaced hope and loyalty….they’ll just end up jilted
      Namawinelake used to do a ‘Greekwatch’, but he doesn’t anymore as writing lots about NAMA!! So I hope you keep up the posts with the facts and figures. :) D

    • Dorothy Jones

      Galgenfrist : stay of execution, repite, Galgen means gallows.

  29. Grey Fox

    If there is anything flammable left in Athens, don’t expect it to be there much longer!!!

  30. Grey Fox

    “Why make a drachma out of a crisis”!!!!!!
    When the money machine can just roll on and on and on……..

  31. Reality Check

    Creative destruction – Joseph Schumpeter.
    This therory explains why;
    Newpapers are dying – destoyed by Online forums.
    Amazon/Kindle has destroyed bookstores.
    Napster/downloads have destroyed CD’s etc

    Old stuff gets cleared out New business and technologies spring up to replace.

    Tough but brutally fair

    Now why hasn’t this been applied to the Irish property market?

    • bonbon

      Actually Schumpeter (of Economist Column notoriety) borrowed this term from Sombart, a true nazi. Creative Destruction is a polite term for Nietzschian Dionysian hatred of Creative Reason. So Schumpeter’s “gale of invention” is turned around into a tornado of destruction.

      We are dealing with nazi fascist economics paraded openly as “theory”, applied to entire countries. The insane wild-eyed mantra that “recovery” and innovation will magically spring from the rubble is satanic.

      I think many here looking at what is happening to Athens or the installation of unelected tecnocrats, hounding down of elected President Wulff because he slammed the banksters at the Nobel meeting in Lindau last August, pull their punches afraid to say it simply.

    • Philip

      The items referred to re newspapers and CDs and bookstores are a disturbing development which serve more to isolate people from “real” stuff. Newspapers used to be good. I like the sense of ownership of a book I can mark or a CD I can share with someone. It is vastly more than just information.

      When everyone is herded into online fora, the real control can take over – all to ensure children are protected. A hard argument to crack. For me, it is down pure and simply to too many insiders working in what are supposed to be professionally isolated areas and gaming the system accordingly as they blatantly ignore all data protection and sharing rules.

      I share your age or picture it is seen as an act of privacy invasion for some innocent act. I share company details or goverment budget numbers with financiers and other coubtries and it is seen as governance. Go figure.

  32. Wobble Dyson & Sucks

    Today ( New Moon ) is the beginning of the journey to the climax of the Moon Wobble on the 28th only to be followed by another suck into the Full Moon a week later .

    The Great Show begins now and any nominations can be handed in at the office box for the Global Awards that no doubt will be seen on your cable free TV very soon .

  33. bonbon

    Just checked RT’s M.Keiser – the collapse of Lehman, MF Global, AIG, Madoff have not changed a single bankers rule. And it looks like London triggered all these, which it should – it is the epicenter.

    High time to Glass-Steagall the system.

    Goldman Sachs’s Blankfein says the insider trading is market-making following Sir Alan Greenspan. It is becoming much more explicit that Mandeville’s economics is in fact exactly what is going on. Nothing must get in the way of Private Vice (sorry market-making) – it might threaten the Public Good.

    This is an incredibly evil logic – Hayek was right – Mandeville did apparently invent the trick the financial system uses. Although I heard he plagiarized it from Giamaria Ortes…

    Anyway this trick fools politicians, even well-meaning bankers, and voters.

    Amazing.

  34. gizzy

    Just watched footage of Spanish Riot Police dealing with students and the public in Valencia (Shocking)
    Talk about the system turning fully on the people.

    I suppose RTE will ignore and our politicians will now pretend that Spain in a third world country.’Ah sure you’d feel sorry for them but sure isn’t it their own fault.’

  35. coldblow

    Apolgies for OT but I have to share this burnished prose from the Da Vinci Code (p22):

    “He turned and gazed tiredly into the full-length mirror across the room. The man staring back at him was a stranger – tousled and weary.

    You need a vacation, Robert.

    The past year had taken a heavy toll on him, but he didn’t appreciate seeing proof in the mirror. His usually sharp blue eyes looked hazy and drawn tonight. A dark stubble was shrouding his strong jaw and dimpled chin. Around his temples, the grey highlights were advancing, making their way deeper into the thicket of coarse black hair. Although his female colleagues insisted the grey only accentuated his bookish appeal, Langdon knew better.”

    Langdon, thickets, dimples. Dia linn…

  36. bonbon

    I think to understand why Greece is being destroyed, almost all the “explanations” fall on their faces.

    Widen the view – Why did France/Britain/Obama murder a captive Ghadafi (and leave a totally destroyed country)?

    Widen the view again – why did Bloomberg publish recently a report on Putin (“days numbered”) with a blood-stained portrait on the ground?

    Now we are getting to the issue – Greece, Libya Eire, Portugal have no chance to stop this.
    Russia has.
    So Russia has become target number 1, and that means, well guess. Elections soon could mean Putin wins – will Obama bomb before? Will he have time to incinerate Iran as a softener? Will Obama just bomb with no warning? Consider the time window – will the financial system implode before elections?

    Any shred of national politics is to be wiped out from the face of the planet. This is what is going on. Pursuit of this makes economics a secondary issue.

    Ironically the pursuit of this is axiomatically part of these economic schools, but now it explicitly the goal as desperation mounts that this system is absolutely finished and cannot be saved.

  37. Afternoon all,

    I will be writing on Greece in the Indo tomorrow. Dreadful deal. Retiring old debt and paying for it with new debt.

    Nothing new there.

    Best

    David

    • Philip

      We’ll get 2 or 3 months out of it initially and with Easter and Summer holidays and Kiddy school breaks it’ll mean we’ll be close enought to Sept before it turns into any issue worth mentioning. This means there’ll be no Brussels officials to do anything of merit and if the media coverage is anything to go by what with poor Whitney Heuston’s demise taking precedence over the Greek half million march I expect the all-Ireland’s and their equivalents will act as sufficient opiate for the masses. Cheer up and beeeee happppeeee

    • The Austerians are committing social genocide on purpose to impose a new European order that serves the Plutonomists, and forces acceptance of slave wage labor.

    • And by that statement, The Emperor wears no clothes, surely?
      Retiring old debt and paying for it with new debt has kept the whole Circus going for decades except, logically, the World is finite.
      Even if China bails this out for its own reasons ( a la Marshall plan previously), unless Papeete discovers some new super mineral and becomes the new United States of the Pacific, post Peak Oil, eventually the funding will stop. Then whence Capitalism?
      Even if every bondholder/ debtholder or sovereign funder across the globe had a Eucharistic moment and Biblically abandoned their positions, what then?
      Start afresh and continue the conversation in 50 years?
      There is a structural flaw inherent in all this and damned if I know how to fix it.

      • AndrewGMooney

        @furrylugs

        your comment grapples with the underlying realities.

        banks and governments can print money. they cannot print energy.

        money is a proxy for the exchange of energy through work.

        economic growth in a debt-based capitalist model is predicated on cheap energy. always has been.

        all these vast debts were advanced on the assumption that economic growth would continue to be fuelled by cheap money (energy).
        that’s not possible, hence the worldwide QE shenanigans.

        ‘my grandfather rode a camel, my father rode a camel, i drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel’

        Rashid Bin Saeed Al Maktoum, Second Prime Minister of the United Arab Emirates.

        these debts cannot be paid, hence the absurdity of Greece taking on new debt to pay old debt. it’s called bankruptcy.

        the structural flaw in all this is ‘cheap peak oil’ and it’s mirror ‘peak cheap credit’.

        there is no fix, no solution: it is a predicament that will have to be lived through.

        Dmitry Orlov was very prescient to figure out that the USSR and the USA were essentially the same: industrial growth junkies.

        http://cluborlov.blogspot.com/2011/11/hubberts-third-prophecy.html

      • coldblow

        Furrylugs

        You are mixing your whences with your whithers.

        Just thought I’d say, like.

    • Lord Jimbo

      @ David McWilliams

      On Greece: Dog in the street knows debt on debt is hardly going to solve any crisis, the EU is merely moving money around, but Greece’s situation hasn’t moved an inch forward. Imposing austerity seems like a cruel joke, while of course Greek politicians will spin it as saving Greece from the fires of hell.

      They have merely postponed the inevitable collapse and ignoble exit from the EZ, reality on the ground for Greeks is some story, appalling.

  38. redriversix

    RTE News discussing Moon Rock in dunsink dump……….!!!!

    I could not make this stuff up.lol

    • Philip

      Point taken…In case people do not know, the Dunsink observatory is of very great significance historically and one which was led by Hamilton one of “the” greatest mathematicians and the disgusting thing is that the place is nearby was allowed to be a dump and generally neglected until relatively recently. I just feel it says a lot about the “attitude”.

  39. Philip

    Could this is the real reason why Greece is being bought off and suppressed http://coldfusion3.com/category/lenr
    Just imagine if this had any traction.

  40. wills

    Folks this link will click you over to an article on the global pOnzi banking scam.

    The nuts n bolts.

    Here it is.

    All.

    http://www.huffingtonpost.com/ellen-brown/greece-default_b_1287970.html

    It is about to collapse.

    World banking meltdown.

    What to do?!

    • bonbon

      Well Obama and the gaggle of candidates want war.

      We saner people know the only way to deal with this, and it is a transatlantic breakdown, not a recession, is Glass-Steagall, which banksters do not like!

      Senator Peterlini for example in Italy is now pushing this through the parliament. It is a US House motion with many signatures. President Michael D. says Glass-Steagall’s repeal is the central issue.

    • cooldude

      This ISDA who regulate this toxic market is made up of the same people who have already issued the derivatives. The fox is supervising the chickens and they will not deem Greece to be in default no matter what the % write down is. Longterm the only solution is to ban these deadly financial instruments and declare all existing ones null and void. The only problem is the big banks (casinos) make lots of money selling these instruments and they also control the governments so don’t expect any change soon. Protection lies in financial assets held outside the banking system that have intrinsic value and cannot be debased such as gold and silver.

      • Grey Fox

        +1 hence my comment earlier regarding the US insurers of defaulted Greek debt (oop’s sorry! “newly Arranged Greek Debt), the five huge US banks who hold 97% of the insurance against default and have the majority voting rights over the ISDA who decide whether the Greek write off is classed as a default or simply a “new arrangement”, you are right, Foxes, Chickens etc….

      • bonbon

        And the only way to do this is Glass-Steagall bank splitting, as everyone by now knows.
        The Dodd-Frank bill that replaced it in 2000 is so full of holes and the Volcker Rule admitted by its author as being not anywhere near Glass-Steagall.

        Glass-Steagall is known ad Split-Banking in Europe.

        The other issue of currency is to be discussed separately.

        First Glass-Steagall.

  41. Fellow subscribers,
    Please study the attached;
    http://freedomfromalldebt.com/
    Watch the video!
    And let me know what you think?

    I’d really love to see David to do an article about The Law and the Constitution – I mean if a persons home is inviolable under our constitution what exactly does that mean?
    Is it the same inviolable as claimed by the ESM or a watered down version for practical banking purposes?

    Is it my ignorance that makes me so angry? Because if we keep trodding on ordinary folk expecting them to take 100% responsibility for wreckless banking practices then we’re surely going to get to a point where the law itself loses it’s right to be respected?

    We had another suicide here last night in the Mid West – A man who’s construction business was destroyed. So he took the ultimate 100% responsibility for a bad deal with the banks. Unfortunately he felt compelled to take this action because the bank wasn’t prepared to take any responsibility. His kids are now paying the price (and his grandchildren)while the banks securitised his loan ages ago and got all their money back. And made another multiple on the old fractional reserve pump! But then they went and lost it all an a little wager!
    How long must we put up with this? This is a life or death situation for many people tonight! Right Now!
    Suicide is currently epidemic;
    http://www.irishcentral.com/news/Suicide-rate-rising-rapidly-in-Ireland-as-recession-grips-138771164.html
    1,000 Brothers, Sisters, Mothers, Fathers, Uncles, Aunts and Cousins – Expected to die this year!
    Most likely no Bankers!

    When the Troubles claimed 3,000 lives over 30 years (approx 100 per year)it was headlines every day and we had every sort of world leader, Senator, General and mediator trying to sort it out. Bertie would claim the end of the troubles as his Opus
    - Now the death toll is running at practically 10 tens that of the troubles and not a word out of Bertie and his like-spawn?

    I tell you now there’s two countries here – the one we’re living in and the one they’re living in!
    And the one they’re living in is suffering more local traffic jams caused by funerals. That’s just about it really.
    And if anyone is content to call this a lawful/civil society they should go back to basic education!
    Or maybe by our compliance we don’t deserve civil society?
    Maybe we’re just following orders?

    • Paul,

      this is making the milk in my coffee turn sour…. I am not finished yet, but one question, I re played it a couple of times, i can not make out what question he asks the cops at the beginning a couple of times?

      more comments later…. so far… A MUST SEE!

    • Paul,

      I started sending this around, I hope this goes viral in no time!

      The man with the folder in his hand, trying to bully his way through by bullshitting and cheating, by pretending to have authority, and of course “only doing his job”, I would like to remark here that it is exactly this type of character that enabled the mass murders during the Nazi terror regimes, also “only doing their jobs”!

      You are very right to point out the tragedies that unfold every single day on this Island now, and the controlled media are keeping a lid on it.

      I would also like to emphasize what was said about the banks getting paid multiple times, it is the truth, all the loans a securitized, they write them off at some point, so declare them as losses on top, although the were paid, they got paid again by everyone in this country forcefully, and then they repossess.

      The banksters get paid 3 times minimum.

      People need to realize the way that the man with his folder was trying at some stage to blame the owner, and play the MORAL card. This is very common, they will try to make you feel guilty and that it is just and lawful what they are doing, same old trickery really.

      They are pretending authority over you where there is none! The moment you accept this authority, you lost….

      Thanks for sharing this Paul, excellent stuff.

    • Just got an email back from namawinelake who linked it on his blog, and it went from 41 views to 8,000 views in 18 hours….

      Please, everyone who reads this, send it to all your friends!

    • If I would be DMW, I would post this video on the front page of this blog, for everyone to see.

      Apart from the obvious content, it is transporting a message that has not been hear on this Island for over four years, it was denied to the people….

      HOPE!

      Namawinelake link http://namawinelake.wordpress.com/2012/02/21/eviction-in-ireland-in-2012/

      • Thanks Georg,
        I was out all morning so just got back to the forum.
        Yes there is so many interesting things about that video. Like why didn’t the Judge sign the order?
        Answer – Because it would be unconstitutional! Inviolability of home etc. (Article 40.5 – The dwelling of every citizen is inviolable and shall not be forcibly entered save in accordance with law.) Inability to repay mortgage is not actually a crime! Therefore neither the so called Sheriff (Was he?/Wasn’t he?) nor the Gardai were constitutionally entitled to force entry.
        Also please note that the Gardai were there to protect the defacto representative of the Bank and not there to protect the inviolablity of a citizens home under our constitution??????

        I, like many, do not know where all this is going to end up but I do feel that the video may provide some very practical answers. We’ve tried marching and it achieved no major buy in.
        What if we individually registered a pledge to stand by our neighbours to prevent repossession evictions? And then when we reached a critical mass – Enable people who cannot keep up the pace to stop paying altogether.
        Lets protect them and fight suicide at the same time.
        Let’s tell our politicians that nobody loses their home or they lose your vote!
        Particularly anybody who entered an agreement in good faith with the proven to be delinquent banks.
        Why not temporarily transfer ownership to the local authority and negotiate a very long term let to buy agreement that takes the suicidal pressure off a family!
        It would still be cheaper than the current position where the local authority is obliged to find/rent accomodation for an evicted family!
        It would immediately lift the fearful gloom from the country for everyone to know that their ultimate nightmare cannot happen! I bet it would even stabilise the property market?
        Lets do the sensible thing now and stop this historically insane episode with a modicum of intelligence!

        • I sent it to Max Keiser and many more people, inside and outside Ireland.

          The same filthy trickery they applied to bailout banksters they try to apply on everybody else to squeeze out the last penny they can.

          I pointed it out here before about the SOCIAL INJUSTICE concerning 84,000 businesses being excluded from using the service of the financial serivces ombudsman, and this was Cowen’s doing, and is still, although they are fully aware about it, there is clear evidence, not rectified by Shatter and Nooan to date.

          These 84,000 businesses are your Mom&Pap shops, one man bands, small businesses etc.

          Although even the ombusdman himself called this extremely unfair, the situation still did not change. Such is the trickery they are used to play on all of us, and it has to STOP!

        • over 18,000 views…. looks promising so far

        • Grey Fox

          I for one, would show up in solidarity with any homeowner at an attempted eviction if I was aware that it was going to happen, maybe a register of impending evictions on a website, we have to show solidarity with our neighbours because, god forbid, it might be us one of these days. This is again an attempt to criminalise a civil matter otherwise the Gardai would not need to attend unless they are there for the intimadation factor. No, they wouldn’t be there for that, would they??

  42. Falls

    http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9097219/50p-tax-rate-failing-to-boost-revenues.html

    austrian economics 101…

    what a suprise, okay, no not really…

    calling art laffer, art laffer to the red telephone please.

    • cooldude

      Falls you seem to misunderstand the austrian view on taxation which is always that the individual should be allowed to keep as much of their earnings as possible. There are many who actually call for the elimination of income tax altogether with just a tax on consumption. I realize that is a bit extreme for our modern viewpoint but it is still a legitimate argument. This is done by downsizing government at every level and abolishing all quangos. Read David’s brief synopsis at the start of his article.

    • Falls

      i could not agree more, Apologies if i was not clear. i think the story above proves without any doubt AGAIN, that taxing a people is foolish. i simply am dumbfounded that our own government believes that taxing people will work. what i meant by austrian economics 101, is that is the first class on it…taxing this way doesnt work and there is also the dreaded unexpected consequences, namely i would bet loads of people in the UK have moved money elsewhere (and legally i might add) so its really a double whammy, they are not legally paying the tax AND the UK banking system is affected by it.

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