June 7, 2012

The Morality of Money

Posted in Irish Independent · 264 comments ·

SPAIN is trying to call Gemany’s bluff. Yesterday, the Spanish finance minister made a direct appeal to the rest of Europe to bail out Spanish banks or at least to put together a fund to recapitalise the Spanish banks. This is exactly what Germany didn’t want but may have to ultimately accept. If it wants to keep the euro, Germany will have to pay through the nose for the pleasure. By opening up another front, the Spaniards have rammed home the point that Europe’s problems are not about fiscal deficits as the Germans maintain, but about the consequences of hyper-borrowing and lending in the boom.

The banking crisis in Spain is not destroying wealth but merely reflecting the extent to which Spanish and European wealth has already been destroyed via too much borrowing and lending to stupid investments which have now gone sour.

This leaves Spain in the same bind as Ireland: the banks are facing mass defaults as the price of property keeps falling. Independent estimates suggest that Spanish house prices could fall by another 35pc if they mirror similar crashes from peak to trough in the sunbelt states of the US. This obviously has an impact on the extent to which the loans go bad. At the moment, Spanish banks have made provision for 2.5pc of loans going bad, yet we know from Irish experience that this can rise very quickly.

Let’s say, given the collapse of Spanish demand and the credit crunch that stems from bank crises, that Spanish defaults rise to 10pc, then we have a huge problem. On top of the banking losses, if we add all the various hidden debts in Spain — from the various regional and local government debts to the total central government debt — we can see that the debt to GDP ratio rises rapidly. Finally, Spain’s unit labour costs have to fall by 30pc to get down to German levels.

The country is chronically uncompetitive and that loss in competitiveness happened when Spain joined the euro. Huge inflows of cash made everyone feel richer. They rewarded each other with higher wages without productivity gains and thus dragged up the cost base and dragged down the bottom line.

As the construction sector collapsed, the budget deficit increased on top of what we already know, in total this year, is €180bn of bonds that Spain has to refinance.

Is it any wonder that the Spanish have thrown in the towel and looked for assistance?

Now for the tricky bit. The Spanish move begs three questions. If Spain gets the EU to bail out its banks using the ESM, will there be enough money in the ESM to do it? Second, if the Spaniards get the ESM to take their bank debt, don’t we have a good case for retrospective treatment? Third, what if Germany says no?

Although not in place yet, the ESM is touted as being as big as €900bn. But this includes contributions from Ireland, Portugal and even Greece — all bust countries. And the German contribution to the new ESM is going to go up from €211bn to €401bn. This has yet to be passed by the Bundestag.

If Spanish losses in the banks were as high as the €200bn that analysts suggest, on top of its refinancing demands of €180bn and its current deficit which is north of €80bn, Spain alone could absorb nearly half of the total fund. And, of course, we know that if Spain is asking for funds, it means it is now as good as in the clutches of the troika. This also signals that Italy will not be far behind.

In terms of our own narrow interests, if Spain were to persuade the ESM to take its bank debts, that would leave the rope for us to transfer our bank debts from the Irish citizen to the EU citizen. But then again, the EU citizen would be right to ask the bank creditors to just take their losses without asking us to bail them out.

Perhaps the most interesting issue raised by Spain’s move is whether the Germans have the stomach for much more of this.

I am not too sure that the central assumption of Irish establishment conventional wisdom, which is that ultimately the Germans will pay, is entirely right. We know all the arguments about why they like the euro and it subsidises their industry etc, but deep down there is a schism within the power brokers in Germany. It is clear that the Bundesbank is getting very hot under the collar about the ECB and what the Bundesbank sees as the ECB’s cavalier attitude to money in its printing cash and bailing out of governments. Many Germans feel the same way.

They know that the ECB’s and Germany’s only hope to keep the euro intact is through breaking the rules about lending to government and banks. There’s a conflict between those who say the rules are sancrosanct and others who believe rules must be broken to keep the whole show on the road.

Many Germans are philosophically in the first camp. Rule-breaking contradicts their moral code. However, the rest of Europe — and those in command at the ECB — see the rules as fungible. This loose grouping takes the view that the end justifies the means. This is hard to take for many German people; it goes against everything they hold to be morally right.

IN a sense, there is a moral dilemma playing out in the heads of Germans. If we extend this moral view of the world to money, the two sides can be broken down into simpler forms. Those like me and many other economists who see money as a “tool” used to push economies in certain directions, and the Germanic view, seeing money as a “common good”, protected by treaties and laws. In this second, moral worldview, the economy adapts to money — not the other way around.

Maybe these Germans might wake up one day and say they’ve had enough. Then the euro unravels quickly. If that happens, you can rest assured that the day this moral revolt started in Germany was the day Spain tried to call Germany’s bluff.

Come to a discussion on financial markets in our everyday world, June 17 with David McWilliams and novelist Aifric Campbell at www.dalkeybookfestival.org

  1. Adam Byrne

    Good morning.

  2. David,

    I like the article but there is a part of me that is tired! I like the sense that you and the contributors to this site make but do we see fruit from the discussions in terms of Government actions???

    Most Irish people have gone through the normally school system and what do we learn about finance, personal finance or community finance? Practically nothing. I hate to say it but we have a system that produces ignorance. Awareness needs to at a higher level for us to make better decisions!!!

    Question: Are you or any readers here aware of initiatives in the Irish Schooling system to increase our awareness of both personal and community financing?

    Thank you

    • Hi Johnathan,

      I agree that there is a terrible level of understanding out there about how our economy operates.

      Not many people realise that money doesn’t really come from being printed anymore. It comes from bank loans. And hence almost every unit of currency has a corresponding debt.

      Most economists are aware of the concept that banks can create money but it’s rare that they realise banks also destroy money through loan repayments. Generally when I point it out and explain the accountancy procedures they agree with me but it’s not something that they learned through normal education.

      If the education system explained that banks create money through lending we’d be well on the way to understanding the root of the debt crisis, and many of out social problems.

      If the accountancy profession explained how banks work a loan repayment and cancel money out of existence in line with debts we wouldn’t be wasting time writing treaties to control Government budgets.

      Instead we’d be deciding how much debt-free money is needed to maintain a healthy economy.

      • Hi Paul,

        Yes, that is exactly where I would like that we could bring this as a society!

      • bonbon

        Economics is not accountancy. Accountants no run the EU, “balancing the books”, with “deficit limits”, “fiscal responsibility”.

        Which is why accountants are never allowed to run a company.

      • Tony Brogan

        Your analysis of the problem is basically correct but your solutions are delusional.

        Never in the history of the world have a government fiat currency paper or digital resulted in anything other than inflation which robs the poor and enriches the well connected.

        On the other hand sound commodity money has lasted for 100,s of years without problem until governments over spent and debased currencies or moved to fiat.

        China tried paper money several times from a 1000 to 500 years ago and and 4 dynisties were destroyed before the Ming Dyn went back to commodity money.

        in the last 200 years economies are littered with the hyperinflationary collapses and destruction of fiat currencies.

        In the 1300′s Marco Polo took a gold coin to china that had been in service for a 1000 years since the start of Constantinople in the 300′s ad.It last until the Turks over ran the city. He was astonished to find the Chinese using paper money.
        The French silver standard of Napoleon lasted from 1813 to 1913 when the first world war had to be funded and the country hyper -inflated the debt away along with Britain and Germany.
        In the Napoleonic wars The largely Irish troops under the Duke of Wellington (Irish), In Spain, were paid by silver coin spirited into the Iberian Peninsula by British banking agents.

        Commodiity money is the only sound money and has been for as long as any one cares to look. 2000,5000 years or more.

        commodity money is making a comeback as all currencies are hyperinflated away. China, russia, Malasia, Iran, Indian, everyone except the western world. What fools we are.

        As Jonathon says above. It is a sad reflection on our propaganda system (sorry schooling system)

        buy gold, buy silver. buy land

        • bonbon

          I hope you know Marco had the job of Finance Minister in Samarkhand under the Khan for 8 years. His trick was to take English silver (war debts) shape them into strange “coins” (squarish) which became the Khan’s currency.
          Polo, from Venice as his father both betrayed europe. So we had silver in service of a genocidal monster, who also happened to exterminate 30% of China (we have the census).

          • Tony Brogan

            I have just done a brief refresh on Marco Polo.
            It seems his first trip was as a boy with his father. a subsequent trip later took many years 10-15 during which time he was a confidant of Kubla Khan.
            Anyway my reference was to the existance of silver coin for a 1000 year period which had sustained use and value.

            I am not commenting on the benefits or depradations of the Mongol invasions, of the 1200′s.

            Your reference to “english” silver and war debts is gratuitious unless you are trying to imply that silver is evil or the ownership of silver is wrong. Suggesting silver was “in service” to a genocidal monster is peculiar.

            Silver is in service to no one and has no character except while acting as money to act as a medium of exchange. Plus it has a reported 500 industrial uses in the current service of mankind. Silver will you act for you as you wish. It takes no actions on its own account.

            Your antipathy to precious metals as sound money leads you to unsound reasoning.

    • bonbon

      Why limit it to “personal and community” financing?
      That is a particular darling of certain royals.

      What we need is national banking. Defined by Hamilton, refined by two Irish economists, Matthew and Henry Carey. Start there, let kids read the Carey report.

      Then Arthur Griffith’s precise identification of British Empire economics as clearly explained by Friedrich List (not the composer), printed in English and German.

      So we in Ireland have since the very beginning of the break with imperial regression, as a founding principle, economics.

      There you have it. Of course do not expect the London School of Economics, the Economist, to provide any curriculum for Irish kids.

      • Bonbon,

        London School of Economics will do what suits London School of Economics. Is it not in out national interest that each citizen knows how the system works because they all contribute in aggregate to the nation.

        The same could apply to Spain, Portugal, Italy!

      • bonbon

        It is critical that our citizens understand the principles, and List’s point-for-point comparison of the American System v. Adam Smith of the Empire, clears the fog like no other book I have ever seen.

        In fact that wiki link is quite fair. Still the List book itself is the best. And Griffith extracted this in his United Irishman a while ago. For those who say we live in a different time, well Tigers are history already.

        In Germany, well just try bringing List to the table and watch sparks fly.

      • Tony Brogan

        We need no national bank at all. Especially not Hamiltonian banking which you never define. It is a central banking fiat money printing proposal that was , is , would be just as bad as what we have.

        Close the Central banks which are controlled by the monied elites to enslave the people.

        Using the national mint and through treasury provide the people with money recognized for value around the world. silver coin. World trade settled in gold.

        Within 5 years an alternate basket of world currencies with a percentage of gold will be the “world reserve currency”.

        That is why The Arab, middle east, Chinese, Russians etc. are accumulating gold as fast as they can even as we squabble on this blogg over the solutions.

        Face it we are bankrupt. The Euro is toast, so is sterling and the US dollar. The US$ will be lucky to be a part of the new basket of currencies making the world reserve currency for trade settlement.

        Gold is being re-monetized now and will not be denied.

        • bonbon

          The “basket of world currencies” is the Goldman Sachs BRIC idea, rewarmed up from Lord Maynard Keynes’s “Bancor” the model for the Euro.

          Do I hear you promoting Keynes? Now I am confused.

          • Tony Brogan

            I am not promoting. Just observing what is likely to happen. I have not expressed an opinion of agreement or otherwise with this policy.
            Now I will say I would prefer separate national currencies free to float one against the other and against gold in which all international settlement would be made.

            Does this remove your confusion?

          • Realist

            Nothing wrong with competition of currencies, being gold backed or whatever backed.
            Allow me to pay my taxes in either gold or euro, or whatever other way.
            Do not monopolize euro as the only currency, where governments through their central fractional-banking system can print and do whatever they want.
            And to answer in advance on your well known reply that ECB is not private and independent once they started taking government bonds as collateral, not to go anymore further.

        • bonbon

          I’m afraid omissions again. Have you any idea what China and India think will happen to them as the transatlantic economy implodes? Gold will not save them. That is for a long past epoch, and tiny population. Imposing gold-backed (not gold reserve) systems as FDR knew at Bretton Woods, when Keynes tried it and was stopped, will implode the population to a previous epoch.

          In other words to try Keynes idea now is naked genocide.

          • Realist

            I lived in the society where we were using money in the toilet for you know what. I have never heard somebody was getting rid of gold yet.

          • Tony Brogan

            Illogical BS. Unreasoned.
            It is not a Keynes Idea. Gold prohibits massive government spending and monetary stimulas. Just the opposite of Keynes. Gold as money is accepted and is close to universal and centuries before Keynes
            You have a fixation on genocide having refered to it on other occassions concerning other subject matter. Last time it was Genghis Khan and silver!!

            China and India and Russia too have a pretty good idea what will hapen when the western financial system either implodes or more likely goes into hyper drive in the production of paper money.
            it is why they are accumulating gold.They want real money that is no one else’s liability. money that can’t be printed to infinity and inflated to zero.money that is fungible (nice word ,David)and a store of wealth and money that is immutable, can not be destoyed by rot, fire, tempest, vermin or central bankers.
            no point in arguing with me about what they are doing. Not my idea although I find myself in approval and admiration of their actions. One day you may regret being so indoctinated against sound money principles.
            You have a vast store of historical knowledge but appear indoctrinated by LaRouche. Take a step back and give your head a shake.

            I report the facts as Jo Friday advised. “Just give me the fact ma’am, just the facts.

            And population size has nothing to do with the price of eggs or gold either. It is another Red Herring. China and India with an affinity for gold and silver comprise a large portion of the total world population. They do not seem to agree with you.

            I suspect we all have many of the same concerns as you and in that respect common ground. The divergence is in the solutions.

            Today we have the first 100 billion tranche to Spain. The spigot is turned on.

    • bonbon

      Here you can find people committed to a Renaissance, and Irish economics.


      No Tiger silliness, plenty to study for curious school kids. Hard work, but good if you can get it.

      • Realist

        Last things that we need are Hamilton and Larouche ideas.
        That said, you are free to create the private school to teach your own kids with such.
        Schools should be free to choose what to teach.
        Only choice and competition can bring prosperity and advancement.
        Having centralisation and hamiltoninism is the last thing we want, as we want to get rid of EU centralisation, why stop there ????

        Good luck Bonbon.

        • Hi Realist,

          I am good with Bonbon suggesting ideas. I am not yet familiar with Hamilton and Larouche enough to comment on them.

          Can I ask you the question what do we need besides a few clones of DMcW to increase awareness on a general level about finance and economics. How could those fundamentals be integrated into our education system?

          Thank you

          • Realist

            Hi Jonathan,

            I am new to the Irish education system and my 3 sons are still young so could not know exact details.
            What is worrisome for me is all the people around without basic economic knowledge, so education system must be blamed a bit, is not it.

            Said that, it is really time for many economic ideas to be put into historical books.
            That is the only way schools will not put such econimic ideas into kids mainstream economic books.

            The first suggestion for kids learning is to learn economics bottom up. All top to bottom economic ideas are mostly plain wrong and they dominate today’s world (e.g. value of GDP, at the moment the most stated economic indicator, is totally useless to learn about).
            Economy is starting from individuals, their subjective needs, their exchanges, … and should be built that way.
            Children should also learn about pros and cons of governments, politicans and their play with economics.

            All that means education should probably be private and not controlled by government ministries and politicians, otherwise I cannot see it being independent and correct.
            At the end the schools should be private and teach whatever they want, but people should know what economic ideas are debunked and which are proper anyway (not politically proper).

            Best of luck.

          • bonbon

            Ah yes the bottom up approach – Pure Adam Smith all over again. National Economy is a top down approach, as Hamilton emphasized. An economy not committed to the General Welfare, i.e., an imperial economy, was what both Hamilton and Arthur Griffith fought against.

            So none of reductionist stuff. The Austrian School takes this approach and is forced to invent a spontaneous unknowable “action” that will mysteriously “emerge” from their recipe. Well we have that – the financial chaos emerged from exactly this.

            So boys, Hamilton and Glass-Steagall, imposed top-down on the out-of-control bottom-up financial pirates.

          • Realist

            We lived enough in your dream world, so please, let’s go back to basics.
            Hamilton’s idea of national (central) banking is stupid anyway as it is based on the same fractional-reserve banking principles as we have now, e.g. we have 1 million, so we can lend 10 millions, but some smart national (read central) banker will know who to give such money to.
            Excellent idea really, like we have no central bank and privileged banks that are given money to already.
            So nothing new there, we did try anyway, it does not work and will never do.
            Your doctrines should be the history by now.
            We do not want booms and busts, the mankind needs proper progress all the time.

          • bonbon

            Austrian School standard fare. To be expected from it’s patron, the LSE. No surprise there. After all Hamilton sent the Empire running. The fight has not even begun.

            So we Irish will take up Griffith’s banner, Friedrich List’s wonderful expose of Adam Smith’s iconic incompetence.

            Time for Glass-Steagll restoration, and national banking committed to the Common Good, General Welfare.

          • Tony Brogan

            You have to throw around a bunch of historical names like you are trying to impress the natives.

            Who mentioned Adam Smith or the LSE

            Who said a national economy should be run by a government. They always make a balls up. get the government out of the way and leave people alone.
            your top down centrist approach results in communism and a state 5 year plan doomed to failure.

          • bonbon

            History is a forte of us Irish, make no mistake. The fact that you would rather not mention names, is deafening in itself. The Common Good will never emerge in a mysterious way from private interests. Adam Smith, CEO of the British East Indie company which in fact ran Britain, a privateer company with its own army (which invaded India), is indeed the model of private economic ownership. Adopted by Mussolini (fascist) from Fabian teachings of the LSE.

            Marx, the unfortunate poor man, was fed economic data for his thesis in London, never mentions the American System, except in one letter that gives the whole game away.
            Glaring omission is not new.

          • Realist

            Bonbon, you must be somekind of historian as you are too much bound to the historical evidence.
            Start thinking with your own brain and start using logic.
            By the way a lot of history is written wrongly by the people who used wrong economics to describe historical events. I assume you read a lot of such wrong books too.

        • Tony Brogan


        • Tony Brogan

          You will have to take care and educate your kids yourself.
          The education system is a propaganda program to indoctrinate programming.
          That is why we are doomed as most are not capable of evaluating a new idea let alone an old one.
          you kids are your most valuable asset.
          open their minds to enquiry, and make sure they have fun!!

          • Realist

            Thanks Tony,

            Very true. Cheers for nice comments.
            This is why I am trying to read in every sphere of life most important and correct books, so I can transfer the knowledge, especially those missing in our education system, to my kids.
            I am seeing how almost 20 years of schooling can harm children’s fun.
            Always questioning do we really need such long conservative schooling for our kids, sitting in the classrooms most of the time ????
            I am just seeing they might be missing real-life experience while being over-protected by monolithic classroom based schooling systems.

          • Tony Brogan

            Hi realist
            Yes three years is enough to learn what is taught in schools. But the universities are nearly as bad.
            challenge the Prof and fail your course.
            A good trade will stand in good stead for future endevours. Not exclusive for education but teach the kids to question and think, look for solutions, examine the truth, talk and discuss.
            Keep them phsically active for good health and eat the best food you can get.
            Here endeth the first lesson!-good luck with your family.

          • Realist

            Cheers Tony,
            Very true as this is exactly what I am doing.
            Ah, challenge the professor :)
            Somebody said that classical school was away better than today’s one as they had logic and discussions in theory and practice.
            Did you mention thinking, examining, discussing, …
            These are concepts that are banned in the modern schooling by ministry of education (duplication and control).

    • Tony Brogan

      Yes, it is called the School of Hard Knocks!!!
      It is private, post secondary, and free.

      Sorry for the sarcasm. you are correrct. I believe the lack of finacial schooling is a deliberate ommission to leave the populace ignorant.

  3. breltub

    In my opinion this article highlights a flaw in your thinking.
    You see money as a tool to move an economy.

    I assume you look at this through aggregate demand stimulating production, so by increasing aggregate demand you drag the economy along.

    Except money printing is “fake” aggregate demand, and you end up with “fake” production. [bubbles]

    So no matter what you decide to do, once you hit print at the ECB and pump cash into the system we are doomed to more froth and nothing tangible. The banking system is broken, it has misallocated trillions of capital which should be productive into unproductive means.

    I agree with you that there should be a debt jubilee, and a hard-reset needs to kick in, but with that needs to come some hard rules, like the German money rules, or else some hard currency.
    Because if you keep the same rules as now you end up with the same dips*its thinking they can print there way out of a hole.

    And that just leads to people who take no risk, who don’t understand risk, and who never suffer the consequences of failure waltzing around with their lips around the teats of the welfare state/bank/money printing system and suckling the good out of SOCIETY! Not just the economy, but also society, because those who want to drive themselves and make a positive contribution are undermined by having to support those who don’t.

    Everytime you try move the economy with “money printing” you are making the assumption that you know better than the markets, because you are propping up failure. If people fail, let them fail, learn from their mistakes, change and move on. Don’t print them into a corner they can’t back out of

    that is my current thoughts on all this…open to debate!

    • Breltub,

      This is the big issue. As you know for years I was screaming that we had a bubble, so I am with you in the notion that the tool, when used badly, is dangerous. But now with a liquidity trap etc, we need to stimulate demand to bring savings down and money is the tool to do that with.

      We are agreed re Jubilee etc.



      • Realist

        Hi David,

        > we need to stimulate demand to bring savings down and money is the tool to do that with.

        How do you stimulate demand? Forcefully?
        Do we want to force people not to save, but to spend?
        I thought that free society means you can do anything you want, you feel comfortable with.
        Are we not spending all we have (and more of course) for the last 10 years (keynesian principle), and it did not help, is not it?
        Are you saying we continue doing the same (e.g. Krugman/postkeynesian and co)?

        You are saying you are different than the government, but in essence your ideas are the same old Keynesian ideas.

        Good luck David.

        • Realist,

          The way I see things is that we are in the brace of Minsky/Keynes/Fischer with a bit of Galbraith thrown in when it comes to conventional wisdom. I am with your scepticism on the universal panacea but what I see is demand management creating a “bridge” from where we find ourselves (too little demand) to where we’d like to go (self reliant demand). We can use monetary policy as a tool to do this, but it means breaking with the Euro – which I expect will happen anyway. And breaking with the Euro would be seen as a classic Freidmanite move. So there’s a little be of everyone it int.

          All the best

          • Tony Brogan

            Stimulating demand by excess money printing got us where we are now. More stimulus will not solve any problem.
            people must save, savings must then be invested in capital plant and equipment, and them production is aimed at a genuine demand and the economy will recover.
            You fall into the trap of thinking that government should be involved with stimulus.

            The past excesses must be wrung out of the current mess before recovery can commence.

            more stimulus (read more printed money) will add to the distortions and prolong the agony and exacerbate the eventual bust.

            The sooner the bust the easier and earlier the recovery.

          • breltub

            Hi David and Tony,

            David, two points you have raised I disagree with.

            1. Let’s take “There is too little demand”.
            I believe this is false. The demand for money is extreme. Not enough can be printed fast enough for every begging bondholder and bank out there. People looking to get loans cannot get it. You yourself describe this as the liquidity trap. So what we have is too much demand for a paper asset which is merely pouring into the debt pools created through all the financial fraud in the markets, this engineered debt is jamming itself in between the market and real potentially productive debt demand. I do believe some debt is good.
            so I think stating there is not enough demand is wrong. The problem is the demand is to pay down all-kinds-of-debts, and it is taking precedent over “real demand”.

            We both agree on the debt jubilee, but by doing that alone you will still be left with real demand. The businesses out there looking to invest in real ideas. The likes of Apple with the huge reserves waiting to do something, and individual people out there waiting for the fraud to stop so they can step out from the safe and go and meet this “real demand” with their “real savings”.

            If you go in now with a “debt jubilee” followed by another “fresh stimulus” you are merely kicking the debt can down the road.

            2. contrived demand management.
            Isn’t that the definition of market manipulation? What exactly do you wish to invest in through this increased aggregate demand? Or is is just for another bull run and some nice charts and some feel good factor for some “boomier” times?
            I merely see it as extending the lifespan of ideas and companies and institutions that are doomed to failure anyway, and we will be asked to pick up the tab once the fairytale ends. Why should one group of central bankers decide what and where deserves extra demand, when in the end it is only used to suit their agenda anyway?

            Don’t have time today to write more, apologies for not signing my real name last time.
            I always forget my login is different,

          • Realist


            You are correct in seeing these guys as problematic.
            This is why I am trying to open your eyes that the economy cannot be controlled by government or driven by them.
            The only thing they can do is get away and create the proper environment for businesses.
            What government should do is shrink to miniscule and left people live, trade, save, spend, whatever they want to do.

            As I like your site and your enthusiasm I am spending time writing from time to time, otherwise I will not bother really.

            Every economist on this planet agrees that value of goods are subjective, that what is 1 bread on my scale is not 1 bread on your scale, or 1 iphone for me and you. There is no monetary value attached to it.
            First bread is not of the same value as the second bread to us, 1 milk might be lower on my scale than 1 bread and opposite for you if you do not eat bread for example.
            All of that is not possible to quantify and aggregate into statistics and then go and define economy based on that.
            Only entrpreneurs, with such local knowledge or prediction of these values from people’s heads might know what to do in the future, and are able to drive the economy.
            This is why releasing of labour, land and money to be used in the most purposeful way by entrepreneurs (companies, ..) is needed.
            Central governments are not capable to do that.
            How on earth they can know what people wants, what people in Cork, Donegal or me and you want.
            Would you bet who is better in knowing that, Google’s, Apple’s and Amazon’s or our government, or you and me ? Not me for a sure.
            Economic information is scattered in all our heads and cannot be aggregated. Terms like liquidity trap, thrift, aggregate demand, advertisment is bad, … are all dodgy terms from those above mentioned names.

            Gool luck David.

          • Realist

            And true, euro will die, as any other fiat currency.
            The only unknown is when exactly, will it be months, years or decades.
            As longer it persists in this format the longer we will suffer.

      • breltub

        Hi David,

        In this situation I think a debt jubilee along with protecting savings is the answer.

        Increase interest rates and make getting your hands on money competitive.
        The savings you are talking about freeing up will be redirected fairly quickly by a functioning banking system to those who are most competitive and that will drive a recovery as the best will survive and grow and bring with them people that want to part of something positive.

        Those that fail, fail. We all do, but if they see that really trying to make it is being rewarded and the value of their work wont be undermined in the long run then people will go and live the life they want to, and in the end the majority of people do want to be net contributors and not visa versa, and that is what will really direct an economy.

        People and their ability to innovate and create and invest in that which they believe, not money. Money is the tool for that, but the tool can never direct the work.

        Savings are just the reflection of an ability to generate excess money through what you do.
        Banks are there to reallocate that excess to allow investors to back the next productive idea.
        Government is there to ensure we have a free and safe society to carry this out in.
        Both Banks and Government are now so far outside their area of ability that we are seeing this lunatic money printing because both banks and government are corrupt to the core. Then need to go back to their core capabilities. Stick to what they can do right.

        I think that the debt jubilee used in conjunction with a “quantitative easing” type event will just shift the debt burden, and those savings you want to free up will be sucked into paying off the debt of the money printed, because current money printing is just increasing the debt pile. It’s a short term injection, and yes I do think it would work in the immediate depending on how it is implemented, but once we move out a few years, how long until we are told we just need another little hit because of a liquidity trap, or some other bubble that the print off caused and we now need to cover the losses on that..and boom..here we go again. Little by little the excuses are made and we end up back at square one.

        but ya, I’m not an expert, I am unsure…It’s more a general perception I have that it would be a cloaked ponzi event to free up savings now to bail out the money printers, or the vested interests closest to them.

        Just do it right first time, and que sera sera. Don’t sugarcoat the medicine, and lets get on with it

        -> jubilee on all “non-secure” debt, let the house of cards fall on all the many many layers of scam out there
        -> Secured “top-tier” debt. Tough, you are getting cents on the dollar. You knew the risks of investing. Nothing is ever AAA, credit ratings are just advertising. There is nothing guaranteed in this life. Let the big babies throw their toys out of the pram!
        -> Break up all the banks, have 20/30 locals banks in Ireland competing for business. Perhaps amalgamated with credit unions.
        -> small dynamic competitive banks with good knowledge of the area they are in with the remit to drive small business and productivity
        -> Make the central bank of Ireland the “money printer” with a hard currency, interest free to the economy of Ireland for the benefit of the people, or with strong currency rules so people can save and it can insure their savings are not devalued. Let it ensure nothing else [CDS, CDO, Municipal bonds, whatever! Investors get burned].
        -> Have 3 or 4 investment banks competing for investment on the large projects. Still with the remit of creating business and not derivatives. let it be clear. You are investing with these. You may lose there is no guarantee. But I don’t know enough on investment banking so I defer to those who do
        -> Let the interest rates and debt and usuary take part in the competitive lower banks system, but let the central bank not be an ever expanding balance sheet for losers.
        -> The interest paid on loans taken out covers the cost of banks service + the interest the bank pays to savers. A fully functioning banking system should natually balance this. I think?
        -> This would put a bit of a gap between lending/investing returns and saving, so if there is more profit to be made investing it will free up the savings you wish to free and the money will flow to productive means and not sit in an e-vault on your internet banking site!

        -> Make the system work for us. Not us for the system

        As for how this fits in with Europe. Who cares. Lead by doing the right thing. I couldn’t care less what “Europe” wants, because the “Europe” we hear about isn’t the average Austrian, German, Spaniard like you and me. It is their Anglo, and the crony’s included in their own versions of Deutsche-Anglo and Anglo-de-casa and BNP-Anglo. Everyone of those countries has/had an Anglo and they will need to face up to it sooner or later.
        All the Emperors are naked!

        You want a dynamic, creative, innovative economy. Let the engineering be functional not financial.

        Maybe there is some merit in what I say. It isn’t perfect I know.
        But right now we are going nowhere, and printing our way there

    • Seanie

      Well said. Another point, if money is only “a tool to move the economy” what on earth are people supposed to save with?
      Keynesian economic policies has ruled the roost since 1971. The connection between real savings and wealth has been lost. Every one seems to forget that Keynes recommended government surpluses should be put aside during the good time, when was the last time that happened?
      Unfortunately a debt jubilee now would destroy most peoples pensions and life insurance polices.
      There is no easy way out this time.

      • bonbon

        Tiger’s liked it easy.

        The way out is hard, Glass-Steagall. So go for it. Break with the trend, the flow, leading only to a Great Depression.

        • breltub

          yip, easy in..not so easy out!

        • bonbon

          As Malaysians well know, the way to catch the monkey with the trap, is because he just will not leave the bait go!

          Leave the Euro go!

        • Tony Brogan

          glass steagall is an option but not a solution.
          It will not rid us of speculation
          There is still fractional reserve banking
          There is still central bank manipulation
          There is still fiat paper money
          There is still goverrnment/banker cronyism.
          There is still the lack of agency enforcement of regulation
          There is still the criminal theft of allocated assets by the like of MF Global
          There is still the corruption endemic in politics and financial business

          • Realist

            Nicely said Tony.

            While bonbon might be correct how to make central fractional-reserve, fiat money, banking slightly better with more regulations, he is missing the main problem and that is the system itself.
            Why on earth is hard to see that the current system is flawed and wrong and needs major changes.
            This is the stupidity of this system, that to make it working you need more regulations and more administration, it is just overly complex and wrong.

            How many years and decades we need to realize that imaginary money is wrong, and expansion of money making booms and busts.

            We want to replace it with sound money system, without central banking, with full-reserve banking, without possibility for fraud and unlimited credit expansion.

          • Tony Brogan

            We want to replace it with sound money system, without central banking, with full-reserve banking, without possibility for fraud and unlimited credit expansion.

            i’ll raise a glass to that. The problem we face is the education system which has programmed the students so that they can no longer think. They are taught what to think and not how to think.

          • bonbon

            Glass-Steagall did not stop 1929 – it came later, just to be precise. It never claimed to make angels out of devils – that’s a job for preachers. It simply makes sure devils do not get rescued by the Common Good.
            After all religious freedom is guaranteed!

            The British Gold Standard, rejected at Bretton Woods in 1944, was Keynes’ dream. At first confunsing, but Austrian School “sound money” preachers are in fact promoting Keynes Gold Standard.
            It is not so strange at all as we find Keynes, a Fabian at the LSE, and also Hayek the Austrian like two poodles on a pillow.

          • Realist


            I do not care who said what, as I only care what is good and what is not.

            What I care is that the society cannot spend more than it saved.
            The progress is coming from using real resources wisely and more efficiently and not from printing more money while pushing them into who knows what economic activities.
            I do not care if my salary is 100g of gold or 50,000 euro as what I care is what I can buy for such, what is the real value.
            As somebody wisely said money is there to exchange 1 thing for another, e.g. in my case my brain and physical work for rent, bread and milk.

            The current economy is based on flawed ideas that growth is good, printing money is good, debt is good, especially when public, spending more than what is saved by society, centralized planning is excellent, who could know better than our wise central government.

            So, get rid of monopoly on money printing, get rid of central banking and fractional-reserve banking fraud, allow competition for money, proper full-reserve banking and allow people to work and trade freely and you will get the progress.

    • bonbon

      FDR in 1933 knew it took quite a different approach than a biblical Jubilee. He split the banks, leaving synthetic debt too fend for itself with no national help. Other legitimate debt, isolated from the flailing now doomed discarded sector, will be serviced by huge development projects at a national scale and international. Real infrastructure, high tech. Then FDR used the TVA (Tennessee Valley Authority) after hearing of the Shannon Development!

      So biblical economics is quaint, even if the principle, the Common Good, is there. Today we need Glass-Steagall, which I am sure none of the patriarchs would disagree with.

      Odd that the Royal Jubilee has not cancelled all London investment debt instruments, what?

      • Tony Brogan

        Perhaps a good start would have been to refuse to bail out any bank with public funds. Banks are private business and should thrive or fail according to business practice. Glass Steagall will not prevent cronyism and bailouts or prevent derivative gambling.

        Moral behaviour can not be legislated. So G/S or not we still need to BAN bailouts or G/S will have little effect.

        Central abnkers are dictating to governments and must be reigned in. Better yet central banks need to be closed and any monetary policy handled by treasury under direct control of government.

        Even better is to closed down fractional reserve banking.
        All unbacked paper money should be withdrawn. Hard currency needs to be available as a choice. use paper money if you wish or save in silver coin if you wish.

        That is an offering for the public good.

        • bonbon

          Glass-Steagall, as I point out here, will not claim to make angels out of devils. But it prevents bailouts, seperates 3 sectors of finance with a Chinese wall.
          Untill 1999 it still functioned, under attack.

          It opens the door to national credit absolutely vital to rebuilding the ruined economy.

          • Tony Brogan

            The derivitive exercises happened in spades in the last 10 years and may have happened anyway even with out the GS repeal–just not by the commercial banks.
            The key point is that any private business that makes a bad decision should suffer the consequences and not be bailed out by the public purse. Moral hazard is running rampant. Nobody can be allowed to be too big to fail.

            The talk of “national credit” indicates more debt as that is my understanding of the term credit.
            Capital can only be acquired from using savings. Savings accrue from profit. There can be no profit until debt is extinguished either by payment or default.
            Default damages improvident lenders so time is required to be rid of the debt and to accrue the savings to invest into capital to generate innovation and efficiencies in the economy.
            The use of further credit is to add debt which is not the way to rebuild the economy. As debt has ruined the economy more debt will worsen the situation. Ask Japan who is further and further indebted but whose economy continues to stagnate?

          • Realist

            It just prolongs the misery into the future and that is all.
            I assume in the few years time we will see GS2, GS3, Basel V, VI and …
            The same is with the government, it is just growing.
            Orwell’s 1984 just missed a year by a few decades :)

  4. bonbon

    Unreality Reigns in Debate of Spanish and Eurozone Collapse

    June 6, 2012 (LPAC)–Everything except what is required — a Glass- Steagall standard and credit system — is being proposed to deal with Spain’s debt blowout and the Eurozone crisis.

    Following the June 5 emergency teleconference by G-7 finance ministers, it was reported today that Germany has “softened” its stance and is considering a plan to recapitalize Spanish banks, which allegedly won’t include the imposition of harsh austerity measures, since Premier Rajoy has already shown he can do a good job in imposing austerity elsewhere in the economy.

    But the flavor of the situation was offered by Commerzbank strategist Rainer Guntermann who told Reuters “it doesn’t look like they have a quick fix at hand, nor a fundamental game changer at this point in time.”

    Official German sources told Spain’s {ABC} that the German plan to recapitalize Spanish banks, “with help from European partners,” will channel funds into Spain’s public bank bailout fund, the FROB. Doing it this way is an attempt to maintain the fiction that the problem is only with Spanish banks, and not the rest of the economy. However, Angela Merkel has said that before going further, she wants to see the results of the private audit of Spanish banks that will be released later this month.

    Although austerity conditionalities supposedly won’t be demanded, Spain will have to agree to a reform of its banking system which will be imposed by Brussels. And before anything happens, Spain will have to formally request assistance from its European collegues.

    However, Finance Minister Luis De Guindos said today that “absolutely nothing is being prepared” in terms of requesting aid from Europe, although he added that the government is willing to “make whatever decisions it has to make” in terms of bank recapitalization, once the IMF report on the health of Spain’s banks comes out on June 11. He insisted that the private audit of the banks will show that the problem with the banks is limited to just a few specific entities (!!) and that the government has already begun dealing with these. Holger Schmieding of Berenberg Bank in London wrote today in his blog on Spain that there’s no time to waste; Spain will have to seek help as soon as next week, because the situation is becoming “untenable.”

    De Guindos’s remarks contrast starkly with those of Treasury Minister Cristobal Montoro, who warned dramatically on June 5 that “the risk premium says Spain doesn’t have the market door open. The risk premium says that as a state, we have a problem in accessing markets, when we need to refinance our debt.”

  5. bonbon

    The reference to “common good” by DMcW is indeed the central point. The only possible morality money could possibly have is in service of the Common Good. This was first put into a constitution by Alexander Hamilton, who created the First National Bank of the USA, a credit system, committed to the common good.

    The irony of this is that Leibniz in Germany was the first to define this many years before in Securitas Publica, a must read for any serious political economist.

    Germany is very much aware of how long it took to get this far and regression is always noticed.

    So time for moral action, Glass-Steagall, and banking committed to the common good, not a tool of regression.

    • Tony Brogan

      Money is not a tool to be manipulated for policy.
      It is simply acts as a catalyst and as a medium of exchange. Money is not consumed in the process but moves within the economy to perform over and over again.

      money has no morals, it does not act for the common good it just expedites trade. Acts as a medium of exchange.
      As it is never consumed it is always there and does not need adding to.

      any addition to the money supply creates distortions and sends false signals through the economy and creates inefficiencies that make all a little poorer.

      • bonbon

        Bald statement or definition. The Austrian School POV. The Common Good is primary, the General Welfare. Government must be committed to this. Then moral action can be taken as FDR and JFK showed.

        Then people are given a real choice, to work for the pursuit of happiness, or to pay off swindlers.

        That’s the choice we the people want.

  6. bonbon

    Note plans for a Banking Union, reported in previous theme here, means saving 25 EU banks only.

    Moody’s Attacks German Public and Mutual Banks

    June 6, 2012 (EIRNS)–In a clear attack on the German public banks and mutual banks (community banks), Moody’s today downgraded by one point DekaBank (the capital investment subsidiary of the savings banks), the DZ Bank (one of the two central institutions of the mutual banks, Raiffeisen- und Volksbanken), while the second central institution of the latter was put on “negative watch). State banks LBBW, Helba, and NordLB were downgraded by one point. Also, Commerzbank (which has been partially state-owned since being bailed out) and HypoVereinsbank (subsidiary of UniCredit) were downgraded. The official reason is “a heightened risk of further shocks radiating from the debt crises in the Eurozone” and the banks’ “limited chances” of making up for possible losses. Deutsche Bank’s status is still “investigated.”

    It is certainly true that all of the downgraded bank have weaknesses, since, after all, the whole system is bankrupt. But this must be seen in the context of the insane “banking union” plans and in particular the plans to create a “European deposit insurance.” This new bailout plan was just rejected by 11 German banking associations in a joint press release on June 1st.

    Moreover, the public and mutual banks sector still is, as it was in the past, the one sector that still provides credit to industry, manufacturers, and farmers.

    As we found in calls during the recent days, many of these banks now have tremendous difficulties, due to over-regulation (by the EU, which has nothing to do with the practice of these banks) and by the fact, that “global players” and those like Commerzbank (private, but rescued by the state) are taking clientele away by offering much better conditions, due to their state rescue, probably in a last ditch effort to stay afloat.

    Anger over the “global players,” which are rescued by ever new financial umbrellas and now by plans for a “banking union,” which sets out to “save” only 25 European banks, was great, and thus also the interest in the U.S. developments on Glass-Steagall.

  7. bonbon

    Rating agencies have their man in Italy :

    Monti Questioned on His Relationship with Moody’s

    June 6, 2012 (EIRNS)–After many media reported that Mario Monti has been an international advisor to Moody’s, the government office has been forced to issue an official statement saying that Monti was part of a senior international advisory board, but never dealt with sovereign debt.

    The criminal investigation on Moody’s has expanded to Moody’s Italy CEO.

    Meanwhile, a drop in consumption caused by Monti’s austerity measures has produced a 2.2% drop in VAT revenues for the government, and an EU3.5 billion gap in the budget. What will Monti do? Increase again VAT in September, as promised. Another report says that 9 million Italians have no money for medical care which is not covered by the national health service.

  8. bonbon

    Here we go again, Eurobonds, EU President, ESM all one dictatorship. A Merkel-Monti Duo to replace Merkozy ?

    Rome-Berlin Axis for European Führer

    June 6, 2012 (EIRNS)–As part of the new Rome-Berlin axis, pro-euro members of the Italian Parliament have agreed with German Bundestag members to vote up a common resolution to accelerate the process towards an EU dictatorship. The resolution calls for direct election of a European President. The resolution was agreed upon May 23 by delegations led by Italy’s Lamberto Dini and by Germany’s Ruprecht Polenz and Petra Merkel. The Italians reportedly wanted the Eurobonds in the resolution, but they did not get it, because of the CDU-CSU opposition.

    However, the crumbling euro is creating a shift in some sections of the Italian Parliament, and the Rome Berlin baby could die in the cradle. Sections of the PDL are demanding a Parliament debate and a resolution binding Monti on the Fiscal Compact. Either Eurobonds or no Compact. That is what PDL Senate faction leader Maurizio Gasparri and former undersecretary Guido Crosetto said yesterday. This means that Monti would go to the June 28 Euro summit with a mandate that binds him to approve the Fiscal Compact, only if Germany accepts Eurobonds. Depending on the small print in the resolution, this could become a serious hurdle and a gambit strategy, or just a comedy.

    The political parties supporting Monti fear they will disappear in the next general elections, as opinion polls put “anyone but established parties” in first place and Monti, himself, in the second place.

  9. Deco

    The fact is that the ECB has been lending money to the Spanish banking system since 2007, where private banks would not do this for fear of the money disappearing down a hole.

    If the Spanish banks are refucing to “mark to market”, and the ECB is providing them with liquidity that they are evidently not worth, then we have already reached the point of the institutional framework of the ECB becomming a joke.

    In fact it became a joke when Trichet took over from Wim Duisemburg. The media called him dim Wim, because he kept interest rates up so as to restrain the impulses of the finance sector for speculation. And the media will do as it is paid to do.

    Dim Wim was far smarter than anybody gave him credit. Trichet lowered interest rates, and created all these asset bubbles.

    How can you have a central banker who has NO clue concerning risk ?

    Well, the West had three in the last decade. Alan “Bubbles” Greenspan, Mervyn King, and Jean Claude Tichet. And this was mandated by the US political Duo-poly, New Labour, and the EU Commission respectively.

    That was where the resource misallocation started. And it has not stopped. There is a real estate bubble in Scandinavia. And it is now developing in Western Germany.

    These clowns have created a mess, and they are staying the course so as to make matters worse.

    • bonbon

      Trichet is french for cheater.
      ’nuff said.

    • Deco,
      Dunno if I posted this before from the good Dr G.


      He pointed out that it was part of his Phd thesis way back in 2003, at about the same time our host was sounding the first warnings on bubbles and boiling economies.

      Looks like the thesis is about to be proven on the Iberian penninsula.

      Ceist amhain.

      Has anyone done a capitalisation exercise on the interbank trade in Germany. Or could we be looking at the biggest bluff of all there?
      I mean, if the German economy is so strong, that being strong enough to carry most of Europe under favourable terms for its own economic model, why have the Chinese (CIC) scarpered.

      This may just be a monstrous game of poker?

      • bonbon

        have a look below at the derivative trade numbers. Without dealing with this any counting small change is merely a parlor game.

        Strange how many avoid big numbers?

    • Tony Brogan

      SSeems to me that all the bankers are not dumb so they must know what they do. If so it is a deliberate policy.
      i see it as a policy to create social discord and cries of help that are met with less sovereignty and another step to autoritarian one world government.

  10. bonbon

    Look who is putting the squeeze on Germany.

    DMcW – It seems Obama and Cameron are reading this blog!!!

    Frantic Call by Cameron and Obama for “Immediate Plan” to Rescue the Eurozone

    June 6, 2012 (LPAC)–G-7 finance ministers had barely finished their emergency teleconference June 5, to discuss the eurozone and Spanish debt blowout, when David Cameron and Barack Obama hopped on the phone to discuss the same subject, Cameron’s spokeswoman Vickie Sheriff announced today from Downing Street.

    The two have issued a call for “an immediate plan” to save the euro and “tackle” the eurozone crisis. Good luck with that. The consensus from Bloomberg and elsewhere is that this means squeezing Germany even more. What else it includes, is anybody’s guess. In fact, Sheriff reported that Cameron will be flying off to Germany June 7 to meet in emergency session with Merkel.

    The {Telegraph} reports that aside from the Obama Cameron chat, leaders of Canada and New Zealand also visited Downing Street yesterday, and that there are signs everywhere that the European financial crisis “is worsening.” Great insight.

  11. molly

    Capashin day centre was on tv3 and an old man was interview and said he met enda kenny and asked him could he live on 210 euros a week kenny never answer the man,shame on kenny and the rest of his government,is this the Ireland we voted our government to oversee.
    I call on this government to stop awarding pay rises to spin doctors and instead give that money to such centres who do good.i for one after seeing the centre on tv was shocked and will be offering my help to the centre in any way I can.

  12. bonbon

    Expanding Support for Glass-Steagall

    June 6, 2012 (LPAC)–Rep. Judy Chu (D-CA32) has become the latest co-sponsor of H.R. 1489, making her the 65th Member of the House to formally support the reinstatement of Glass-Steagall.

    In Utah, Dan Liljenquist, a Tea Party-backed Republican challenging Sen. Orrin Hatch of Utah in the GOP primary, said he supports reinstating Glass Steagall, at a town hall meeting on Saturday in Provo. Liljenquist, a former consultant for Bain Capital, was asked, “Are you in favor of reinstituting Glass Steagall?” He answered: “I am in favor of reinstituting Glass-Steagall, but let’s take it offline. It’s very complicated for most people.” In response to another question, he said: “I’d reinstate Glass-Steagall. We’d put the wall back up between investment banks (think Goldman Sachs) and deposit banks (think Wells Fargo).”

    Economist Joe Stiglitz, interviewed on NPR’s “Fresh Air” on June 5, cited the repeal of Glass-Steagall as a major cause of the financial crisis. When asked about the impact of lobbying on financial regulation, he answered: “I think the example that most epitomizes the problems that I’ve been talking about was the repeal of the Glass-Steagall Act… After the repeal of Glass-Steagall, the differences between the investment banks, which took rich people’s money, invested in high-risk activities, high return, the difference between those banks and ordinary commercial banks was abolished, and the unfortunate consequence of that was that the commercial banks began to act like investment banks, undertaking high-risk activities with ordinary individuals’ money. “It had two other consequences,” Stiglitz continued. “One was that the banks grew bigger and bigger. They became too big to fail.”

    Stiglitz stated that Glass-Steagall “served the country well,” explaining: “In the decades following the passage of this… the United States had no financial crises, no major bank failures. In the period after deregulation, we’ve seen the kind of instability that we face.”

    Rich Elfters, columnist for Enumclaw (WA) Courier Herald, called for reinstating Glass-Steagall in a June 4 column, in which he wrote about FDR’s measures in 1933 — the bank holiday, FDIC Act, and Glass Steagall — and continued: “For 66 years, until 1999, this law functioned well, until with the push from Federal Reserve Chair Alan Greenspan, Secretary of the Treasury Robert Rubin, and some large financial institutions, the law was dropped.” Elfters, a former teacher, writes of its repeal:

    “Having taught about the causes of the Great Depression for more than 20 years at that time, I wondered what effect that decision would have upon the economy. We all found out in October 2008 when the economy went into a tailspin… My fear is that not having a Glass-Steagall type provision in place will lead to a repeat of the 2008 economic disaster. Unless Congress and the president act to reinstate a form of Glass-Steagall, we will see a repeat of the 2007-10 fiasco.”

    See the EIR editorial on Glass-Steagall from the June 1 issue.

  13. molly

    Well I said it before Spain will be no push over ,we the Irish let FF destroy this country and then we elected a pack of liers in on the promis of there lies,so we replaced one bunch of liers ,with another bunch of liers.
    The school bully is a live and well and resides in the dail .
    Question if the government can bully the Irish people why can’t it bully Europe .
    Maybe the difference is Europe stands up to the Irish bully or maybe not?

  14. bonbon

    To approach precision :

    QUESTION: The amount of bad debt on the books of Spanish banks, which has to be bailed out to avoid formal bankruptcy, is:

    A) 300 billion euros
    B) 375 billlion euros
    C) 475 billion euros
    D) 10 squillion euros
    E) All of the above

    The correct answer is letter E). Last Friday, Nomura said it was 300 billion; on Saturday, UBS said 375 billion; on Monday, the {Financial Times} reported 475 billion; and 10 squillion euros is a fair estimate of where this is all heading.

    I wonder what kind of bluff a Squillion is?

    • breltub

      I think the number is ∞

      • molly

        Spain is like Ireland it will take 2years to find the truth or 2 years to never be told the real truth.
        The word cover up springs to mind.

        • bonbon

          Spain was covered up since last December. Now the 640 pound gorilla under the rug just cannot be ignored anymore in the backrooms of power.

          • molly

            It’s funny ( no we don’t need a bail out ,yes we do ) remind you if someone else)
            Maybe the government of Spain where taken to the space ship ,the same space ship FF,FG!LAB where taken to and when they where there it was discovered the brain cells where past there sell by date .

  15. Morality of Money?… No, it is the Immorality of Policies and Politicians!

    David’s article on the Morality of money fails to address the system inherent problem, the built in design flaw, the real reason for this engineered coup d’état, instead it offers the narrow focus of a true believer, a disciple of an unsustainable capitalist world that does not hesitate to equal economists with philosophers.

    The triumph of the financial capitalist Industry is the downfall of the west.

    Triumph over who?

    Globalization enabled the corporatist world to bend all rules to maximize profits and limitlessly exploit the people of our nations and their natural resources.

    The World Bank, IMF and last not least World Trade Organization were instrumental in supporting this rape of nations, outright thievery.

    I recommend Joseph E. Stiglitz’s, “Globalization and it’s Discontent” for a deeper look into the global economic policies that were force fed onto Nations around the globe.

    Now, you heard me repeating this since years here on this blog, that this is not a crisis, but engineered coup d’état.

    The East Asian and the Argentine were precisely the same methodology, social engineering and social political warfare. The privatization of state assets and fiscal austerity represent both side of the neoliberal flag, the IMF represents no other than the interest of the financial industry.

    The disaster that unfolds in from of your eyes since 2007 is of the same making.

    The immorality of policies that was forced upon most people, and just to be precise, people here in Ireland were even voting for it, is evident in the results they brought along.

    Under attack and dismantled are civil rights and liberties, democracy at large is suspended, technocrats are forcing policies to serve the financial capitalist industry exclusively, the rest is collateral damage, hundreds of millions of people are suffering, no one or very few speaks of the impact on the poorest in this world, the focus is exclusively on capitalist parameters and paradigms, ethics is diluted into a farce with Ethic committees popping up like mushrooms after rain.

    Brussels was the dumping ground for nationally unwanted but high ranking and not so easy to get rid of political characters since years, they were promoted away, and as a result Brussels is infested with ineptitude and a sense of entitlement.

    We are moving back with full speed into the dark ages and 1884 might be closer than they think.

  16. Adelaide

    RE: the ‘ignorance is bliss’ goal of education

    If I were a conspiracy advocate I would reckon the Irish education system is designed by the evil Illuminati to produce automatons for their evil machinery.

    Dodo school leavers and dodo graduates with no tools to understand the mechanisms behind their own reality = dodo population living in a contrived bubble of ignorance and acting accordingly and passing on their fatalistic ignorance to their children who are themselves being educated by the manufactured dodo teachers. Meanwhile the Oz Wizards of Illuminati pull their strings and chuckle to themselves with great secretive satisfaction in their great castles of wealth.

    Q: Can I do a JobBridge intership for the Irish Illuminati, possibly in their digital marketing department? I need a lucrative career change. I can use Microsoft Word. I also can write and speak coherently. I also wear underpants beneath my trousers, daily.

  17. wills

    Ah yes Spain.

    Another crony run economy.

    Run by a group of insider syndicates using the banking system to inflate a property bubble to cream the euro with the help of City of London CDS weapons of mass destruction.

    And surprise surpriser, the Spanish decide yesterday to blame Germany.


    How about the Spanish insiders sitting on the pile of cash they stole, how about returning the stolen wealth into the Spanish economy instead of blaming Germany.

    Christ this finger pointing at Germany by mainstream media is getting barmy. BBC yesterday and their reporting of it pure City of London propaganda bull.

    • bonbon

      Yes it is crazy, but planned from the Euro introduction, explicitly to “contain” Germany after re-unification, by those very same City banksters.

      What a mad dance indeed.

    • Another crony run economy.

      Same as Ireland

      • bonbon

        The cronies happen to be in the City. Cameron and Obama are now on full alert to save the cronies – see post above.

    • Philip

      Speculate to accumulate to speculate more. That’s the game and it is a positive feedback loop that is sucking in Germany and the rest of Europe.

      Speculators start to quicky from small insider groupings and sweat out the competition. It’s like global monopoly, there’s only one winner and one who winds up owning everything and squeezing the rest out.

      I agree with David on one thing. Money is a very dangerous tool. Like radioactivity, it needs very careful management.

      • bonbon

        The “winner” the TBTF gargantuan banks, 6 mainly, are an easy target for splitting up. After all the won all the derivative debts, quadrillions of it.

        We control radioactivity every day making power. We can easily control finance. FDR showed how.

  18. joe hack

    Good article David,

    Politics is now finally at work and not the German aspergers syndrome attitude to accountancy or economics;

    Spain has learned lessons from Ireland and Greece and it is using a brinkmanship similar to that of the Greeks but Spain is not Greece the Spanish are been given the nod by other nations. Last night Cameron sent strong messages to German on the airwaves with the blessings Obama’s and others.

    The Germans may well be aware that they need to become more adult and drop there aspergers syndrome attitude towards money, if they don’t they may be politically forced to via export sections on them or worse they are holding the world to ransom.

    I believe there is a building consensus that the EU eaders are becoming mad as hell at Germans who are heading the EU in to Dangerous place and they will not allow the Germans bring the world with them.

    The Germans are repeating history again the euro may well survive and expand or collapse but it will not be economics that decides the fate of the EURO but the memories of Europe’s recent history and because of it Politics will prevail god or bad.

    It may be a case that, “it’s economy stupid” but it is always politics that adjusts the stupid economy.

    • Seanie

      Maybe it’s Germany who should leave the euro area. This will allow the other countries to steer the ECB and print up as much money/debt as they need. Let the good times roll ;)

    • C21living

      You mean ‘the Spanish are being given…’

    • bonbon

      Notice below who exactly is railroading Spain – London.

      Now ask what Berlin thinks of this.

      Let’s not be stupid missing the 640-pound gorilla under the rug!

  19. Interesting read

    Everybody has to sometimes break the rules

    A wee song for Frau Merkel:


    • molly

      France and Germany break the rules
      by Tyler Cowen on November 30, 2003 at 7:40 am in Current Affairs, Economics | Permalink
      The EU fiscal rules, that is. Each country using the euro is supposed to maintain a budget deficit of less than three percent of gdp. Earlier this week France and Germany announced that they had no real intention of meeting the target, here is the full story. What are the implications of this?

      1. The euro hit an all-time high against the dollar, clearly the markets were not rattled and largely expected this outcome or some version thereof.

      2. Many of the smaller countries in the EU are upset, most of all Netherlands, Austria, Finland and Spain, all of which went through painful fiscal restructuring themselves. It appears there are two sets of EU rules, one for France and Germany, one for everyone else.

      3. France in essence has given up on its dream to provide significant leadership for the other EU countries, and can no longer expect to lead by example. Otherwise France and Germany will suffer no real penalties from this.

      4. France and Germany have shown that they simply will not make significant spending cuts, no matter what.

      5. France and Germany were right not to raise taxes to meet the targets.

      6. The three percent rule is effectively dead. The rule was a bad idea in the first place. Rules based on strict targets, with trigger penalties kicking in at a predetermined level, are likely to fail in democracies (remember the Gramm-Rudman Act, first it was to control deficits, then spending, ha-ha?). The boundary lines are arbitrary, and if they start to matter the penalties are seen as arbitrary and unfair by voters. So no penalty is accepted and then the targets fall apart.

      7. The old written rule mandating three percent will not be revised. The new system in practice will likely take the form of loose ranges, with penalties of moral suasion applied by other EU members.

      8. The real question is what will happen when one of the smaller nations thumbs its nose at France and Germany someday, over some EU agreement, and then claims exemption from the relevant penalties. Until then, stay tuned…

  20. abutler

    Time to look at the positives here, the Eurozone has no inflation problem. Costs in all countries are reducing; admittedly through a painful adjustment. Remember inflation hits the poorest the hardest as they have less money in the first place and usually have no assets.

    It the Euro can hold it together over the next few years I see the whole EU economy rebounding rapidly.

    My big criticism is the EU’s marketing and messaging of their side of the story is really desperate. Some of that is the right wing British press (Murdoch) hell bent on EU destruction but most is the bureaucrats like Van Rompuy who are hopeless communicators.

    Some of the ideas expressed above are reasonable and need implementation however a financial meltdown will suit very few.

    Have a look at Argentina the country that choose default, devalue and isolation and where that is at: a basket case heading to communism.


    So anyone including DMcW advocating our Euro exit and such measures need to carefully consider such actions.

    • bonbon

      You really think a financial meltdown is a choice? Incredible hubris. It is guaranteed as long as Blair-Obama continue the bailout.

      Glass-Steagall, as President Higgins repeatedly stated is the issue. The Euro is merely a boil on the transatlantic collapse.

      Looking for “positives” in the dung of this dino system is not what people need to forage. Positive intervention to split the banks and open the door to Hamiltonian national banking, huge projects, all that banksters hate, is what people need.

    • Tony Brogan

      There is no f****ng choice. It is inflate or default. Inflation will win
      Saying inflation is not a problem is bizarre.
      Have you been to a grocery store lately. 10% per annum for the last three years is conservative.
      Inflation is baked in the pie.My groceries have gone from 300 -450 a month. a 50% gain in 3 years. It is actually 12% pa.

      You sound like another Chicken Little. I’d rather live in a tent on a river bank a free man than live under tyranny and threats from one world rulers.

      Robin Hood was a favourate of mine for a reason.

      • bonbon

        I agree on the financial situation, not on the action to be taken.

        But the reference to Robin, a free man, and tyranny, prompts the question – have you ever heard of the US Agrarians, “I’ll take my stand”, the Fugitives?

        For Confederates the Union was tyranny, Lincoln a tyrant. Such always put FDR, Lincoln in the same boat as world government when in fact Bertrand Russell, British, was the advocate and the Keynes Bancor was meant as a tool of World Government.

        • Tony Brogan

          No I had not heard of the US Agrarians but now I have just having read a little about them. You are a source of inspiration to my broadening education!!!!!

          Ditto Keynes Bancor.
          Lincoln was shot after he proposed to removed currency production from the bankers and return it to treasury.

          Well it seems to me that no national currency should be the world reserve currency.
          We do not need a Bancor currency or UN special drawing rights etc.
          There is already A UNIVERSAL MONEY that is owned by no one country but distributed accross the world. Namely gold. It is the ultimate enabler as a medium of exchange between nations. It also has a value because it is a commodity and not easily replicated or increased. Thus it curtails inflation and stymies the major currency expansions bedevelling most countries today.
          Any entity betting on a mountain of derivities would die a natural death not to be revived again in this century. Glass steagall would not be a requirement. It would not prevent government bailout under bank threat of catastrophe from the Goldman Sachs’, Paulsons of this world.

          • bonbon

            Well we’ll see how Glass-Steagall will function. All kinds of luminaries are now admitting no other option exists.

            Bailouts must be stopped, Spain is a bail too far!

          • Realist

            I thought we had seen Glass-Steagall already in the past or you are talking about some new one ????

            It could just prolong the debacle of the fractional-reserve system and fiat currencies and nothing else.
            It will save our generation of suffering but will destroy our kids in the future.

            Maybe getting into this position faster, as we are off now, will make mankind suffer now, so we can correct the wrong system.
            The same is with oil speculators that are making prices realistic faster so everybody complains how nasty they are.

            We should just live in the dream world longer with Glass-Steagall ?

  21. cooldude

    Interesting article David on the nature of money and it’s role in society. To understand this more clearly I think we should look at what characteristics good money should have and how our current system fares out. The first characteristic money must have is that it must be a convenient medium of exchange. On this score the Euro does very well as it is used and accepted throughout Europe and is very convenient to use. The second main characteristic good money should have is that it should be a store of value. That means it should maintain it’s purchasing power for long periods of time. This is where our Euro and in fact all unbacked paper currencies fail badly. All of them lose their purchasing power rapidly and none come anyway close to being a store of value. The best way to follow this is to compare it to the price of gold. On 01-01-2000 one ounce of gold cost 286 Euro. Today it costs around 1300 which shows how much purchasing power our money has lost in the twelve years. It is not a case of gold rising in value it is more a case of our money constantly losing value. In the case of the British pound it is actually much worse. 100 years ago an ounce of gold cost £4. Today it is around £1000 which shows the massive loss of purchasing power in the pound over the last 100 years. Why not give people a choice in the type of money they would like to use. Let money become a “tool” which people can use to preserve their purchasing power and not just a medium of control which the corrupt banking system has over us. People need to be given a choice of which type of money they can use. Has this easily debased money brought prosperity and full employment to our modern economies? Unfortunately not and things are only going to get worse as the currency debasement starts to hit top gear to bail out all these insolvent banks who are never allowed to fail. Until good money is allowed to circulate side by side with this fatally flawed paper system people have to protect their savings by moving a significant portion out of the insolvent banking system and into real money which maintains it’s purchasing power. Traditionally the best forms of such money have been physical gold and silver stored outside of the corrupt, insolvent banking system.

    • bonbon

      Which “people” exactly? As far as I see it the “people” now have a tool and are using it. Do you mean we are these “people”?

      Bankers are people too, just as moral as we the people.

      Glass-Steagall cuts through this fog quite nicely. It requires national intervention to pave the way for national banking of the people, for the people, by the people as Lincoln said.

      • Tony Brogan

        Bon bon
        Sometimes you are incomprehensible. G-S has nothing to do with cooldudes subject.
        As for bankers being just as moral as the people then you mean a different class of banker than say Jamie Dimon or Corsone. Unless you imply that all people are as corrupt as bankers?

        • bonbon

          Yes bankers are people too. Just like any others. As the cops will tell you they meet all kings.

          Glass-Steagall did occur after Pecora put certain famous people through the press wringer, but it was a moral act for the common good, not blaming any particular people.

          The “give people a choice”, you see is Darwinian, nothing to do with General Welfare.

          Glass-Steagall gives the people a choice – commercial or high risk banking. If the latter, no bailouts.

          So the General Welfare is a choice, a moral act.

          • Tony Brogan

            you lost me with the reference to darwinian.
            Why the issue with ‘give people a choice”
            are you suggesting there should be no choice.
            your logic escapes me

        • bonbon

          Come on, look at history – the US civil war was about states rights against the General Welfare. The states wanted a choice, and Lincoln showed the world what general welfare really means.

          Right now the bankers have a choice of any part of our wealth they fancy. So why are you worried?

  22. cooldude

    By people I mean the ordinary citizens who are losing the purchasing power of their money through constant and deliberate debasement. You can be quite sure that the elite bankers are stocking up on precious metals because they have designed this monetary system and know it leads to inflation and constant debasement of money. I don’t give a shit about these people what I am trying to do is to show how the “tool” that we use for money does not have the characteristics necessary to be good money and that this is a deliberate policy. Our monetary system is designed to rob savers through inflation and rob the rest of us through the asset bubbles it constantly throws up. As I have said before I have no problems whatsoever with the reintroduction of Glass-Steagall. What I would also like to see is failed financial companies being allowed to fail and not being propped up at the expense of the tax payer. The reason this is not happening is because the elite bankers are dictating policy to the politicians. All this nonsense has to stop and failed businesses have to be allowed to fail and citizens have to be given a choice in the form of money they can use to maintain their purchasing power.

    • bonbon

      That’w what Glass-Steagall is all about – letting the doomed banking sectors fail. Keeping a commercial banking system, free of this disease, is absolutely necessary.
      All plans that do not start with banking separation are doomed to fail because of the existing bailouts, and derivative IOU’s. So first banking separation.

      Legitimate debt because of zero growth in 40 years, must be made up. All the projects blocked since the 1960′s now get the go ahead. Remember the very same banksters who bubbled, blocked all real development.

      • Tony Brogan

        The “doomed” banking sector into derivitives are going to have to fail anyway. glass-steagall may prevent commercial banks from being “investment” banks but I do not see how it can reverse what has already occured. Doomed is doomed!

  23. Philip

    I think we need to be very careful about blaming nation states or their institutions for the current financial wreakage. The German did not cause the mess and neither did the Spaniards…and guess what, money will only ever be a temporary stopgap.

    I am with the idea of using money as a tool to direct economies – but only very temporarily. Adrenalin is just for that fight or flight burst to get out of trouble. The snag is, we are only running on adrenalin and nothing else for the last 20 od years and that causes burnout and death.

    Keynsian economics and indeed many of the other forms set the guidelines. They cannot make anything better of themselves. Economic solutions are a treatment methodology. It is not a cure in itself. The patient – i.e. You and I and the rest of humanity needs to do the rest. unfortunately, few see it that way and I suspect the Germans and the rest of Europe being on opposite sides about how to manage a treatment which really has not being doing any good is basically getting everyone waylaid off the the main point – i.e. how do we create a sustainable economy for the longer term.

    Sustainability is about how my kids, the youngsters we see being more increasingly unemployed are having to hunt for higher points and higher degrees and higher this that and the other for fewer opportunities to basically flip burgers for a living…I see this in the US, UK and it is happening all over the place and with all this wonderful education, I see an even more massive dearth of true innovation to dig us out of the pooh. Money will not fix this. It might stimulate something but really all we see is an engine being spun up by a starter and no fuel to really keep it going. Sorry for all the dumb clichés,

    I would ask folks to stop fussing about banks, money, GDP and that stuff. This has become serious. This is about idle young hands, unemployed “highly educated”, pension timebombs, lower quality of basics such as food and water and worst of all, a complete lack of imagination and a concern and general mindfulness for eachother.

    We need to change. No organisation or set of laws or economic treatments will save us. There is no where else to run to or conquer.

    • bonbon

      We faced this before. And not only us. We have learned over generations what economics is about. It is about the survival of the human species.

      So it is time to be serious, face up to the swindle perpetrated by all forms of Empire on us again. The you will understand Arthur Griffith quite well.
      I post above the way to deal with this and get a real education.

      • joe hack

        I am in favour of Star Trek economics – no money, science and knowledge, don’t know if they have Blogs sites or economists on Star Trek?

        • bonbon

          Arthur Griffith on Star Trek? He was not a football player either. And did not appear in the Eurovision.

          Turn off the TV!

          • joe hack

            Arthur Griffith what would he do with the Euro?
            At the moment I am reading Noam Chomskys Hegemony or Survival

          • bonbon

            I don’t need to say what Griffith would do with the Euro.
            First burn the bondholders.

    • Phillip I totally agree with your observations and points. I too believe that we have already passed the critical point and money can no longer rescue us.

      This is a train-crash and it’s happening.

      The people who control the network, train, points and brakes regard the likes of you and I as unimportant, expendable unworthy of respect or indeed insane.

      So the choices are;

      1. Brace for the crash and see where we land even though we could be fatally injured? (Consequences of the Yes Vote)
      2. Try to persuade the Engineers to change direction when in fact they are actually handsomely rewarded for staying on the current track.
      3. Forcefully overcome the Engineers and stop the train. This can only be achieved if we cobble together an alternative crew. But alas there are currently no credible volunteers!
      4. Jump from the train. Become feral!

      And the consequences;

      No.4 means no more degrees and no more pensions but maybe or maybe not cleaner water. Not so sure about the mindfulness for each other neither.

      No.3 might work if we can put together a team that first says what it will do and secondly do as it says? Easy huh?

      No. 2 Is a complete waste of time! (Reference the entire history of our species)

      No. 1 is where my gut says we’re going.

      Please feel free to enter my analogy!
      It would make my day if one of you could completely invalidate it. Please!

      I visited Aushwitz/Birkenau last November.
      It’s the end of the railway line you know?
      And as I stood with my back to the buffers to my left and right once stood Gaskamer/Crematorium 2 and 3.
      And as my eye ran along that rail and out of the camp through that infamous and evil arch, I couldn’t help think how this railway line is physically linked to all of the beautiful and peaceful places throughout Europe. And conversely how all those peaceful places are just a train ride away from this?

      • Philip

        I have another option 5? and I believe it should be incorporated into the constitution. Everyone under the age of 55 who is a professional and employed should spend 2 solid weeks every year looking after old folks and disabled – unpaid and no tax relief. In fact it should be mandatory requirement for anyone holding an accreditation of any sort – be it a degree, holder of office, certification etc. If you earn over 150K, you have to do 4 weeks.

        That’ll solve your carer issue overnight.

        Education: Anyone with a degree and is a practising professional shall ensure they provide direct personal apprenticeship involvement for propective candidates who live outside their area and are not in any way related to same for 2 weeks every year. That’ll fix waffling and spark imaginations overnight.

        Oh, and all of this is to allow you retain accreditations.

        The remaining problems will melt away. The constitution of the government, the decisions people make and the general level of mindfulness will come to the fore pretty fast.

        One more little rule…any attempt to outsource any of the above activities for reasons beyond ill-health is a criminal offence – somewhere up there near manslaughter.

        • paddythepig

          What about those who are unemployed? Why do you exclude them from your carer’s scheme? They have more free time.

          What’s the definition of ‘professional’? I don’t see why you would put this obligation on one group of people, and for some reason, completely absolve other groups.

        • Colin

          I’ve a better suggestion.

          Everyone learns how to be responsible. Everyone learns to care for themselves. Those who don’t then suffer the consequences.

          So, you have more children than you can afford, tough, no one asked you to have more children than you can afford, so don’t ask taxpayers to pay for your family. So you neglect your health, then don’t expect taxpayers to pay for expensive hospital services which you and you ilk are so fond of clogging up. So you neglect your education, tough, don’t moan at others who are disciplined and do well in their careers. So you eat too much, tough, learn to eat less, don’t blame McDonalds for making you fat. So you use your car too much which is expensive to run, tough, move somewhere nearer to where you need to be, don’t expect others to fund your lifestyle.

          • Dorothy Jones

            I agree

          • joe hack

            Ah! but Colin,
            if you were a single young rich dude earning allot of dosh and you suddenly become ill and can’t work but the next door neighbours 12 kids who work in the laundry, kitchen of a hospital or clean the streets for you and pay minimum taxes including the universal social fund to pay back banker debts and just enough to keep you in a state nursing home for fifty years should they stop PRSI and leave you dying in the streets?

            Remember one day you will be old and the babies of today will be paying taxes to keep society running for your befit. What society do you want to live?

          • Colin

            Joe hack,

            No one suddenly becomes ill. Sorry to burst your liberal lefty balloon. Lifestyle plays a huge part. Wake up and smell the coffee (and drink it in moderation), and get some exercise, eat good quality food, don’t take drugs except if they are prescribed, drink in moderation (if you must) and give up smoking if you smoke.

            Nothing in excess. Know thyself.

          • bonbon

            Ah now medicine is purely a matter of being frugal. Wow, the last time I heard that was from Prince Charles (who’s entire alternative medicine chain went belly up).

            Obama cut health costs to bail out Wall Street, said he would not get his mother a new hip because she was 84. Anyone notice this interview? Old people have less value!
            1939 Aktion T4 cutting health costs for chronically ill for ” the effort” got them hanged at Nürnberg.

            So now tell us more about medicine please?

          • Colin


            ‘Prevention is better than cure’ – That is the best advice to take, and you don’t need to be a medical professional to share this golden nugget.

            I don’t suppose you’ve ever heard of that.

        • bonbon

          I expect any moment to hear RAD, Reichsarbeitdienst, the idea of Hitler’s Economics Minister Hjalmar Schacht in the 1930′s which led to the labor camps.

          After all Germany is mentioned here a lot, DMcW seems particularly interested. Now imagine what your “smashing” ideas sound like in Germany? Have you any idea?

          I thought Tigers had learned something being so European and all that.

          It would be much better to reinstate the army, with a heavy engineering and logistics focus, to handle the huge infrastructure projects waiting on the table. And forbid serving foreign officers in British Imperial wars abroad. Germany just recently stopped mandatory service, and the Uni’s are flooded to overcapacity, just as education cuts kick in. Merkel again.

          • joe hack

            I enjoy logical intelligent debate
            Unintended, a nerve may have been touched?

            The illness in the banking system is now been paid for by likes of those on minimum wage-welfare checks for bankers.

          • bonbon

            The blowout will lead to genocide unless action is taken immediately. That being Glass-Steagall.

            Those emminent figures refusing to act on this will be blamed.

          • joe hack


            I switched on the TV last night and there was a documentary called Meltdown on Al Jazeera the second part I think.

            Paulson was mention quite a bit referring to him allowing lehman brothers to collapse to outrage from Europe.

            Lagarde was interviewed along with Flaherty, Paulson was in a panic he got physically sick at meetings retching and was offered a trashcan his skin when blotchy true out this period. he then went on the write the biggest single welfare check in history to AIG, Markel went ballistic at him along most of the Euro Zone finance ministers in a private meetings later and not long after Markel did the same for one of the German banks, German Morals? They showed image Merkel and Sarkozy in a bitter finger waging type argument, it appeared they did not see the camera.

            Paulsen tried to get legislation trough in a ten page document he was told that congress needed months to get a toilet flushed and documents of this nature were usually 750 pages long he was voted down.

            The USA government were shown to be not it control of their finances and had no control. Henry Paulson only got AIG to agree to the take the check because of bluff AIG were in fact in control but did not know it at this meeting???

          • bonbon

            Paulson of Bush era. Geithner went further. The bailout is suicidally fatal, and it is very late now. The entire AIG story was only the beginning.

            Anyway the way is clear – we must plit them up, and below I giver numbers – it is only 7 large monsters that need treatment. The vast majority of banks are not a problem.

          • Tony Brogan

            Paulson had protection built in to the bailout of AIG etc.
            He was inviolate, untouchable.
            he set the precedent for the ESM. nobody can be sued there either but they can sue a country for non compliance. Indemnified. Nice if you can get such a free hand.

  24. bonbon

    Here is some of Friedrich List’s work on Political Economics.


    Compare this to the discredited standard fare and wonder not how we got into this mess.

  25. Dorothy Jones

    From above:
    Many Germans are philosophically in the first camp. Rule-breaking contradicts their moral code. However, the rest of Europe – and those in command at the ECB – see the rules as fungible.

    From Wiki:
    Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution, such as crude oil, shares in a company, bonds, precious metals or currencies.

    It refers only to the equivalence of each unit of a commodity with other units of the same commodity. Fungibility does not describe or relate to any exchange of one commodity for some other, different commodity.

    As an example: if Alice lends Bob a $10 bill, she does not care if she is repaid with the same $10 bill, two $5 bills, a $5 bill and five $1 bills or bunch of coins that total $10 as currency is fungible. However, if Bob borrows Alice’s car she will most likely be upset if Bob returns a different vehicle–even a vehicle that is the same make and model–as automobiles are not fungible. Appreciate, however, that gasoline is fungible and though Alice may have a preference for a particular brand and grade of gasoline, her primary concern is that the level of fuel be the same (or more) as it was when she lent the vehicle to Bob.

    From Leo Englisch-Deutsch [Law]
    Fungible: Vertretbar;Ersetzbar

    • bonbon

      A complicated way to explain what Max Keiser nicely put: The law does not apply to banksters. If it gets in the way they change it (or buy it).

      No dictionary needed.

    • bonbon

      And since Glass-Steagall was repealed in 1999 banksters have the Dodd-Frank and Volcker Rule, i.e. a law to break rules!
      Wonderful for them!
      They made rule breaking legal.

      Time to give them a taste of Glass-Steagall don’t you think?

      • Dorothy Jones

        Rules do not and never made a whit of a difference. J Schwartz’s [now quaintly ancient] Market Wizards 1 and 2 and the plethora of publications on Lehmann’s tell the story….same stuff….different year.

        • joe hack

          Thanks Dorothy, I thought David was taking about a dolphin called Fungi and how the trawler men of dingle were able to migrate from fishing to tourism.

          Fungibility: the ability to make money out fungi.

          They still make money out of sea creatures, they still get there $10

        • bonbon

          Glass-Steagall did make a difference and will again. The pirates fear this like no other. See Bloomberg article below.

  26. wills


    Agree with most of your comments from last article and this one too.

    The banker ends up owning all, like monopoly.

    But only if the game is a usury system of debt money.

    Now there are different money systems available to use.

    Usury is one which is radioactive.

    Whomever uses it will be contaminated.

    • joe hack

      I believe greed is inherent within the human condition and rules try to fix this;

      Some Germans are demanding rules now (ESM) but only because they are on the up side of a cycle and the timing suits them (what might be called their morals) but they are quite happy to break them when it suits them.
      There is no morality in allowing the destruction of others

      • wills


        I’ve more faith in human condition.

        Worrying about babysitting other folk is just do-gooder crap.

        Live and let live.

      • C21living

        So Joe, it’s the German’s fault?

        Thinking about it, they’re not going to give €400bn to Spanish banks.

        Spain will fall out of the EZ along with Greece, maybe taking Portugal too.

        Italy will be a massive struggle to keep in.

        Ireland will probably hang in there, since we voted yes.

        German will emerge the centre of a massive United States of Europe and we’ll be part of the core.

        The majority in Ireland will never vote to leave the EZ. Never in a million years!

        • bonbon

          There we go again, British Faschist Sir Oswald Mosley’s USE, from Churchill.

          Funny how no new ideas appear from bankers?

          Why is FG playing along with Mosley I wonder? Blueshirts and Black (and Tans) maybe?

          • Tony Brogan

            There we go again, British Faschist Sir Oswald Mosley’s USE, from Churchill.

            What does this mean?

          • bonbon

            He coined the United States of Europe, following Churchill’s first use of the term a few months before.
            People are promoting Mosley’s USE – homework in this case is essential.

          • Tony Brogan

            Thanks for the USU explanation

        • joe hack

          Hi C21living,

          Don’ mention THE WAR!

          So Joe, it’s the German’s fault? No;

          It is not the Germans fault that Ireland is in the mess we are in that is the fault of some of the Irish and their polices.

          But that is not the issue now we have stupidly bailed out the Irish banks to help the euro and the Germans are laughing all the way to their banks it is the hypocritical policies of the Germans over the euro and their so called morals that is questionable they are on a high now and are not been supportive.

          I do agree with them that if the Euro remains in place that there should be rules in place across the banking industry and the euro banks should be open to scrutiny there is a trust issue about the worth of each euro zone countries banking system but now is not the time. It should have been when we entered the EURO but who would allowed that then? Certainly not the Germans at that time there were not where they are today. But I do not want to be in the Euro never did or for that matter the EU we are to dependent on it and are not capable of looking after ourselves not healthy for a society there is big decisions to be made and in this country we don’ even have a debate on where we want to be (as Dragi said) it poetics now, the English continually debate this we have no confidences in ourselves. I am awaiting David to bring this issue up which I expect he will but it is probably more important in the narrow view of ourselves that we debate this a length at the moment and for five years now we are jumping from pillar to a post reacting to crisis like firemen.

          just for the record I have work with Germans here recently they were here because then could not find work Germany so 15 of them came here 2001-2005 their work rate was about the same as the Irish some worse some better.

          Immigrants tend to work harder that was not evident with most of the Germans. The Hungarians that I worked did appear to work harder but they did not interact I suspected that was because they were been paid less and were kept away and/or they needed the money more the polish possibly the same interestedly one the Hungarians was call Attila
          They Germans happened to be in digs near me and after work they would be drinking until closing there was nothing that distinguished them from the Irish worker other than their accents.

          I have worked with Germans on lots of other occasions over the last 32 years or more and always had great fun with them in the eighties when the Germans came over they were here to commission and were impressed by the Irishmen’s craftsmanship.

          At that time we used mostly English or German equipment some Italian equipment too due the fact we used the same electrical system now Greek and Spanish equipment is used due to technology changes and price the euro and so on so I have worked with Spanish and Greeks too.

          Don’t mention the war, it never happen?

          • C21living


            Many say the Irish YES to the fiscal compact was out of fear of falling out of the EZ.

            Possibly. But even if it is just fear, or mostly fear, nonetheless the Irish would never vote to leave the EZ. We are following the path of austerity and bailing out banks, and we are going to stick with it for the foreseeable future, since we’ve only recently voted YES to this direction.

            The goal is to end up with a budget balanced, a solid banking system and rules and regulations, checks and balances in place to make sure it never happens again.

            Until very recently Mick Wallace was a kind of folk hero, a loveable rogue who encouraged his countrymen to be patriotic and don’t pay the household charge, vote NO to the fiscal compact.

            How the shoe is on the other foot now! He’s getting some kicking.

            Expect the Croke Park agreement to be scrapped soon as the austerity bites into the public sector. Expect the government to go after the household tax and septic tank rogues like they were Al Qaeda.

            Now I’m not asking you to agree with this, but this is the mainstream view in Ireland. This is the way the country is going.

            We are going to give it everything we’ve got to stay in the EZ.

          • joe hack

            Yes they are the facts as they stand, but;

            The euro will not last, we reluctantly voted for the ESM we reluctantly voted for Lisbon and Maastricht.

            The Spanish at the moment are not willing to take what we were forced to take, they clearly don’t want further integration at the moment they certainly don’t want us or the Germans telling them how to manage there country .

            The debate I refer to is further integration into Europe eventually leading to single tax and governances this is the discourse we should be having now in Ireland but we won’t we will be ask to vote on something we have not debated and the long term consequences will not be heard in yes / no vote .

            I think Draghi point was- the politicians need to decide where they want to be in X number of years.
            I don’t think culturally that EU countries are ready for this.
            When a country like German and Finland who are doing well today don’t want to spread the wealth even though it is the poorer countries who buy their goods, the euro cant last like this but some argue including Germans that further integration would fix this I agree it may but we are far from ready for that and I believe Ireland would not do well in such a scenario we would be the poorer for it similar to the likes of New Orleans in the USA unable to look after ourselves and we would become lazy dependents in the long term it would be not healty.

            Long term some are suggesting a global central bank with continentally sub central bank but at the moment we can’t even make one working system in Europe
            The idealist in me would want to see full integration

            Why people voted for Wallace when he had no policies and why people voted for Lowery after he was fist found out and went on to top the poll show a real nativity in some of the Irish reasons for voting. A good argument for been run by outsider or are good augment for education of a citizens responsibility for their actions, the French have such a system.

            A little of Draghi press conference below;

            But when you talk to governments and, in general, to the citizens of Europe, you hear that this is not enough and that they do not see the benefits of this. Perhaps in some cases it is too early to see the benefits, but I also think that the full benefits could be achieved if we were to clarify what the euro is going to be in five or ten years’ time — this is where I think the efforts of the leaders are oriented. In the next European Council we all expect a clarification of this vision. Perhaps we use the word too much, but when we say “vision” we basically have in mind the path towards an objective with all the conditions that have to be satisfied in order to achieve this objective. If you remember, the road to the euro was very much like that. You probably were not born yet, but, unfortunately I remember that and Vítor does too. In 1988, after several failures in the process to link the exchange rates and to try to coordinate monetary movements, the first step was made towards having a common currency.


  27. StephenKenny

    The last five years summed up rather well by Mike Shedlock:

    “China wants to stimulate growth but it has already exhausted every economically viable infrastructure project. All that is left is malinvestment opportunities.”

    • bonbon

      I’m afraid one has not been listening. China’s problem is the transatlantic collapse. Even massive Russian Siberian cooperation will not be enough to make up for this.

      All that is left is Glass-Steagall now for US and Europe immediately, then we will see growth like never before.

      Such “summing” up is incompetent.

  28. dwalsh

    @ cooldude

    The currency is merely a utility…and need not be a physical store of value.

    This notion of commodity money is not the solution to our global monetary problem; although it may be a good means to mitigate personal loss due to the corruption of the present monetary system.

    It is an error, I believe, to confuse the two issues; in the sense of thinking that the personal solution in times of financial collapse, is also the global solution to the problem of a stable and equitable monetary system.

    The reason our currencies devalue steadily is because of private credit creation by the banking system, including the privately controlled central banks.

    Every time credit/debt is created the money supply increases and the currency devalues.

    Our governments have given away the franchise to create money and control the economy to private corporations. Add to this the unregulated gambling and outright fraud of the financial sector and we have financial Armageddon and monetary destruction.

    The power to create the money supply belongs by right to the people; and thus it is the prerogative of the government. It should never be given to private corporations.

    Money and currency should be sovereign…not private.

    Yes…this means in order to solve the monetary problem we must solve the political and democratic problem.

    The reserve currency of the world is a private currency which is guaranteed by the wealth and future earnings of the American people. If ordinary American people realised that, there would be revolution in the morning…as Henry Ford noted.

    • cooldude

      As usual DWalsh I agree with most of your points. The creation of the Federal Reserve Bank in 1913 was a sad day both in American history and in the history of our civilization. As you say this is a privately owned bank and the main shareholders are the elite banking families such as the Rothschilds, the Rockerfellers, the Warburgs etc. Woodrow Wilson later described the setting up of this bank as the greatest mistake of his career but it was too late then for remorse. He, and other leading politicians, had been bribed into transferring control of the American monetary system into the hands of these ruthless criminals. Now we have a global system of central banks, all private institutions, under the umbrella of the Bank of International Settlements, also a private institution. The only real interest of these organizations is to protect the interests of these banking families who own the 147 global corporations who control most industries. They use the IMF and the World Bank to enforce their agenda on a global basis. John Perkins has explained very clearly how this system works on a practical level.
      The big issue is how do we break this stranglehold these bankers have over our civilization? It is my view that one of the best ways to do this is to allow competition in the type of money people use. They have the franchise to create most of the modern currencies at practically zero cost to themselves and by creating too much debt they come in and clean up the assets of real value which was their goal all along. An example of this will be our forestry industry which they seem to have their eye on. I feel that by allowing different types of money to be legal tender this will take away a lot of their power and will also give people a chance to protect themselves from the incessant debasement of purchasing power that the bankers money always leads to. I believe precious metals as legal tender are like kryptonite to these guys as they take away the extraordinary power they have over us. The one thing these guys HATE is competition and giving people a real choice in the type of money they use. I include any alternative type of money system such as bitcoin or the Kilkenny system not just metal based ones. In my view this is the best way to take back ownership of our monetary system from these criminals.

      • bonbon

        No problem to break the banks, they are mainl 6 TBTF’s – split them. FDR showed the way.

        And the FED was prepared by Teddy Roosevelt who gave Aldrich the green light. Based on British banking. In other words Teddy broke the Treasury, the Credit Clause of the Constitution. Today we have Bubble Bernanke…

        And Wilson, Woodrow, brought the KKK into the White House (remember the recruiting film?) Confederacy, which had an embassy in London (still exists apparently).

        Teddy only got the job because McKinley was assassinated. This paved the way for WWI.

        Now we have Blair running Obama’s campaign as a come-back tralala.

      • bonbon

        Each nation will soon have its own sovereign currency again. A fixed exchange rate (Bretton Woods, FDR again) existed until Nixon broke it in 1971. We put that in place immediately. And governments of the people, for the people, by the people will review regularly rates.

        This is national banking in action.

        • Tony Brogan

          Fixed exchange rates will not work. That is essentially what you have with the Euro. Everyone fixed to each other.
          Exchange rates must float one against the other and all against gold the only constant. The standard for settlement one currency to another.
          Nixon did not break Bretton Woods. He just recognized that it was already bust and abandoned it.
          FDR solution was wrong.

          • bonbon

            Nixon signed an order. Thats clear enough for me.
            The Euro is 1 currency, so no national exchange rates – hence the mess.

            Bretton Woods, no floating currencies, and let the banksters fend for themselves, while bankers serve the Common Good.

            That’s why we are so upset at FG/LP – they have refuse their sworn role to our utter disgust and revulsion we see everywhere.

          • bonbon

            I.e. Nixon had a choice. He caved in, was no FDR. But what to expect from McCarthy’s sidekick!

    • Realist

      > The reason our currencies devalue steadily is
      > because of private credit creation by the banking
      > system, including the privately controlled central
      > banks.

      You need to live in outer space to say they are private.
      They have trillions of collateral bonds in their possession either bought directly or given by the banks.
      I thought bonds are payments to politicians and their smart public establishments.

    • Realist

      > Money and currency should be sovereign…not private.

      You put everything upside down again.
      Money is sovereign already.
      Do you pay your taxes in anything else than the sovereign money ? May I pay it in something else than euro ?
      Who pays salaries to your Irish central bankers ?
      Who is buying bonds (sponsoring politicians) or using them as collateral ?

      It is the symbiosis of government and central banking with fractional-reserve banking that is making the havoc in the world, while blaming everything on private.
      Anyway, not too much private banking left in Ireland, is not it :) Most banks are now public so to say we already have bonbon’s national banking system, excellent, as cannot wait to be more happy.

  29. bonbon

    Panicked U.S. Financial Circles Find Themselves Discussing Glass Steagall

    June 7, 2012 (LPAC)–Bloomberg TV on June 5th interviewed two supporters of restoring the Glass Steagall principle, former Treasury TARP Inspector General Neil Barofsky and {Bail Out Nation} author Barry Ritholz, on the great issue: how to prevent another financial meltdown. After both had endorsed the Glass-Steagall principle, their Bloomberg host asked them to respond to the widely-cited Bloomberg Editor’s View of May 23rd, that returning to the days of the Glass-Steagall Act, “is not likely to work. The financial system has evolved in some irreversible ways.” Ritholtz exploded, that the financial system didn’t “evolve;” $300 million dollars and 20 years of relentless lobbying by the banks forced the repeal of Glass-Steagall upon society. Barofsky stated that Glass-Steagall is one of a series of dramatic steps that are “essential” to break up the big banks, and end the bailouts. JPMorgan’s situation and Bloomberg Market magazine’s expose of how Citibank has been engaging in mortgage fraud right into 2012, shows that nothing has changed since the last meltdown.

    The next day, CBS News’s Moneywatch posted a commentary by Larry Swedroe, Director of Research for the U.S. investment firm, BAM Advisor Alliance, on how to end the threat of the “Too Big to Fail” banks, without putting the taxpayer at risk for bailing them out. Arguing that regulation isn’t enough, he proposes setting required capital reserves according to the size of the bank (with a swipe stuck in at that “2,300-page Dodd-Frank bill that no one can even read, let alone implement.”) Swedoe then adds: “With that said, restoring the Glass-Steagall Act should be a priority. Again, the price for being able to offer FDIC-insured deposits is that you will be limited in the types of risks you take. If you don’t like those limitations, don’t take consumer deposits.”

  30. bonbon

    Which Euro Break-up Will It Be: Destructive Chaos? Or Glass Steagall?

    June 7, 2012 (LPAC)–European bailout schemes are falling apart before they even are set to paper. The Fitch rating service blew out the latest one for Spain, with its announcement on Thursday that they had lowered Spain’s sovereign credit rating by three notches, to BBB, because of the cost of a Spanish bank rescue which they estimated at 80 to 100 billion euros. And 100 billion euros is peanuts compared to the trillion-plus in bad Spanish debt! Each proposed bailout more un-implementable than the next, the details of each scheme no longer matter.

    Obituaries for the Euro proliferated on Thursday. The {Wall Street Journal} reported China Investment Corp (CIC) chairman Lou Jiwei as saying that the giant Chinese investment fund would not buy any Eurobonds (should they ever be issued). “There is a risk that the euro zone may fall apart and that risk is rising.”

    Two voices from London pronounced the project dead. Former UK Finance Minister (1990-1993) Norman Lamont told Reuters that European leaders must throw off the burden of the euro if they want their economies to grow. The London {Daily Telegraph}’s Ambrose Evans Pritchard pronounced in a “webchat” that only a European-wide Treasury and debt union which could “print, print, print and print” money could save the euro, but “the historic nation states of Europe” are not prepared to “commit suicide.” Neither Germany, nor, in the end, would France do so. Angela Merkel “is massively constrained by the German constitutional court. It ruled in September that the budget powers of the Bundestag cannot be alienated to EU bodies. Fiskalunion would violate the Basic Law,” Pritchard wrote. He suggested that the least painful way to break the euro, is for Germany to leave, and the southern states to keep the euro.

    That would be no less chaotic than the other. German Bueso party chairwoman Helga Zepp-Larouche elaborates the only possible grounds for a solution, in her introduction to {EIR}’s just released Special Report, “There Is Life After the Euro!”:

    A solution “is absolutely impossible within our current system… Re-attaining national sovereignty is the absolute prerequisite for both economic recovery and the preservation of peace…. Once we have psychologically digested the fact that today’s trans Atlantic monetary system is beyond salvation… only then will our minds be equipped to turn to constructive solutions.” Those solutions require implementing a two-tier banking system in the exact tradition of the Glass-Steagall standard established by Franklin D. Roosevelt in 1933, cancelling the EU treaties, from Maastricht to Lisbon, re-establishing national sovereignty over monetary and economic policy, with national currencies, fixed exchange rates, and an economic reconstruction program for Southern Europe, the Mediterranean region, and the African continent.

  31. Shadows of The Past

    The recent eclipse of the planet Venus with the Sun has imbued many tears and emotions .

    Today a very dense water blob crosses the isles and leaves its mark subsequent to the recent earth movements off the coast of Mayo and on land in Italy .

    Venus has been venerated in Greece in another time and today the Greek born Consort to the Queen lies in wait unable to join the celebrations of the jubilee .

    More tears thrown on Greek TV live showing clashes of more emotions prior to the imminent break up of that nation.

    Only ten more days for a political heave and the cutting of the Greek Euro umbilical chord and the re creation of the Drac Ma in a new maternity ward.

  32. gizzy

    The laws of the western economies are written to suit the Banks. Though the Banks have every sophisticated risk management tool and management information system to hand they are exonerated from bad lending decisions. The law merely takes the the simple ( i would say stupidly simple ) view that the borrower signed for the loan so is then by law the culpable party.

    In almost all cases the Bank is the dominant player in the relationship with more market knowledge,sector knowledge etc than the client. But the system never holds them culpable for bad lending.

    Only when risk sharing is introduced and the law looks at cases on the basis of judging the lending decision. If the loan deemed to be poor lending on behalf of the Bank and they have to carry part of the loss.

    That together with Glass Stegall will reshape the Banking Industry.

    But at the moment they can take what ever risks they want pursue the borrower as the only culpable party and when all that fails get a tax payer funded bailout. It is the best business in the world , no doubt. And i worked in Banking for twenty years.


  33. Tony Brogan

    Here is a very good write up on the choices of EU countries,UK and USA. Based on what I read here I give the Euro 6 months. Germany will absorb as much as they can before allowing the collapse. They do not want to be seen as the problem who would not help out. We did what we could thay wil;l say as they step aside and most europeans revert to domestic currencies and inflate their debts away and or default.
    Hyperinflationary depression is baked in the cake. QU to infinity from all sources.



    Ireland’s Thieving Banks have Bankrupted Ireland

    “Ireland was just frightened into voting in favour of austerity for continuing euro-zone bailout cash. The facts are that Ireland’s banks have bankrupted Ireland and Ireland remains PERMANENTLY reliant on Euro-zone bailout funds to keep it’s economy just flat-lining. The Irish people are in a state of denial, they just cannot comprehend the fact that Ireland is bankrupt. Until the Irish people realise this fact then Ireland will continue to suffer indefinitely as periodically it’s bankrupt banks will declare MORE hidden losses and request MORE bailouts of a country that is broke and Ireland will then have to agree to even more austerity if it is to be in receipt of its NEXT German bailout on top if the Euro 67 billion to date.”

  34. StephenKenny

    Rumours of a new US law regarding US firms in low tax nations.


  35. Twiggy Recall ( made in China )

    Twiggy Chapter of David’s book came to mind this week . As we know Twiggy went to Laurel Hill Secondary School, Limerick City .

    The sister boarding school of that city school in Bruff Co. Limerick is now closing this term . Thus end of a long chapter and old tradition for country girls upbringing.

    Also Limerick City has failed for the sixth year to produce a Rose to be represented in the Rose of Tralee .

    Now come to think about it , all bankers originally came from Kerry .And Limerick is ‘Controlled’ by Kerry People …..and those are facts.

    • Colin

      Dem kerry folk are taking advantage of St Munchin’s curse on the people of Limerick.

      In London, tis a Limerickman running the famous Kerry civil engineering contractor.

      Mayo folk tend to run subcontracting here in London.

  36. joe hack

    By Joseph Campbell
    “Behind a web of bottles, bales,
    Tobacco, sugar, coffin nails
    The gombeen like a spider sits,
    Surfeited; and, for all his wits,
    As meagre as the tally-board
    On which his usuries are scored.”

    Football Economics the Mick Wallace way

    The German news media may have some fun with the Mick Wallace story????

  37. coldblow


    I see that you will be interviewing/ in conversation with John Waters at the Dalkey Book Fair on 15 June (I think) about his new book “Was It For This etc”. Should be interesting, but it’s too far for me to come up for. Should be interesting: he always followed the political toings and froings in a close way, like many out in the country do. He reckons people already knew the game was up by the time Cowen got the Taoiseach job – at a gut level. This is probably earlier than is conventionally held. I twigged it this time five years ago when I read the Perfect Storm chapter of the Generation Game.

    Here’s the stanza from Yeats that the title alludes to:

    Was it for this grey geezers bled
    The country and it future white?
    For this that all that sh*te was said?
    For this that Sean Fitzp*trick l**d?
    I think that’s how it goes!

    About the Germans, morality etc, I mentioned here before how Caesar (Gallic Wars 4 – the best-known book of the series) described their disinclination to import anything – they didn’t mind selling stuff but had little need for what their neighbours had to offer. The Celts on the other hand, according to JC, were mad for horses and would spend any amount on them, while the Germans were content to keep their old nags until they dropped dead from over-work (Schwabian housewives?). They had no quibbles about raiding their Celtic neighbours’ lands, or driving them out of them so they could settle in them. JC, according to himself, carried out a punitive expedition into their homeland (the Suebi – Schwabians?) to teach them a lesson. This involved killing 10s of thousands of them. The Celts were mad for gossip, would force traders to tell them all they knew, even if that wsa just lies to keep them happy. JC saw them as really slippery and unreliable.

    • Tony Brogan

      The celts were also the most formidable fighters JC met and they drove him out of Briton. described as fearless, unafraid to die.
      They also liked gold and wore it as a status symbol and a portable source of wealth.Makes good money.

      • bonbon

        The Keltoi, as the Greeks saw them – have a look at the Dying Celt, a famous work. Ionians just could not understand why they went into battle naked (except for a little gold money). No match for Hoplites.

        Right now those who voted ESM should urgently look at that statue.

        • Tony Brogan

          There is a body of thought that suggests the acient greeks were in fact celts themselves. also the first 10 dynisties in Egypt.
          Some say to Goidelic celts came out of egypt the same time as the Iraelites. Wandered to ancient Sythia and thence across Asia Minor and Europe (leaving the name Galatia in place) and ending in Iberia ans launching an invasion of Island by the sons of Mil Espaine(Milesius) and Scota who were the Sons of Scotia giving the name Scots to the people of Ireland as recorded by Roman historians.
          The semi autominous region of galatia in NW Spain has a statue of King Breoghan near the tower of Brigantia, (A Coruna). Breoghan was the grandfather of Milesias. The Galatian national anthem is an Ode to the land of Breoghan.

          This region was never really conquered by Rome or the Arabs but was over run in the early middle ages by Germanic people.

          Hoplites were Greek troops and not Roman that fought in a phalanx. Is there much evidence that the Greeks battled celts directly?

          Not much to do with the Morality of Money but an interlude following your comment.

          An Irish tv program a couple of years back said after documenting research that the closest genetic relatives to the Irish of Kerry are the Basque people of the northern Spanish region.

        • bonbon

          The so-called biblical archaeo’s are a bit daft. It boils down to “Indo-European” and what that means. Greeks and Celts are indeed, as well as Persian, Slav and many others. Non-Indo European include Komi, Basque, Finn, semitic groups (includng Egyptian). This is best dealt with in Gandar Tilak’s Orion, a very hard-to-get-book. I have it!
          Ionians did face Keltoi in battle. That observation is historic. Hoplites were part of Alexander’s strategy.

          Well gold, pushed here as a money thing, does have a lot to do with history. But money as a weapon goes even further back.

          • Tony Brogan

            Sometimes we forget that modern people in a country are not the same as those who used to be there generations ago.
            There is some discussions about the first ten dynasties of the Egyptians being Celtic as well as later invasions by Nubians and semitic peoples.
            There for example is evidence surfacing that the sphynx is some 8000 years old and not 4000 odd as previously supposed.

    • bonbon

      Taking Julius as a teacher is lawful, after all the British Empire is based on the Rise and Fall of the Roman Empire, one should say the Fourth Roman Empire following Byzantium, Venice. Roman economics is indeed at work – they were globalizers, constant warfate, witness NerObama.
      As to what Rome did to Celts, just visit Vienne near Lyons.

      Eire was saved from Rome, then, by pure luck. A fleet ware ready to invade and called back as Rome fell into riots. Because we never had the Roman Empire, which continues to ravage European thinking with glorious ideas of “Federal Europe”, USE, etc, we resisted Britain.
      This puts FG’s role into sharp relief, likely from their start.

    • Hi Coldblow,

      Shame you can’t make the festival, we have a terrific line up which we are very excited about.
      All the best

  38. joe hack

    Hi Coldblow, Wow,
    just read John Waters in the Irish times and noticed that David will interview him. I met John Waters once accidently and had a very long chat, a very pleasant man. The subject we discussed at for quite some time was of personal matter to me.
    I have lot of respect for some of John’s observations but defiantly not his religious ones.

    I do agree with some of his ideas that why we should leave the EU and Euro.

    I find most of his work to be dull- not insightful but rather provocative for self publicity he can be bombastic pretentious and pontificate, I sometimes think that he is trying to impress his English tutor?

    Below is part of a review from the Irish Independent which is quite funny;

    “At times it is difficult to understand what John Waters is trying to say to us. His curious admixture of down-home aphorisms and chunks from social science primers do not help his case. Hark at this sentence early in the first chapter of his latest book which sets out to explain how we all went nuts in the recent phony economic boom.

    “The Celtic Tiger was neither the nineties nor the noughties, but took a bite out of both that left the remainders of each like doleful twins cast adrift in time, creating a sense of a different possibility for a continuous reality in which the abberation of prosperity never came to pass.”
    We gather he means the boom ran from the middle of one decade to the middle of the other. For the rest, this sentence has been sent to a language laboratory and analysis results were still pending as we went to press.”

    I guess I am given both John Water and David McWilliams some more publicity for The Dalkey Book Festival

  39. “The Celtic Tiger was neither the nineties nor the noughties, but took a bite out of both that left the remainders of each like doleful twins cast adrift in time, creating a sense of a different possibility for a continuous reality in which the abberation of prosperity never came to pass.”

    People actually get paid for writing like that. It sounds like a Raymond Chandler spoof:

    I told moll it was a very dangerous assignment and that she’s probably be killed but if she loved me would do it anyway

    • Colin

      Maeve Binchy, who is dalkey based, has been told a thousand times, ‘sure what you write is simple, anyone can do it’, and her response is, ‘well go ahead, be my guest and do it yourself’

      So, there you are Pauldiv, put your thoughts and musings down on paper and submit for publishing, I will promise you I will buy your book.

    • joe hack

      Mr. Paul, whatever one thinks of his writing style his voice is always worth listening to he does not get paid for that book unless it sells and it is not the type of book that will probably make him rich, €14.99 per copy.

      His does open up debate and intelligent thoughtful debate about who we are as a people and the stick he gets is probably not worth it but if he removed the bombast he may get his thoughts to a wider audiences.

  40. Dorothy Jones

    Doll Parts by Hole ie inc right now…..

  41. Dorothy Jones

    Doll Parts by Hole ie inc right now…..

    • Dorothy Jones

      Oops, not sure what happend there. Meant Ireland inc dismemebered…..however goal score just now might get the show on the road again :)

  42. Tony Brogan


    Globe and Mail comment on the redemption plan. And a gold backed Euro is stronger than a stand alone euro.
    bond interest rates drop from 5% to 1%.

  43. bonbon

    What Glass-Seagall will mean – what will be affected.


    June 8, 2012 (LPAC) — The question, “What would Glass-Steagall do to derivatives holdings?” is heard so often the debates on restoring the Glass-Steagall Act, that one could wonder who is really asking it.

    A report on global derivatives concentrations, by Fitch Ratings Service, gives a clue.

    It seems that 10 banks in London do 47% of world derivatives. Sixteen banks based in the United States do another25% of world derivatives ($290 trillion in nominal value), and those 16 have 99.5% of the derivatives exposure of U.S. banks.

    Six of them — JPMorgan Chase, Citigroup, Bank of America, Goldman Sachs, Morgan Stanley, and Wells Fargo — have 75% of that exposure.

    In other words, the great majority of banks in the 7,500 banks based in the United States do little or no derivatives trading, lending, or borrowing, although “banks must hedge” is a watchword of Dodd-Frank and the Volcker Rule.

    The strong impact Glass-Steagall would have in clearing out the financial derivatives markets, would have very little effect on the operations of that vast majority of commercial banks.

  44. bonbon

    Spain Being Railroaded into Bailout

    June 8 (EIRNS)–Spain is being railroaded in taking a bailout which will put all the bank debt onto to the sovereign, but the question is: will the euro survive?

    Unnamed German and European Union sources told Reuters that Spain is expected to ask Europe for help at the weekend with re-capitalizing its stricken banks. Although the Spanish government denies this, these EU and German sources said that the Eurogroup, comprised of the Eurozone finance and economic ministers, would hold a morning conference call on June 9 to discuss a Spanish request for aid, even if it doesn’t ask for it! The Eurogroup ministers will issue a statement after the call. “The announcement is expected for Saturday afternoon,” one of the EU officials said. A German official said an agreement had to be reached before the Greek general election on June 17.

    This sounds like the same stitch-up they gave to Ireland, which was forced to take the bailout with the condition that it guarantee all the private bank debt. But the question remains, whether this will be one bailout too far?

    City of London mouthpiece Ambrose Evans-Pritchard writes that a Spain rescue is too big. While the International Monetary Fund thinks Spanish banks require EU40 billion euros, Megan Greene from Roubini Global Economics says Spain’s banks will need up to EU250 billion, while the Bank of Spain said yesterday that yet other Caixas, Catalunya Caixa, and Novagalicia will need a total of EU9 billion in new state funds. Then the numbers get bigger. JP Morgan says the banks need more than EU350 billion, while RBS says EU370-EU450 billion which Evans-Pritchard rights “is by far the largest in history.”

    Christophe Frankel, the EFSF’s chief financial officer, claims the European Financial Stability Facility could handle a Spanish bailout. Others point to the fact that Spain would have to drop out of the EFSF, with its share spread among the rest. Italy’s share would rise from 19% to 22%, and Italy is in no shape to face extra burdens. France’s share would rise from 22% to 25%, and Germany’s from 29% to 33%.

  45. bonbon

    Financial warfare, a reminder of what London is all about.

    London’s Allies Push for Devaluation and Bank Run in Argentina

    June 8 (LPAC)–In a June 1 press conference, Argentina’s Deputy Finance Minister Axel Kicillof denounced the rash of rumor mongering and lies about a supposed “de-dollarization” of the economy, emanating from local City of London allies, which he said was intended to sow panic in the population and force a currency devaluation and run on the banks.

    The Fernandez de Kirchner government has recently tightened exchange controls and import restrictions to defend the economy from capital flight and tax evasion. On June 6, the government raised tariffs on imports of capital goods already produced in Argentina to 14% (from zero) to protect industry and jobs.

    The London {Economist} warned June 2 that such measures have turned Argentina into a “siege economy,” while financial predators and their media allies predict even more radical steps, such as freezing all dollar deposits. Moody’s is also predicting a devaluation. The message here is that Argentina is headed toward financial upheaval similar to that of December of 2001, when bank accounts were frozen and the country defaulted on its debt. Various foreign media are lyingly portraying sporadic pots-and-pans demonstrations by well-heeled citizens of Buenos Aires as reminiscent of 2001′s mass citizen protests.

    The London-allied daily {El Cronista} has been hyping a coming “de-dollarization,” fueling panicked dollar buying on the black market by fearful citizens. This has driven the black-market exchange rate to almost six pesos to the dollar, against the official rate of 4.49.

    {El Cronista} is deliberately publishing insane lies, Kicillof said, “instilling terror in the population, creating panic. They’re saying we’re going to open strongboxes, rip apart their pillows…They are inventing this; it’s aberrant and stupid, agitating about the coming Apocalypse.” This “is not 2001…The intention here is to force a devaluation and unleash a run on the banks,” he asserted.

  46. bonbon

    Glass-Steagall, Split Banking, known as Specialization in Italy, Trennbankensystem in Germany.
    Guess how broke Glass-Steagall in Italy? None other than Goldman Sachs operative Draghi now ECB chief.

    Italian banker calls for bank “specialization,” i.e. separation

    June 8 (EIRNS) – Banker Roberto Mazzotta, chairman of Mediocredito Centrale, calls for a return to the regime of banking separation existing in Italy before the deregulation introduced by Mario Draghi in 1995. In an article in today’s {Corriere della Sera}, entitled “What Today’s Bankers Do Not Know,” Mazzotta writes that although the introduction of the universal banking model in Italy produced fewer disasters than elsewhere, “in banking we have lost the application of two principles: territoriality and specialization, which are very important in our reality.”

    “Specialization” is the term previous used for separation in Italy. Mediocredito, the bank chaired by Mazzotta, was created in 1952, and “specialized” in offering government credit and subsidies for industry, in the framework of the government reconstruction and development plans. During the post-1992 privatization frenzy, Mediocredito was privatized and also went into investment banking. Eventually, under then Economic Minister Giulio Tremonti, it was put under the Post Bank in order to create a “Banca per il Mezzogiorno.”

    Today, Mediocredito and Banca per il Mezzogiorno are two banks under one hat.

    “The culture of old special credits was a wise one,” Mazzotta writes. “It is obviously not a question of going back to the past, but of acknowledging that the present is not satisfying. Companies… need a friendly bank that knows them, visits them, is able to assess an industrial plan, understands issues related to technologies, can accompany them in markets near and far, and which, related to a need which it can measure, is able to offer the technically opportune financing or can explain the reasons it is better advised to not offer it.”

    Mazzotta was a member of the Italian Parliament for three legislatures and a government minister before becoming a banker in 1986; he was chairman of the International Institute of Saving Banks.

  47. bonbon

    Banking Analysts of Alpha Value Urge France and Europe To Adopt Glass-Steagall

    June 8, 2012 (Nouvelle Solidarité) — Alpha Value, a very respected private firm of financial analysts published a report saying that Glass-Steagall banking separation “à la française” would be the best way to go for President Hollande in France and for the rest of Europe.

    According to {Les Echos}, while François Hollande is still undecided about the technical details of the separation of banking activities he wants to adopt, Alpha Value “calls for the rapid implementation of this measure,” i.e., return to a strict Glass-Steagall “in Europe and especially in France.”

    In line with the worry of U.S. community bankers, the report observes that the value of stocks of the four French banks — BNP Paribas, Société Générale, Crédit Agricole SA, and Natixis — has dropped by 81% since 2007. However, if a strict banking separation were adopted and the parts valued separately on the stock market, shares of BNP Paribas would rise by 37% and those of Société Générale by 38%.

    Therefore, says Christophe Nijdam, the leading banking analyst of Alpha Value who coordinated the report, the shareholders should speak up in favor of a solution “which could bring up the value of their shares and could also be profitable to other players.”

    Nijdam, a respected banking analyst and former associate professor at Sciences-Po, served as the VP and General Manager of Crédit du Nord New York and VP at Crédit Commercial de France (CCF) Paris and New York. For him no doubt: “Since the end of the Glass Steagall Act, finance started going wrong.”

    Going through the three available options (Volcker Rule, Vickers ring-fencing and Glass-Steagall, Alph Value concludes that only a strict return to the original Glass-Steagall would be profitable for both the shareholders, the clients, and the depositors. It would only hurt the traders and the management. “But the 2% of those employed by the banks are holding the remaining 98% hostage!” says Nijdam.

    Nijdam seems aware this is only the first step for a general clean-up. Glass-Steagall alone will be insufficient to protect against a systemic risk, says Nijdam who mentions the danger of derivatives “which represent, broadly defined, ten times the size of world GDP. It has become monstrous, the equivalent of a weapon of mass destruction!”

    {Les Echos}, which gives the report major coverage, adding a half-page allowing Nijdam to debunk all the arguments against Glass-Steagall from the French banking establishment.

    The report also comes out in the midst of the legal appeal of convicted former Société Générale rogue trader Jérome Kerviel. Kerviel not only revealed that the top management of the bank was duly informed and fully aware about his risky speculative positions which lost the bank nearly EU5 billion, but accused management of having sacked him in order to cover up major losses they were having at that point.

  48. wills

    What is truly so idiotic and laughable about Spain looking for bailout is that its the ‘Spanish banking system’ demanding the billions of euros.

    …and yet, all week all we get is the media mis-reporting it as Spain demanding a bailout.

    The media are in bed with the banking gangsters it would seem.

    Mind you Reuters is owned by the Rothschilds.

    And of course it’s h.q is in City of London.

    This stuff is not difficult to see and understand once one does a little homework.

    • bonbon

      City of London mouthpiece Ambrose Evans-Pritchard writes that a Spain rescue is too big.

      So what is going on in London exactly? They created the Golem, and now its turning on the City. As in the case of the Rabbi of Prague in that famous story, the wife forgot the name so could not stop the destruction!

    • bonbon

      See above – the media do in fact report what’s going on.
      One must do the hard work gridding out with a good approach based on thorough homework.

    • bonbon

      Of course not all media is English speaking, but welcome to the real world!

  49. Couple of interesting links

    Vincent Browne
    After Bilderberg, Noonan could usefully visit Moyross


    U2, Bono? Celeb partners with Monsanto, G8, to biowreck African farms with GMOs


You must log in to post a comment.
× Hide comments