March 12, 2012

Year of the central bank

Posted in Sunday Business Post · 162 comments ·
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Now there we were, thinking that financial markets didn’t like defaults. In fact, we were warned that if we were to do something as dastardly as not pay Anglo unsecured creditors, the sky would fall in. This line has been followed by our state as if it were gospel.

Yet on Friday, we see that not only is it not gospel, it is nonsense. The financial markets didn’t sell off, but rallied enthusiastically after the news that Greece had defaulted spectacularly on sovereign debt, not bank debt. So the markets that lent Greece money rallied on the news that Greece wasn’t going to pay the money back.

The largest sovereign default ever – and the only one in a developed country in 60 years – was embraced by the financial markets. In fact, for what it’s worth, the Greek stock market rallied too.

So what does this tell us?

It tells us that financial markets have no memory. They move on. It also means that when something becomes inevitable, sensible people accept it and make provisions. The fact that the default was not orderly or chaotic makes no real difference. Only weeks ago, creditors of Greece were saying that they wouldn’t accept default (as if they had a choice).

Yet by Friday, 95 per cent of all creditors said that they would accept losing half their capital.

The other 5 per cent, let’s call them ‘rouge creditors’, who won’t accept the deal and want all their money back, risk getting nothing.
So what happened to the so-called vindictive financial markets, and what they would do to Greece if Greece defaulted? They rolled over. And what about the ATMs? Remember the notion that the ATMs wouldn’t work if bondholders didn’t get paid? Well, ATMs worked just fine in Athens on Friday evening.
More significant has been the U-turn by the troika. A few months ago, the EU view was that no default could be contemplated yet, on Friday, even the so-called hard-line Wolfgang SchÃŒuble, German finance minister, called the deal an “historic opportunity for the country”.

So what we are seeing is a U-turn in attitudes as events overtake the big players. The biggest enemy of dogmatic positions are rarely other ideas, but events and the march of time. As Greece contracted and contracted, the idea that it could pay its debts evaporated.

The new reality is one that we have been arguing here in this column all along, which can be summed up by the idea that you never make a balance sheet better with more debt – you make it better with less debt.

Now what does all this mean for us in Ireland, as we move forward?
It means that we, too, will get a debt deal on banking debt, not just the promissory note. The question is whether we are best to go for it now or wait for something much bigger down the road.

Let me explain what I am on about when I say “much bigger down the road”.
At the moment, the central banks of the world are responding to this mega-debt crisis and the consequent de-leveraging that we are witnessing everywhere with lower and lower interest rates. Interest rates are as near to zero as possible. In the US, the Federal Reserve said that it would keep rates as low as necessary. In fact, last Tuesday, when Fed chairman Ben Bernanke suggested he might not give all the free money the market wanted, there was a sell-off in the markets the next day. This was followed by a report on Thursday that the Fed would indeed provide more liquidity and, guess what, the markets rallied on Thursday afternoon.

The Bank of Japan, the Bank of England and the ECB are all at the same game. We are in the Year of the Central Bank, where the only action is what policy makers are doing.

They are injecting as much liquidity as necessary because the banks are in a very fragile position. Even the much-maligned stress tests of European banks show that banks need over €150 billion of capital right now. Banks can get this by either selling assets or raising equity. Given that they don’t want to do the former and can’t do the latter, the central banks have stepped in as lender of last resort.
Now, let’s get a handle on how much money we are talking about.
Over the last three and a half years, Britain, Europe, Japan and the US have boosted their central bank balance sheets to $8.76 trillion, and pumped out that much new money into the banking system.

The central banks have opened the discount window and taken in all sorts of collateral and, in return, given out this cash.
Today, the balance sheet of the ECB is 30 per cent of eurozone GDP. The figure for the Federal Reserve is 17 per cent and the Bank of England 18 per cent. This is an increase without historical precedent or parallel in peace time. Under these circumstances, we may say that the economy is ‘recovering’ – as we have been hearing in the US – but it lacks real meaning because we are so awash with central bank cash and credit.

Now here’s the rub. What goes in must come out. As all this cash finds its way ultimately into asset prices and inflation, the central banks will have to take it back out of the system because they can’t countenance mass inflation.
So what will they do?

The will raise interest rates rapidly and maybe much more rapidly than we expect.
Last week, I was lucky enough to hear 87-year-old Paul Volker speak at a conference. As he got up on stage, I thought to myself that when this guy was head of the Federal Reserve, after a bout of inflation he raised interest rates to 20 per cent to purge the system. Last week, the same short-term rates in the US were 0.2 per cent.

Could the greatest monetary splurge in human history be followed by a Volker-style whiplash in interest rates, the likes of which we haven’t seen in a generation?

The answer is yes, but maybe not to the same magnitude seen in the early 1980s. But it could happen if inflation took off, forcing the central banks to reverse their policy of the past three years.

What would happen here, if real interest rates in Europe went up to 5 per cent to choke off inflation? After all, don’t forget that savers in Germany would benefit from this. Here would be chaos, mass default, bank failure and another credit crunch, but this time on a much greater scale.

A whiplash in interest rates is not remote, in fact, it is quite likely. Given the fragility of our banks, the state of their mortgage books and the fact that people can’t take any hikes in interest rates, the lesson from Greece is that we’d better position ourselves for higher – not lower – interest rates.
At least we now know for sure, creditors will do a deal because events will overtake them. The centre doesn’t hold and the world quickly moves on to the next paradigm.


  1. Colin

    Great Article David,

    The genie is now out of the bottle.

    Not surprised if Interest rates shoot up in the future. So, if anyone out there is thinking of getting a mortgage to buy a house now, here is some FREE IMPORTANT advice from a trusted economist with a proven track record. Cue accelerated mortgage defaults. Cue house prices plummeting further, into 90% fall from peak territory.

    So don’t come to this forum in 5 years time, worried about negative equity you got yourself into. Don’t listen to Frank Daly and his pals at NAMA, they want to enslave you.

    • Johno

      Couldnt agree more Colin , attemped to talk my brother out of buying a house last year. And my wife is mad for us to apply for a mortgage but I have told her I am not in anyway getting a mortgage now or never.

      At the moment Im 63 months away from been able to buy a house with cash ( 62 after this month ). Clearly there will be a few things out of my control like house prices etc etc but all things going well for me Ill be able to push on with my plans. And as soon as I have that done , ill start saving for my son and my daughter to be able to buy a house in years to come.

      No more debt.

      • Colin

        We have to de-program ourselves. Your wife is still programmed, it’s much harder for women to de-program. Freedom awaits those who de-program, slavery awaits those who cave in. Be proud to be a tenant. Choose life. Choose David McWilliams as your free source of independent economic advice (buys his books and file them at home under Philosophy).

        • bonbon

          Sounds like something from “I, Robot”.

          Robots cannot choose life, liberty and the pursuit of happiness – only humans can create such a society.

          Monetarists want life, liberty and property, like the Confederate secessionists using Britain’s John Locke’s proposal.

          • Colin

            bonbon, you’ve been doing a good impression of a robot here for a while now, what with your constant blame game of the British Empire, and over the top sympathy towards those poor misunderstood Iranians who just happen to like messing around with atoms and hiding their facilities, and playing cat and mouse with the UN Inspectors.

          • bonbon

            The Brits are not good at pursuit of happiness, as Benjamin Franklin well knew. The British Empire is now in full swing – it’s financial system is collapsing. All political and economic forecasts must be made with this fully explicit.
            To pursue happiness for the future we must rid ourselves of this oligarchical tyranny and master fire in all it’s densities, including Iranian, Irish, Indian advances. The greenie oligarchy prefers otherwise as the dino’s did.

          • “those poor misunderstood Iranians who just happen to like messing around with atoms and hiding their facilities, and playing cat and mouse with the UN Inspectors.”
            This sounds like the WMD that Saddam was hiding in the hills. Do you believe American Propaganda all the time Colin.
            Every day we hear about thegreat US Recovery. are we all fighting about the 16 trillion debt. The last trillion runs out in May, then what?

          • Colin

            Patrick,

            You seem to forget that Saddam, the dictator who murdered more than 100,000 of his own people, could have prevented war by showing his cards, that he had no WMD, but he choose not to. He bluffed, he wanted the Americans to think he had them, he didn’t want to appear weaker than he actually was. He lost. He’s dead.

            Iran is publically pursuing nuclear weapons. There is no dodgy dossier in this regard. If they are invaded, it’s their own fault.

          • bonbon

            @Colin – am I hearing Ashcroft all over again? Or Blair with the exact same formulation as Cameron that Iraq/Iran has ICBM’s capable of hitting London in minutes?

            They found WMD in Iraq, but the Israeli’s had a problem removing the “made in usa” tags so ’nuff said.

          • 33square

            “Saddam, the dictator who murdered more than 100,000 of his own people, could have prevented war by showing his cards, that he had no WMD, but he choose not to. He bluffed, he wanted the Americans to think he had them, he didn’t want to appear weaker than he actually was. He lost. He’s dead”

            Dr. David Kelly: Did he lose his life or take it?

        • Dorothy Jones

          Ooooh Colin…..interesting angle there on gender-based ability to re-calibrate the dial!:)

          • Colin

            Didn’t intend to insult the fairer sex. They are the homemakers, so it is their instinct to set up home, and this usually means owning your home in the Irish Psyche. This needs to be de-coupled. Your rented accomodation can become your home too, if you allow it to be. But with many women brainwashed into the whole ‘Desperate Housewives’ lifestyle, wishing they could have it all like the female characters in the show, so it is not their fault that most of them think this way. This has nothing to do with intellect by the way, so there’s the gender bit out of the way.

        • LongGone

          True. We have to stop measuring success by the size of the house you own (i.e. actually by how much you owe the bank).

          In Germany ownership is around 25-30%. Not that we need to be German but most the other 70% of Germans manage to lead happy lives without owning property.

          Add to this that the concept of work & mobility has changed so much in the last 30 years, it may not even be practical to own a property anymore!

          • Peter Atkinson

            Folks have you spared a thought for the quality of housing you will be renting in the future.The majority of the “buy to let” stock purchased over the last 12 years will have either been handed back or reposessed.The condition of this stock will be in ruins owing to the owners lack of care due to lack of funds and the remaining stock owned outright by the “old school” landlords will be akin to the damp and dank squalar of the late 70s and 80s of RRR (Rathmines Ranelagh and Rathgar)flatlands.Yes you will have the vultures circling the kill but believe me they will not spare a thought for the tennants they put in them.

            Mortgage is not a dirty word.The dirty words were equity liberation.There will come a time again when the old formula of 2.5 times the principal earners salary plus 1 times the secondary salary will apply and this in my opinion will give us a starting point again for the real cost of house purchase for use as a home and not a financial goldmine.Only then will we return to normality and the ordinary aspirations of young people will once again be realised.

            There will always be room for the rental sector in Ireland but purely on the basis it was in the past.There is no way a landlord would enter into a 99 year lease as they do in other parts of Europe. By the same token you will not change the mindset of a nation which was enslaved by the landlord system for centuries.

            There was never anything wrong in wanting to own a house you could call home.It was the second and third house that caused the problem.The temporary lack of supply owing to this mentality along with silly tax incentives caused the decade of price spike.

          • juniorjb

            Home ownership figures for Germany are misleading, I would suggest. The EU average is 76 percent, with 13 nations (Spain, Italy, Greece, Portugal, Norway, Cyprus, Malta, Iceland, Latvia, Romania, Lithuania, Poland, Bulgaria, Estonia, Hungary, Slovenia and Slovakia) ahead of Ireland’s 74 percent (down from 79 in 1991) in 2006. Renting over a lifetime involves a massive transfer of wealth. It’s a scandal that government policy has done so much to encourage this.

          • Colin

            juniorjb,

            You must factor in life insurance, home insurance, maintenance and upkeep costs, household tax, and any future charges that come to the mortgage holder. It simply is not worth it to own your own house. With work becoming more and more mobile, people will need to follow the work. You can’t do that with a mortgage in tow.

          • LongGone

            If it it worth it or not to own your own house is a very individual calculation and one cannot say generally its worth it or it is not.

            It depends on how much of your own capital you bring, the interest rate you get and the lenght of term of the loan in addition to all those factors that have been mentioned here.

            In Germany the typical own capital (or deposit as we say in Ireland) is between 20% – 30%. Often meaning that interest rates are lower and terms are shorter. Rates can also be fixed for up to 15 years.

            The opportunity costs of buying means that you could take that deposit and invest if otherwise for a higher rate of return over a similar period of time to the lenght of the mortgage if you did not buy. Add the difference between your monthly rent and you mortgage (mortgages are usually higher) and you could get a better return with smart investments. Or you could get burned over a period of 20 years. Do you have the interest to manage a sum of money over that period of time.

            All very difficult to say.

          • juniorjb

            I don’t thiink it’s that difficult to say, LongGone. For most Irish people the difference between a mortgage and rent isn’t sufficiently high to justify sinking the capital that goes into rent in order to free up the difference. Of course, that depends on how foolishly you borrowed in recent times, but is it reasonable to use figures from a bubble scenario to judge this? Then, how realistic is it to expect them to invest this difference with sufficient success over a 25, 30 year period? This ignores the inflexibility and insecurity of renting, another cost. Most ways you look at it, for most people, the reality is that owning your own house is the most reasonable option.

        • Spot on about deprogramming Colin.
          Could have worded it better though!
          Irish women have always been the back bone of the nation.
          5/10

          • juniorjb

            Colin, I would suggest that when you look at the figures, even if you factor in these extras, the numbers still come out against renting over a lifetime, and quite strongly. I’m not going to do that here, it would perhaps be a waste of effort this late in a thread. The point you make that I think is more important is the question of mobility. At present I reckon home ownership and good employment are still the best prospects for securing the financial well-being of most people. You may be right that we are seeing a decoupling of these, which will have a negative consequence for most. How do we get to a state where our choices in housing are appropriate to this new reality? The present system of private rental strikes me as often little more than a tax avoidance investment scheme that rewards the affluent excessively and has little concern for the financial health of those driven to use it, qiute apart from the disastrous manipulation of the market that has gone with it.

        • redriversix

          Colin
          seems you have no idea about Iraq and less about Iran.

          Go and do some research and come back to us.I know you stated before you did not care what people thought of you,but it would be good for you to get some research done on Iraq/Iran/U.S.

          The U.S always knew that Saddam had no weapons of mass destruction,just words of mass deception

          Best
          RR6

    • Dorothy Jones

      It’s off piste wrt. to David’s article Colin, but apropo Frank Daly of NAMA: good piece on namawinelake today 120312 re conflict of interest associated with Frank Daly’s appointed roles

    • munsterman2011

      Hang on just a moment – house prices are down 60 percent since 2007. At present most houses are being sold for less than the cost of actually building them. If we have inflation (which is pretty much inevitable)the cost of pretty much everything goes up from wages to commodity prices therefore it ain’t going to make property fall (well they may in fact be cheaper in real terms even if they rise in price at a rate less than overall inflation!!). Agreed, if people have large debts and rates go up then of course they will struggle big time but the vast maajority of property in Ireland is either debt free or close to it. Population rates are still rising despite emigration and birth rates are the highest in Europe. I’m simply saying that one can argue either way with regard to the merits of buying property now! I personally think that there is amazing value available for first time buyers now, at the same time I would tell the same people that they shouldn’t be in any rush to buy (: (and no I’m not in the property industry!).

  2. cooldude

    David we are coming to the end of this experiment in Keynesian economics where unlimited amounts of new money are constantly injected into the money supply to stop any hint of a slowdown. The new money is no longer producing any growth at all and we are now at the “debt saturation ” stage in this experiment where no matter how much new money is introduced no new growth will occur. This will not stop the main central banks from trying like crazy to kick start our economies and we are now heading into the “QE to infinity” phase of this crisis. There is no need to worry about interest rates going up because these guys know that even a small increase in rates will bring down the whole rotten system. No it is full on money printing on a global scale which will lead to the destruction of the present bunch of paper currencies. Its happened lots of times in history and is now starting to happen again. The only protection on an individual level is through owning hard assets which act as a store of value. The best of these traditionally have been gold and silver although oil and agricultural land are also useful but not as practical. The unfortunate thing about Keynes’s General Theory is that it is generally wrong and eventually will lead to this debt saturation that now exists. The next phase of this crisis will a currency one and it’s not too far away. Here is an interesting piece on Keynes’s fatally flawed theories http://www.thedailybell.com/3617/IMFs-Disastrous-Neo-Keynesianism-Is-Groovy-Idea-Says-TNR

    • Ross

      This is a good point, I think we’r at the point of no return. How can they increase interests rates with out great risk of bringing down the house of cards.

  3. bonbon

    Paul Volcker Has Read Glass-Steagall… And Saw That It Was Better Than His Own Volcker Rule! Pity someone did not pose this at the conference. The question is not about interest-rate policy, it’s about derivatives.

    October 28, 2011 In an interview with the Financial Times yesterday, former Federal Reserve Chairman Paul Volcker says that banks should not complain about his provision on proprietary trading in the Frank-Dodd Act, because Glass-Steagall was much stricter. Formally, it’s a defense of his toothless reform, but he himself says that Glass-Steagall was better.

    Writes the Times, “If the banks do not like his rule, they should look at Glass-Steagall, the more draconian 1930s response to excesses that forcibly separated commercial and investment banking. Mr. Volcker looked at it, he says, and found language simpler but also tougher. ‘It said an affiliate of a bank cannot be “principally engaged” – a wonderful phrase – in underwriting,’ he says. ‘The other part is a much longer sentence that says you can act for a customer in buying or selling a security, but it’s got to be in the customer’s account and it never can be on your account. That is a strict interpretation of no proprietary trading. You can do zilch. You can service a customer but you can’t put anything on your books. So, if the banks want to go back to Glass-Steagall – let’s go!’”

    • StephenKenny

      Not that it really matters, but reimposing Glass-Steagall would have no real effect in this day and age.

      Financial institutions other than retail banks can get hold of the use of savers funds, form indirect financial links, and transfer/trade risk, without needing to be part of the same group.

      The last 5 years have shown that the rules are completely meaningless for the big players, it is just a matter of enforcement, of which there has been none.

      Forget Glass-Steagall, even with a strong regulatory environment it would have no real effect today, and with no regulatory enforcement at all for big players , it doesn’t matter whether there are rules or not.

      • bonbon

        Strange circular “logic” there. GS was repealed in 1999, after intense lobbying by Sir Alan Greenspan over 10 years. Why such an effort? Have a little read of the 33 page act (compared to 400+ pages of the Swiss Cheese replacement) to see what worries Wall Street. The sudden imposition of GS as in 1933 will smash the stranglehold monetarists have on the population. Nothing else will work, and all alternatives are deeply loved by Goldman Sachs. GS put Wall Street in its place and was steadily salami sliced away especially after Black Tuesday.

        Forget any interest-rate fiddling while Rome burns. We take the “banks” and split them.

        • StephenKenny

          The point is that this regulation stuff is really a lot of smoke and mirrors. A new raft of regulations could have the same effect as those in the 1930s, were they 1. enacted, and 2. enforced.

          Even with a Prof William Black style regulator, to legally bypass Glass-Steagall just consider the possibilities offered by derivatives exchanges, government guarantees, non-financial currencies e.g. oil, wheat, etc.

          We’re all with you in spirit on this one – it’s just not so much Glass-Steagall.

        • bonbon

          Under Glass-Steagall, the Chicago Commodities Exchange worked – agricultural futures mean life or death for farming. Of course Monsanto/Cargill are still there but if we take away their derivative toys they will behave themselves.
          Derivative synthetic debt amounting now to $14×10**15 must be declared void. Investment banking can go ahead on its own (and likely will last 1 millisecond in today’s high-speed world).

          It took FDR, not just a regulator to impose Glass-Steagall – Obama has blocked this on at least 2 occasions. This is a constitutional issue, the issue right now. “Constitutionalists” that evade this reveal their provenance.

          • StephenKenny

            It’s an academic point, but the CFTC wrote letters allowing specific financial services institutions to speculate. They’ve had the ability to do that for decades.

            FDR enacted the laws, but they were enforced by regulators for the next 70 years. Citicorps broke the laws in the late 1990s, which, in the bizarre ways that these things seem to happen these days, was the starting gun for Gramm-Leachy, or whatever it was called, that removed the regulations.

            It’s also worth noting that financial services companies were only allowed to take on limited liability status in the late 1990s. Prior to that, the partners at Goldman Sachs and the rest were personally liable for their trading losses, right down to their houses, cars, and the shirts on their backs – so to speak.

            The point, if it’s worth making anymore, is that even the current regulations and laws outlawed a lot of what has happened and is happening, but it has been decided simply not to enforce regulatory violations by large companies.

            It’s one thing to get regulations enacted, but even were that done, to be effective they would need to be enforced. The aren’t, and there’s no reason to think that they ever will be again. What else does “Too Big To Fail” really mean?

          • bonbon

            Too Big to Bail – which means the point has come where the game is over. Obama and the GOP candidates do not seem likely to put Glass-Steagall on the table although there are bipartisan bills gathering signatures. Never underestimate what the derivatives mean. 5 large institutions have concentrated the risk – not too many to break up. They are making the job easier!

  4. RentingRoger

    You’re probably right David, once all this moolah finds its way into asset prices many are expecting gargantuan inflation. That’s why I piled what little savings I had into gold and silver bullion rather than put a deposit down on a house back in 2009. So far so good but time will tell if that was a wise decision.

    • bonbon

      It seems everyone is afraid to mention hyperinflation, Weimar II on the way. DMcW is right that ocean of worthless paper will drown us.

      Draghi is the Weimar II man, Goldman-Sachs. Greece with the Drachma might be better off but only for a while.

      This springs from the FED 0% rate Bubbles Bernanke of Helicopter Money madness.

  5. Great article, indeed, but what makes you say that Greece has less debt? In fact, they’ve been relieved of the odd 100 billion euro in bank credit, but are saddled with a new debt of 130 billion sovereign debt, be it on less harsh terms.
    As for higher interest rates, never before US general elections in November.

  6. NeilW

    “The central banks have opened the discount window and taken in all sorts of collateral and, in return, given out this cash.”

    Not in the UK they haven’t. The amount lent on the discount window is zero. There has been no propping up of the capital side (beyond the share purchased of the part nationalised banks).

    There has only been cash available on the liquidity side – which is nothing more than an asset swap.

    If there is lending expansion then that is because of tardiness in bringing in tight capital rations, and the fact that banks can still fund commodity speculation with short-borrowed money. Remember that the bank regulations have not been tightened up hardly at all.

  7. molly66

    Kenny and co the very people who are supost to have the Irish people’s best intrest are not doing what we elected them to do kenny says we will pay our depts ,that’s easy for the likes of him to say the domestic economy is chrashing down around us my mother is sick in the Lourdes hospital and her other son lives in Dublin and works for the HSE can afford diesel to go to drogheda to see his sick mother in hospital because he is trying to survive on low pay with for kids to feed and look after .welcome to Ireland under kenny/Gilmore ,the word plonker comes to mind.

    • Deco

      This country was broke in the 1980s, but we never had that type of situation, where people could not afford the everyday necessities.

      Of course, we did not have NAMA, Pillar bank strategies, Anglo Bondholders, hundreds of quangoes, and Brian Cowen’s pension either.

      The waste in the institutional state is squeezing this society.

      • molly66

        Yes but will change ever come in our life time,when this country is benign run by the free loaders back by free loaders for free loaders what chance do we have ,people say look after your family and yourself fight your own corner that’s all very well but will this change the over all picture of the way this country will or should be run for the betterment of Ireland as a better place to live.look at the warped tunnel vision that runs us now.

    • It’s the same for people everywhere Molly and it makes my blood boil.
      Welcome to post Celtic Tiger Ireland

      • molly66

        I am just lost to see and here what’s going on in this country,how we the Irish people take the crap thrown at us and I am sure that the way the country is run suits certain people,but how can things be so far removed from our daly life’s buy this government kenny and co must be blind and also deaf and thick,when you see the dail on tv it’s like one big laugh or is it once you get elected to the dail you have won the lotto.

  8. Adam Byrne

    subscribe.

  9. And yet again another fine lucid article.

    I’ve just heard a guy (sorry Guy, forgot your name, but he was a CEO of a think tank) state on the Al Jazeera economics program that China could buy up all the debt of the PIIGS and have money to spare to buy Microsoft and then some.
    The reason they won’t, methinks, is twofold.
    They’ll let the old system sink into a cesspool of a failed Capitalist model to weaken it further and because they haven’t fully developed a new system yet.
    That system will not be democratic but they see where it has to have a social element.
    As David has been saying for yonks, the Chinese save everything because there’s no safety net for the rainy day like Pensions or Healthcare.
    This they could put in place quite easily given the exchequer surplus (8.5Trn ??)but they don’t want to ape the failed Western model.
    Watch that space very closely.

    Have I got that nearly right David?

    • Deco

      Furrylugs – welcome back.

      Thanks to the level of mismanagement that has permeated the West since the 1960s, there will be no safety net in many Western countries in a few years time.

      Bailing out the asset ponzi schemes of the West is not a feasible investment.

      • And God help us all Deco in the time of The Great Correction when the nouveau riche try to prevent themselves becoming the nouveau pauvre. Led by blind goats like Trichet, at our expense.

    • Hi Furrylugs

      How’s West Cork? Yes you are right. Just one caveat re saving precluding crises. The Asian Tigers had high rates of savings in 1997 when they had a financial crisis.

      Best

      David

      • Thanks David.
        Tá na daoine as Turin Dubh agus Beal Atha an Ghaoirthaidh go maith ar fad.

        The kettle is always on if you find yourself on the road to Bantry.

        Slan

        Joe

    • bonbon

      China is not fool enough to buy Euro toxic paper. Lagarde went begging and got a smile.
      China is interested in infrastructure projects abroad, in Africa, Portugal, Ireland, especially the Arctic and Siberia. I guess the EU is really only a tiny piece of Eurasia.

      For this reason, the refusal to submit to financial rescue demands, and their pursuit of high tech political economics, Obama wants war with them, using Syria or Iran.

      We should also not submit to this financial tyranny, but be aware of what is at play right now.

    • You allude to “The third way” spoken of for many a year at the top….not quite democratic/ not quite communist.

      • Heh heh
        Wash you’r mouth out Josey.
        Shure you can’t have a social democratic aspect to neo capitalism.
        Or can you?
        They’re inscrutable chaps, those Chinese.

        As BonBon commented, its all in the smile.

  10. Philip

    Great article. The “much bigger down the road” concept says it all. Whether we like it or not, people are not hanging about forever and at the same time, doing a deal too early in an environment where things are starting to take off if just plain crazy. If interest rates are rising, it means there is a demand and that means more exports and people want their money back to start investing again….

    Summer’s coming.

  11. CorkPlasticPaddy

    It just goes to show that we’ve only just swapped one bunch of feckin ejits for another bunch of feckin ejits to run the country. Kenny and co simply haven’t got ‘the message’. It’s true what David’s said time and time again if a country defaults it’s not going lead to armageddon!!!

  12. LongGone

    Schäuble (German Finance Minister) was just on TV saying that there will be no similar deal for other countries in debt. However as David pointed out what is denied today can be reality next week.

    Death by a thousand cuts for the EU perhaps or if defaults were allowed for the rest of those countries who are actually already insolvent would this actually save Europe?

    Is it worth saving?

  13. Deco

    Great article.

    When the ECB was founded, a lot of noise was made about how it would not be controlled by the politicians. The EC would have institutional independence.

    The fact is that the ECB is controlled by the Big banks.

    And so are the politicians. (Well Sarkozy is, but Hollande is making the noises of somebody who is not controlled by big finances).

  14. Deco

    They call him super-Mario now. But in the history books, he will be hyper Mario.

    • Adam Byrne

      Could anyone make a reasonable prediction as to when we can expect the onset of this hyper-inflation?

      • Deco

        I was told once that it takes 18 months for money printing to run it’s course as an inflationary process. After which the cost of living for ordinary people is permanently higher.

        The bank economists rehard deflation as a great evil.

        Imagine the cost of lving actually decreasing. It makes ponzi-economics completely unworkable.

        • Adam Byrne

          Thanks Deco. Although ‘permanently higher’ does not necessarily mean hyper-inflation per se. We shall see.

          18 months seems as good a guesstimate as any. I suppose we are some way along that time frame already depending on when and from where you start counting.

          Good point about ponzi-economics. It would scupper them completely although deflation also brings it’s own problems.

        • Deco,

          Good point. I can see a situation where prices rise for the poor and fall for the rich.
          I wrote about that in January.

          All the best,

          David

          • Deco

            Ah yes, what a way for the rich to design an economic bailout system – to perpetually keep them comfortable.

            Marxism for multimillionaires. Capitalist competition in the labour market. The rich can buy what they want. The middle class learn austerity. And the poor struggle to get what they need – and they are driven mad by a culture that deliberately undermines them, and a welfare system that keeps them dependent.

            The words of Leonard Cohen come to mind.

            http://www.lyricsfreak.com/l/leonard+cohen/everybody+knows_20082809.html

            {
            Everybody knows that the dice are loaded
            Everybody rolls with their fingers crossed
            Everybody knows that the war is over
            Everybody knows the good guys lost
            Everybody knows the fight was fixed
            The poor stay poor, the rich get rich
            That’s how it goes
            Everybody knows.
            }

            The war was lost in 2008, a financial war. A war of redistribution. From the middle class taxpayers, to the well to do tax minimizers.

            And there you have the source of inequality – the tax system. The state revenue/welfare system has been converted into something strangely immoral. No wonder it is heading for bankruptcy in so many countries. And the politicians who sit in mastery of it, can only dream up schemes to make sure that the money is available for borrowing – to inject confidence into the bond markets.

            We the people will take the punishment, so that the bond market can continue to be persistently reckless.

            Except Leonard Cohen got one word wrong.

            It is not everybody knows. Maybe it was a few years ago.

            Now thanks to non-stop media coverage….”Nobody” knows.

            The worse thing that can happen is to play a game that is rigged, on the assumption that you have a fair chance.

            Wait until people wake up and realise that it was all rigged. It will not be pretty.

            Today’s politicians have been given the responsibility of making sure that “nobody knows” continues.

          • coldblow

            Deco

            Yes, and one of the things about it is how stupid they are as it can’t be made to work beyond the short term.

  15. Deco

    Portugal – the next shoe to drop ?

    http://www.economonitor.com/blog/2012/03/portugal-gradually-shuffles-its-way-up-towards-the-front-of-the-debt-queue/

    Edward Hugh is a UK economist who is in semi-retirement in Spain. His views on Spain have been predictive. Here he reflects on austerity in Portugal.

  16. Ireland was dudded – again: which makes me more interested in the result of the vote than ever, to see if the Irish people actually get kicks out of sporting the hair shirt.

  17. Joe0035

    Great article David and rite on the money. Bit if the track of the article, I’m looking for advice. Have a bit of cash to invest and I am thinking of buying about €10,000 worth of BOI shares – am I mad?

    • cooldude

      Why buy shares in an insolvent company. This is a casino mentality that is fostered by this endless money printing. If you are interested in the return of your capital gold and silver have outperformed every other asset class over the last decade and have a track record over thousands of years of surviving monetary crises. But you probably have been told they are barberous relics.

      • Joe0035

        Thanks – I was taking a view that is probably very simplistic and unexperienced that the BOI shares are very low in value and if / when this country rises out of this recession that the BOI shares will rise with it. I am looking at longterm, maybe 10 years on investing in these shares.

        • Adam Byrne

          In my opinion you would be foolish to take this step. That ‘bank’ may not even exist in 10 year time. If fact, I doubt it will.

    • stiofanc02

      Too late for gold or silver, five years too late for meaningful growth anyway, it would be like buying a house here in the boom. Read Shane Ross, back of the Sunday Independent this Sunday past, he specifically answers your BOI question in no uncertain terms.
      As for asking David for any advice I don’t think he gives any advice on specific financial queries, that is not his area. And a blog is not the place to be asking either. Much like paying attention to Tweets, texts or TV, you need to do the do diligence yourself. Good luck.

      • cooldude

        Not fully certain you are correct there Stiofan. If we simply used the exact same criteria as was used in the Bretton Woods agreement ( just divide the money supply by the official gold reserves) you currently come to a figure in excess of $10,000 per oz for gold. This shows the massive increase in the money supply over the last 70 years and particularly over the last 40 when Nixon closed the last link to gold and allowed these currencies to just float around likes corks in the water. I know this figure seems high but it is just a reflection of this global print fest we are engaged in. Gold is not really rising it is these paper currencies that are being constantly debased through excess supply and this eventually shows up in hard assets of fixed supply such as gold, silver oil, food etc. The current thinking that there is somehow a bubble in gold is deliberately spread by the central banks and their pet economists because they know very well the true value of gold. As famous central banker Alan Greenspan wrote in a piece in 1966 called “Gold and Economic Freedom”
        “In the absence of the gold standard there is no way to protect savings from confiscation through inflation”. For some more on this the new book “Currency Wars’ by Jim Rickards goes through all of this in great detail.

  18. molly66

    David please what do you think the Irish government is doing wrong to protect the Irish people at the present time.

  19. Harper66

    SPIEGEL reports this week that the German government didn’t reach even half of its planned savings in the federal budget. Only 42 percent of the spending cuts named by Merkel’s coalition government, comprised of the conservative Christian Democrats and the business-friendly Free Democratic Party, were actually not implemented.

    Calculations made by the influential Cologne Institute for Economic Research indicate that only €4.7 billion ($6.16 billion) of the €11.2 billion in austerity measures stipulated by the savings package actually took shape in 2011

    http://www.spiegel.de/international/germany/0,1518,820828,00.html

  20. johnniekelly81

    So for those interested in the Icelandic model… Worth a read http://blogs.ft.com/economistsforum/2012/02/iceland%E2%80%99s-new-banking-disaster/

    I was over with my dad during the week, he found a bank letter from April 1980 announcing an increase in interest rates to 16.5%. It was scary to hold it. Rates went even higher after that.

  21. mishco

    Yes, another great read, David. As always I learn from both your articles and the discussions that follow.

    Just one point. I often feel it’s like watching a lecture where the speaker immediately leaves the podium without answering questions.

    I know you are very busy, and sometimes you do give short replies; also you may prefer to have others let the ball roll whither it may.

    But, looking at regulars like Furrylugs and Molly66 asking heart-felt questions as they do above directly to you, I just feel you could address them personally.

    That would be icing on the cake, and you may have been about to answer them anyway.

    What do you think, David?

  22. [...] experience hasn’t proved this to be false, the Greece default last week certainly has. David McWilliams had this to say Now there we were, thinking that financial markets didn’t like defaults. In fact, we were warned [...]

  23. Juanjo R

    I disagree with the big love-in going on here.

    The punch in this article rests on a single prediction on the role of the central banks in the near future;

    “The (sic) will raise interest rates rapidly and maybe much more rapidly than we expect”.

    Will this not mean curtailing the never ending profit bandwagon the banks, and financial institutions, been on? ( i.e. with faux profits reckless asset and bond lending and real profits from bailouts/carry trade/repo speculation on assets and bonds ).

    Concerted interest rate rises will kill growth across the world too. This would mean the show wouldn’t go on – which isn’t what the banks want. They have politicans in their pockets. So somehow I can’t see it happening.

    A significant point the piece missed too – is that it seems the Greeks have given themselves a haircut!

    Greek Banks hold half the sovereign debt of Greece. So that begs the questions which creditors agreed to a deal? And what are they actually losing? Was it the Greek banks that provided most of the required 66 percent of creditiors to force the deal? Basic maths says to me they were in on it at the very least, if not driving it.

    Here is what I’d guess to be happening – the Greeks have just tried to open the money taps that were shut to them. They want to start the same money making game again that they were up for 10 years before this crisis kicked off – using cheap EU rate based loans to subsidise a corrupt, inefficent state.

    • Mark Walsh

      “Greek Banks hold half the sovereign debt of Greece. So that begs the questions which creditors agreed to a deal? And what are they actually losing?”
      This in no way ‘begs the questions’.
      It may prompt the questions.

    • stiofanc02

      No, you have to re read and understand the main point and that is this, “they cant countenance mass inflation”
      In Germany’s case “any inflation”
      I think David has this one spot on.
      interest rates WILL rise again and sooner than you think.

      • Juanjo R

        No – I did get that point. I don’t agree with it.

        What I’m saying is that if interest rise across the board then like a equal and opposite lever action any ( weak ) domestic growth will be snuffed out. Therefore the banks promises of risk free growing returns on capital won’t be credible. This is why I think this won’t happen.

        I think the key philosophy already at play is the “endless growth” one. Alan Greenspans big piece of bullshit. Its the same one that one sheet memo man McCreevey, the PDs and that ex-head of the Central bank in Ireland espoused. This is why US rates are at .02 percent or whatever. I believe this won’t change.

        As for Germany? What do the Germans borrow for? The answer is pretty much nothing – thats why their money winged its way to Ireland and the likes.

  24. CitizenWhy

    Why have we subordinated government to big banks? Let them all collapse and bring in Canadian banks to to replace them.

  25. johnm

    heres The view of Ireland form the Australian abc television show Four Corners,an Australian version of panorama or primetime…Features interviews with such illustrious individuals as Simon Kelly….one breakfast deal in the shelbourne was worth 220 million….many others….iinteresting comment about connections and links on the board of Anglo Irish to friends of Brian Cowen……ah well…what did we expect ???

    http://www.abc.net.au/iview/#/view/908646

    cut and paste….45 minutes long…..

  26. SleeplessInWicklow

    Everytime I hear a quote from our government in regards to europe, I cant help but feel that the movie “Invasion of the body snatchers” was not a piece of fiction after all.

    I mean everytime an official boards a plane on the way to brussels they give speeches etc…on how they will fight for ireland. But as soon as the meeting in europe is over and they return they cant remember what they went to europe for or what the people want. They then spew some euro waffle. Have they been replaced already?

    Now, coming back to the article at hand I just feel it misses one point. The political elite and banks are going to keep everything as it is for as long as possible and they will always keep coming up with some previously un-thinkable solution to do so. Interest rates will be a pain in the butt to the general public, but bankers and politicians are not general people.

    Now before people start shooting me down, lets look around. Greece has a leader that was imposed on its people and nobody cares. Italy is the same. Ten years ago if you suggested this, a person would have put you in a straight jacket for suggesting it. I really am afraid of what they will do next.

    The EU Commission knows its power has been usurped by Merkozy but say absolutely nothing. Indeed Van Rumpoy was the only european politician with clout that actually voiced his annoyance at the constant Merkosy dictats. But amazingly, within a month, a Belgium bank nearly goes boom and it gets bailed out. Never heard a word from Van Rumpoy since. Oh, I think he has also been given another stint as the president of the council. Absolute silence from him now.

    The point is, these are the people who are in charge and they dont care about us in any way what so ever. This crisis we are in will linger for generations. It will never be solved by economics, it will be solved by death. Yes, the death of anyone who was there, the death of anyone who lived at that time and the death of everyone who can remember this crisis. I cant help but feel this way because it is the only strategy that currently fits with european policy.

    Just my two cents.

  27. to: finegael@finegael.com

    Dear Taoiseach,
    in the light of Greece getting a 100 billion Euro write-down on their debt, I now ask that you seek similar terms for this countries Government volunteered debt!

    You may be a martyr for the banks but by G-d I am not!!!

    by the people, for the people….remember!!!

    Is mise et cetera,

    Josey

  28. Very insightful stuff and feels like looking into a crystal ball containing a kaleidoscopic view of events in the near future

    You are reminding us that we should take anything we hear in the media with a large grain of salt and to trust our own judgement and common sense. No one knows what the world will look like in a years time but you told us three years ago that the creditors, politicians and mainstream media were all bluffing and now you have been proved correct. A man with vision and a track record cannot be easily ignored

    This is a huge U-turn in attitudes sure enough and it proves that even the attitudes of most bloody minded idealogues can be changed. Whether such flexibility in thinking will ever be bestowed on Irish politicians is another question. Recent history tells us no

  29. Mark Walsh

    When will the Irish people finally realize that Ireland’s two governments, elected and non-elected, have zero to negative interest in the Irish peoples’ welfare with regard to European diktats?

    Their missives regarding the ‘green jersey’ run counter to the ‘blue and yellow jersey’ once aboard Air Corps One en route to meet their EU bedfellows.

    Resolved, we are an export economy. Our latest budget ‘mission statement’ is a concerted drive to cement trading relationships with the BRICS nations (Brazil, Russia, India, China & South Africa). Good call.

    What part of the Euro are any of these nations aligned to? A big fat zero…nada…nothing. But we must proffer our goods and services to the BRICS nations in probably the world’s hardest currency?? This beggars belief.

    What about our two largest trading partners, the UK and USA? Surely they too are pegged to the Euro, right?

    This prompts the question…why in the name of god, or Merrion St, are we trading as if we are an economic superpower like Germany?

    Most people know that the Euro is saving German exports from falling off the cliff. Their export costs would be many multiples their current level if denominated in D-Mark.

    I posit our elected and non-elected governments are on an enormous ego trip with their European colleagues. They will stop at nothing to ensure part parity at the political financial trough.

    Furthermore, our two governments mouths are writing checks our economic body can not cash.

    They care not for the people….’let them eat potatoes’.

    Oh wait, I’ve read of this somewhere in our past…

    • Mark,
      who are our non-elected government, are you speaking of the bankers?

      • Mark Walsh

        Our permanent, pensionable, top-end civil servants aided and abetted by AIB/BOI.

        • 33square

          “Our permanent, pensionable, top-end civil servants aided and abetted by AIB/BOI.”

          Our permanent, pensionable, UNACCOUNTABLE, top-end civil servants aided and abetted by us not sorting them the f#@k out…

      • redriversix

        Senior Bankers and Senior Civil Servants Josey……………They are the ones who are in charge today.

        Best

    • bonbon

      In 1846 we did not have a vote – now dump the ESM compact with a resounding NO!

      See DMcW’s pithy comment above on what the would-be dictators will do then!

      As for BRIC – that is a Goldman-Sachs project to counter the Dollar. Banco Santander is a large part of it and the largest Euro bank. The Brazil carry-trade was supposed to fund this. So the very same Inter-Alpha banks are at it again.
      Now the Fed is bailing out the Euro – call that a “peg”.

      Medvedev fired LSE idol Kudrin, the Russian minister pushing BRICs in Moscow, which meant huge “investments” out to the Carribean. I think Putin will follow through, explaining the insane rage in Wall Street (see the Bloomberg Putin photo recently).

      • Mark Walsh

        Totally agree on NO to ESM.

        Our Europhile politicians and civil servants* (*really should be renamed ‘self servants’ for their actions are the opposite of anything to do with civil society) will whip the electorate in to a state of fear to vote Yes.

        The confluence of repugnant politicians, vile civil servants and beastly bankers will once again sell our country to become ‘Made Men’ in their respective spheres of influence.

        Cardiff, Sutherland, Flynn, McCreavey et al spring to mind.

        I’d rather a self confessed, up-front, well run NY/NJ Mafia style of governance than the less than 1% shitting all over the more than 99%, and laughing at us as the excrete.

        At least you know where you stand with a Soprano & Co which cannot be said for our parasitic prostitutes.

      • redriversix

        Bonbon……

        If The V.P is such a V.I.P maybe we should keep the P.C on the Q.T in case it leaks to the V.C then we would all be put on K.P ?

        Your thought please……..!

        • bonbon

          Various reporters asked Medvedev and Putin about the danger to their lives.
          Neither VIP has any intention of going MIA or KP!

    • bonbon

      Various reports show that so called DM picture presented is false. Germany will do fine with the DM and without the Euro fiasco.

    • redriversix

      Ireland is a Registered Corporation,we are nothing but something for these crooks to make money out of………..

  30. wills

    David,

    In regards article I reckon the figures and stats with CB etc are official figures used to window dress the public.

    The shadow banking system and its CDS ponzi pyramid doomsday device is ticking away and when do the CB and relevant authorities etc ever even mention these numbers in tandem.

    Never.

    The official figures are nothing but a falsity and to sift through them to find sense IMO is really just fools gold.

    • wills

      Folks,

      Here is an interesting example of info the mainstream news reprting data on CB etc will never touch and yet it reveals so much on issues regarding wealth, money flows and real dynamics.

      ‘Greek drama, weather reports, Chinese demand, OPEC, Iran and so on, are not responsible for high oil and gasoline prices, which are causing the recession and could lead to a depression. The oil price is dictated by the faudulent “round-trip” trades of the “dark pool” trading in the IntercontinentalExchange (ICE) in Atlanta. The international Big Oil/big banking cabal, or an international gang of criminals, owns ICE. BP and Shell are partners in ICE and Chevron, Conoco Phillips and ExxonMobil are “silent partners” in ICE. Goldman Sachs and Morgan Stanley are partners in ICE and JPMorgan Chase and Citibank are “silent partners” in ICE. ICE operates outside of US law, considers itself to be above the law and can commit fraud and law enforcement cannot do anything. The Commodity Futures Trading Commission has no jurisdiction over ICE, influenced by Big Oil. ICE’s energy speculators and traders can ratchet-up the oil price anytime they feel like it, for their own profits and on the behalf of Big Oil, using “round-trip” trades. Google the “London Loophole,” the “Enron Loophole,” the “Dubai Loophole” and the “Global Oil Scam.” The Oil Deregulation Law is the Philippines “Enron Loophole.” “Paper oil” and the crude oil futures markets have to be done away. Cash at he wellhead. Over 75% of crude oil futures trading takes place in the ICE. The NYMEX is a decoy market. ICE is a super Enron. The “Enroning” of California was a test-market for ICE. Oil is too critical a resource to be manipulated and controlled by greedy speculators, greedy traders, greedy refiners and greedy corporations. Cash on the barrelhead. To obtain a fair oil price, Senator Sanders and the Occupiers have to investigate ICE and seize immediately the trading records of ICE, before they are destroyed and end this crime against humanity.’

  31. John Q. Public

    I’m tempted to say that Greece should be used as a model of how to do things in the present circumstances and after reading this article. I wonder what would be wrong if all EU countries followed suit and even offloaded all it’s debt onto the ECB? The ECB would then have control over interest rates and curb inflation.

  32. redriversix

    Greece defaults and we are all still here

    Spain,this evening gets a softer deal from EU on its budgetary constraints.

    Ollie Reihn says No to Noonan and Ireland regarding the postponement of Anglo 3.1 Billion payment at end of March.

    Why are we asking for permission when all the disaster forecasting has proven to be bullshit ? and………….we are over 12 years old !

    • gizzy

      He doesn’t just say no but in Latin reminded us to honour our committments.

      I worked for an Irish subidary of an overseas bank and the level of subservience and reverence of Irish Senior management to anyone from the overseas head office regardless of position was nauseating.No matter what bullshit they uttered and there was lots of it most of the Irish nodded and accepted it as gospel.

      So I am not one bit surprised at life long politicians and civil servants behaving the same. they are cut from the same cloth. they really are a shower of mammy’s boys.

      I’d say Ollie thinks he is being mauled by a dead sheep

      • Ollie is an ex professional soccer player ….Noonan is a ranting ex primary teacher who only reads and practices dogmatic theory and is devoid from the real world of finance where change matters .

    • Evening RR6,

      yeah well man, I don’t know, I really don’t know… but something deep down inside of me changed I guess… LOL… when I heard it, I really had to laugh hard, not bitter, nope, just pure old laughter. All this is funny as Hell, really, I mean it!

      It’s about time some bankers get shot again!

      • Note to the Irish:

        Hope is a cruel bitch
        she makes you dream
        dream of what you can not have
        dream of what you refuse to yourself

        One day you wake up
        and when nothing is left for your life
        that bitch
        is all you have

        ;)

        • Dorothy Jones

          Jeepers Georg…what uplifting thoughts….hope to attend the NAMA appearance before the Oireachtas Committee today…..that should complete the gloom!
          :):)

      • redriversix

        Its Good to hear from you Georg

        You have to laugh otherwise you would go nuts and I am not going back their again.!

        This Morning the FT reports that Citibank failed the federal reserve stress test.

        What is their stress test ?

        is it two Snr Managers having a arm wrestling contest in the stationery cupboard ?………….

    • Funny as feck. Lol 12 year olds – ‘Pat, Pat may I ask a ask a question please Pat?’

      David’s answer above about telling certain people to eff off seems to be gaining momentum. I never knew he had such humour in him but am glad to finally see it. Comedy is very powerful. This is more like the Irish brothers

      It’s only a matter of time now and wake the stupid will. Speak thy mind and remember who we are. We are not and will never be and would honestly not want to be, ahem. Germans. We are nobody’s fucking slave no more

      This article should give you hope and restore your faith in Irish people. We will stop being sheep and will figure the game out ourselves, to suit ourselves

      Ps don’t mention Leeds United next time David chooses a footballing analogy. Shhhh.

      • ^^ Even the stupid will waken

        Even if we have to orally and intellectually slap them awake. They are bring down the ‘class average’

        • Adam Byrne

          With all due respect Pauldiv, the stupid won’t wake, they never have, they never will.

          To paraphrase the Bible ‘the stupid will always be with us’.

          • Thanks for keeping us straight Adam

            However such generalizations are fascist in nature and way out of my league

          • Adam Byrne

            You don’t need me to keep you straight Pauldiv, it was just my opinion. I am open to having it changed by experience but so far in my 40 years it hasn’t happened. In fact, with the dumbing down of contemporary ‘culture’ the stupid seem to becoming more stupid and numerous, and whose to say that I’m not part of that trend myself?

            Generalization yes, but so was yours. Fascist? I doubt it but I take no offence. See you on the frontline! (small f).

        • …Stupidity is a lack of intelligence, understanding, reason, wit, or sense….

          It is not stupidity…. much worse… IGNORANCE!

          • 33square

            “the stupid seem to becoming more stupid and numerous”

            i do not agree. i don’t watch xfactor anymore cause the voice is so much better. like i said on my bacefook, i’m a celebrity is old hat, tallafornia’s where it’s at. i’ve signed my “smart” phone up to 48months cause it’s so cheap. i’m gonna be a property speculator when i get out of college, cause it’s easy money (harms no one, guilt free), i’m just holding off until this global financial doohicky turns around. i’ll know that has happened when my friend in the bank (he got his job through his daddy) tells me that loans are flying out the door again.

            stupid? pfft! no sir. i’m “connected”

            LOL

          • Grey Fox

            “Ignorance”

            “A want or absence of knowledge.”

            “Ignorance of law is a want of knowledge or acquaintance with the laws of the land in so far as they apply to the act, relation, duty or matter under consideration. Ignorance of fact is a want of knowledge of some fact or facts constituting or relating to the subject matter in hand.”

            George, how is that worse than stupid!

          • Well Grey Fox, in my world one that is stupid, and I have not met a lot to be honest, really lacks intelligence, and has not the tools to gain the knowledge required.

            As for the Ignorant however, we can safely assume that the tools exist, and the knowledge as well, so Ignorance is a matter of choice, stupidity not.

          • Adam Byrne

            Yes, IGNORANCE is more accurate. I stand corrected Georg.

  33. Property Crash

    Cote D’Azure is currently suffering a property fall and this has been announced today in the local press .Is this the beginning of a shaky road in France . Paris has no report issued yet .How long more will that take ?

  34. David is Elliot Ness just a fantasy figure?

    Or do you ever imagine Ireland being cleansed to the extent that we will have real democracy and people who are incorruptable?

    There are people of principle and who are incorrputable but they are few

  35. 1 out of 35 people in this world today is a migrant…. just saying

  36. Adam Byrne

    Doom and gloom and worst case scenario economics on Newsnight right now – might be worth a watch.

  37. Harper66

    http://www.youtube.com/watch?feature=player_embedded&v=yjhxp-JJqDo

    Noonan argues against paying Anglo promissory Note December 2010.

    Clear conscise overview of the entire anglo promissory note by Noonan and shocking how he has changed his tune….

  38. J999

    So to summarise, following years of austerity and pain, central banks who caused the credit bubble to begin with, are now in the process of acquiring our assets. Sound familiar? Who are the ECB? We didn’t elect them and they don’t answer to our leaders.

  39. Year Of The Central *ank
    ^^ Plank?

  40. Morning,

    Interesting piece on deleveraging by Martin Wolf in FT. Also, I came across this link last night which puts Ireland into perspective. BTW the original book is a must read.
    http://www.reinhartandrogoff.com/data/browse-by-country/

    Best

    David

  41. Adam Byrne

    Just read the first paragraph of this before heading to class, looks like it might be a good read:

    http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html?_r=4&pagewanted=1

    • bonbon

      Extract on DT points to Goldman-Sachs out of all limits derivatives “culture”. With the clients referred to being likely Greece, Italy, the ECB (all run by GS boys) as “muppets” this is explosive.

      Still i wonder who the speaker will go to work for now? An honest bank? He’ll be looking!

    • imithe

      Wow. It will be interesting to see how this guy is treated in the coming days. My guess is he will be destroyed in the “respected” media.

  42. bonbon

    For perspective, Gerry Adams said yesterday :

    “Olli Rehn’s claim that respecting commitments and obligations is a key tradition in EU law is a nonsense. It was never applied to France or Germany when both regularly breached the stability and growth rules.

    “Germany breached the deficit rules in 1994, 1996, between 2003 and 2006 and each year since 2009. It has broken the debt to GDP rule every year since 2003.

    “France has broken the deficit rule every year since 2003 and has breached the debt rule every year since 2003.
    “It is clear that for Mr. Rehn there is one rule for the Irish and another for everyone else.

    “The EU has singularly failed to deal properly or effectively with the economic and banking crisis. It has staggered from one failed short term solution to another and has contributed to the crisis in the European banking system and to the levels of debt confronting Irish citizens.

    “The Irish government should do what is in the interests of the Irish state and of Irish citizens and declare its inability to pay the promissory note.”

  43. Off topic…Never too late…. to die for your country!… -Motherfuckers! -

    Survivors of Britain’s 1950s atomic tests in the Pacific….the supreme court ruled that their action should be time-barred because it had been brought too late.

    http://www.guardian.co.uk/law/2012/mar/14/pacific-atomic-test-survivors-mod

  44. bonbon

    In France Presidential Candidate Cheminade confronts “Collective Anaesthesia.”

    That has now worked, and British press is having a fit.

    I hope no one here is pursuing collective anaesthesia?

    • bonbon

      Just a thought – collective anaesthesia is blocking out reality. Most parties and groups are doing this with group-speak etc…

      Collective amnesia – blocking out the past, history where Ireland comes from.

      But I think the worst of all is collective loss of future – how to coin a word for this I wonder?

  45. [...] Keep your pension pot away from the sharks Energy index rises 8 per centenergy index up Year of the central bank Government pledges ?45m to boost exports Richest 300 Irish now worth ?62bn If we all want jobs, [...]

  46. Grey Fox

    Who is Olli Rehn?? and when did he buy Ireland?
    Don’t remember that transaction!

    • Grey Fox

      Far too little, far too late, this self serving apologist is just setting himself up for a book deal and an appearance on the Morning America show, this is my one and only comment on this Piker, he doesn’t deserve even this one!!!

    • Grey Fox

      georg, understand your point from earlier, my mis-interpretation, mea culpa. Cheers

  47. CitizenWhy

    Brief but detailed picture of how the Irish taxpayer is being screwed to benefit foreign banks (names names).

    http://dailybail.com/home/rothschild-bank-and-goldman-sachs-are-both-on-the-list-of-bo.html

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