April 24, 2012

That's not rain - that's a lie

Posted in Sunday Business Post · 198 comments ·
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There is a famous scene in the 1976 film, The Outlaw Josey Wales, starring Clint Eastwood as the eponymous hero. During a particularly brilliant exchange, the bounty hunter Fletcher, hot on the heels of Wales, comes out with an inspired put-down to the cowardly senator who is trying to pull the wool over his eyes.

Squinting into the sun, saloon door at his back, chewing tobacco, Fletcher disdainfully hisses: “Don’t piss down my back and tell me it’s raining.”

The expression, which is originally from South Carolina, beautifully captures the moment when someone who is being lied to turns the tables on the person who is lying to him.

When it comes to the fiscal compact, the EU is pissing down our backs and telling us that it is raining. And the fact that the government is also going with this line implies that it is party to this falsehood.

Brussels is pretending that the fiscal compact is necessary to strengthen the euro. This is nonsense. The fiscal compact has nothing to do with solving the eurozone’s problems. Let’s be clear about that. It has everything to do with reassuring the German electorate that they will not be on the hook for the internal inconsistencies of a currency union, which they were bounced into a few years ago.

When I say ‘bounced into’, I mean the Germans never wanted the euro. They were more than happy with the Deutsche Mark but the French demanded that the price of German unification in 1991 be greater EU integration. A new currency would anchor Germany into western Europe, just in case the newly-unified Germany got itchy feet again and lurched eastwards.

Throughout the 1990s, the German public was kept in the dark about what all this meant for them. In the past few years, they have woken up. But they are now told that they are on the hook. However, this is only half the story.

Germans should know that there are no free lunches, and the greatest free lunch of all was the belief that Germany could lock in a permanently cheaper exchange rate off which to export without a price. Of course, the quid pro quo of their huge trade surplus was massive inflows of money to Germany, which has to be spent somewhere.

Had they their own currency, it would have risen in response to these inflows and German exports would have become very expensive. This didn’t happen, so Germany got turbo-charged export conditions, a massive current account surplus and huge financial exposure to its neighbours because German banks re-lent this cash to the periphery of Europe.

Unfortunately, no one told the Germans this bit of the story. As a result, they have misdiagnosed the ailment and they claim every problem begins and ends with free-spending governments.
But the financial panic wasn’t caused by budget deficits. Ireland and Spain entered the crisis with budget surpluses. The problem in Europe is driven by capital flooding from the north to the south and west.

At its core, it is a problem of capital flows rather than budget deficits. Ireland and Spain’s budgetary problems are the consequence of capital flows, not the cause of the crisis.

It is important to remember in Ireland that the reason we are in the clutches of the troika is not because we threatened to default on our debts, but because we didn’t. It was when we said we could pay everything that investors panicked.

So the problem for the euro is the capital flows between the creditor nations and the debtor nations.
What caused the problem? The culprit is the current account imbalances. Ours has reversed dramatically, providing the evidence for the idea that our budget deficit is simply a reflection of a massive increase in domestic saving, rather than explicit government spending.

The turnabout in our current account position reveals the massive domestic swing to saving over investment.

It also suggests that, when the eurozone breaks up, as I expect it to, Ireland will be able to finance itself. In fact, in the coming era of capital controls, this country will be in a better position than most. Far from being dependent on foreigners for financing, the ludicrous reality today is that this country is actually exporting capital – capital, which could be much more effectively deployed at home.
The real story of the past five years is that government spending was driven to replace the increased savings of the private sector. If the government hadn’t spent in the past five years, how deep do you think the recession would be now?

When we look at the entire eurozone debacle, we see an example of a monumental misdiagnosis to suit German political opinion.

Doctors will tell you that sometimes misdiagnosing the aliment is as dangerous as no diagnosis at all.

By focusing on budget deficits as the ‘fiscal compact’ does – which is not the root of the problem – the Germans are pissing down our backs and telling us it is raining.

And while they might be able to fool the insecure Irish people into voting for the ‘fiscal compact’, they are not fooling investors.

In the past few days, investors have taken flight from the bond markets of Spain and Italy and now, interestingly France. After all the cash injected by the ECB, investors are heading out of Spain and into Germany. They realise that the euro is a currency primed to explode.

Many years ago, this column argued that the euro would break up. Back then, I thought the break-up would be the likely upshot of a dramatic eurozone debt crisis. Now I am certain that this will come to pass.

A bit like Ireland with the bailouts, the flight from Spain happened, not because Spain said it wouldn’t meet its tighter budget targets, but because it said that it would! Investors know this is not politically possible.

We have yet another summit this weekend, while today we have an election in France in which the people are set to give Nicolas Sarkozy his marching orders. The world knows that the fiscal compact is not credible. Eventually, the people of Spain and Italy will get fed up of austerity, and the people of Germany and the Netherlands will get sick of bailouts.

The currency will go the way of most monetary unions; it will break up.
Remember there have been plenty of examples of countries leaving monetary unions in the past 100 years. It’s not unusual at all.

In these weeks of April showers as we go into the campaign season, remember that sensation of dampness you are feeling down your back is a bit too pungent to be water.

David McWilliams will be speaking at NUI Maynooth on Tuesday April 24.
http://campuslocator.cs.nuim.ie/show_venues/JH3/


  1. Adam Byrne

    subscribe.

    • redriversix

      Great article David.to the point

      Best
      RR6

      • molly

        Hi have you notice how every day things are getting worse in this country.
        I an just back from holidays I stayed at a hotel Spain where there would be a good number of Irish there but this time there was only us and another couple.
        This treaty is going to be if passed the straw that broke the camels back,there seams to be only one way to fight this and we need the Irish people to stand up and be counted.
        What’s your view on this?

        • Tony Brogan

          vote no, and be adult enough as a nation to stand on your own two feet.

          • molly

            Yes I will vote no but we need to do so much more .

          • Tony Brogan

            Yes, repudiate the odious debt, close the central bank, take the nations issuance of currency back to treasury, Issue a national currency, monetize silver currency along side the paper money.
            Treasury notes carry no interest, and do not add to a noational debt. silver coin is a protection from inflation and can be done at no cost to the treasury.

    • happyboy

      vote no to austerity on may 31

  2. Falls

    excellent article. its always back to government. therein lies our problem, we have to cut and cut and cut it back to allow us all the breathe. this EU and govt fetish of controlling markets, in fact controlling everything, will kill us all.

    just saw this clip this morning.

    http://www.youtube.com/watch?v=SwoCrE_Txzc&feature=colike

    where is the EU and Irish equivalent of this? we are now slaves and whats worse, dont even realise it.

    • jonathan

      Thank you Falls,

      That was a really thought provocative video!

    • Tony Brogan

      Good shot except it does not point out whence all these destructive ideas are from.
      From the power elites whose primary weapon is the control of our money, and money system.
      All nations need to wrest back their sovereignty by getting back the control of the money system from the elites.
      It must be returned to the people as their rightful private property.

    • onq

      This video is a shill for Big Oil. It is against climate change policies. It is “steady as she goes” on the rapacious “free market policies” what have supported Capitalism and its paragons, the Bankers.

      The flip side of “free market policies” is “globalization” which has done more to undermine the American Middle Class than anything else.

      It is quite clear who is undermining the European Experiment. Ratings Agencies, Goldman Sachs repackaging of the Greek debt, “the markets” orchestrated adverse reactions – no matter what steps are taken.

      From the repackaging of American sub-prime loans and their Triple AAA rating by rating agencies to the downgrading of entire countries because of taking on the debts of the financial institutions (close relations of the same rating agencies) we are looking at a PART of the Full Spectrum Dominance agenda spoken openly in the PNAC.

      Wake up. Smell the Coffee. Its American.

  3. wills

    Thought provoking article David, nice one, thank you.

    Can I take a look at the central idea the analysis hinges on …..

    ‘The problem in Europe is driven by capital flooding from the north to the south and west.’

    I cannot help but think but that surely the Irish banks irrigating in from the German banks the slush monies are responsible for Ireland drowning in debt.

    Surely the Irish banks grab on the German savings is where the chink in the chain is here.

    The turbo boost in German exports IMO is a good thing. It makes high quality product more available to more people. This is IMO a productive eventuality,

    Surely the focus of accountability for a slush fund drowning an economy goes too the gatekeepers open the lock for the surplus cash to avalanche in for the Irish banking class to cream the euro et up and through the syndicates rear in place run a ponzi property bubble.

    The Irish banking Insider class are on the hook in this analysis not the German IMO/

    • wills

      Please excuse the typos. The automatic spell corrector is catching me out!!

    • Tony Brogan

      Take a step back and the idea and policies come from the power elites that impose policy on the countries via the central banking system.
      The legalization of production of money by the central banks and then the legalization of fractional reserve banking provided the flood of cheap credit.
      It is a deliberate policy designed to enslave the world in debt and then impose draconion laws depriving the people of freedom in the name of controlling the resulting social chaos.

  4. PollyMolly

    Yeah good line from a great film.

    Here is the clip, beautifully delivered by John Vernon http://www.youtube.com/watch?v=kfdpcrOgUp4

    With the massive shifts in the EU political scene, potential socialist President in France, fall of the Dutch government, Spain near the edge, Italy not far behind, Ireland trying to be the best boy in the class, holding a referendum seems off the wall.

    • Polly,
      there will not be a socialist president in France.

      Sarko will win again as he’ll get 90% of Le Pen’s votes in the final round.

      • Nono

        Josey, I don’t think it is that simple. Being French, I know a little bit about French politics and I know a lot of FN voters will NOT vote at the second round. They are people who are disenchanted by politics and the appeal of a Le Pen is the populism and the “Anti system” they represent. They would rather stay at home but vote for another 5 years of Sarko (and wouldn’t vote Hollande in their wildest dreams!) However, people who voted Melenchon and other left wing parties will most certainly vote Hollande because they are so sick of Sarko and his clique. Tale it as more of an anti-Sarko vote than a pro-Hollande one if you wish…

  5. wills

    …contd/

    So, is it not the case the pisser in the articles analysis is surely the Irish banking insider class keeping mum, diverting Irish public monies into their coffers, keeping mum again, letting everyone else take the blame.

    • Tony Brogan

      It is the banking elites pissing on the world.
      It is the central banking system set up to control each county and then the major groupings of people.
      It is the one wold government ,new world order, lying cheating and stealing.
      Feeding as all sorts of distractions as we indebt and enslave ourselves.
      We must get rid of the central banking system. we can start on a national level and maintain independence.
      One of the lies fed to us is that we have to join the big group to survive. I say BS to that.

  6. richlp5

    Another good line from that film which is appropriate also, is when Clint Eastwoods character is in the bar and a rough looking bounty hunter asks him
    “are you Joesy Wales, your wanted” to which he replies
    “you a bounty hunter”
    The Bounty Hunter says “a mans got to do something for a living these days”
    To which Joesy Wales says “DYING AIN’T MUCH OF A LIVING BOY!”
    Austerity ain’t much of a living for the people of Europe!

    • C21living

      Do you reckon we should stop austerity?

      What a total f**king delusion!

      ‘You ain’t seen nothing yet boy!’ Just vote NO to this fiscal compact, watch the EU make good on its promise to lock us out of the ESM and wait until you see austerity, you’ll have ringside seats for the austerity catastrophe of the century right here in Ireland.

      • redriversix

        Austerity has never worked…….anywhere

        • C21living

          Do you reckon if we had a ‘punt nua’ we could just print punt nuas day and night, and flood the country with ‘new money’ and it’d be just grand, loike?

      • richlp5

        C21living
        I am not delusional just highlighting that the people of Europe and Ireland will be surviving not living for the next decade or two.

        I have no problem with auserity at a certain level if done right. I have a huge problem undergoing the level of austerity in our country to prop up banks and our greedy senior public service. see link below same cronies benifeting from a broken system paid for by the likes of me.
        Basically what our government want are private sector workers like me to live like Monks (shop in Aldi, No foreign holidays, a banger of a car, no meals out, Yet well eductioned with relatively good Job but no disposable income and at the end of it all no pension worth talking about) to keep them in the lifestyle they are used to..meanwhile our bailed out banks pay their CEOs €500K a year, while their employees hoover up any cash they can get there hands on from viable businesses all over the country making more people unemployeed when those fxxkers should be the ones on the dole.
        We live in one of the most corrupt countries in the world. The total cost of the bank mess will be somewhere between 60B~80B and yet no one (Regulatrr, banker, polictian) has been held accountable.

        http://www.irishtimes.com/newspaper/breaking/2012/0425/breaking2.html

        • C21living

          Read back to your earlier ‘austerity ain’t much of a living’ post. We all have it hard and the bailout of the banks is a disaster, as is the Croke park agreement.

          But we ain’t seen nothing yet.

          If we vote NO, we’re locked out of ESM money. That’ll push us to the brink. We won’t be bailing out our banks or paying exorbitant sums to public sector managers because the financial shutdown of Ireland will be making world headlines.

          That’s what I mean by ‘you ain’t seen nothing yet’.

          Because….we haven’t. We HAVE NOT seen austerity yet, not like we are sure too very very soon.

          • richlp5

            I think there are a lot of people where it couldn’t really get much worse – as I said they are basically just surviving. Do you actually think if we vote no ..people will Starve and become homeless ?
            I am voting NO for the following reasons
            1) to give our Polictian’s some negotiating chips when looking for some deal on the P.N’s
            2) The debt/GDP requirement of 60% will need another 15 years of 3/4B budgets even after we hit the 3% structural deficit
            3) Maybe as you say they will deny us ESM funding but I doubt it and even if they did we would then have no choice but to default on the ECB and other bondholders, our banks would also need to default on the ECB as when the choice comes for people to eat or pay their mortgage they will not pay their mortgage leaving our banks with massive losses. Most people are only working now to eat sleep and pay the mortgage anyway
            4) If the only reason I should vote for something is because bad things will happen if I don’t with no other convincing argument then I would rather vote no and bring this BS to a head for once and for all. I think in general as a country we have become too addicted to comfort and prosperity and the threat that someone might take that away is enough to force some to do anything, vote for something that they know is not right,,whats next once were on the hook..and by the way all that comfort and prosperity will continue to drain away over time anyway regardless if we vote yes..just keep the pigs at the trough fed for a few more years at the expense of future generations.

            “In the end, more than they wanted freedom, they wanted security. They wanted a comfortable life, and they lost it all — security, comfort, and freedom. When … the freedom they wished for was freedom from responsibility, then Athens ceased to be free.” — Sir Edward Gibbon (1737-1794)

          • dorn

            nonsense. if we stop getting bailout money, we stop paying off anglo et al, and if we stop being on the hook for that shower, suddenly we don’t owe anywhere near as money as everybody said we did. we are only paying anglo because the eurocrats told us we have to if we want more loans form them. in effect, they are lending us money to pay off anglos debts. and if anglos debts are removed from the national debt we are in a pretty good financial state.

  7. Philip

    Watch the German economy start to falter. Cheap Euro will not be there to help it along for much longer. Indeed, with the major imbalance of trade between West and East starting to become more apparent, I expect large exports Germany is tuned for will start to create problems in the very near term.

    The turbo charging German got will need to be wound back a) because it will not get the money it lent out and b) excess capacity force their own internal devaluation.

    No one has won here. The bankers are discredited, the get rich quick brigade are found naked, the turbo charged will be emergency stalled and the gravy train of the EU commission and ECB and other associated bureacracies will be seen for the incompetents they are. This is one major cockup.

    • CitizenWhy

      The German economy is officially headed to recession (decline this quarter).

      But Germany biggest export buyer is China. Germany also exports to countries like Iran that are under “international”(that is, US mandated) interdicts. Yes, China is not growing as fast but that’s due to a big decline in its real estate bubble. Germany exports precision products for its other industries.

      And Germans continue to save. If these savings can no longer be invested in western Europe they can be invested in Poland and the Baltic countries. If the investments/capital inflows are too big they could ruin the Polish economy the way they ruined the Irish economy. But this is unlikely to be allowed by the Polish government. Germany can also invest internally, especially in the east and north of Germany.

      In brief, there is a lot of leeway in how the Germans can maneuver their economies. The natural economic order is for Germany to revert to the DM, and for the DM not to be the currency of eastern European countries, but to be the back-up currency for people’s savings, as it was in the past. The DMs were often literally buried somewhere on the farm or hidden in the house.

      I’m surprised that people in Ireland are not stashing away some of their savings in British pounds, Canadian dollars and Scandinavian currencies.

      • redriversix

        Germany uses its current account surplus to loan money to Europe so Europe can buy German products ……….cannot last in a market which is Bankrupt.

        Best
        RR6

    • The globalists and the old banking families are winning!!!

      Everyone else is losing but it is not lost yet!!!!

      • Tony Brogan

        No it is not lost, but it requires courage and faith in ones own self reliance.
        close the central bank, inpliment a national currency through treasury, repudiate the odious debt, allow the monetization of silver coin along side the paper script and give the people a choice of savings vehicle. Paper money subject to inflation of silver money inflation protected.

  8. Sarkozy will WIN

    In the south of France and the island of Corsica many of the voting regions gave Sarkozy their first preference and this was closely followed with votes for Le Pen with Holland showing a poor third .Ipsoc now predicts that 60% of Le Pens vote will vote Sarko and 19% Holland and the rest abstain.

  9. DC

    Lone Watie (Noonan) tells Josey (DMcW)about a meeting that he and some of the other chiefs (Kenny, Gilmore etc) had with “Abram” Lincoln (Merkel). “She told us we must ‘Endeavor to persevere.’ We thought about it for a long time, ‘Endeavor to persevere.’ And when we had thought about it long enough, we declared war on the Union (Austerity).”

    :-)

  10. CitizenWhy

    Big capital inflows into a country cause big problems.

    Huge capital inflows into a country cause huge bubbles and crashes (Ireland being a sad example).

    In all the posturing about the debt crises in Europe, why is no one/no country talking about limiting capital inflows? Brazil does it, having learned how evil unrestricted, big capital inflows can be.

    • Tony Brogan

      Eliminate central banking and eliminate fractional reserve banking and there are no more excess capital flows. all bonefide investment should be from savings and not debt based money or borrowings.
      Wealth is built from savings and investment in capital using those savings.

  11. Paris75013

    Agree with Nono that Le Pen voters will express themselves on 6 May next by NOT voting at the second round.

    David,

    I have a question. There are many Irish people like myself living outside of Ireland, in other EU countries. In the case of a break up of the Eurozone and even the whole EU, what would become of our residency rights in other EU states? What would happen to people like myself who were forced to emigrate to find work elsewhere in another EU state?

    • Colin

      Don’t worry, we’ll be fine. It’s non Europeans they’ll ask to leave first if they ever started going down that road, which I do not see happening at all. But if you arrived with a cock and bull story with no memory of where you came from and destroyed your passport in the bog in arrivals, then you may get your collar felt if they ever went down that road.

    • Molly : your views are from Ille De France ( Paris and North ) only

  12. So is the inference here that a ‘no’ vote on the treaty will help bring forward the inevitable / eventual break up of the monetary union – thereby expediting Ireland’s return to a stronger position?

    • C21living

      Apparently.

      DMcW has identified himself as an ‘Atlanticist’ in the past.

      He knows full well in we leave the EZ we will have to return to a currency union with the UK (ie. peg our ‘punt nua’ to sterling) and he’s ok with that as an outcome.

      Maybe he’s right. Maybe staying in the EZ at the price of bailing out bank bondholders just isn’t worth it.

      But he has never promised the Irish some kind of ‘freedom’ if they leave the EZ – take note! He knows that economically speaking, it’s as good as returning to the UK.

      FYI he’s from Dublin’s South Side, his wife is Northern Unionist and he’s never praised things European in my experience. Like everyone else at this time, he’s entitled to his opinion. But just as the Irish elite who brought the country into the EZ – think of Francophones like Garret Fitzgerald, John Bruton and Pat Cox – didn’t explain to the Irish electorate that the full implications of EZ membership would be that we’ll be a region of the United States of Europe…

      …similarly, those voices calling for us to leave the EZ aren’t revealing what they know, which is that the end result of that break from the EZ will be a punt nua pegged to sterling. That’s where we were before 1979!

      • Colin

        And what’s so bad about a peg with sterling? And no, I’m not married to an ulster unionist.

        • C21living

          Nothing, really. I’ve a unionist girlfriend, as it happens.

          It’s just that anti-EZ voices rarely clarify the ‘endgame’ of an EZ exit.

          The endgame of an EZ exit will be a peg to sterling.

          What’s so bad about being in the EZ? Apart from bailing out banks, that is.

          • Colin

            It would have been fine, had Lenny kept his inner eejit inside him. And had he taken full advice from David McWilliams at the crucial times, we’d be a lot better off than we are now. But no, he had to act all earnest and ‘intellectual’ and speak French at EU meetings, in other words, Lenny didn’t have the balls to do the right thing for the country. And then we have Biffo and his destructive decisions.

          • C21living

            So what’s so bad about the EZ, exactly?

            The imbalances after its launch have led to the current disaster, couldn’t we stick with it and make it to a better place?

            Or do you reckon we’d be better off with “punt nua” pegged to sterling, presumably in the old 75p to the GBP?

            All we’ll need then is to bring back macroon bars, Don Coburn and World in Action.

            Oh, and young couples trying to pay off their euro-mortgages will love our slide down the snake of the punt nua after the ladder of the euro.

            Talk about back to square one!

          • Colin

            There was another reason for the single currency. It was to stop banks making a fortune from foreign exchange transactions. The banks didn’t take this lying down, so they ramped up their lending to make more money from that.

            The single currency idea was good, albeit flawed. The banks reactions were envious and criminal.

  13. Rory

    It has always been my favourite quote when it comes to politics, long may it reign.

  14. gizzy

    Very good article.

    Contrast with Simon Coveney on radio this morning. Yes vote is needed for continued recovery. Euro is essential and China is the answer to all our woes.

    • C21living

      Vote NO Gizzy

      Vote NO and don’t stop their, either. Keep going until we are unambigiously locked out of the ESM. Make sure we are so broke that the bank bondholders get burned.

      Don’t stop their either, get us out of the EZ and into ‘punt nua’.

      We’ll have a giddy moment of elation. We might even go on the rip for a weekend! Then our exporters will be so alarmed at our antics that they’ll make it clear that they will only stay in this country if our ‘punt nua’ is pegged to sterling.

      Then we can party like it’s before 1979!

      • redriversix

        “are you sure your not Lucinda Creighton”…?

      • gizzy

        Thank you for the advise. You do seem a tad annoyed by open debate though. I don’t go on the rip, spend my weekend coaching kids sport and i know a lot of Irish who don’t so don’t use stereotypes to back your argument use logic and reason. State where austerity only poilicy has worked and i will read and digest.

        • C21living

          Austerity is anti-growth, obviously.

          But we currently spend €18bn more than we earn as a country.

          We have to cut back on spending and raise taxes. We are out of control.

          If austerity ‘doesn’t work’, what does spending more than you earn indefinitely do?

          Have you ever tried that?

          • 33square

            “what does spending more than you earn indefinitely do?” we are doing this anyways and will continue to do so if we vote yes. what is your proposed solution to this?

            “We are out of control.” we are, yes, but where’s our bailout? banks were out of control, got bailed out, now they’re completely under control and providing NO SERVICE OF ANY BENEFIT to any person in this country other than holding onto their cash semi-securely. it is their recklessness and bail out that has resulted in an out of control economy, nothing else, plain and simple. there is no arguing that point.

            HAVE BALLS… DEFAULT… pay no one… leave the eu if they want us out… actively DEFEND our fishing waters… use OUR oil, gas, wind & solar… reform social welfare: NOBODY gets something for nothing except in justifiable circumstances (verifiable incapacitation)… legalise cannabis (duh!)… tax it to shit… export it (it’s worth trillions!)… grow it for bio diesel… criminalise petrol engines… return to the land… let the money laundering/tax evading ifsc dwindle and die, who gives a fuck? what services do they provide to REAL PEOPLE?… promote green tech… promote sustainable development/growth of permaculture… tax wasteful factory farming of all sorts… promote local food, local industries… feed ourselves… provide free broadband infrastructure (with eircom copper if necessary)… let exporters cry all they want about pegging to another currency… let them sell with bitcoins if they must… if their products are good enough (usually not the case unfortunately) they will export them and people will buy them, simple as… if they want to play the “money game”, let them leave to somewhere that wants part of that crap that ALWAYS results in boom/bust, making bankers rich and our future children poor… CLOSE OUR PARASITIC BANKS! promote credit unions… there are too many (any is too many) people in this country making money by graft and by pull instead of by hard work, that’s the problem… they want a free lunch on your back… they want to ensure banking survives at all costs (including you & your childrens lives if necessary)… it’s a swindle… let it die… make it die…

            i’d rather serve in heaven than reign in hell: C21Living seems to suggest we should all aim to serve in hell… fuck that!… fuck the EU… i will be voting no… any decent thinking person should do the same

          • C21living

            Saying ‘fuck the EU’ isn’t going to impress our exporters, who keep the lights on in this country with the tax they pay.

            We need to keep our heads.

            We are in a difficult position, we’re holding a bad hand vis-à-vis our European peers.

            We are one of the most globalized nations in the world, economically.

            We can’t and won’t be burning bridges as you suggest – even Sinn Féin won’t be doing that.

            Vote NO to the fiscal compact by all means. At least we’re getting a vote.

            Being in the EZ and EU doesn’t mean ‘serving’. This is childish. It’s just that our banks have made dog’s dinner of our involvement in those projects, we are covering for them which is a disaster, and so we’ve goofed up our involvement in these projects.

            Other countries have made a much better job of it, we should learn from them (not Spain or Greece, though).

          • Tony Brogan

            33square
            I’m with you
            Ireland is an adult not an errant child to be told what and how to do it.
            Stand up and act as an adult. Take responsibility.
            be accountable for your own actions.
            Close the central banks, inpliment a national currency, monetize silver coin, repudiate the odious debt. Issue currency from treasury debt free.
            Reduce government to the essence.
            That is protection of the state from external forces, protection of the individual within the state according to the rule of law.
            Protect peoples freedoms from the predations of government. All else is surplus, non productive, and expensive.

          • Cod and Chips

            sorry 33square, but didn’t Dev already try that approach and we all know where that landed the economy

  15. dwalsh

    As we know the former vice chairman and managing director of Goldman Sachs International, Mario Draghi, who now heads up the ECB, has doled out a trillion euros in 1% long-term credit to the European banks in the past few months. It is interesting to consider the fate of this enormous sum of ‘our money’. It is our money; since it is we, the citizens of Europe, who are the ultimate guarantors of the ECB.

    Many of us in middle or later years tend to think of banks in terms of how banks used to function 30 or so years ago; but of course banks are no longer the more or less legitimate businesses they were a generation ago. The financialisation of the banking and monetary system has utterly changed them. They are now predominantly speculative or gambling operations.

    So let us consider the fate of the trillion euros of our money doled out to these gambling outfits; and the implications for all of us, the citizens of Europe Inc.

    The mission of the banks’ executives with regard to the ECB credit is determined by the terms of their employment contracts, which state explicitly and/or implicitly that their job is to transfer as much of the ECB credit sitting in their corporate current accounts, into the private accounts of the bank shareholders and executives; by all means permissible — which means, in any way they can get away with it.

    This is accomplished primarily through the arcane alchemy of leveraging and derivatives trading. On the issue of leveraging, we know that banks have learned how to go far beyond the quaint levels of fractionalisation practiced a generation ago. We know that officially Lehman Bros was leveraged up to 40 times their asset base at their height; and it is not unlikely that the real figured was higher.

    [Lehman Bros chief executive, Richard Fuld, paid himself half a billion dollars during the final eight years of the operation.]

    As to derivatives we know they are unregulated, unreported and operated off-balance sheet. This is why the derivatives industry is referred to as a ‘dark market’. In fact it is a black hole; and it is the engine driving the global financial and economic meltdown.

    The ECB credit (our money — your money) is fed into the derivatives bucket shops and boiler rooms departments of the banks. They get busy generating trading activity in a vast quantity of intra-bank and inter-bank financial transactions which inflate the credit geometrically. At every stage of this process fees and commissions are skimmed off. The aim is to inflate and transmit the credit here, there and everywhere they can; in every way they can; all the time skimming off as much as they possibly can in privately bankable executive compensation, bonuses and corporate profits.

    And what apart from the enrichment of the executives and shareholders of the banks is accomplished by this process? Well lets say we conservatively estimate that the banks inflate the ECB credit by a factor of half that of Lehman’s – so 20 times – this means the net effect of Draghi’s operation is to produce something like 20 trillion Euros of off-balance sheet derivatives in the system. 20 trillion euros in ultimately non-negotiable paper assets which are effectively losses; losses which we, the citizens of Europe; the ultimate stakeholders in and guarantors of the European economy; will be expected to cover.

    Bear in mind that global GDP in terms of real productive economic activity probably stands at something like 60-65 trillion. Draghi’s 1 trillion will probably produce toxic dark assets amounting to at least half that value.

    If that money had been given to governments on the condition it was used only on infrastructure and capital projects a very different effect would result. But today our world is run by finance capitalists who have no interest in productive economic activity. All they are interested in is trading paper assets and fiddling the books.

      • dwalsh

        That ESF idea seems sensible…definitely the kind of thing we need…but it would never be permitted by the oligarchs. If we did that here we’d find ourselves quickly listed along with rogue states like Venezuela and Syria et al; who need carpet bombing back into the free market.

    • CitizenWhy

      You’ve just laid out the rationale for the huge compensation (salary + all sorts of more) the big bank executives are taking. The banks are insolvent, sinking except for taxpayer money and the tribute that is today being called “austerity,” so the captains and officers of the ship are looting the cargo while they can, and robbing the passengers. This is entirely rational behavior in a “me-me” culture.

      • dwalsh

        It’s a culture where the only purpose is the maximisation of profit; irrespective of any other considerations…it’s pure capitalism….and pure evil in my view.
        The “me-me” culture, as you say.

        Look at that Blythe Masters creature; she and her fellow demons will be the cause of massive commodity inflation in the years ahead; from which many already devastated by her invention, the credit default swap, will suffer sorely; even death. And this kind of thing is considered legitimate business.
        Only the morally bankrupt could think so.

        • CitizenWhy

          Yes, modern Western democracies have established the separation of banking and conscience and the separation of corporation and citizenship.

        • Tony Brogan

          Hi Dwalsh
          I agree with your analysis of the world view on the banking elites.
          I do not think you can blame capitalism. we do not use capital to invest. as you point out we are enmeshed in a debt based system.
          Call it corporatism. not capitalism.
          i disagree that there is nothing to be done. you are correct if you are to submit. but if you wish for freedom you will have to fight and or die for it as of old.
          Doing nothing is slavery. There is only one alternative

          • dwalsh

            Hi Tony
            I hear what you say; but I disagree.
            I will explain why in a later post addressed to you.

  16. Winter

    What are you talking about David? The sun is cracking the stones outside and you’re telling us it’s raining

  17. CitizenWhy

    Just a little background on why everyone exists to bail out the big banks:

    The big banks are holding over 225 $trillion in losing derivatives. The big banks have to replace these derivatives with a lot of real cash – your cash.

    http://www.ritholtz.com/blog/2012/04/228-trillion-derivative-exposure/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

    • C21living

      Well then just vote NO, get as many people as you can to vote NO, we’ll be locked out of ESM funding and we’ll experience such penury as a state that the Croke Park agreement will be scrapped immediately, the dole slashed, public spending grind to a halt, and any and all further bailing our of bank bondholders will stop.

      But be honest about the extreme catastrophe of this for many people, please!

      Don’t act like it’s simply a matter of not bailing our bank bondholders and ‘we’re laughing’.

      No funding from the ESM is dramatic stuff. Lives will be ruined as a result. Maybe it has to be done anyway, but my goodness, it’s going to be a scat-astrophe.

      • Winter

        Not necessarily C21living. There are alternative means to fund the state without recourse to financial markets. All it takes is the political will. Check out the link below to see what I mean.

        https://sites.google.com/site/equitablesovereignfund/

        • C21living

          Holy crap! you can’t be serious, can you? Listen to what your ESF has to say, it’s about a 100-1 shot it’d work:

          “The Equitable Sovereign Fund provides an alternative sustainable way of funding the state from its own resources without incurring debt. It provides an effective and efficient way of recycling the money supply by removing the toll (interest charged by bondholders) placed on the natural flow of money generated from trade. By borrowing exclusively from the citizens of the state and replacing the burden of interest payments to bondholders with tax benefits to citizens, the economy will benefit significantly. The downward economic cycle will be stopped and replaced with a new sustainable economic model, bringing an end to the so called business cycle of booms and busts”.

          Did I read that right … “borrowing EXCLUSIVELY from the citizens of the state”.

          After the household charge, water charge and septic tank fiascos, you actually believe the “citizens of the state” are going to lend to the Irish government?

          They will not! Not under any set of circumstances, not for the sake of our financial independence, no way José! It’s absolutely and utterly out of the question.

          Every OECD country has a water charge, and look at the opposition.

          The citizens of the Irish state have no trust of any kind in the Irish government, this is somewhere way beyond pie-in-the-sky daydreaming.

          Unless the Irish government borrowed from the citizenry by confiscating their money, as with Revenue taking over the collection of the household charge.

          “All it takes is political will”.

          My God almighty, you can say that again!!

          • Tony Brogan

            simply create a national currency. Issue it through treasury. It bears no interest. It can be earned into existance. It does not add to the national debt as it is owed to no one.This is a temporary fix as commodity money must be implimented along side the paper fiat. Silver coin needs to be monetized and put into circulation. Use the postoffice to do so.
            close the central bank. Let people choose how they wish to save.
            repudiate odious debt.
            Reduce government to the basics
            Stand up and assert ones independence or die from debt suffocation and financial slavery. Controlled by economic serfdom.

  18. strathspey

    For 700 years the Irish blamed the English for their trauma, then there was a brief period when the influx of Eastern Europeans was blamed for everything from crime to stealing jobs and now the Germans have fallen victim to another flight of the Irish imagination. Am I the only one to spot the common denominator here?

    • CitizenWhy

      Well, the English did have a tad to do with Ireland’s problems for a number of years, or do you not think so. Aided and abetted, of course, by Irish collaborators.

      And the Germans banks, aided by the cozy club of Irish politicians and bankers, also had a tad to do with Ireland’s recent problems by making huge, imprudent loans to Ireland’s crew of idiot bankers. If there is ever a new Irish banking system I hope it is run by executives imported from Canada and Sweden.

      Agreed, the Irish must take and solve their own problems. Not likely to happen. Yet, if the Euro collapses, Ireland may emerge in decent shape.

      • C21living

        Ireland will emerge IN A CURRENCY UNION WITH YOUR PALS THE ENGLISH!

        Make no mistake about it – we leave the EZ and we’ll be back pegged to sterling.

        Our exporters have spoken!

      • Colin

        Plenty of Irish Catholic Gombeens down through the years willing to cause more harm than a Sassanach could ever dream of.

        Irish Catholic merchants exported home produced food during the famine. They never stopped and asked themselves, “Hold on a second, my fellow native Catholic Irishman is starving, shouldn’t I feed him out of Christian charity instead of making money exporting it”? No. It never happened.

  19. C21living

    Lookit!

    If we vote YES, we vote for grinding austerity and budgetary adjustment, whilst similtaneously attempting to plug the hole in our banks, which will get bigger as mortgage defaults increase and increase…

    but if we vote NO, we don’t qualify for ESM bailout money so we get aven more drastic austerity quicker as we absolutely and utterly run out of even emergency funding.

    If we vote NO, we’ll be so broke we will certainly default on bank bondholders. It’ll be a massive break with our currently ‘strategy’. We may even end up out of the EZ, back with the punt, which will OF COURSE be pegged to the GBP sterling as it was before 1979, to provide some currency stability for exporters based in Ireland. Those exporters are the strongest lobby group of all – they want us to stay in the EZ, for obvious stability reasons, but failing that they’ll pressure the government to peg any new currency to sterling.

    My point is…

    …that a NO vote is NOT a vote for meaningful ‘independence’ because with such an open economy as ours, it’s out of the question, our exporters won’t allow it. A NO vote is a vote to default on the bank bondholders, due to the unprecedented financial catastrophe that will befall our government as the electorate locks its own government out of the ESM emergency funding.

    Let’s not kid ourselves that their are easy choices here, but above off lets not here any naive happy talk about ‘independence’. Forget it! Its Frankfurt currency union, or London currency union.

    Poor auld Bonbon will have a fit when he reads this, but sorry Bonbon! the exporters will have us in a currency union, either the EZ or sterling, and that’s ‘the long and the short of it’.

    • Radman

      A few thoughts occur to me on reading all of these comments

      1.Anti-British feeling has been part of our psyche for centuries and the reasons are obvious . Our fate like many other small countries living next to a larger one was inevitable in the age of colonialisation-we were subjugated. We are not unique .If we were the big boys we would have subdued England. That is how things were done. We don’t seem to mind cozying up to Germany who stompted on quite a few smaller neighbours in the fairly recent past.
      Our anti British bias should be put to rest in our own interest. The UK is our closest neighbour, now benign after all the turmoil of centuries and our most important market for goods, tourism and job seekers. The attempt to get out from under the British shadow is geographically, culturally and genetically futile . The gene pool has been well and truly mingled. We share these islands with Britain . We now accept that we share this country with the UK. We have more Irish citizens living in the UK than in the Republic (sharing UK citizenship). Our British “cousins” are the only people in Europe who speak the same languages (including Gaelic)
      Yet in large part driven by our old predjudices we rushed headlong into Europe and find we are an peripheral “parish” on the fringe of Europe micromanaged by bureucrats from totally different countries, culturally and politically,such as Romania, Bulgaria, Lithuania Germany etc .
      To be nice to our new paymasters,we obligingly relinquished large chunks of our sovereingty . With the massive givaway of resources particularly fish stocks we gave far more than we got, but for the politicians the EU money was instant cash and the ticket to reelection
      All our laws must now comply with EU “regulations” 90% of Dail output is compliance with EU directives.
      I am not very nationalistic but I think the 1916 boys would turn in their graves at the way we squandered our independence for a few sheckels. This was largely facilitated by well orchestrated brainwashing and scaremongering campaigns by politicians who were courted and cajoled to to be “team players” and bankers and businessmen especially developers who wanted the quick buck. We certainly have less control over our own affairs than we would have had under Home Rule.

      2.Regarding the currency. Countries having their own currency is the norm , monetary unions are the exception and subjct to stresses and strains such as we are now seeing. Like chemically unstable bonds they need a catalyst such as monetary or financial gain to hold them together. Portugal Greece and probably Ireland in monetary union with Germany was doomed sooner or later.
      As a small country if Ireland needed to peg to another currency the obvious one for us would be Sterling (mutually single biggest trading partners). I would hope that as with many other small countries we would be able to keep control of our own currency as this would restore some of our independence and perhaps give us competitive advantage. In recent years we were leaking jobs to lower cost non Euro countries.

      Like the alcoholic who hits the bottom we now have an oppurtunity to repudiate the past blunders .
      Irish working people are not morally obliged to send billions of Euro back to European banks who ignored the most basic tenets of sound banking and lent billions to speculator banks, fuelling a property boom that like every other bubble in history,as even my Granny could tell, was going to end in a crash.

      That’s how I see it.

      • Tony Brogan

        Hi Radman
        I like how you see it
        Quiet self assurance that you can make it happen. confidence the country can be self sufficient.
        Aware that a country’s sovereignty is inextricable tied to its independent monetary policy.
        I believe that Ireland should:
        Repudiate the bankers private debt (at law, odious debt)
        Get the house in order and establish a domestic and foreign policy.
        Reduce government expences and activities to a percentage of the gross national product. Say 30-35% maximum.
        Establish a domestic Irish currency
        Monetize silver coin for the general population and gold for the international trade balances.
        Prepare for the rapidly approaching paper money collapse world wide. ( we already see both China and India offering to pay for Iran’s oil in gold bullion.
        The cracks are now visible not just suspected.

        Best
        Tony

  20. redriversix

    The treaty is now firmly a sideshow,of little relevance.

    Russian stock market posted massive losses.
    Dutch parliament Dissolved,P.M resign’s.

    Sarkozy loses first round in Presidential election.First time a sitting President has lost first round since “58″

    Bundesbank owed 616 Billion Euro from E.U Central Banks……”like to see them get that back” FT

    Czech Government dissolved…Monday.

    Investors selling [ dumping ] Spanish,Italian and now french bonds in favour of more conservative German bonds….FT

    I will be voting No to the treaty,but following on from the weekend political activity I think it will make no difference either way.

    German elections to follow………….this treaty and its timing is just to appease German electorate.

    Best
    RR6

  21. Harper66

    http://uk.reuters.com/article/2012/04/23/uk-germany-election-debt-idUKBRE83M0AC20120423

    “Germany – Euro style austerity at home? No thanks.

    Under Merkel, Germany has forced high-debt countries like Greece, Ireland and Portugal to accept painful austerity as a condition for financial aid. Spain and Italy are also making unprecedented budget cuts in a desperate bid to avoid bailouts.

    But in NRW, a rust-belt state whose debt has swelled to a record 180 billion euros ($237.74 billion), the electorate is rejecting Merkel’s message of fiscal responsibility and embracing the SPD’s go-slowly approach, which promises investments in children, education and NRW’s ailing cities…”

  22. straboe1

    Enda Kenny states that the Fiscal treaty is like an insurance policy which we must have, Simon Coveney asserts that it is as essential as a lifeboat on a ship. Fine, but imagine an insurance policy which insists on one having a lifeboat, but due to financial restrictions, prevents one from carrying out the necessary repairs to keep the ship seaworthy. This is why I will be voting no.

    • As we live in a dictatorship it maters not which way you vote. The treaty is just an exercise keeping up the veil of democracy over the ugly dictatorship.
      There are still people out there who still believe that they live in a democracy but they are getting fewer.

      • straboe1

        One can help to undermine the legitimacy of that dictatorship by rejecting another nail in the coffin of our constitution, which is supposed to stand for our democracy.

  23. Is this a slightly different way at looking at the same problem, (note: its more based on the US but makes several references to Europe).
    http://michael-hudson.com/2012/04/productivity-the-miracle-of-compound-interest-and-poverty/

  24. Scania,the dictatorship’s main weapon is the use of artificially low interest rates,the cause of and the “solution” to this crisis which will lead to ever greater inflation,lower standards of living and we will all work longer and harder for less as a result.
    Democracy is being ruined by fiat money,in this case it does grow on trees, German ones,and the leaves always get clogged in the gutter of the periphery again and again.
    if we vote Yes or No,what will change anyway?

  25. rebean

    As I remember during the 80s we had massive speculation of our currency and as a result we had crippling interest rates.If we roll back into our own currency who is to say we wont face that demon again or have things changed in the world of high finance?

  26. rebean

    Correct me if I am wrong but we borrowed 16 billion last year to keep the teachers , nurses and just about everyone working in the public sector. So we could go it alone if we thought we could get anywhere. Enda Kenny knows if the ECB say finance yourself from now on means he wont be paying himself 200k a year. At the other end of the scale the lads and lassies on 200 a week on the dole wont get their cash either. There is only about half the income coming from the private sector and the way thats been treated it is dying. So we are over a barrel really and dont have any options. What should have happened was a change of policy to balance the books over the last three years. There is no will and the can was kicked down the road. There is a day coming however when the Europeans will say there is no more cash. Until the day arrives then the game will be can kicking and empty promises

    • straboe1

      If we are locked out of the markets, we will be unable to repay the billions owed to the rest of Europe, now how would Europe react to that, the whole European financial system would collapse. they made us take on the Anglo debts because of the effect it would have had on their banks. They can not afford to let us sink, no matter what we do. T.o retain some sense of pride ans independence we must vote no to the fiscal treaty

      • rebean

        They will get their cash back before they let us sink. They way they will get their cash is by taking over our renewables and any other resource worth anything.

      • C21living

        Vote NO.

        But we have been warned! As DMcW has warned time and again, and Patrick Young from Belfast so vicerally on Russia Today, German pensioners are now finding their local libraries and swimming pools are closing because money is being used to bail out the PIIGS.

        If we vote NO, and any money from the ESM is given to us in a second bailout, the German public will go nuts. So no second bailout will be given to us.

        Of course, without a second bailout, we won’t be able to bail out our bank bondholders. So that link in the chain will snap too.

        But this idea that ‘they can’t afford to let us fail’ is bollocks.

        Ireland most certainly is NOT too big to fail, and our banks’ debt is not too big to fail.

        But what the EU can’t afford to do is give ESM money to any country that gave two fingers to the fiscal compact.

        If we vote NO we are going toe-to-toe with the German taxpayers.

        DMcW thinks they’ve been brainwashed into seeing this problem from ‘the wrong side’.

        But what the night Brian Lenihan passed the bank guarantee? The idea was to suck in deposits from all over the world and thus bolster the Irish banks’ balance sheets, and Lenihan pulled this stunt without consulting our EU partners.

        What a despicably selfish act! He wanted to save Ireland’s banks and didn’t care what effect sucking in all those deposits might have on banks in other EU countries.

        In the event it didn’t work anyway, because the depositors correctly interpreted it as the act of a desperate government that knew its banks were screwed. It had the opposite effect of informing the world of how much of a balls we’d made of it, although in au underhanded, reverse psychology way.

        The Europeans never forgot that act of treachery, and so they told us to backstop our banks, as a kind of ‘right back at you’ gesture to teach us a lesson.

        People on this board who suggest that a massive debtor nation like Ireland (or Greece) is actually holding the cards in the standoff between debtors and creditors is in for a rude awakening if and when they piss off the Germans.

        I predict a NO vote in this referendum, no more ESM money for Ireland, and the absolute mother and father of all austerity tailspins this country, right through summer into a Winter not of discontent, more like of desolation.

        You can stick a fork in anybody who still owes €100K plus, they’re all done.

        Germany will want to kick us out of the EZ and the EU will have to oblige.

        Then it’ll be back to the punt (nua), a peg with sterling and massive property investor money will flood in to buy up all the bankrupt apartments in Dublin for next to nothing in the new currency.

        Once we’re out of the EZ the English will buy this place up when it’s on the floor and gombeens will collect the rents and tithes and we’ll have to start all over again.

        On the upside, we’ll have regained our ‘competitiveness’ because we’ll be nearly as cheap as Poland.

        • Harper66

          The Europeans never forgot that act of treachery, and so they told us to backstop our banks, as a kind of ‘right back at you’ gesture to teach us a lesson”

          Are you for real?

          You’re killing this blog with your rants. Intelligent debate where peoples opinions differ is one thing but your just scaremongering.

          What user name did you post under before Eireannach?

          • straboe1

            On the night of the bailout I’m sure that the ECB was involved, and they they told the Irish government that they had to include the Anglo debts as part of our sovereign debt. If we give in to them we will be going further down a slide into utter dependence on the power groups within Europe, anything at this stage is better than that.

          • C21living

            Scaremongering?

            How does that remark constitute ‘scaring’ people?

            The posters on this site all see things from the ‘bastard Germans and French bankers are asset stripping our country’ point of view, and it’s frankly tiresome.

            Of course creditors are looking for debtors to pay!

            What do you think the other European countries thought of our ‘modèle anglo-saxon’ as the French call it? German, British, French and Belgian banks simply couldn’t lend into their countries at the same rate as they could into Ireland and Spain, where most of the money was going into utterly reckless rezoning of land for development and hastily built, sloppy ‘development’ that is now blighting the landscapes of both Ireland and Spain.

            Look at County Down in Northern Ireland – why isn’t it full of one-off housing? Could it be that planning laws are hard as iron in some locales, and soft as soggy toilet paper in others (Donegal, Leitrim and the other bad boys of the An Taisce report come to mond).

            How can the Irish or Spanish blame ‘German and French bankers’ for this? Our government could have prevented the overheating and recklesss, insensitive building madness, but didn’t and wouldn’t, because it was creating employment for Spanish and Irish construction workers. You’d have your head bitten off if you were a ‘cribber or moaner’ about this recklessness in the boom.

            So the money was blown ‘on our watch’ in Ireland and Spain – but lots of Irish feel that actually, the fault lies with the ‘French and German’ lenders?

            Even though the lenders were:
            €130bn German
            €110bn British
            €48bn Belgian
            €40bn French

            There’s your ‘French and Germans’ right there. Even correctly characterizing the dastardly ‘bondholders’ is as poor as the quality of the building we are responsible for!

            So an Irish solution to an Irish-made problem is – lets burn the bondholders! We’ll if we vote NO in the referendum, we’ll end up burning the boldholders alright, such will be the astonishing cut off of funding to us, we simply won’t have any money to backstop the banks whether we wont to or not.

            We have been told that we will not qualify for ESM money if we don’t ratify this treaty – does anyone believe this is an idle threat? I suggest it’s not an idle threat. The core Europeans are sick and tired of us and don’t have a lot of respect for us, and certainly not for our way of doing things hitherto, what is so disparagingly dismissed in the French media as ‘le modèle anglo-saxon’.

            We either ditch our modèle anglo-saxon and join the United States of Europe fiscal union or we don’t, setting in motion or dropping down a gear to speed-two of a two-speed Europe, which in our case will necessitate rejoinging a currency union with the UK.

            So which way to go? The states have never been higher.

            But if you think there’s a third way, I’d like to hear it.

            There’s only core or peripheral Europe. Time to choose.

          • C21living

            The ‘stakes’ have never been higher.

            It may be that the EZ will fall apart entirely.

            Personally, I think there’s a high chance the the EZ core will retain the euro, or relauch another currency union which will expand into much of the current EZ space.

            The idea we will return to 27 floating currencies in the EU is ridiculous. It is a fatasy of people who read the British press too much, however.

            Germans would be glad to lose Greece, Iberia and Ireland, for starters.

            The chances we’ll stay in ‘core Europe’ are diminishing daily.

            So it’s back to the auld punt and your Celtic knotwork shite again, whilst it’ll be 75p to the pound again. God, it’s like going back in Doctor Who’s tardis. What a mess!

          • C21living

            @straboe

            Yes, you’re right.

            To clarify my remarks – it was the ECB that nudged Lenihan to blanket guarantee our banks. The ECB knew this would trigger an arms race by soveriegn states to guarantee private banks against the prospect of failing.

            It is absolutely impossible to overstate what a treacherous and treasonous move this was by Brian Lenihan. He is the Trojan who opened the gates and let the bankers of Europe turn the table on the sovereign states of Europe.

            This is why the rest of Europe has not come to our aid, protesting that this is unfair on the Irish people to have to pay all of these bondholders. The Irish people should have had FF fired the very same day they offered banks such guarantees.

            But the Irish public were more concerned about their pensions and deposits and so on at the Irish banks, that the ATMS would work and all the rest of it.

            We are the weakest link where the banking elites of Europe took over the sovereign states of Europe.

          • paddythepig

            C21living makes perfect sense to me.

            Why don’t you debate on the issues he/she raises, instead of labelling them as ‘rants’.

            There’s a fascist undertone to your post here, you do believe in freedom of speech don’t you?

          • Harper66

            @Paddy the pig,
            Good man Paddy right on cue.
            Tell me ,when can I expect you to start the name calling and the abuse?

        • Harper66

          @ Rob, C21Living, Eireannach,
          I do not have as much time as I would like to post a reply to you this morning. However here are a couple of quick thoughts.

          I see you’re going to vote yes in the upcoming referendum.
          I also see you are pro- Euro and Pro Europe. I am not sure as to why. Is it that you are uneasy with the thought of Ireland getting “back in” the UK? Because that is not a foregone conclusion.

          I also see you are pushing the idea that a vote no can lead to only one outcome. This is not the case. You are putting forward your suggested outcomes as inescapable fact. This is certainly not the case.

          Here are some facts –

          The capitalist solution to 2008 crash would have been to let the banks fail; create a temporary support for these banks as a stop gap measure. Invite interested parties to tender to take over these banks.

          This did not happen due to a very complex pan- European system of inter lending. Immense pressure was put on our incompetent and corrupt government to “save the banks”. Pressure came from ECB, European political leaders, and US treasury. Private banking debt was made sovereign. The weight of this debt took away the ability of this state to manage its looming state spending deficit. It was locked out of bond markets.

          The money borrowed to recapitalise Irish banks went straight to shore up the finances of German, French, UK banks. Orwellian phrases such as austerity, and contagion and PIIGS developed. The capitalist system and then the political system was circumvented in order to maintain that is unsustainable.

          We still have little or no reform in Ireland of professional fees, our government is top heavy and grossly overpaid. Nama is yet another trough from the vested interests to feed from. Ministers claiming mileage allowance to visits holiday homes, I could post lists of ministerial expenses that would sicken and anger in equal measure. Look up costs for Name. Our local government needs reform.

          Ireland is dying on its feet to pay for a system that is unsustainable. Retail space is being offered for rent free and still shops are lying empty because there is no money amongst the class of people who spend.

          Germany will need higher interest rates as time passes and Ireland will need lower ones. Just like Ireland needed high rates in the early 00′s and it got low ones to suit Germany. High rates will make be the straw that breaks the camels back as far as the Irish economy is concerned.

          Europe is in free fall I posted a link above of German people refusing to accept “austerity” likewise Holland is getting uneasy.

          European political leaders are living in cloud cuckoo land and there are more alternatives out there other than the narrow scaremongering that you are misrepresenting as fact.

          • C21living

            Who said I’m going to vote YES?

            I never said I’m going to vote YES.

            I said something altogether different – I said, let’s see some honesty from all the NO voters. Let’s do better than the auld chestnut that ‘the EZ suits Germany’.

            My point is – what are the full range of implications of a NO vote?

            Firstly, we’ve been told we qualify for ESM money. Is this an idle threat, or a genuine statement of fact? I think it’s the later. As you mention, the Germans and Dutch and Finns and so on are already sick to death of bailouts to the periphery, if we don’t ratify the compact that’ll be settled then, no more money for us.

            What next? We won’t be able to backstop our banks…in fact, given the massive truck of semtex they are sitting on top of in the form of unacknowledge mortgage defaults, we will not be able to save our banks at this point anyway.

            But without ESM funding, the collapse of our banks will be inevitable.

            That’ll be a moment of truth. It’ll be Ireland’s full confession that there’s been bluffing since 2008…actually we’re a busted flush.

            Then what’ll happen to our annual spending? It’ll be cut back by maybe €20bn in the blink of an eye.

            How many MORE mortgages will fail as a result? Another 100,000 or more.

            We’ll have new bankruptcy laws of 3 years discharge period. We’ll people lose their homes and be evicted? In many cases, yes, in most cases, the banks will carry on the nonsense and accept a nominal sum a month for the rest of time.

            Will we be a liability for core Europe if we vote NO? Of course, because we’ll be a cetrifugal force on the periphery. Will they want rid of us? Of course, they’ll starve us out of the EZ by withholding ESM funding. That’s the mechanism they’ll use to get us to leave the EZ of our own accord, as the only way we’ll have of resolving the economic dislocation and chaos.

            The key idea I’ve been focusing on on this thread is that for us to leave the EZ ‘core’ of Europe and sit alongside the UK on the ‘periphery’ of the EU, would require us ultimately rejoining a currency union with the UK via a currency peg, because our exporters will insist on it for the stable pricing of their exports.

            Most of our exporters will fight tooth and nail to keep up is the EZ, but failing that, we’ll be told to peg to sterling for stabilities sake. We’ll do it.

            London money will come in a buy up all the property in Ireland, paying prices for city centre apartments that’ll give the classic 10% rental yield. Even now, this is the final outcome they are anticipating.

            Geo-politically, we will have returned under the sphere of influence of the UK.

            I think most Irish are more comfortable with that than the difficult readjustments and legal and societal changes we’d have to make to conform to the norms of core Europe.

            So the political elites of Ireland want us to conform to the conditions of corre Europe (ie the EZ north) and it is widely believed that if any of the PIIGS can make the adjustment, Ireland can.

            But most Irish dont speak French or German and have no intention of doing so, so they want a softer option, and leaving the EZ core of Europe and pegging our currency back to sterling is the other option.

            A third option, currency ‘independence’ will not be permissible to our exporters and we are frightened of them and we’ll so whatever they want.

            So do we want to be in the EZ space, or the UK space?

            I’m not saying vote YES or NO. I’m saying cut the lying and let’s face this stark choice as it is, between a rock and a hard place.

          • Harper66

            You are clearly arguing from a strongly pro european perspective. While you may not like bank bailouts you see them as an unfortunate but neccessary requirement.I would have more repsect for your posts if you simply acknowledged that fact.

            Europe is at stage that Louis 16 found himself in in the final days of the Palace of Versailles. A tiny group of privilaged people are being supported by the majority who are being bled dry.

            UK recession –
            http://uk.reuters.com/article/2012/04/25/markets-sterling-idUKL6E8FP5L020120425

            Stability of Holland undermined by “Austerity” –
            http://www.telegraph.co.uk/news/worldnews/europe/netherlands/9221378/Dutch-prime-minister-Mark-Rutte-resigns-over-austerity-measures.html

            Ireland still bankrupt and delusional –
            http://www.thejournal.ie/minister-to-reveal-on-monday-whether-mini-budget-is-needed-428777-Apr2012/

            I could keep going but the spam trap on here will not allow more links.

            Terms like PIIGS and peripheral countries are insulting. I deem myself and my country no less important than another member of the European Union. Your use of those words also reveals your mind set.

            France is now looking to rework the esm.There is a huge swell of anti austerity support within Germany. The eurozone is falling apart. This is the new reality.

          • Tony Brogan

            to c21living

            “A third option, currency ‘independence’ will not be permissible to our exporters and we are frightened of them and we’ll so whatever they want.”

            Will you explain to me why you think this is so?

            Thanks
            Tony

        • rebean

          Yes that about sums up the Dante Inferno type result of our bad management over the past 100 years. Unable to manage ourselves since the British lads left we were unable to ever make tough decisions except when it was poor uneducated people.The government even today wont tackle the vested interests. It would take a real hero to give all the senior civil servants the two fingers. It would take real leadership for a minister of energy to tell the ESB to get their house in order and provide some cheaper tariffs.It would take guts to have the unrest ,the strikes, bring on the unrest.

        • Tony Brogan

          All banks around the world have been bailed out. It is not a unique irish policy. It is a universal policy to impoverish the people of the world and make them debt slaves to the banking elite families. It is deliberate policy.
          PPeople must assert their independence, individually and nationally.

  27. [...] McWilliams has written another article about the real motives behind the EU fiscal compact treaty. As I mentioned in my very first post, [...]

    • natmedic

      Congratulations David on a very informative article.

      For those who have not seen it, I recommend an article by Ellen Brown

      http://webofdebt.wordpress.com/2012/04/18/the-european-stabilization-mechanism-or-how-the-goldman-vampire-squid-just-captured-europe/

      Also http://www.courtfool.info/en_A_tale_of_two_monetary_systems.htm

      For a suggested letter to Elected representatives and a complete list of emails of senators and TD see
      http://www.courtfool.info/en_EUROPEAN_ACTION_AGAINST_ESM.htm

      I say- bring back the Irish Pound as an alternative parallel currency to the Euro- with parity exchange. Use the Euro coins, no need to mint the Irish coins. The Government could take over the printing of currency. Pay bills and public Service, provide interest free loans. Exchange for some of the Euros in circulation, and send them back to Frankfurt(where they will be destroyed anyway. Some Euro currency can be retained for foreign trade- which is mostly electronic transfer anyway. Why should we allow central banks to provide fiat currency and stick us or interest. We can print our own, interest free.
      Anthony Hughes

      • C21living

        @Natmedic

        I see you’ve dodged rejoining a currency union with the UK by offering us Hobson’s choice – our own currency, pegged and parity with the euro.

        Clever.

        An equally constructive suggestion is local currencies to facilitate and encourage local trade. Kilkenny has it’s own currency already, for example.

        The transition movement in the UK has launched several local currencies, starting with the Totnes pound.

        Here’s Future Proof Kilkenny on local currencies.

        http://futureproofkilkenny.org/?page_id=781

        There are some people who seem to think I’m into bailing out banks and whatnot. This is rubbish.

        I’m simply saying – if you plan to vote NO, explain to the Irish public that you UNDERSTAND that this means we’re strategically sailing away from core Europe and into peripheral Europe, which’ll mean ultimately quiting the euro and rebooting the punt, which will be in a currency peg with sterling to give some measure of security to our exporters.

        • CitizenWhy

          Great link.

        • Tony Brogan

          No need to have a currency union with anyone. As you say, local currencies have work well to pronote local trade.
          The best local currency by your own logic is an Irish independent currency.
          Only problem is that it will be yet another paper currency subject to abuse by politicians in the future. So a parallel commondity money should be introduced at the same time .monetize a silver coin that is inflation proof money and give the people the choice in which to save and use.
          Malaysia is reintroducing the silver durham and gold dinar coin to great acclaim from the people.
          http://www.ecademy.com/node.php?id=153511

  28. CitizenWhy

    Four stages of grief – 1. denial … 2. numbness … 3. anger ..4. reorganization of life.

    Most Irish and US citizens are in the first two stages most of the time, but also vacillate between stages 3 and 2 often. Many others in the anger stage, as in Spain and Greece. But the anger is dismissed, nothing changes. The politics of anger does not work any more. The western states have learned to absorb, isolate and ignore the anger, however widespread. Europe and Ireland on the whole are more right wing than left wing, out of fear and a desperate need for reassurance and a sense of security, the hope that “all will be well, just give us time.”

    Those emigrating are in the fourth stage? Emigration from Portugal is almost as widespread as it is in Ireland.

  29. doflynn

    I wouldn’t bother me bollix anymore engaging with anyone on this site, including its author – ye’re all wind and piss. Ye talk, we walk, every Sunday in Ballyhea and Charleville. There is one issue that should bind us all, the bank bondholder bailout; eventually this will become clear to all but it’s clear to us already. Get out from under that bank debt burden and we’ll all know where we stand; stay in there, we’re sunk.

  30. And another desertion from the Good Ship Eireann.
    This would have slipped under the radar only for another fine piece of digging by @NamaWineLake.

    http://bit.ly/Jn1L2x

    Have a good read and then go figure how the Fiscal Compact will deal with this reality.

    As David keeps saying, the markets know all aboutthis skeleton concealment and exactly how exposed our banks really are.

    My own opinion, for what its worth, as well as keeping the head on the average hardworking German voter, is that the Fiscal Compact is designed to maintain a status quo of power and wealth across a well connected pro Euro Land elite.

    While the rest of us stump up just enough to keep them there.

    No bank is ever going to take the risk of lending money to the great unwashed as long as the Politicos keep generating vast pots of bailout funds to further the carry trade.

    Nice work if you can get it.

  31. michaelcoughlan

    Hi,

    Rewrite the article and where you have put in the word “Germans” put in the words “German Bankers”.

    The German population are just as much victims in all of this as the rest of us.

    • Fair point Michael,

      Best David

      • michaelcoughlan

        Four score and ten years ago our fathers brought forth on this island a new nation, conceived in liberty, and dedicated to the proposition that all men and women are created equal.
        Now we are engaged in a great conflict, testing whether that nation, or any nation, so conceived and so dedicated, can long endure. We are met with financial forces who seek to usurp that nation. We have come to dedicate a portion of ourselves in communion with those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.
        But, in a larger sense, we cannot dedicate, we cannot consecrate, we cannot hallow this nation. The brave men and women, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us–that from these honoured dead we take increased devotion to that cause for which they gave the last full measure of devotion–that we here highly resolve that these dead shall not have died in vain–that this nation, under God, shall have a new birth of freedom–and that government of the people, by the people, for the people, shall not perish from the earth.

        I couldn’t possible lay claim to being the author of the above; that was Lincoln at Gettysburg but I have modified it slightly to bring home to everyone her who reads it that it is just as valid now in Ireland in 2012 with the dangerous forces ranged before us as it was to Lincoln and the American people in 1863 at Gettysburg.

        • So let’s start by voting NO!!!

        • Tony Brogan

          Good one Michael
          time for the nation to stand up for itself and take control of its own affairs.
          vote no, no a thousand times no.
          Repudiate the onerous debt. Form a national currency.
          Impliment a commodity money. monetize silver coin for the people to save with protected from inflation.
          close the central bank
          issue the currency from treasury earning it in to existence. There will be no aditional national debt and no interest to pay.
          Ban fractional reserve banking.
          circulate the coin via the post office.

  32. wills

    Hang on a second gents.

    The German bankers are not too blame here.

    Did anybody put a gun to the Irish bankers and force them to take in the capital flows from Germany.

    Nope.

    The German bankers and their humongous cash pile flowed and the Irish bankers grabbed all they could grab.

    The record speaks for itself.

    The worst property bubble in the world, in Ireland for 10 years.

    Blaming the German bankers is really just avoiding the real culprits responsible.

    • They obviously knew it could not be paid back Wills….that’s fraud!!! Otherwise they didn’t do their due diligence…that’s incompetence….either way they are part to blame.

      But this is all semantics we all know this whole debt thing was deliberate to consolidate wealth for the globalists.

    • michaelcoughlan

      Hi wills,

      The German Bank Hypo real estate bought the German bank Depfa in October 2007. Depfa had moved to the IFSC in the late 1990′s it seems now to take full advantage of the piss poor regulator we had. Depfa had been underwriting municipal bonds in the US and only a few months after its sale to Hypo the financial weapon of mass destruction detonation of the municipal bonds losses in the US led to hypo being nationalised in Germany.

      And your point is?

      Mine is that the corporate psychos in charge of Depfa would hardly have sold the company if they thought those “investments” in municipal bonds were sound would they? The same psychos probably took a short position against Depfa once they moved it onto Hypo.

      Seems ironic that the bomb dropped by the Luftwaffe which killed over 37 people in Dublin in the early 1940’s landed only a few yards from the IFSC in Amiens Street doesn’t it?

    • gizzy

      @ Wills
      I always thought German Banks had credit departments, credit committees, risk functions, boards, assel/liability committees.

      The lender is in control of who he lends to. The borrower can only seek money the lender must be satisfied with secoral risk national risk repayemnt ability etc. You are very easy on large comple Banks treating them like the money was borrowed without their knowledge

  33. Did you hear the one about Argentina re-nationalizing it’s oil and gas resources?

    Yeah taking it back off the Spanish company Repsol, staking a 51% controlling ownership in YPF company and reducing private interests to 49%

    People hear say it is too late to do that in this country or that we cannot do it.

    What’s stopping us only our pitiful spineless self-serving politicians????

  34. Reality Check

    Josey who is better at running oil companies Exxon Mobil or Hugo Chavez?

    • Chavez isn’t in Argentina Reality Check.

      More efficient at making a profit doesn’t necessarily mean better for the people.

      Argentina had to import oil and gas for the first time ever last year even though it is hugely rich in these resources.

    • Tony Brogan

      Good day Greyfox
      It is a good article at awakenlongford.
      paper money does not need an expiry date on it as it automatically depreciates because of inflation and probably at the suggesed rate of 5% or even more:)

      commodity money must be reintroduce as the ultimate money but the removal of the central banking, and fractional reserve banking system is a must

      Best regards
      Tony

  35. wills

    Folks,

    My comment is within the context of the article.

    The article lays responsibility at the door of German banks.

    The first door to go too to knock on to cast responsibility at is the Irish banks.

    This is the ethical fact of it.

    Those primarily responsible are those who took the money.

    The German banks and their measure of responsibility is below Irish banks.

    The rest of it I agree Josey the system is using debt money to transfer real wealth from the many to the few.

  36. wills

    *are* the Irish banks.

  37. wills

    The article is about WHO is responsible/

    The fact of the matter is that the Irish banking system is primarily responsible.

    There is no alternative.

    The irish banks are primarily responsible NOT the German banks.

  38. wills

    David is in error in the article placing the primary responsibility on German banks.

    The grabber of the cash – the Irish banks are the primary culprits.

    There can be no doubt about this.

    The irish banks are PRIMARILY responsible.

    NOT the German banks.

  39. wills

    So, David, if you are reading this, I am challenging you on your contention that the German banks are primarily responsible.

    You are incorrect.

    And way off the radar screen on this assertion.

    • Adam Byrne

      Wills,

      Responsibility is shared among many entities in my opinion.

      Regards,

      Adam.

      • wills

        Adam,

        Wether we like it or not the responsibility is on different weight.

        And with the Irish banks the responsibility weighs heaviest.

        Sincerely,

        Wills/

  40. wills

    Lets be clear about this.

    The Irish banking system is the No1 culprit NOT the German banking system.

  41. wills

    Just to be clear.

    I am using the term *responsible* in regards the concept of accountability in its ecclesiastical, common law and civil law definitional understanding.

  42. goldbug

    THE CENTRAL BANKING MONEY SCAM IS AT FAULT.

    A GIANT PONZI BUBBLE -> ALL MONEY IS DEBT.

    TO PAY INTEREST -> IT HAS CONSTANT REQUIREMENT FOR NEW BORROWERS!

    THE SYSTEM WOULD CRASH WITHOUT BORROWERS -> CREDIT CRUNCH.

    THIS IS THE REAL REASON FOR THE CRASH -> DEBT SATURATION.

    BORROWERS ARE NOT AT FAULT -> GUILLIBLE VICTIMS.

    THE TRUTH IS -> LESS BORROWING -> WILL CAUSE A CRASH QUICKER.

    THIS IS WHY THEY TEMPT WITH LOW INTEREST RATES. HA.

    SOMEONE IS ALWAYS NEEDED TO BORROW THE INTEREST…

    -> THERE IS NO SOUND BORROWING.

    -> FINGER POINTING IS WHAT THEY WANT.

    DAVID -> ECONOMICS IS USELESS WHEN FLOATING ON PONZI MONEY.

    • wills

      The primary responsibility sits with the junkie NOT with the pusher when it comes to the junkies CHOOSING to take the drugs.

      We are in wonderland beyond that.

      • dwalsh

        The responsibility for recovery lies with the addict; that much is correct.

        The human person begins as a child in this world and only gains wisdom with experience. Before that we usually trust our elders and betters. Many learn the hard way that elders are not always betters. Ireland as a nation has learned the hard way. Many Irish people were fooled by the intense political and media propaganda during the tiger years; just as many are being fooled by the intense political and media propaganda today.

        I would not be so quick to judge my fellow Irish men and women so harshly.

        • wills

          Oh FFS I am not judging anybody.

          I am simply making an observation of the facts.

          Better this better that is not relevant to my rebut to Davids ludicrous contention the German banks are primarily responsible.

          The facts determine that the Irish banks are the primary culprits.

          • dwalsh

            I dont put much stock in David’s analysis of the causes either. He used to put the blame for the Irish property bubble on the older generations whom he claimed wanted to make a quick few quid ripping off their kids and other people kids.

            I get pissed off by the penchant of some here to want to blame and punish ordinary folk whom I think were the victims of a gigantic international scam.

            If that doesnt include you I apologise.

          • Cod and Chips

            yeah, dwalsh, I thought it was unfair of DmcW to ‘blame’ those older generations….the likes of my parents, who really knew austerity, growing up in the 50′s and 60′s…raising a family in the 80′s when they were on ‘super tax’ and 16% interest on their mortgage at one stage! My mam used to buy kitchen towels at Christmas for a treat…so if they managed to pay off all their debts and have a few quid, I was delighted for them…most of them anyway

      • goldbug

        @WILLS

        IF YOU DONT KNOW IT IS A DRUG -> THEY WONT TELL YOU.

        THE SYSTEM FEEDS IGNORANCE OF THE PONZI SCAM.

        WHEN SYSTEM RUNS OUT OF BORROWERS…

        GOVERNMENTS WILL STEP IN TO BORROW.

        -> WHAT WE SEE TODAY.

        THIS IS WHY GOVERNMENTS ENCOURAGED MORE BORROWING…

        -> THE BANKERS TOLD THEM TO

        THE PONZI SYSTEM ALWAYS NEEDS BORROWING..

        -> IT DOES WHAT IT TAKES TO GET THEM.

        • dwalsh

          Yes…it is a monster that eats debt and debtors.

        • wills

          pOnzi economics is a manipulation of accountancy tricks.

          I agree with you on that one.

          • Tony Brogan

            So having decided what the problem is?—What to do about it.
            Problem is the central banking and fractional reserve banking system set up over the last 200 years or more bit by bit.
            Accelerated sharply once all nations were off the gold standard completely by 1971.
            The solution is easy to see but not so easy to eliminate. many have died trying to implement an antidote to the banking system. Mostly they were politicians who saw the light but did not have the backing or understanding og the electorate or the people in general. In the internet age it is easier to exchange ideas and spread the message.
            Once the people as a whole get it, a change will occur.
            In the meantime all are deceived by misinfromation and lies. threats of catastrophic events make the people afraid and mallable.

            The central bank must be closed.
            A new national currency put into existence.
            This issued by treasury and distributed by the post office thereby avoiding the banking system.
            a silver coin must be monetized and available for the prople to choose to save if they wish.
            Ban fractional reserve banking.
            Money is private property as it represents the savings of the efforts and energies of the individual in possesion of the money.
            Putting commodity money back into circulation provides the individual with sound money. The best commodity money is gold and silver. Silver being practical for day to day transactions.
            government must be reduced to the basics
            to protect the state from external forces.
            to protect the individual from crime though the aplication of ancient common law.
            And by the constitutional protection of the individual from the predations of government.
            At least that would be a good start.!!

        • Tony Brogan

          gold is again acting as money in many parts of the world.
          It is the only medium of exchange not a debt to a counterparty. trust in the ponzi paper scheme is running out.

          http://www.goldmoney.com/gold-research/alasdair-macleod/a-plea-for-sanity.html?gmrefcode=gata

          • Adam Byrne

            I’ve had an account with GoldMoney for over ten years Tony but they could disappear overnight and run off with my money (if I had much) any time they liked and there wouldn’t be damn thing I could do.

            They wouldn’t be the first such company to fold and run with what they have under pressure from either their shaky business model, the feds, or both.

            Unless you have the physical gold buried in your back garden and your own security guards to protect it (assuming you can hire someone you trust will do the guarding rather than the robbing) and unless you can easily transport it should you need to move in a hurry or a crisis, then placing your trust in a digital certificate that purports to tell you that you are the owner of gold in a far off, impenetrable vault is seriously questionable.

          • Tony Brogan

            Hi Adam

            Yes true
            I was not advocating gold money or digital currency. I was simply forwarding the Alasdair Macleod essay. He is pretty astute.
            Most of my postings have suggested PM’s in hand. Not hard to store and there are economic rental vaults available in non bank operations.

            The point of the essay was to confirm the spreading use by country after country of gold as colateral, and the recent trade offers using gold as money and the medium of exchange. Such countries avoiding the SWIFT sanctions imposed by the banking system at the behest of the US on Iran.

            This is the main point not commented on by you.
            what do you think of that development?

            best regards
            Tony

          • Adam Byrne

            I wouldn’t know enough about it Tony but I could certainly see the point of keeping precious metals as a store of value. I just don’t see governments doing it, or reverting to such a system. I have no faith in politics or governments whatsoever – there’s not an honest man standing among them worldwide. All they are interested in is lining their own pockets and brazenly ignoring any other possibility of change. So I would say the chances of reverting to a gold standard (or similar) are less than nil.

            Individuals may keep gold (or silver) as part of a diversified asset base but if shit really hits the fan it’ll be every man for himself and random chance will dictate whether you and your gold see the other side or not – as it does most things in life.

          • Tony Brogan

            Hi Adam

            i do not want to sound like a broken record but. although your comments have validity regarding an individual the whole point of the MacLeod essay is to point out that gold is now acting as money. It is large countries not trusting the paper money and also side stepping the sanctions inposed on Iran.
            you may not be aware but there is a system set up to enable the transfer of large sums of money from one place to another. Banks are members and the acronym is SWIFT. Iran was cut off the swift system and so effectively cut off drom world trade.
            However china suggested they would us gold to buy oil from IIran. India did also. this is two examples of the remonetizing of gold, and the finger to the US dollar.

            The implications of this are huge. Other countries taking note of this will purchase gold ASAP.This is the physical gold not paper promises to pay.This is a tanker leaving Iran with oil and returning with gold.
            with gold Iran will buy whatever they need.

            As we know gold is in scarce physical supply it means that sooner or later the price will break upward. it will likely be at 3000 as quick as it gets to 2ooo an ounce.

            As the western financial system collapses gold will again be money.

            In the meantime we argue over how much we should own or whether we should be in the euro.. my position is nothing but gold and silver.
            It is why I advocate the ownership of silver for the people to save.
            It is the solution for the coming paper money collapse.
            This blog is way too short sighted except for a few.
            cheers
            Tony

  43. Reality Check

    @josey I’d like to see if the nationalised Repsol will be as efficient and profitable as Exxon – profits are good for People, profits = jobs.
    http://finance.yahoo.com/news/exxon-mobil-hikes-dividend-21-173640646.html

  44. dwalsh

    People pin the tail of responsibility on the particular donkey they want to flog. Many pin the tail on their neighbours; the plumber down the street; school teachers; public servants. Some pin it on the politicians or the government. Then there’s the Irish banks; and the European banks. We’d need a whole sack of tails, of varying sizes, to satisfy everyone.

    Me, I pin the biggest tail on the financial oligarchs at the very pinnacle of the financial system. The ones who effectively own and control our monetary system. It’s quite obvious that the deluge of cheap credit which was unleashed upon all the Western nations, resulted from a decision at the very highest level of the financial pyramid, to open the floodgates.

    The torrent of recklessly leveraged cheap credit which inundated our nations was accompanied by a clear message from the top, which was enforced by local political and business elites and the media (big tails all round there); that anyone crying wolf was to be explicitly warned: “look the other way; or look for another job”.

    The global financial crisis was created by the primary producers in our monetary system; and propagated by their local pushers. It is a global systemic crisis. This is completely obvious to anyone who can see beyond the orbit of the parish pump.

    • Tony Brogan

      Well commented
      Most can not see the wood for the trees as the saying goes.

    • wills

      Hang on dwalsh!

      Each individual is accountable unto their own actions.

      Irrespective of whatever racket or con or scam etc is underway.

      So in the case of the crisis there are the culprits and there are the players and so on.

      And each party has a certain level of responsibility relating to their actions they carried through on in regards the crisis.

      That is the mechanical facts of it.

      Not a philosophical or a moral or whatever, it is just the breakdown on to according to the law of cause and effect.

      • C21living

        +1 Wills

        If people don’t assume responsibility for their actions, then they’ll carry on behaving the same way in the future.

        I had an amazing idea today – myself and two friends are going to buy a ghost cul de sac with 4 4-bed houses on an acre of land in Carlow/Wexford area. We should get it for around €100,000.

        That’s a 4-bed house each for €25,000! We have to do them up a bit of course, and landscape our acre, but we’ll put in a communal BBQ, a veranda area, a wood stove, a large group orchard, all kinds of stuff.

        What a fantastic idea! My mates thought it was brilliant. They’re in.

        Then we met a bunch of mortgage-moaners. They all bought during the boom. They frowned and didn’t think it was possible, then admitted it could be done but probably wouldn’t work.

        Where are the bankers in all this? Nowhere.

        A lot of Irish in trouble now were idiots and remain idiots.

        If you think my idea ‘won’t work’ – a mortgage for €25,000 and a shared acre of land with your friends, then you’re a closed-minded idiot too.

        This blame game of the bankers is a childish philosophy.

        As Gerald Celente says ‘my philosophy is…think for yourself’.

      • dwalsh

        @ wills
        I dont think you read my comment very carefully.
        My whole point was precisely that responsibility for the mess is spread among all of us. Where I disagree with you and many others here is that I place most of the responsibility for the mess on those who have the power to ‘make the market’ as they say; as well as their local controllers or pushers, such as the media and politicians, who put the con over on the public.

        I place the least responsibility on the public.

        As I wrote before, the persons who find themselves emeshed in the mess created by the financial oligarchs and their local agents and pushers are of course 100% responsible for getting themselves out of their own difficulties. But that is another kind of responsibility…and it does not equate to saying they are responsible for the global mess.

        Also…you keep on insisting that your opinions about who is responsible are “mechanical facts”; but they are not facts; they are your opinions; with which I disagree.

    • Deco

      Dwalsh
      Some very valid points there !!

  45. wills

    dwalsh,

    Davids observation of the facts on generation baby boomers running ponzi property bubble rackets is spot on.

    They are and they did and they are doing the preps to do it again.

    But in the context of the article in regards the banking accountability there can be no doubt in the scrutiny of the facts regarding the dynamics of accountability within the transaction between beneficiary and counter-party that the Irish banks are primarily responsible over German banking in where the responsibility is weighed regarding the mess they BOTH made.

  46. Deco

    Excellent article.

    Merkel is trying to get the countries of Europe to agree with living within their means, officially speaking.

    Given that so many politicians in so many countries have already broken so many rules, should we be shocked if this proves to journey towards more deceit.

    Merkel, is trying to prove that the politicians of Europe are converted to the cause of restraint. They are not. In some countries they have no choice, because the electorate will not tolerate any funny business. I some countries, the electorate is extremely tolerate of liberal spending regimes and funny business (think Ireland when Cowen was Finance Minister).

    Essentially, Merkel is trying to prove to the markets that the politicians are disciplined. And as we see in the political instability – we have corrupt, inept, spendaholic politicians who have “educated” voters to do likewise. Essentially, Merkel is trying to fix a generation of politicians indulginf and spoiling voters with promises that never added up. It was all a ponzi scheme. And it is unravelling. So Merkel, thinks she can maintain order. She can’t. Even the Dutch can’t seem able to restrain themselves from living within the means of their state budget.

    Europe, and it’s “leadership” is in an intellectual deficit long defict, that started a long time ago. The intellectual inadequacy spawned the stupidity that made the financial inadequacy inevitable.

    Europe is pretending to be against fiscal expansionism, while the ECB exercised itself in monetary expansion. They might be attempting to copy the strategy used by Reagan in the 1980s. It is not going to work. It worked for Reagan because the Russians invaded Afganistan. When the Russians invaded Afganistan, the Saudis flooded the world with oil, making the 1980s a cheap oil decade, compared to the 1970s. This caused shrinkage of the Soviet exporrt value, and was effectively an economic war on the Soviet Union. In the West, it reduced the rate of inflation, dramatically. And this allowed central banks to play with the money supply and goose up the money supply, and “financialize” the economy.

    The finance sector never looked back.

    That is not going to happen anymore. Peak Oil means it will not happen.

    http://peakoil.com/consumption/peak-oil-peak-everything-lecture/

    Unless, the West can suddenly decrease the cost of a critical factor input in the modern lifestyle, the monetarist expansion is only going to end up driving up inflation.

    The formula being used no longer applies. The Ponzi scheme has gone as far as it is going to go. The Suburban Lifestyle concept has peaked. The economy of the west is under sustained pressure from lower cost economies, and a sustained effort by vested interests in the West to protect the absolute size of their slice of the pie, when the pie is shrinking.

    And this is being played out in the political system. This in itself is a sign that the political system itself is a large part of making the problem worse.

    Like the Soviet Union, we will find our way out of this mess, when we dismantle the complex mechanism that we all have in place for avoiding the reality that we face, and the delusions that we entertain. When we allow simplification of matters.

    And in the political system, we see a persistent need to avoid the simplification. Breakdown is not the problem. Avoiding it when it is inevitable, due to the level of deadweight in the system is the problem. Deadweight like the Irish property market, the over-reach of the state system, the over-reach of the EU, the over-reach of the logistics behomoth behind modern consumerism (with apples from Chile in discounters), the intellectual laziness endemic in our society, and the over-obsession with irrelevant minutae.

    The complex systems themselves have lost track of their system objectives. There is no adaptability, only an obsession with sucking in resources. This is destroying adaptability.

  47. Deco

    There is one possibility that you never hear in the media, no matter what the circumstances.

    The possibility that “more Europe” is actually going to cause more problems for the peoples of Europe.

    It is forbidden. Yet this is actually what we seem to be getting. The EU became increasingly more centralized after the Treaty of Maastricht. And unemployment has been shifting continually higher ever since, in the core six founding members.

    In fact it seems that the only way that Europe can address unemployment is to make interest rates so low, that ponzi bubbles are inevitable.

    And now we have a private sector debt bubble in Finland and Holland. And we have property prices creeping upwards in Germany.

    The Euro zone project, and the ECB has now created a mess that never existed in the 1980s, despite some of the idiots who were running countries with mediteranean coastlines.

    And there is no discussion of it. Intellectual dishonesty abounds in the EU. It has become a de-facto standard from Brussels.

    • cooldude

      Entirely true Deco. We are being led down a very dangerous road. All the rules on deficits were already in existence but they were just ignored by everyone. This ESM is all about more and more centralized control being given to the banking elites. These are the same guys who created the mess with their easy liquidity and low interest rates. All asset bubbles are fueled by negative real interest rates which put pressure on savers to take on risk because they are losing value because interest rates don’t keep up with inflation. One thing we can do is vote NO to all this nonsense and fear that is being spread. Another thing is to protect our savings by moving them out of the insolvent banking system and the constantly debased Euro and into precious metals which always hold their purchasing power. By doing this we can take away some of the banksters power over us and protect our families from the upcoming currency crisis which now seems inevitable.

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