August 9, 2012

Childcare costs hurt -- but beware mortgage rate rise

Posted in Irish Independent · 154 comments ·
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YESTERDAY a very important article appeared in this paper by my colleague Thomas Molloy on the exorbitant cost of childcare. In the piece Molloy examined the results of a survey carried out by the Irish Independent and KBC Bank, which indicated that many young couples are now paying more each month for childcare then they are on the mortgage.

He went on to make a broader argument about how different generations are bearing differing economic burdens in Ireland and how on many indicators, it appears that the older generations have managed to fare better than the younger generations for a variety of social and political reasons.

These are important points and deserve to be fleshed out in detail because many societies — maybe not intentionally — end up with a situation where one generation does much better than another.

In Ireland this generational split is made all the more stark by the housing boom and the fact that the very people having children now are also highly likely to be the very people lumbered with huge mortgages.

The average woman here has her first child at 31. This means that the people we are talking about crippled with high childcare costs are the generation between 30 and 40, in the main.

These are exactly the same people that were bundled on to the property ladder in the final years of the “smash and grab” exercise known as the housing boom. Therefore, they are caught in a brace between the exorbitant cost of childcare and the collapse in house prices.

In many cases, they bought into the property scam precisely because they wanted to have families.

Owning your own place was marketed as the thing responsible people did. The prevalent view back then was that this was something that responsible young people should do rather than rent and expose their family unit to the alleged vicissitudes of landlords.

As a result, hundreds of thousands were herded into the wealth destroying grinder machine called the wildly overvalued housing market. Some walked willingly into personal financial Armageddon, others were pushed and prodded against their better judgment.

But ultimately they all ended up in the same place — a land of crippling negative equity where financial hope for the future is tempered by the realisation that they have destroyed the wealth of their family forever because general house prices will probably never recover to mid-Noughties levels.

Throughout this madness I warned, in this column, about the consequence of the bubble, so what you are about to read might sound strange — but for many reasonable people, rising house prices is, or was, at least seen almost like a “social contract”.

Most people want to live decently, raise a family and by saving and investing in a house that holds its value, we can generate modest wealth, which we then hope to pass on. The house is a store of this wealth.

We are not talking here about excessive, greedy returns, but just the normal human desire to create something of value that we can call our own when all is said and done.

In our society this was taken to be a kind of “understanding” which is why the fall in house prices is sometimes termed a betrayal of a generation’s hopes and aspirations.

Whether this is the right way to regard accommodation is neither here nor there for now, this is the way our society and all other English-speaking societies have evolved in terms of the individual and the relationship with property.

Banks take advantage of this potentially volatile relationship, which is one of the main reasons why they are regulated or are supposed to be.

What happens when you discover that not only is your house not a store of wealth but quite the opposite? What happens when you realise that it is the single greatest destroyer of the wealth?

It would be fair to say that you tolerate this angrily as long as the monthly cost keeps falling, even if the value has collapsed because you don’t have to sell and crystallise the losses.

WHAT do you think will happen to this generation, caught between huge childcare costs, negative equity and falling incomes, if the monthly mortgage bill were to rise?

What choices do you think the 400,000 people on tracker mortgages might take? Will they choose their children or their houses?

This is what the choice will come down to: do you pay for the mortgage or do you pay for the childcare or do you stay at home, in which case you lose your independence and your income.

Of course they will choose their children and their own careers, which they need to maintain for their own sense of themselves and have to maintain to pay the bills.

At the moment, because of the European debt crisis, interest rates in Ireland are at historically low levels. The main beneficiaries of this are those 400,000 on trackers who have seen their monthly mortgage payments fall and fall since the beginning of the crisis.

But what happens if the European debt crisis is solved and normality returns? Then interest rates go back up and Ireland sees mass mortgage default while the rest of Europe, not mired in such personal and mortgage debt, moves on.

Can there ever have been a more ludicrous situation where failure of the eurozone characterised by on-going debt crises, summits and the like, is actually in the interest of many hundreds of thousands of citizens of that monetary union?

It is quite, quite bizarre.

As the cost of childcare remains extremely high and as, after tax, incomes fall, the only big saving the average punter can make is on their mortgages.

If mortgage rates rise, which they will do over the course of the average 25-year mortgage, the numbers will simply not add up for thousands of the generation that were first-time buyers in the Noughties.

This will most probably manifest itself in more and more mortgage defaults as the next phase of the Great Irish Housing Crash — the mass default phase — plays itself out.


  1. positron

    “… by the realisation that they have destroyed the wealth of their family forever because general house prices will probably never recover to mid-Noughties levels.”

    As someone in his thirties, who bought a house in the mid-Naughties to start a family, and now has a very young family to support, the above truth really – I mean really really – hurts. The house has cost me twice my annual salary already, and it’s in negative equity by approximately the same amount.

    • Positron

      This is exactly why we need a debt deal for your generation.

      Best

      David

      • Halo Effect

        If this instant self gratification generation gets it any softer I fear for the next generation

        David you and debt forgiveness, why don’t you make tuck them in at night too.

      • Halo Effect

        Hubris has met it’s Nemesis and cant man up

        Know thy self, know thy enemy… your enemy may you

        • positron

          Halo Effect,

          I know you are free trolling around here, and I should know better than feeding trolls, but my first and final comment to you, which may or may not register with you is – as much as one can try, it is nearly impossible to completely imagine what is going on in someone else’s life – and you have absolutely no idea what my story is, and you are perfectly entitled to fight with your keyboard and conjure up witty comments all you like, but you wouldn’t be doing anything productive, or helping anyone, including yourself.

          Positron.

          • Halo Effect

            Oh don’t assume I have no compassion and don’t assume I am in a better place than you I would guess from the little that you have said about yourself that I am not but I do not expect anyone to change the policy of an community for my sake you cannot personalise an economy that would selfish, would it not.

            And no you cannot know what going on in someone personal life and you are way off target with me that is for sure, nor do you know the hardships I have had to endure but don’t go crying about it on a blog about the economy.

            You do allot of assuming about me and personalising.

            I do not address anyone’s personal circumstances and for the most part that I have seen on here very few people bring there personal circumstances to this site.

            Most if not all people here and for the most part are here to address the overall economy but sometimes there is some banter by those that have been on here a while.

            I don’t know what you mean by a troll

            Why are you addressing me I am responding to Davids reply not to your personal circumstances.

      • Halo Effect

        Hubris has met it’s Nemesis and cant man up

        Know thy self, know thy enemy… your enemy maybe you

        • Dilly

          My (private Jesuit educated, at great cost) cousins are all stuck with massive mortgages and families. I always had to work hard for money, so I never got suckered into this nonsense, even after being ridiculed for suggesting it was possible all a scam back around 2003.

      • Tony Brogan

        How about a debt deal for my generation, David.
        I went from retirement territory to broke in 2 years in the 80′s. property prices wherte I lived dropped 45% in 5 months.
        40 years old and three babes made do what i had to. Work 16 hours a day to get out from under.
        I recovered, invested, and the government took a pot full in capital gains taxes as well as income tax.
        I calculated correctly that the government in taxes, fees, duties and dues took 66% of my earned income annually.

        I have paid my dues to fund my fellow citizen and received no help. The energetic and motivated are taxed out of existance while the indolent, unlucky, and infirm are supported. The receivers out number the donors. There is no longer enough in the kitty to pay out any more. Even that bastion of free enterprise, the USA, find the current and contingent liabilities require a tax greater than the entire output of the nation annually to fund those liabilities. Never mind the bank dirivatives.

        Face the fact. All are bust, broke, bankrupted. The gravy bowl is licked clean!!! The state can not take care of anyone. All must prepare to care for their own. We are in the midst of a major decline in living standards already reduced 60% from 1970. There will be another 60% the next 10 years. Those who prepare now will be better off than most.

    • bonbon

      We must and will do what Franklin Rooseveldt did in in 1933 – declare the entire investment banking arm void and its synthetic debts that were loaded onto your generation by a criminal gang, partly the current and previous gang elected apparently by a majority.

      Glass-Steagall is the way to handle this, for the young kids sake.

      After all those kids expect you, adult to make a future for them. So go for it, campaign for splitting the banks now!

  2. righton

    This to me is the elephant in the room.It is a very painful reality.
    These are my experiences over the last 5yrs:
    Young family in our early 30′s, bought a family home.moved out 20miles out to buy what we thought was affordable at the time. only took two thirds of mortgage of what we were approved for.
    We lost at least 150k of saving in our house and had to hand to bank as was long term unsustainanle(permanent tsb varible).
    Between us we had lost our job and business with 3 very young kids.
    I was an accountant. I have since been let go a further 3 times since due to cutbacks & business closing.
    Last year while working in practice, i would have older clients(55/60yrs+) giving out to me that my generation was the cause of their problems, that we were selfish, greedy etc etc. Almost put me to tears.

    What i could see from doing a large amount of personal tax returns, that in general from my experince. People over 50 had things very good. No mortgage, shrink with inflation as they were riding the curve up and my generation are riding it down.
    They had large large savings, permanent jobs generally public sector, several rented housed etc etc.
    These were ordinary people driving old cars, and always playing poor.
    They were angry at me that their rented houses were worth less now, and that they got a cut in pensions etc.

    Our childcare is so so expensive. I had one day of work this week and had 35e after childcare which we went to tesco and tried to get a weeks shopping, mainly rice and nappies. My own mother suggested that her children should supplement her pensions by 50e each a wk because of cuts to her large public pension, and how tough it is on ‘elderly’ now. I am so anger even writing this, and i already hate that generation now.
    On a good note, we are getting sk tv tomorrow after 4yrs of no tv at all due to our peraonal cut backs.

    • Colin

      Enjoy the TV.

      Clear the air with your mother and the likes of her, sunlight is the best disinfectant.

      Older generation are lucky simply due to their date of births. They generally held unionised jobs, with better pay and conditions than the young who went into multinationals over the last 20 years.

      I was always amazed, how when it came to the big weddings, the (Irish) father of the bride suddenly found himself no longer culturally expected to pay the bill for the wedding, the bride and groom began to split it. That’s when I knew things had begun to go arseways!

  3. JapanZone

    I just moved back to Ireland with my wife and three kids (10,7 & 5) after 27 years abroad. The move was something we wanted to do sooner rather than later but we waited several years before taking the plunge. One of the main reasons we moved now was that our youngest is able to go to infant school and we don’t have the burden of childcare to worry about along with all the other unavoidable expenses. On the whole, we’re finding that the cost of living (in North County Dublin) is on a par with what we paid in a major city in Japan (where most costs have be stable or even declined over the last 20+ years).

    My (Japanese) wife and I both grew up with the mindset that buying property was a given. Once I’d been out of college a couple of years and saved a bit of money, I bought a flat in London in the late 80s. I let it out when I moved to Japan a couple of years later and it was probably only the fact of being half a world away that prevented me from panic selling it when the UK market collapsed in the early 90s and I first heard the term “negative equity.” The market eventually recovered and I sold the flat at a profit, but that experience together with living through Japan’s lost decades taught me a valuable lesson and I knew to be sceptical about my elders’ advice about property always appreciating.

    That – and maybe the distance – gave me the perspective to see the madness in Ireland and elsewhere for what it was early on. It all seemed so obvious, so inevitable, but nobody would listen and only on forums like The Property Pin could you hear voices of reason. So I watched and I waited. If I had been more shrewd and spendthrift, we might have returned to Ireland with enough cash in hand to buy a nice house outright, something I’d do now if I had the money. But the prospect of decades of debt servitude and uncertainty make me very reluctant to borrow.

    I have a vague, unsubstantiated hope that things will be better in Ireland by the time my kids are of working age – their futures would certainly have been no more secure in Japan – and for now I have to simply focus on doing what I can to insulate my family from the cold winds that are coming (ironically, it’s a beautiful day today).

    Macro economics aside, it’s good to be back.

    • Halo Effect

      When a HOME become an investment or a property the madness begins.

      • werty

        that makes no sense

        • Halo Effect

          You then are most likely the reason we are in the mess we are in, do I have to explain and David wants Debt forgiveness, David education may be much more economical effective than debt forgiveness.

          Please somebody explain

    • saitama

      Hey japanzone,
      How’s it going?
      I live in Toda, Saitama just across the arakawa river from Tokyo.
      I live with my Japanese wife and two daughters who are both under 3.
      I am from Cork city, and hoping to move back with my family. I spent over 10 years living here. Main reason for moving back is just to be close to family. How’s life in north county Dublin?

  4. redriversix

    Morning David

    In my experience I have found many young couples suffering in silence under the pressure of trying to raise a family and meeting their banking obligations which they signed up to in the good times.

    This stress,anxiety and fear is putting a huge strain on couples today trying to do ,what they believe is the right thing.This group in Society has little or no savings and is trying to survive week to week or month to month.The hope that “next year will be better” holds a lot of sway in a household like this.

    Some are good at asking for help but when help comes they do not want to face up to some difficult decisions regarding their budget and costs and are now living beyond their means just by trying to live week by week,…… not by spending foolishly.

    Although one generation has appeared to stop tipping their cap to the Banks etc in reverence and are now willing to stand up for themselves.They are being replaced by the thirty-something generation who live in as much fear as we ever did, which I believe is clouding their judgement and destroying their quality of life…….. by not facing up to some harsh budgetary changes which they have to make if they want to raise their children in a “stable” environment.

    Sometimes we have to just do a budget,face facts and take action,some of that action may not be easy but the sooner they face up to it the quicker they can get on with the rest of their lives.

    As stated earlier, they are living week to week so if in the event one loses a job their are no provisions to deal with this as a lot have the “it won’t happen to us”mentality.

    So with costs rising , a economy in depression and Budget 2013 looming,I would implore these people to do a budget and cut their cloth so they may “live” a life rather than surviving one.

    I hope they can throw off the shackles of fear ,anxiety and the pressures of society to do the right thing for themselves and live the life they promised each other….

    best
    RR6

    • Halo Effect

      In short adjust expectations and a smiles may return to faces.

    • molly

      One side of this is my mate is a plumber and he is very slack but how can this be boilers are still breaking down,maybe when a boiler breaks down now people are not having it repaired,because there’s no money to pay for the boiler to be fixed.

    • bonbon

      I believe the most “stress” is the unwillingness to step aside from being popular with the rest and go for a bank split as if their very lives depended on it. And their children’s.

      Wailing about the injury done to children as the financial system devours them, is just not good enough.

      • molly

        The very people who we voted in on the said mandate that we would see real change,have are and will continue to let us the voter down.
        I heard one guy in fine gale saying if we went back to the punt we would be 20 percent worse off,there’s different types of worse off thoes that can well afford to be 20 30 40 percent worse off and thoes of us who would really be worse off.
        I wonder how many people have in some way have just stepped back from the way this country is run and don’t really want to be part of the banana republic and have no faith in ever seeing real change.
        If real change does not come,I hate to think of what kind of a country we will have to live in.

  5. greatredshark

    One observation, from the ‘post bust’ generation.

    Renting is not a viable option in Dublin if you have a young family. I have lived in rented accommodation in Dublin for the last decade. And it is poorly appointed, overpriced rubbish.

    Myself and my wife are a young ‘starter family’. A one year old baby and neither of us are from Dublin so we have no family support. We are eager to ‘settle’ someplace, to begin laying ‘roots’, to start preparing for schools, to get to know our neighbours, to build a life etc.

    But the issue of childcare means that even the fallen house prices are out of our range when the inevitable interest rate rises and tax increases kick in (never mind the fear that seeing so many of our friends in difficulty engenders).

    We live in a tiny 3 bed house in a not so decent area in Dublin. It’s rental orientated so there is no community spirit. We cannot afford to rent in a middle class area (check out daft, a 3 bed family homes are going for 1,600 plus per month).

    • Halo Effect

      Before we became a rich country, ‘apparently’ in the average family home only one person worked and that one persons wage could afford to buy a home then came the tax individualism and more importantly its mentality.

      The only REAL difference is that you pay child to offset it two at work this in my opinion has not benefited the family but it has befitted the financial system’s

      Your circumstance are not dissimilar to those of the 70s 80s 90s what has changed is your expectation with are based on lots of subtle changes, none of which have benefited the community you seek.

      There are ways to alleviate your circumstances that you find your self in you could adjust your expectations, fight for change ,work harder to achieve your goals, remember you are complaining about your personal circumstances and not the communities ‘Ireland’ so the community spirit you seek maybe a collection of Individuals You’s be careful what you wish for you might not like want you see.

      David wants to stick a plaster on a cancer and not route out the tumor.

    • GreatScot

      Where do you consider to be ‘middle class’? I just did a very quick search on daft and the first place that came up was Beaumont which I know from experience is perfectly nice at €1k pm. Not Dublin 4 I’ll grant you but if you can’t afford €1600 a month how middle class are you really? Maybe your expectations need to be lowered. Or why don’t you rent a 2 bedroom house given for now you’ve only one child?

      One of the advantages of renting is that you can live in a place that you could not afford to buy in and this in general still stands and most certainly will when, as David points out, interest rates go up.

      You should consider yourself very lucky to have missed getting sucked into the property bubble unlike the group discussed above who in my opinion need some sort of debt forgiveness.

      • Halo Effect

        I knew a lone parent very well who lives on social welfare and rents her max rent allowance was approx was 1200 but she rented a house for 1700 she had to lie the price of the to the HSE withe the help the landlady to get the allowance of 1200. that meant she had to make up with a short fall of 500 she already was in debt to 20,000 she is now in debt to 30,000 oh yea and she got the latest iphone and ipad

        She wanted to live in a middle class area, she amazed she me she took holidays and moved money like those that worked in Anglo she missed her calling.

        Living beyond your means is not a misfortune its a decision, a lack of responsibly, snobbery,

        Maybe you need to adjust your personal expectation and consider others that may later have pick up your bills like we all are now for the bankers

  6. Halo Effect

    “alleged vicissitudes of landlords” are you for real David we are not in Germany

    If I rent equivalent family home 60 years or till I die with nothing to pass on and with rent increases for sixty years =

    If I mortgage equivalent family home for 25 with a house to pass on plus other benefits, like this simple one for example I am able to hang a picture on a wall =

    Work out the cost and numbers yourself’s

    So no debt forgiveness for the people renting who will also in David world have to pay rent for those with mortgages in the real and social context.

  7. SLICKMICK

    There was plent of affordable homes for rent along the rail lines outside of Dublin ? It would help if employers based in cities gave a housing allowance of €5k a yr to their staff. Many employers take the view that you should move back in with your parents !!!!!! That’s what I remenber older people telling me in the eighties.It’s called the Bill Cullen approach. What do need a salary for ? Work for pocket money, pretend that you are still 12.LOL.

  8. [...] McWilliams has published this article in relation to the news this week that “many young couples are now paying more each month [...]

  9. paddythepig

    In the middle of the Bertie bonanza, they introduced tax individualisation, which removed any financial incentive for one parent to remain at home with the kids. I know of families who nonetheless decided to stick with the stay at home option, but whose peers, especially some of the the new generation of working women, branded them as mad. Strangely enough, this new species of Irish couple in a lot of cases splashed the cash on an oversized house instead of a modest one, an uppity area instead of an average one, an oversized motor instead of an average one, more holidays than they could afford or even need, and now that reality has hit and everyday things like doing a budget has had to be adopted, we are being treated to the previously spoilt brat engaging in a whinge binge.

    We deserve this. We deserve that.

    In life you deserve what you earn, nothing more.

    Range rover man has had to give up the range rover he never should have had in the first place. Rolex man is suffering folks, and is looking for a dig out.

    The people I feel sorry for are those who struggle to meet their obligations, and who have always lived modestly. there is nothing wrong with living in a working class area. What’s wrong with a 3 bedroom house and a cash and carry kitchen.

    I also feel sorry for those who were modest in their aspirations but who got snared at the very end of the property boom.

    But that’s about it.

    • redriversix

      God,How I used to love my Range Rover,had a very nice Roles too,but that was then and this is now.Sold it all to pay banks back,honored my debt and all that jazz.

      But it was great while it lasted,I created employment and managed to protect my employees jobs before going under.

      Should never have paid them a penny,but.what can you do.

      I achieved a lot,have great memories and a wonderful family and I am very happy today,one day at a time.

      Bit like paddythepig..”Howya Paddy”?

      Now time to work on this “odious” debt issue

    • Halo Effect

      Yep, but not the cash and carry kitchen, why not quality hand or home made Irish wood Kitchen that last.

    • Deco

      [ In life you deserve what you earn, nothing more.]

      You realise that people are persistently programmed to think that they deserve whatever “our advertising sponsors” want people to think they deserve.

      A lot of people will have to get up off the couch, switch off the remote control forver, and do some serious reflection, before they come close to grasping what you are trying to tell them :)

    • Colin

      What about the real heroes, the ones who didn’t cave in to peer pressure and parental pressure to buy property? Who’s that I hear you all ask? Well, they used to be sneered at as Losers by those chattering classes who don’t chatter as much as they used to anymore – well not about property anyway.

  10. michaelcoughlan

    Hi,

    Very important article. I am 40 with 3 kids 3 and under. Those of us who were trained professionals in the construction industry found ourselves surplus to requirements BEFORE the crash for the same reason as top quality risk managers in the banks found themselves sidelined. The fact that we would do our jobs properly was too much of a threat to the establishment and status quo. The decision to stay at home and mind the kids has been made for me because I would need a salary of 45k to 50k just to break even with child care costs. As for investment in property I always preferred it because I knew that the pension funds and bankers were not giving good returns on pips/peps (remember those) pensions etc but they have now also destroyed property. The only solution to the world wide problem in my view now that the politicians are compounding the previous errors with policies making the problem worse is to bring forward an Iceland like meltdown (pun intended) and start fresh with a clean slate. I know savings and pensions will be wiped out but we are getting there anyway with the way the government is handling the problem.

    • Halo Effect

      Your looking great for forty, lets give Ireland back to the Irish.

    • redriversix

      Excellent suggestion Michael.

      Iceland is the way forward,won’t happen.But it is the way.

      Best
      RR6

    • bonbon

      Iceland put bank splitting on the parliament agenda. Glass-Steagall by name. This subsumes burning the so-called bond-holders which will happen.

      Staying with the FG policies puts the very lives of children at risk.

      The financial system is in meltdown – knowing this as FT very well does there is one way to go.

    • Colin

      So, how many properties do you own?

  11. Paris75013

    David,

    We’re talking about 2 different things here — childcare costs and negative equity. Childcare costs are high everywhere not just in Ireland, and there are plenty of single people also affected by negative equity.

    Childcare is actually more expensive here in Paris. Up to the age of 3, we were paying €1100 per month for our son (now 8). And we were supposedly the lucky ones, as only one child in ten gets a place in a creche in Paris. And when your child has a cold or is ill, they cannot take your child in the creche and you need to pay to keep the place, and also pay someone else to look after your sick child.

    Life is difficult everywhere for young families. But at least in Ireland, generous children’s allowance benefits do help to pay the bills! It’s not the case here. Children’s allowance is means tested, and you can only qualify if you have 2 or more children.

    It’s true that it is difficult for young families with childcare costs and in negative equity. But I know plenty of young families here in Paris who are finding it difficult, because salaries are lower here, childcare is more expensive, renting is about €30 / m2 and buying is about €10.000 / m2.

    Most people I know agree that life is more difficult here for young families than in Ireland.

    • niamhdb

      Those childcare costs are not more expensive than Ireland – I’m paying €1,100 a month in Bray! And, after reading the article and all of these posts, have just worked out that, by the time both of my children go to school, I will have paid €50,000 each, so €100,000 in creche fees…..nice.

  12. Beaver

    Very relevant. I have a relative with a huge interest only mortgage from NIB. Hes paying only 0,5% above ECB rate so hes on 1,25 % interest at the moment and its the only thing keeping him above water as far as I can see. At the height of the boom his interest rate was 4,75% which I believe is near the normal long term cost of money. NIB must have been losing money on the mortgage until the ECB allowed all banks to borrow at 1% as they were allegedly paying 3% in the market before that point. Because the banks have cheap money from the ECB they´re cutting interest rates to savers and we have the ridiculous situation that being thrifty is punished while silly borrowing and lending is encouraged by the ECB rate policy. I personally reckon Europe is so screwed that the ECB rate will be low for a very long time so there´ll be lots for childcare.

  13. Pardon me asking, but what are the reasons for childcare being so high in Ireland?
    EU and national regulations about quality?
    I’m living in Holland. A decade ago, when young women joined the labour force, neighbour childcare sprang up everywhere, very cheaply. The government intervened, because accommodation and the day care quality weren’t up to EU standards. Now, it’s very expensive to have day care, if you’re so lucky as to find a place, at all.

  14. letatcestmoi

    Hmm, I think there is some merit in your proposals but what if you’re a mortgage holder who is lucky enough not to be struggling as a result of the property crash (not my situation, btw). Does that person have to service the repayments in full whilst his neighbour gets a debt deal? Who pays for the debt forgiveness ultimately? What about people who haven’t a mortgage perhaps because they didn’t play the keep up with joneses game in the early to mid noughties. Remember, it wasn’t as laudable as simply wanting a home for your family – the social contract that has worked for decades. It was the “property ladder” – buy this house with a view to a bigger house etc etc. Greed accounted for much of this problem. I have sympathy for people born and reared in large urban areas who couldn’t afford to buy in there own hinterland. But the people who chased “dream homes” with designer interiors etc and now find themselves squeezed…tough…you’re on your own

    • Colin

      Ireland is unique – crony capitalism / socialism combo. The chancer in the big house, in the swanky neighbourhood is looking for a bailout, when he should be looking to move to a more modest house in a less leafy area.

      • bonbon

        When the Plague hit Italy, every city-state was unique. But it began with the collapse of the Lombard banking system, the Bardi and Peruzzi houses. The rich would gather on the hills overlooking dying Florence thinking they would escape.

        Much better to stop the plague of financial collapse with Glass-Steagall, than tell stories in the hills of cronies and tigers?

        • Tony Brogan

          Yes and close the central banking and the fractional reserve system and use a banking and monetary system where the money supply can not be expanded.

  15. Tull McAdoo

    Steven Pearlstein who writes for the Washington Post had some interesting observations that I have edited down for those of you who do not have subscriptions to that publication. The first quote is from Boyracer who posts some interesting stuff on another forum…….

    “Glass-Steagall was not in fact repealed. Only the provision prohibiting a commercial bank and an investment bank from being controlled by the same holding company was repealed” (Boyracer)

    Repeal of Glass-Steagall has become for the Democratic left what Fannie Mae and Freddie Mac are for the Republican right – a simple and facially plausible conspiracy theory about the crisis that reinforces what they already believed about financial markets and economic policy.

    Facts such as that Bear Stearns, Lehman Brothers and Merrill Lynch – three institutions at the heart of the crisis – were pure investment banks that had never crossed the old line into commercial banking. The same goes for Goldman Sachs, another favourite villain of the left.

    The infamous AIG an insurance firm? New Century Financial a real estate investment trust? No Glass-Steagall there.

    Two of the biggest banks that went under, Wachovia and Washington Mutual, got into trouble the old-fashioned way — largely by making risky loans to homeowners. Bank of America nearly met the same fate, not because it had bought an investment bank but because it had bought Countrywide Financial, a vanilla-variety mortgage lender.

    Meanwhile, J.P. Morgan and Wells Fargo – two large banks with big investment banking arms – resisted taking government capital and arguably could have weathered the crisis without it.

    Did U.S. investment banks create a shadow banking system and derivatives market outside the normal regulatory framework that encouraged sloppy lending and created what turned out to be toxic securities? You betcha.

    And did regular banks make some of those bad loans and buy up some of those toxic securities? Yes, they did.

    But that was as much a problem at the banks and investment banks that combined as those that remained independent. More significantly, the bulk of the money that flowed through the shadow banking system didn’t come from government-insured bank deposits. It came from money market funds, hedge funds, pension funds, insurance companies, foreign banks and foreign central banks.

    Confronted with these inconvenient facts, the conspiracists like to double-down and argue that the real damage caused by repeal of Glass-Steagall is that it triggered a wave of bank consolidation – which has now left more than half of the country’s banking assets under the control of a handful of institutions that are so big that the government has no choice but to bail them out if they risk a meltdown of the financial system.

    No doubt about it – too-big-to-fail is a problem. It turns out, however, that it was also a problem in 1984, when Continental Illinois, the seventh-largest U.S. bank with a whopping $40 billion in assets, had to be rescued. It was a problem a few years later when the Fed quietly rescued Citicorp because of mountains of loans to Latin American governments that turned sour. It was a problem in 1998 when the Fed had to orchestrate the rescue of Long-Term Capital Management, a hedge fund with less than $5 billion in capital. And it was the reason behind the Fed’s 2007 rescue of Bear Stearns, with less than a quarter the size of its biggest Wall Street rivals.

    A bank doesn’t have to have $1 trillion in assets to be too big to fail. Context matters. It depends on how much it has borrowed from, or lent to, other financial institutions. And it depends on the degree to which the banks are counterparty on futures, credit-default swaps and other derivatives contracts.

    The decision of whether an institution needs to be rescued also depends on the overall state of the market. When markets are strong, the failure of even a highly visible institution might be dismissed as a one-off event. But when markets are nervous, even the failure of a second-tier institution can spook investors and lenders to begin pulling back from all similar institutions, creating a contagion effect that can send global markets crashing.

    Don’t infer that I think bank consolidation has been a good thing. There aren’t many who have railed against it in print for as long, or as consistently, as I have – to no particular effect, I might add. But repeal of Glass-Steagall has not been the key driver of this consolidation, which began long before 1999.

    Excessive bank consolidation has left us with megabanks that are too large and complex to properly manage and regulate. The evidence is now overwhelming that top executives and directors and regulators are often clueless about risks deliberately taken and corners knowingly cut by people working under their direction. The chances of that happening grow with the size and complexity of the bank.

    Perhaps more important is that consolidation has created the kind of oligopoly that has reduced price competition in the market for many financial services. That has allowed the industry to earn operating profits well above those of more competitive industries. And those excess profits – largely captured by the top executives, bankers and traders in the form of bonuses – create the perverse incentives to take excess risk and cut corners.

    Any number of factors led to the recent financial crisis. At the top of the list – and rarely mentioned – is the willingness of our trading partners to finance our trade deficit with an artificially low interest rate and an artificially high exchange rate. And right behind it was the growth of a vast new shadow banking system largely outside the reach of regulators. Shoddy lenders, foolish borrowers and investors, greedy investment bankers, compromised appraisers and ratings analysts, clueless regulators – all of these were also part of the story – along with excessive consolidation.

    • bonbon

      Well I think Citigroup Chief Sandy Weill knows much better than the clown who wrote that. The self-described “Shatterer of Class-Steagall” in 1999/2000 widely reported in the press prompting sputterng rubbish like above. All over the mainstream financial press, widely posted by me here are desperate calls for the full restoration of the original Glass-Steagall. The Bernanke and Frank jibbering since ought to show something to even the most subservient.

      So we have various banksters trying to preserve Dodd-Franck and the Volcker Rule which never worked.

      So back to a clear strategy : (not any number of factor hand-waving smoke screens)

      1)Full restoration of Glass-Steagll now
      2)Reconstruction Finance based on the First National Bank of the USA – Alexander Hamilton’s methods
      2)Massive projects to get people back to work.

      • Tull McAdoo

        What is blatantly clear to me is that the part played by Glass-Steagall in the collapse of the Irish economy is right up there with Bertie’s blaming of the Leahman brothers.

        It is also blatantly clear to me that if we took Glass-Steagall and returned it to its original format, updated it, translated into outer Mongolian, or even have it tattooed to everyone’s backside, it will not make a bit of difference to Ireland and what is needed to be done to drag Ireland back from the unholy mess that it finds itself in.

        What is needed in Ireland is the political will to do what is best for the country. Vested interests have to be faced down. Kenny needs to get off his bloody knees in Europe and tell them enough is enough, and 4 years of austerity has failed.

        We already have a list of economic traitors waiting to be dealt with, and what we don’t need is another bunch of gombeens from Labour/FineGael to add to the list.

        So BonBon don’t take this personally but I really don’t give a damn what the investment bank gamblers on Wall Street do to keep themselves amused no more than I care about some gobshite’s gambling their lives away at the Golden Nugget in Vegas. I engage with this forum because of my interest in Ireland’s welfare and maybe we should all refocus our attention on what is happening here at home, put that right and then amuse ourselves with the shenanigans on Wall Street or Coronation Street, which ever takes your fancy.

        • bonbon

          Sounds like the typical emigre who believes Ireland still has horse taxi’s. Keeping it quaint for nostalgic reasons.

          To incredibly single out one country with its own particular financial stink rising with an overpowering stench, and say it smells different from Spain’s or Portugal’s, not to mention Greece’s is the Tiger addiction to the nose or “gut feelings”.

          Now open the windows and let fresh air in, that lovely Atlantic breeze, and smell the coffee. That smell is Glass-Steagall, to put in popular terms.

          So do not give advice, without dealing with the reality of the global financial system. Do not patronize thoroughly angry citizens, or treat them like some kind of leprechaun who dare not think.

          • Tony Brogan

            Sounds like the typical emigre who believes Ireland still has horse taxi’s. Keeping it quaint for nostalgic reasons

            Another nasty innuendo. What is a typical emigre. another of your little boxes to put people into. Very tidy. You are not a nice person Mr. mal mal.

          • bonbon

            To box people into their very own “private financial crises” refusing to see the cause or deal with it is not very nice. This is the insane attempt deal with it “on a case by case” basis, when an epidemic is raging.

            It’s like telling a patient in a Haiti cholera tent the neighbor is dying of a totally different kind of cholera, while refusing to call in the Marines to restore drinking water “because its bad press” – Obama’s comment.

            Glass-Steagall goes to the cause of all the raging financial plagues now raging.

          • Tony Brogan

            Sorry Bon bon
            Gs goes a little way. The root cause is the control of and by the central banks. the central banking system and the fractional reserve system are what have to be closed down . you refuse to go there at all.

      • Tony Brogan

        A repost.

        Did some reading on Alexander Hamilton. seems he was an agent for Rothschild. seems that his first bank of America as modeled after the bank of England, the worlds premier Central Bank. Seems he married into the Rothschilds!!

        Read at your leisure

        http://www.google.ca/search?sourceid=navclient&aq=1mK&oq=Hamilton+and+rothschild+&ie=UTF-8&rlz=1T4SKPT_enCA449CA449&q=alexander+hamilton+and+rothschild&gs_upl=0l0l0l13896lllllllllll0&aqi=g-K1g-mK1g-q1s1

        Reply

        cooldudesays:

        August 10, 2012 at 4:36 pm

        Well well the great Alexander Hamilton and his supposedly brilliant system of banking turns out to have not only been a Rothschild’s agent but he was actually married into the family. Andrew Jackson was dead right to shut down this Rothschild owned central bank but future presidents have not been as strong. Bonbon you are going to have to get a new hero. Try Sandy Weill who is just another bankster scumbag who is pretending to have gotten religion. Central banking is the keystone to the system of financial repression which is being fostered on every nation on this planet. Any nation like Libya who doesn’t play ball is simply taken out. Now they are after Syria and then it will be Iran. What a bunch of lowlife warmongering scumbags the leaders of the western world have turned out to be.

        Reply

        Tony Brogansays:

        August 10, 2012 at 6:40 pm

        Nobody cares, Cooldude
        They, like a flock of sheep, have gone to the next topic.
        another bailout. This time for the individual. I suppose there will be a means test.
        Maggie thatcher was correct “The trouble with Socialism is that sooner or later we run out of other peoples money”
        Seems they have not done yet. Spend, spend, spend. borrower or lender it does not matter. There is a bailout coming to a place near you soon.

        • bonbon

          Hey Austrian dudes, it is time to discuss Andrew Jackson, and how he destroyed Alexander’s First National Bank. I am beginning to hear strange discriminating tones on who is allowed to marry whom? Very odd from liberals, what?

          Now back to reality. Who else could possibly know the exact strategy of Citigroup, than Sandy Weill, the Shatterer of Glass-Steagall in 1999? Trotting a better insider would be quite difficult. We have his public statement, that that repeal is what caused the entire mess since 2000. To attempt to wiggle around that is very amusing. I am noting the reaction, you may be sure.

          Odd how an insane anti-Ami (as we say in Germany) knee-jerk frenzy start as we get closer to Glass-Steagll, and we are getting close. This frenzy will become a Banshee frothing from otherwise quite rational School favorites.
          The Financial Times editorial of July 04 is wonderfully ironic – dudes you have been dumped!

          • cooldude

            The only one being fooled here is you Bonbon. You’re precious Hamilton turns out to have been a banksters lackey and you still have the balls to pretend central banking is not the problem. There is $700 trillion in derivatives floating around this insolvent banking system. This is over 10 times global GDP. Come on and get real. No little tweak of regulation can save this corrupt ponzi scheme. This system is collapsing and perhaps it is all deliberate for certain people to gain more centralized control. All that is certain is that central banking and unbacked paper currencies produce huge asset bubbles which impoverish ordinary people and enrich the banking elites whose INTEREST is always paid.

          • bonbon

            I’m afraid you do not read or see what you want to see. Hamilton’s First National Bank of the USA was developed precisely to deal with British imperial banking (central banks being only one aspect). Precisely point for point to deal with private financial interests, to promote the General Welfare, investments for progress of the nation.

            Look beyond the feudal von Mises and von Hayek POV, and note below that today as in Hamilton’s time there is a reason that all financial crises point to London. Hamilton understood that very well. Understanding this as banksters very well do indeed, and the obvious action of Glass-Steagall becomes apparent. Believe it, when Sandy Weill, of the Citigroup, calls for doing this it must be clear the system is finished.

          • Tony Brogan

            to hear strange discriminating tones on who is allowed to marry whom? Very odd from liberals, what?

            That is a nasty inuendo. totally out of place and unwarrented.

            You should know that Rothschild himself left instructions in his will that the family banking business should be handled by no other than family.
            hamilton married in to that family for reasons best known to himself. however it might have meant that he was now a part of the rothschild dynasty with the money and policy support available.

            it is curious how the bankers themselves are supporting glass/Steagall. Of course it makes them look reasonable and they know it is of no effect. It gives the appearance of providing a solution. Makes them look good and it is business as usual. Make an error and get a bailout. Nice work if you can get it.
            Privatize the profits and socialize the losses.

          • bonbon

            Actually you brought up marriage above making some weird innuendo.

            Bankers know banking, even banksters. Sandy Weill today knows full well the state of financial disaster much better than any pundit. It is not to be saved as it is. It will kill us all if not regulated.

            Financial Times speaks for a very powerful London faction, as FAZ does, which makes it all the more ironic that they are now in the process of dumping a paradigm which includes the monetarism of the Austrian School.

          • Tony Brogan

            “Actually you brought up marriage above making some weird innuendo”

            Actually just a fact to Identify connection. You insinuate when the fact is indisputable. There was no suggestion of a discriminating tone as you put it.

            Hamilton associated with the London Banking fraternity you despise and was influenced and financed by the Rothschilds.
            You want to repeat this if I follow your reasoning and sugestions correctly.
            Hamiltons bank was a branch office of the Bank of England as far as I can see. You are correct in that the major banking influence is still through london as it was then. Still Rothschild rules.

            “I’m afraid you do not read or see what you want to see.”
            This statement is incomprehensible. I read and understand and also see very clearly what is going on.
            The bankers control the money supply , operate as a monopoly (oligopoly), control monetary policy, cause inflation, get rich at the expence of the people, have thenselves appointed as great influence in governments, cause the boom and busts, break the people, call for an international central bank, exert greater control, are authoritarian, sidestep parliamentary democrocies, pass draconian laws, put the people into economic serfdom.
            G/S is a sop to pretend a solution. The real solution is to ban the central banking system, and the fractional reserve system. Return the money to the people as private property, and remove fiat currency.

            Presidents have been assasinated for proposing such a solution, nations without a central bank are invaded under other pretext. Wars are created and financed on both sides by these bankers.

            The expiry of the charter for hamiltons bank led to the war of 1812 as promised by Rothschild. The central bankers are the agents of war, despoilation and destruction.

            http://www.google.ca/search?sourceid=navclient&ie=UTF-8&rlz=1T4SKPT_enCA449CA449&q=hamilton+rothschild%2c+war+1812

            Plenty of reading here to prove the point for those so inclined.

            If removal of the central banking system is not the solution then why do the banks defend the central banking system so viciously?

          • Tony Brogan

            dumping a paradigm which includes the monetarism of the Austrian School

            The oft repeated phrase above, by you, is not correct.
            you are either ignorant of that fact (hard to believe)
            or deliberately distorting the truth.

            Mr mal mal, where is the evidence for your statement.

            The Austrians do not agree with monetarism.
            Here is some reading to get you sorted out.

            http://www.google.ca/search?sourceid=navclient&ie=UTF-8&rlz=1T4SKPT_enCA449CA449&q=monetarism+of+the+Austrian+School

          • bonbon

            Austrian School is pure monetarism, the wild-eyed belief that the mere possession of some king of money will exude economic growth. There is no basis or argument put forth to back that up, meely “its a law”. It is based exactly on the same approach of Adam Smith, and Mandeville. It is standard London School of Economics fare.

            To make this crystal clear, Hamilton defined a national public Credit system, opposing directly British monetarism. The US Constitution has that Credit Clause, and can be activated at any time. Hamilton publicly explained the reasoning of this new approach, the nation-state banking for progress. Since then there has been war waged as the ancient feudal monetarist see the end of their system looming.

          • Tony Brogan

            Wrong again bon bon
            “Very odd from liberals, what”
            I would consider myself a conservative but what do these definitions mean? Nothing much at all in fact.

          • bonbon

            Hamilton knew full well what he was dealing with. He identified the flaw in British imperial finance, and posed the soultion, national banking and the Credit Clause, for the first time in history. He found the way to deal with the huge war debt, and use it to develop the nation. All of this at the time was new. None of this came from England, but as a counter to England. After all up to 1793 all Americans were British subjects. Even Benjamin Franklin was one. Hey even Arthur Griffith was one!
            Banks are about money, so to claim the First National Bank was a British arm because they both dealt with money is a bit sideways.

          • bonbon

            Ron Paul lauds Libertarians in various videos. Apparently he lauds Mitt’s Paul Ryan. To “cut spending”, control the money supply, small government, are all hallmarks of the London School of Economics, whether it be Keynes (who liked totalitarian gov’t) or Hayek. Monetarism is the trademark. Conservative Hayek wanted liberty from regulation, expecting spontaneous economics to spring from this magical well. This is alchemy. National Credit on the other hand involves progress of the agro/industrial harmony of interests for the future. The TVA is the best example of what Hamilton’s methods mean. And FDR based that on the Shannon Scheme here.

            Fittingly ironic as Irishman Henry Carey’s son Mathew collection (1822) of Essays on Political Economy, is one of the earliest of American treatises favoring Alexander Hamilton’s idea of protection and promotion of industry.

        • bonbon

          Was’nt it under Maggie that the City of London Big Bang really took off, an institutionalized instrument to spend other peoples money on high risk investments, and be bailed out with other peoples money because they are too big to fail.

          See below a British report on the reason all financial crises lead to London.

          So what did Iron Maggie really mean?

          • Tony Brogan

            No matter how you twist and turn the statement
            “The trouble with Socialism is that sooner or later we run out of other peoples money”
            is still correct.

          • bonbon

            The trouble with Maggie’e City is is running out of other peoples money, especially drug laundering. Look at the Standard and Chartered and HSBC investigation.

            The only “socialism” that exists today is the socialization of debts incurred by a financial cartell.

          • Tony Brogan

            Since then there has been war waged as the ancient feudal monetarist see the end of their system looming.

            Putting this statement at the feet of austrians is an outright libel. The thrat of war was uttered by Rothschild if the hamilton bank was removed. That theat was fulfilled shortly with the outbreak of the war of 1812.
            This is the policiy of the central bankers if they do not get conformity and submission.
            There were no “Austrians” in existance at that time

            The austrian school emphasizes the actions of the individuals within the economy as collectively causing a type of economic activity generally beneficial to society as a whole. The monetarists are Keynes and Friedman but even they have nothing to do with war mongering.

            Look to the monied interests that fund the formation of these central banks who are the threat to world peace and prosperity. look to the historical record of the statements of the likes of Rothschild who are ruthless enough to assinate, murder, starve and destroy individuals and whole countries in their pursuit of power. Hamilton was complicit in a Rothschild controlled bank.

            This is not the position of those of us who wish to remove these people and have a monetary system judged to be the sound, honest money of a free and prosperous people.

            The predictions of the results of the use of a fiat credit based currency were as they are currently unfolding and they were from the Austrian school of economics and nowhere else, and made decades ago.

            I consider you to be duped or a lackey of the central bankers. I tend to agree with Cooldude that you are the one being fooled.

            However this discussion will only proceed in circles and so it is my last word on it at this time. I have to turn the wheels on my bike, get some exercise, go sail my boat and plan a trip to visit the home of my ancestors. Au revoir.

          • bonbon

            I presume you are bound by this code : “Tu ne cede malis, sed contra audentior ito (Latin: Do not give in to evil but proceed ever more boldly against it)” – Virgil Aeneid. This is very odd considering von Hayek praised Mandeville’s Private Vice, Public Virtue, as the core Austrian School idiom. True there were no “Austrians” in Hamilton’s, but plenty of Mandevillians, as also today.

            Austrian monetarism is thus pre-Hamilton, a feudal leftover from that “glorious imperial epoch”. It is pre-National Banking, pre-Credit System, in other words rendered null in 1783. It is a last gasp of a bygone age. Of course it will do anything to go back there. It is in fact the very monetarism you like to assault.

            Very confusing indeed. Hamilton’s took this on directly and was killed for it by Burr.

  16. Paris75013

    I agree with what has just been said. Greed and keeping up with the joneses had a lot to do with the whole thing. Debt forgiveness will never happen, because why should other people pay? We’ve all bought things and then wondered later on, why did I ever buy that?

    I remember a few years ago some friends of my sister popped in to see us in Paris. They spent the whole time saying, how do you live here, so small, 2nd floor, no lift (you don’t get lifts in classified historic buildings in Paris) … and bragging about their 3 bed with garage extension in Leixlip and how much it was worth! Irish people were so arrogant during the celtic tiger! Really glad to have bought here 10 years ago!

    • GreatScot

      Greed in the terms you frame it had very little to do with the current crises and there is a big difference between buying say a shirt which you later decide you don’t like and a house especially when you are actively encouraged by all supposedly respected sources to buy said house.

      Why should we all pay for the banks losses? Yet we are.

      Also replacing the arrogance of the Celtic tiger days with smugness about ones own good fortune is no less unattractive.

    • Deco

      While the arrogance of suburban Ireland might have been at it’s peak around 2005, I reckon that it was building since the late 1980s.

      A case of building (excuse the pun) an entire intellectual model on nothing except unfounded (excuse the pun) justification.

      This type of intellectual malaise, was based on an increasing belief in the self-evident triumph of theory of “something for nothing”. A generation brought up on the concept of anything, however badly calculated being great, if the superficiality looked good.

      We are an ungrounded society. And God help us when we suddenly decide on what is suitably fashionable for becomming grounded – chances are that a ton of BS will be found found suitability for the job.

      The is a society, whose unconscious ambition is to create a hell hole – and who will not be stopped from chasing its ambitions. The arrogance is highly indicative. But to see the real unfolding disaster requires cold rational analysis. And that is forbidden because that would cause too much trauma.

      My gut instinct is that the property mania, and the property crash are not results in themselves, but phases in a series of disasters that an entire generation brought up binge boozing, sloppy takeaways, hard sell consumerism, soap operas, and non-stop sports spectatorship is facing.

      The couch intellectual generation has mixed reality and virtuality and created many imaginative approaches to dysfunctionality. And the praise is forthcoming for their creativity. The worst thing that can happen to a crowd of people is for them to make a series of cardinal elementary errors, and somehow or other take in the flawed assumptions that they are making progress. As a learning regression, it means that mistakes are effectively to be expected henceforth.

      Beware the crowd effect. We seen it many times in the past twenty years. And it is highly efrfective at separating brash idiots from their hard earned wealth.

      This is a society that programs it’s young people for impending disaster.

      • bonbon

        This is belly button meditation on the “facts”.

        Easier to do that than consider an idea, an economic principle?

        Why take the easy way out spreading hopelessness, i.e., more of the observed “facts”?

      • Tony Brogan

        Not hopeless, more grounded to reality than some others. Knowing the problems they can in future be avoided.

  17. Philip

    Childcare costs are high because of bureaucracy and the anti-community effects of today’s form of living. By the way, I feel everyone should have access to childcare at a good price – indeed I claim children benefit from childcare from experienced parents (as against institutional process childcare monkeys) certainly in the initial years.

    Take boarding schools. These are creches for rich absentee parents. Such can be found in the corridors of power in the EU and elsewhere. Because a disturbing number of these people are sociopaths (being boarded away themselves) and/or opportunistic they can easily dream up reasons for having regulations around community based groups for so called health and safety reasons (one big reason why we will remain uncompetitive and why Asia will wipe the floor with us).

    Lack of community, individualism, isolationism you name it. We are being led by the nose by cost magnifying institutions who are only too interested we are led by a media that encourages self gratification above all else. These institutions are ramping our costs before we put a crumb on the table.

    The only way we are going to fix any of this is a) facilitate community – have more sports centers, give tax breaks to allow quality low cost community care and encourage community policing, community men in sheds and so on. b)realise the benefits of teleworking for a large range of working styles to discourage commuting. c) remove as many input costs as possible from outside the community and transfer to within.

    • Julia

      Agree.
      Rent control would have to be brought in too. Landlords near me who own one small house each are finding it very difficult to pay their mortgages on the extra house bought in the boom. Bought probably because them as a more reliable form of income in later life. Not so as it turned out. Two I know are unemployed now and will probably have to sell.

      Their tenents, my neighbours, are also unemployed. They have just recieved letters from the Dept of Social Protection, telling them their rent allowance has been reduced. Less protection then. Their rent is not very high for this area – E800 or so pm. Its’ not clear where they can move to. One landlord said to me – tough, if they can’t afford the rent, they’ll have to move out. My neighbours are young, decent people with children. The landlords are people in private industry who (rightly I think) didn’t trust pension funds. I see potentially a big increase in slum landlords in the future.

      • Beaver

        Any landlord who gets rid of a paying tenant thinking hell find another one easily these days is a fool.

      • Tony Brogan

        Rent control would have to be brought in too.

        Any jurisdiction that has implemented rent controls has ended with a diminished housing stock and a deteriorating standard of maintenance. more government interference in the housing economy will worsen the situation.

    • bonbon

      and d) continue to debt-service to the bone ?

      Correct me if I am wrong.

      • Philip

        No one wants that. No one. I do not agree with the big boogey men with super plans to take over the world. The IQ and organizational nonce is simply not there – believe me, having worked in large global corps, this is all too visible. People stumble from crisis to crisis and learn a few things. That’s all.

        • bonbon

          Ok, no d) then, but without refuting d) a-c are fantasy. To allow d) to continue then becomes the trademark of the “solution”.

  18. Halo Effect

    Go Katie Box Ireland out of the ‘Debts’ of despair

    • Deco

      Put her in the ring with Barrosso. She would be more use than Noonan or Gilmore at any rate. They will not even fight their corner, as they are too busy grovelling.

  19. Solving Insolvency

    Halo Effect must be perfect, and his/her ability to predict with such uncanny accuracy who requires assistance, and the reasons for which they require this assistance, and the reasons why they should not get any assistance. This gets us nowhere.

    CSO figures tell us the economy is substantially smaller than it was in 2008 (by about 13%). In simple terms this means that there is 13% less to go around in terms of paying for things (be it mortgages, childcare or retail items).

    The decrease in the money supply is exacerbated by three things; banks acting as collection agencies and not lending, the population’s fear of what is coming next and saving any excess money they may have, and the state’s austerity reducing the sums that are available in the economy (albeit that is included in the decrease in the GNP figure).

    It appears that three sectors in the economy; public sector, export sector (principally internationally traded companies with their Irish suppliers), and the agricultural sector have largely been insulated from the worst of the downturn. Therefore the reduction in the size of the economy is concentrated in the local, SME sector and is amplified accordingly.

    Where fixed costs remain the same or higher (debt, taxes etc.) and income is reduced, the continued failure of businesses and their consequent effect is certain. Relieve the pressure on businesses to meet debt obligations and they have some chance of succeeding. Relieve (not absolve) the pressure on individuals to meet theirs, and allow them to spend and generate momentum in the economy.

    I accept that borrowers should repay their debts. The point is where the ground rules are so fundamentally different to when the money was borrowed that we must take cognisance of these changed circumstances when determining what obligations are met. Pretending that all is right with the world is not going to make it all right, and will guarantee the further deterioration in the economy.

    • bonbon

      Sandy Weill of Citigroup, who knows the banking system inside out differs with your abject subservience. The “borrowers” being Citi itself and the Too Big to Fail monsters borrowed from the taxpayers savings, against their acceptance using the removal of Glass-Steagall, and gambled at the casino with other people’s money, lost and now expect you, subservient, to repay them.

      This has been going on since 2000.

      We do not repay the synthetic losses. First split off the “investment” bank divisions, let them eat their losses. Legitimate debt we repay over 25 years with Public Credit Banking for huge projects the world and Ireland desperately needs.

      So no pretending now. Go for this !

      • Solving Insolvency

        In fact, I am not describing “abject subservience”. You have described the cause of the problem (and may be correct). I am trying to advocate one of the solutions requred to resolve it.

        These suggestions will have impacts on the banking system, which again you may be correct in anticipating.

        Remarkably, it appears from the number and ferocity of some of the replies to the article regarding debt write off that this will not be politically popular.

        However, the problem will certainly not get fixed as matters stand, and unless something significant changes nothing is going to get better.

        I don’t believe that infrastructure or public spending for the sake of it is the answer to our problems.

        • bonbon

          So a Tiger “solution” to the Tiger problem. Does’nt exist I’m afraid.

          What must be done is quite Tiger free.

          Now being human, not pussy cats (which I’m reminded how tough they are all the time by my Tomcats) we must take charge. Cat’s expect it. Take charge of water management, transport, new harbors, power generation, not greenie wind (give the sun back to chlorophyl), food production (not biofuels) and urgent research. Banking to support this Public Good, is Hamilton’s method which every nation-state will activate.

          In other words the “entertaining crash” is holding up progress.

  20. Deco

    Interest rates since the introduction of the EU have been too low. Keeping them low is not sustaining people, it is sustaining their delusions. And this is across the society. Low interest rates have acted as a subsidy towards speculation. Both causing increased speculation, and bailing out speculation.

    I have to wonder what exactly were these people thinking when they bought expensive property – were they thinking at all, or were they just reading absurd Irish media commentary frmo the likes of Austin Hughes and Dan McLaughlin concerning house prices going up forever.

    The unavoidabe answer is partial default and renegotiation. Forget about interest rates. The principal amounts involved were absurd. The lenders will just never learn. And they will continue to lobby the politicians to ensure that there are low interest rates forever in Europe. And more and bigger bubbles.

    But guess what – the sovereign is tied to the banking system all over the place. So there can be no renogiation because that will result in a retraction of the amount of money available for the state.

    Anyway, I am coming to the conclusion that the goldilocks economic paradigm prevalent everywhere from the PDs to Trichet to Bill Clinton for the past twenty years has caused nothing but harm. What the heck were these people smoking ? Never in the history of economics have so many been so stupid for so long…Strangely enough the analysis has been purely ideologically based, even though there really was no difference between any of them.

    The West is intellectually sliding into the abyss. You only have to walk into a bookshop to see this, to see the ceiling of intellectual activity that takes place, in any major Western shopping mall. Or observe the amount of time that people waste watching television. Or sit in a car park outside a large shopping mall, and watch suburbia swagger into action, in the one realm of activity for which people are ultimately programmed these days.

    That which looks to good to be true, invariably is just that.

    • Tull McAdoo

      Austin has’nt gone away you know, why it was only earlier today that I was reading all he had to say about “consumer sentiment”……..

      http://www.rte.ie/news/2012/0809/consumer-sentiment-at-two-year-high-in-july-business.html

      Oh Dear…….nightmare stuff….I wont sleep tonight….people are back soliciting opinions from Austin……Oh dear

    • StephenKenny

      I’m not sure that I’d agree that Clinton, Trichet, and others, are stupid. They, and others, have fantastic wealth, influence, and power.

      We have a system that enables this behaviour to succeed, on a broad scale. Why would people who yearn for power, not ensure that they keep it, whatever the cost to the 99.99%? It’s a simple matter to break social fabric, degrade education and social support systems, and instill into the populous such fear that they are prepared to accept any form of degradation, if carried out in the name of safety and equality.

      They sit in their multi million $€ estates, with tax payer funded guards, and we call them stupid.

      • Philip

        History has shown that to suppress your people yields less wealth and accelerates your own decline. Remember these people have hopes and dreams of a better world as well. Why kill off the very resource that would eventually rebel and kill you off. Remember, at a practical level such groups are jostling each other for power as well. No one wants the other to become too powerful or allows conditions for same.

    • bonbon

      Glass-Steagall is an idea, applied by the elected leaders of a nation-state in the cause of the General welfare.

      Call that intellectual? If so then support it instead of making sweeping criticisms loaded with false morality.

      Morality is not the purview of mere observers.

      • Deco

        Bonbon,
        You do know that the Democrats threw it out ?
        Slick Willy, and Robert Rubin and pals.
        Anyway it is immaterial here, because the banks here fell for a completely different reason.
        We never had separation of the investment units and retail units of Irish banks.
        In fact we even had Irish Life (an investment bank of sorts) merging with Irish Permanent ( a retail bank). The result was a synergy of uselessness. Collection of turkeys. Currently in state ownership.

        Try and get separation of the investment units and the retail units of the Irish banks acheived. Lobby your public representatives. You will be up against the establishment. Best of luck with it.

        • bonbon

          Next you will be telling us Ireland is sovereign, not in the EU, not running offshore trading for London, has it own totally isolated banking system, a merry little island with its very own private financial stink!

          What utter and complete claptrap!

          Now back to serious banking policy in the real world, especially the transatlantic disaster.

          Sandy Weill of Citigroup the self-described Shatterer of Glass-Steagall, is the reason typical politicians caved in in 1999. No better or worse than FG/FF. He knows what he is talking about, and said bank separation is the only possible way to bring this under control.

          So continue to apply pressure, remembering Eire is not Tir na n’Og.

        • bonbon

          So what about it, an intellectual idea or some “completely different reason” ?

      • Philip

        Glass-Steagall served a purpose in the US. No one will do this globally. You restrict in one part of the world, there will be flight of capital to another parts where there are fewer regulations. Same with labour, same with anything where you can get a better return. Ireland benefited because it could offer cheaper labour than the US and so on.

        You need a world government to pull off what you want. World government is a spooky concept for NWO fascist nutters – Larouche being one of them. Time to wake up and come up with ideas that work in today’s multi-polar world.

        • bonbon

          Silly twaddle. Glass-Steagall existed in all nations up to 2000, under various forms – in Germany a package of 80 laws, systematically salami sliced away by none other than Green lobbyists.

          Glass-Steagall FREES us from the financial “world chaos not government” now raging in its death throes.

          So FDR, who defeated the last fascist attempt at world government knew exactly what he was doing when he split up Wall Street. They in turn organized a fascist coup, whistle-blown by Smedley Butler. I am amazed at how many Irish names were in that coup attempt.

          So what do we want a fascist Sir Oswald Mosley United States of Europe, part of a fascist Banking Union, or sovereign nations with a functioning commercial banking element?

    • Halo Effect

      Hubris has met it’s Nemesis and cant man up

      Know thy self, know thy enemy…. your enemy maybe you

  21. Adam Byrne

    subscribe.

  22. bonbon

    The Troika kills. First the pensioners, the suicides of able workers, then the children.
    To bury the nation state, the only idea we have, is their objective. That idea is determined by our future, a future. The future is the kids. They do not want this breakdown now.

    The kids will, and make no mistake about this, measure you. What kind of anti-idea mentality brought this destruction? What insane mental disease?

  23. Halo Effect

    Hubris has met it’s Nemesis and cant man up

    Know thy self, know thy enemy…. your enemy may you

  24. Halo Effect

    Caveat emptor

  25. Philip

    If you bought your PC to write this blog, you are contributing to the destruction of the nation state. If you bought anything internationally because it is cheaper than local production and you exported because you are cheaper than their local production….you have aided and abetted in the destruction of the nation state and the ability to sustain itself.

    Now, on the law of averages, it was hoped that this would even out as nation states scavenged one another, but the sudden arrival of Asia and her massive ability to export low interest rates (and this is an important point) by virtue of keeping prices down and then forcing people to move from pensions/ savings to property because reliable blue collar income was eliminated.

    I 100% agree with Deco about the sustaining delusions with low interest rates. However I see that the root cause of these delusions was the imbalance of trade – not interest rates of themselves.

    The mess with mortgages and the EU and Banks etc is the result of 20-30 years of increasing trade imbalance by virtue of an imbalance in human rights which led to the take on of unproductive debt in the west. The Dollar and the Euro is on a base of sand called property where everyone in a renter with negative returns…including banks.

    The fight by the Elite/Insiders (call them what you will) is to stabilise with no real plan for exiting out of this mess. The world is multipolar and it is in no one’s interest to see anyone fall – because the outcome is utterly unpredictable. Do not think for one second that zeroing the debts will solve the problem…it’ll just reinforce delusions and a temporary restoration of “normality” which we know is failing.

    In Ireland the problem is one of maintaining some stability of sorts. We are lucky to be small, have flexible workforce with high emigration to a large anglo sphere. But against that we know if we suddenly pull plugs in the public sector (Teachers/ Nurses/Gardai)…you have a mess. We know if banks are purged suddenly, we break EU connections. And EU needs stability as well.

    Reading these blogs, I have yet to see/understand any way out. But there are ideas out there. And one or two will catch hold. My view is that the root cause is still incorrectly diagnosed. It is not banks that are breaking the nation state – but that capital always has another route to less-regulated areas. In a multipolar world, policing that is a major diplomatic challenge. But acknowledging it might be the first step.

    • Halo Effect

      Policing is the only way forward and I thought I was the only one on here to suggest that now there is two?

      “policing that is a major diplomatic challenge”

      There is of course Merkels banking Union, which is inevitable if the Euro/EU is to last and and hopeful it will spread world wide but those most opposed would be the USA and the UK but they could in time find themselves isolated.

      Trust needs to be a top priority and policing is the only way this can be achieved in both the short and more importantly the long term.

      • Philip

        The problem as it always was and always will be…who polices the police – and there-in lies the basis for democracy, laws etc. We are getting there. Slowly.

        • bonbon

          Some here want bankers to police the police, Draghi, Monti, Geithner. Bankers Union, United States of Europe? Monti remarkson ignoring elected governments, i.e., Mr. Blair’s “Governance” has woken up even the Frankfurter Allgemeine Zeitung, FAZ – see below.

    • bonbon

      “It is not banks that are breaking the nation state”. Wow what a statement! Noted for its sheer sophistry.

      Now the best banker to know about this just told everyone that indeed since 2000 the entire mess has been caused by the repeal of Glass-Steagall in 1999. Sandy Weill of Citigroup, following the Financial Times Editorial of July 4, all concur, and they should know, that this cannot continue. The real root cause is correctly diagnosed, and the real root solution. I’m afraid you have simply ignored the real world.

  26. Dorothy Jones

    http://www.independent.ie/national-news/childcare-costing-more-than-mortgage-bills-survey-finds-3190912.html

    Also from the Indo 120807 on childcare costs…. €1,113/mth to have a small child minded in Swords? Wow

    • Halo Effect

      If wages fall as David predicts then child care cost should also fall.

      ask David if child workers over overpaid

      But David does not want debt forgiveness for those renting a 1600 euro house he wants debt forgiveness for those with an average monthly mortgage payment of €913 according to Irish Independent.

      Last month the Irish independent told house prices were rising when they were in fact falling.

      UP TO; €1,100

      {{{“Our nationwide survey found that families are paying up to €1,100 a month to have just one child minded.

      That far exceeds the average monthly mortgage payment of €913 faced by parents in the key child-rearing years of 25-44.”}}}

      • Philip

        Paying for health and safety and regulations that add little or no value. Paying for insurance, over speced buildings. No money left for a good carer who get nah dah. It is a disgrace. And then there is tax and audits…rubbish the lot of it. Pay 400/ month is reasonable and fair. Get along with your neighbours and I am sure there are a few experienced mums who’d do it happily for 100-150/month. But so much inter-generational division makes this unlikely.

  27. Halo Effect

    David,

    you appear to be equating falling house prices “negative equity” with mortgage areas.

    { “WHAT do you think will happen to this generation, caught between huge childcare costs, negative equity and falling incomes, if the monthly mortgage bill were to rise.” }

    It has also always been the case with mortgage’s that interest was never stable they were at 17% 80s

    A baby born at the time of the crash of 2008 is now in school and some of those born in the 00s boom some are now twelve.

    Hopefully they will be educated on the risk associated with borrowing and the importance of only spending the money you have.

    A false liquidity may well become another and more dangerous Gorge feast this attitude of self gratitude has to stop ‘because I am worth it’

    A education in civic responsibility is what is needed

    STOP SPENDING OTHER PEOPLES MONEY

    • bonbon

      The investment banks spent other peoples deposit money gambling at the global casino. They could only do this as the barrier between these banking operations were taken down in 2000. These barriers did not allow banksters to spend other peoples money. This wave began in 1998 when Sand Weill merged Citi and Solomon Brothers. Weill now calls for the immediate restoration of banking separation.

      I agree banksters should not spend other peoples money, and when they loose a gable, get bailed out again with other peoples money. But mere pleading, prayer, or “civic resposibility” is not up to par. Laws help keep bankers honest.

      The banksters have been gine more than $30 trillion of other peoples money, and future kids money, and are still not sated.

      • Halo Effect

        One wrong does not make another wrong right that is a justification the so called hoodies use the Martin Gilligans if this world use it too…

  28. Halo Effect

    David, do you only want debt forgiveness for those that have mortgage’s

    • Philip

      The more we talk of Debt Forgiveness, the more we are missing the point. All you do is re-spark the spending.

      I am all for debt forgiveness if spending suddenly become wise? But that is dreamland.

      We need a better approach.

      • bonbon

        There is a better approach – splitting the banks, repudiating the synthetic debt, respecting the legitimate, and starting huge economic buildup over 20+ years to get us back on track. This has been amply demonstrated by FDR, JFK, Lincoln, Hamilton, and the German Reconstruction. Lots of projects are on hold because of the Tiger fascination with “that glorious epoch”.

        Snap out of it. The kids DMcW mentions, if they survive, will be adults in 20+ years, and expect a functioning economy. If they still hear the drivel passing for “economics” and “morality”, while rummaging in garbage dumps, they will puke.

        One could spend that 20+ years muttering “We need a better approach” – it becomes a way of life does’nt it!

  29. bonbon

    Monti’s Attack on Parliaments Draws Prominent Criticism in Austria and Germany

    In a harshly-worded statement issued in Vienna yesterday, Ewald Podgorschek, financial policy spokesman of the Freedom Party of Austria (FPOE), denounced Mario Monti’s disrespectful remarks on national parliaments, in a newspaper interview, as an attack on democracy. The division of power, giving parliaments political control over governments, is a core aspect of democracy; therefore, Monti’s remarks have to be rejected in the most categoric terms, Podgorschek said, adding that one may pose the question of whether Monti’s loyalty still is more with his former employer, Goldman Sachs, than with Italy and its people.

    In Germany, a Frankfurter Allgemeine daily commentary said that Monti’s remark that governments had to “educate” their national parliaments, “tells of a, cautiously formulated, weird understanding of democracy. He is probably right to say that the breaking apart of Europe becomes more likely if governments are totally bound to decisions of their parliaments. What follows from that, however? Europe can only live on, if the national parliaments have the least to say? The Federal Constitutional Court, which is presently deliberating on the ESM, will note these remarks with interest.”

  30. Halo Effect

    Below is an opening paragraph from The Irish Times – Comment-Friday, August 10, 2012

    Germany’s euro debate

    A NECESSARY, welcome but belated public debate is opening up in Germany about the future of the euro and that state’s role in preserving it. The discussion engages different members of the conservative coalition between the Christian Democrats, Free Democrats and the Christian Social Union, the opposition Social Democrats, Greens and Left parties as well as dividing economists, lawyers, philosophers and other intellectuals, the media and the country’s wider public opinion. Since Germany is the central player in this drama it is essential that its political leaders and voters have a clear understanding of the choices facing them ahead of federal elections in just over a year.

    http://www.irishtimes.com/newspaper/opinion/2012/0810/1224321894074.html

    • Halo Effect

      I have said here before that the Irish should be having public debates on this and others issues including debt forgiveness but we wait until a few week before a referendum and what little debate we get inevitably descends into a party propaganda shake down.

      We should have ongoing public debates which would help inform the public and our our politicians.

      • Harper66

        “I have said here before that the Irish should be having public debates on this and others issues including debt forgiveness….”

        what user name were you using when you said this?

        • Halo Effect

          What does that mater from one aka to another aka -I think I was Harper65 or was it Deco007, it may have been BONBON the 1st.

          If I am anonymous like you are now then I don’t have to back up what say, do I.

          I can do what some others do and change my name even pretend I many different people I may be David McWilaims.

          I have conversations with myself sometimes I am Philip
          sometimes when I am really low I reply to one of my many altar ego and tell myself how great I am.

          I could be a group of people at work using the same tag.

          But Harper66 who/what ever you are, You are right I also wondered who would be sharp enough to spot that and you get ten points for that.

          So where do we go from here David McWiliams as tomorrow I may change my name to elephant in the Blog

          So what you think Harper66 should we debate the subject above – a national debate – or should debate my anonymous self’s.

          I am not anonymous and I have even left a clue before I changed my Tag and there is at least one man that should know it but Harper66 you are anonymous and it seem to be a case the kettle calling the pot black?

          What do you think Harper66 maybe we are the same person?

          • bonbon

            Eh? Multiple personality disorder MPD, caused by blogging? Could be an occupational hazard. I’d watch that – sounds worse than Beri Beri.

            Politicians are showing worrying signs of MPD, and bipolar twitches, caused by their incredible loop-the-loop party tactics as the entire financial system collapses. Sandy Weill’s sudden Damascus Road conversion is not MPD, rather a return to humanity.

            Caught the entire “community” unawares – very nice.

      • bonbon

        In Germany, a Frankfurter Allgemeine daily commentary said that Monti’s remark that governments had to “educate” their national parliaments, “tells of a, cautiously formulated, weird understanding of democracy.

        Are we talking Monti-speak here?

        • Halo Effect

          This debate does show that it is politics that will be a major part in deciding the Germans position on the EU/EURO and think this is the most intelligent approach on the euro crisis to date why no other country is doing this is beyond me…

          Were do we want to be?

        • Halo Effect

          Tagging is what news headliners do ‘pigeon holing’

          Bonbon, does it not make sense to debate instead of jumping from hot coal to hot cold making rash reactionary decisions like debt forgiveness bank bailout and more.

          News Headline should not be allowed to run a country that what stock brokers do too and there is to much power afforded to them.

          • bonbon

            As Tsiprias of Greece says, you cannot debate with Hell, the Troika. Sandy Weill did not debate either when he shattered Glass-Steagall or when he called for its restoration. FT did not debate and delivered its very surprising call for Glass-Steagall.

            Realizing the “elites” would like others to “debate”, shows a different approach. Put the nation squarely on the table, Hamiltonian banking for the Public Good and change the terms of the “debate”.

  31. bonbon

    Deutsche Welle, the official international broadcasting agency of the German government, runs a lengthy article announcing boldly that Glass-Steagall “is on the table in the United States and Germany.”
    Accompanied throughout by captioned pictures :

    “Senator Carter Glass and Rep. Henry B. Steagall wanted to help end the Great Depression”

    American statesman Lyndon LaRouche called the article significant, noting that a number of opponents of
    Glass-Steagall have recently turned to endorse it, such as the Financial Times and The New York Times, and in Germany, the debate has been joined by Handelsblatt, Der Spiegel, and the Constitutional Court. LaRouche characterized the support for Glass Steagall in both nations as “reaching a significant threshold.”

    Summary :

    “Can Breaking Up Banks Fix the Financial Crisis?”

    “An over 80-year-old idea is on the table in the United States and Germany: separating risky investment activities from everyday banking. But views differ on how strict the separation should be and if it will even help.

    – Reform fervor back then, a fear of reform now -

    “The Glass-Steagall Act was not the only change made in the US banking sector. The US Securities and Exchange Commission (SEC) was established one year later — in 1934.

    “In contrast, — nearly four years after the collapse of Lehman Brothers — politicians have few fundamental reforms they can say will protect future generations. `It’s bordering on the criminal that we have not learned one lesson from the crisis [that began in] 2007 and have not really managed to improve regulatory mechanisms,’ Voth said. `I think it also reflects a failure of intellect.’


    – The appeal of the old system -

    “No wonder then that some now wish a return to the major reform of the past, the separation between commercial and investment banks of 1933. That was finally eliminated in 1999 under President Bill Clinton. The decision suited a time in which deregulation was the magic word.

    “Even before 1999, the legal separation of banking had been gradually weakened. Thus, in 1998 the financial giant Citigroup, itself the result of a merger, was allowed to buy the investment bank Salomon Brothers.

    “Ironically, Sandy Weill, head of Citigroup until the outbreak of the financial crisis and one of the major beneficiaries of deregulation, is now demanding the reintroduction of the separation between commercial and investment banks. The New York Times, which had fought the Glass-Steagall Act for years is now a convert. `Having seen the results of this sweeping deregulation, we now think we were wrong to have supported it,’ the newspaper said in an editorial.

    “In Germany, Social Democratic Party leader Sigmar Gabriel and Nikolaus von Bomhard, CEO of reinsurer Munich Re, have come out in favor of separating banks. They said there should be no banks that are so important for a country that they need to be rescued with taxpayers’ money: `If something is system relevant, something is wrong with the system,’ von Bomhard said.

    – Size isn’t everything -

    “`I’m not a big fan of a black and white policy that says we should break up the banks and keep them seperated,’ said Georg Fahrenschon, president of the German Savings Bank Association.
    “Economic historian Voth also said he does not believe that a two-tier banking system would have prevented the financial crisis. But added that a separation is necessary to prune banks back down to a size that does not threaten the entire economy. Until the beginning of liberalization in the 1980s, the world managed to get by very well without banks that were `too big to fail,’ and economic growth was strong.
    “Voth said the argument that growth was not possible without large international financial groups is a myth: `Nothing that is important to the economy was really worse 20 or 30 years ago. We wouldn’t really miss any of the economic functions that investment banks perform today due to their size.’

    “Because of its size Deutsche Bank is also `a risk to Germany that would be really hard to bear,’ said Voth. `I do not know how many crises we need to go through before we learn to regulate things well.’”

    August 10, 2012 Author Andreas Becker

  32. bonbon

    London Financial Investigator: There’s a Reason Why Almost Every Major Financial Scandal Has a London Connection

    Rowan Bosworth-Davies, a former London Metropolitan Police (New Scotland Yard) Fraud Squad detective and the former head of investigations for City regulator FIMRA, the predecessor to the FSA, has denounced the cries of ‘unfair’ coming from sections of the City after the announcements from New York State’s Department of Financial Services on Standard Charter Bank’s money laundering.

    He states on Aug. 9 on his website, “They don’t seem to understand that the American authorities are growing very concerned with the way that just about every major financial scandal seems to emanate from London or has a London element. Barclays bank, the LIBOR scams, HSBC, and the money laundering evidence, the billion dollar derivatives losses caused to J.P. Morgan Chase, were all orchestrated from London; there are further U.S. investigations into RBS, [and] it all adds up to an orchestrated level of regulatory failure and the Americans are rightly concerned.”

    Rowan Bosworth-Davies has decades of experience working with U.S. investigators and is not unknown to numerous former prosecutors from New York who support Glass-Steagall.

  33. bonbon

    This is how to do it :

    Perth Amboy, New Jersey City Council Demands, Pass H.R. 1489!

    Aug. 10, 2010 (LPAC)–The Perth Amboy, N.J., City Council passed the resolution below calling on Congress to pass H.R. 1489, the bill to reenact Glass-Steagall, on Aug. 8:

    RESOLUTION URGING CONGRESS TO ENACT H.R. 1489, “THE RETURN TO PRUDENT BANKING ACT.”

    WHEREAS, the current weight of trillions of dollars in gambling debts, foisted on the U.S. taxpayers in the 2008-2011 bailout of Wall Street and the City of London is currently obliterating and destroying the economy of the United States and its people; and

    WHEREAS, it is in response to the failure of thusands of banks across the country that Congress enacted the Banking Act of 1933; and

    WHEREAS, the first step to solving this problem is the reinstatement of Glass-Steagall through the adoption of and enactment of H.R. 1489; and

    WHEREAS, the enactment of HR 1489 would provide greater security to banking deposits in commercial banks, would allow investment banks to leverage their own funds and limit the risks of the American citizenry;

    NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF PERTH AMBOY:

    1. That the United States Congress is hereby requested to immediately pass H.R. 1489 and identical legislation in the Senate as the indispensable first measure to save the nation from irrevocable economic harm.

    2. That copies of this resolution shall be forwarded to United States Senators Frank Lautneberg and Robert Menendez, to the New Jersey Delegation to the House of Representatives, and to the Boards of Chosen Freeholders in New Jersey.

    /s/ Kenneth Balut, Council President /s/ Elaine M. Jasko, City Clerk

    Dated: August 8, 2012

    APPROVED AS TO FORM: /s/ Mark J. Blunda, Director of Law

  34. bonbon

    The IT opinion piece posted above, firstly does not show the harsh response to Monti’s outburst posted here, nor is it up to date.

    Guns of August Drumbeat: Some Hope for the Great `Carl Schmitt Moment’

    {Sueddeutsche Zeitugn} journalist Thomas Kirchner, Aug 10, writes an ominous feuilleton essay with the headline: “The attack is imminent. We should therefore finally approach the crisis realistically.” He cites Fred Bergsten and Jacob Kirkegard, who said that the situation in the eurozone is comparable to what in former times would have been “an imminent military attack” on a territory. In such extraordinary times, countries always were ready to give up sovereignity on a large scale. Therefore, says Kirchner, “the threatened collapse might be a small sign of hope for the euro.”

    Before that, he lays out various scenarios: How to circumvent the present resistance in the European population and nations against a full-fledged United States of Europe, which cannot be sold in this way. Other proposals, with “only” some transfer of sovereignity, come from Van Rompuy and Padua Schioppa. However, all of this would not function at present. The euro can be saved, if at all, by splitting the eurozone, as Jean-Claude Piris, former chief of the legal service at the EU proposes (a sort of “deepening-treaty”). This avant-garde would establish new institutions, which would exist in parallel to the existing ones.

    Kirchner lauds the Habermas/Gabriel offensive for joint liability and budget control; however, that is not good enough either. But it was high time that somebody said “the truth,” that we have to pay anyway. The SPD and Greens have to organize for “another European economic policy and a refoundation of the currency union,” and leave the “European emphasis of the professors” behind. Europe now needs politicians who are ready and have the strength to take their citizens into “an unfamiliar world.” The approach of little steps will not be sufficient. “He who really wants the euro, must be ready to take political risk.” Kirchner “predicts” a big crisis, and that very soon: the German lax attitude, to only see the euro crisis as the fault of the others, will “immediately turn into panic, when the first real guarantee millions have to be paid.” And already, one sees the end of “the triumphant German special economic conjuncture in the export results of Siemens, MAN and Deutsche Bank. — In short, some people are counting on the coming Carl Schmitt moment, in which suddenly those things considered impossible before, will be accepted.”

    ——–
    For those with no historical view, Carl Schmitt was the Crown Jurist who wrote Hitlers Enabling Act. Schmitt is a favorite in many Justice depts, Uni’s, a darling of Ashcroft and Rumsfeld.

    Schmittlerian methods to “save the Euro” ?

    • StephenKenny

      and ‘Guns of August’ is an interesting book about the run up to, and first month or so, of World War 1, by Barbara W Tuchman.
      It paints the picture of the chain of events that, after a point, made war almost inevitable. Then it covers the the complete misunderstanding of the nature of the forthcoming conflict.
      So the pre-war impression was that it couldn’t happen, and doom mongers were right and it did, it would be short and sharp, with few casualties. These were the views of the best brains of the day.
      Recommended read – JFK apparently mentioned it during the Cuban missile crisis.

      • bonbon

        Obama sent Congress home (after they unanimously voted for no recess) to have a free hand likely to attack Syria. And now we have this kind of press comment on the immanent collapse of the Euro. Guns of August.

        Tuchman has another excellent book, In A Distant Mirror: The Calamitous 14th Century (1978). Cataloged are the horrors that destroyed all of Europe, with the bankruptcy collapse of the Lombard banking system, the outbreak of the Hundred Years’ War, and the arrival of the “Black Plague.” Within a few generations, half of the population of Europe was obliterated, and it took almost a century for Europe to recover….
        Yet, today, Synarchist bankers are all working overtime–on behalf of a London that is today’s “new Venice”–to return Europe and the Americas to the 14th-Century nightmare, where nation-states no longer exist, and where warring city-states dominate a greatly depopulated world, all in hock to private financier cartels….

        Blair’s recent intervention “to save the Euro” is pure Venetian in intent.

  35. bonbon

    Some are calculating wrongly : Asian banks prepare for BRIXIT :

    http://blogs.telegraph.co.uk/finance/author/ambroseevans-pritchard/

  36. bonbon

    Everyone knws austerity cannot work, either here or in the USA. But billionaires apparently think it must.

    ROMNEY PICKS AUSTERITY FREAK PAUL RYAN AS VP RUNNING MATE

    Aug. 11 (LPAC)–Putative Republican Party presidential nominee Mitt Romney has picked uber-austerity fanatic Rep. Paul Ryan (R-Wisc.), the 42 year old chairman of the House Budget Committee, as his vice presidential running mate. At an appearance at a rally in Virginia this morning, Romney introduced his pick.

    Ryan was first elected to Congress in 1998, when the Democratic incumbent sought the U.S. Senate seat. Prior to his election, Ryan worked for Empower America, the Jack Kemp political action committee, where he was a speechwriter. The group later merged with another conservative PAC and was renamed FreedomWorks.

    At an Atlas Society meeting celebrating Ayn Rand’s life in 2005, Ryan said that “The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand,” and “I grew up reading Ayn Rand and it taught me quite a bit about who I am and what my value systems are, and what my beliefs are. It’s inspired me so much that it’s required reading in my office for all my interns and my staff…”

    “I always go back to… Francisco d’Anconia’s speech in Atlas Shrugged on money when I think about monetary policy.”

    “We have to go back to Ayn Rand. Because there is no better place to find the moral case for capitalism and individualism than through Ayn Rand’s writings and works.”

    One of the first major votes that Ryan cast in 1999 was for the Gramm-Leach-Bliley Act which repealed Glass-Steagall.

    Now Obama has intervened to take Glass-Steagall of the agenda.
    —–
    Looking at the von Mises Austrian School website, so favored by Ron Paul, we find Ayn Rand “required reading”. Small little band of “thinkers”, eh?

  37. bonbon

    As Griffith said, political independence would be meaningless without economic independence.

    http://laroucheirishbrigade.wordpress.com/2012/08/11/time-to-remember-griffiths-role-in-pursuit-of-irish-liberty/

    Griffiths economics, well published in the United Irishman with explicit reference to Friedrich List’s writings, are here :

    http://american_almanac.tripod.com/sinnfein.htm
    http://american_almanac.tripod.com/listlieb.htm
    http://american_almanac.tripod.com/hammanuf.htm

    Here we have a point for point refutation of Adam Smith, a full exposition of Hamilton’s economics and finance.

    Telling is the IT essay this week not mentioning a single economic reference.

    It is high time to put Hamilton’s, List’s and Griffith’s policies on the agenda immediately, with 100 years of experience including Lincoln’s, FDR’s and JFK’s examples. Thus the economic recovery of Ireland for today is developed.

  38. bonbon

    Arthur Griffith acknowledged Friedrich List’s economics, developed from the American System. That none of this is taught today is a telling epitaph of a dying financial casino.

    What is `American System’ Economics?
    PHYSICAL ECONOMY — Part I http://american_almanac.tripod.com/nbs1.htm

    The ‘American System’ Means Sovereignty, Not Free Trade
    PHYSICAL ECONOMY — Part II
    The ‘American System’ Requires That A Nation Control Its Own Currency
    PHYSICAL ECONOMY — Part III
    The ‘American System’ Requires a National Bank
    PHYSICAL ECONOMY — Part IV

    Considering what Wall Street and London have foisted on the world, it is time for Griffith’s approach again. Step aside from the raging financial storm and wonder.

  39. Rename this blog!

    I suggest this blog to be renamed into LarouchePac dot ie instead of David Mc Williams dot ie.

    • StephenKenny

      How about we all look at the references that we are presented with, read the comments, think for ourselves, and, to the best of our abilities, decide what is true. Then take that belief, and write comments.

      We need also bear in mind that most people do not read every comment, every day, so to get a message across it is necessary to repeat it.

      For all of my life, I’ve listened to the views of the vocal political groupings, and have come to the conclusion that their near-religious political obsessions are the core of the problems that we are now facing.

      In every single case, we hear, in some form or another, that the ‘ends justify the means’, and these ‘means’ always seems to involve doing considerable damage to everything around me, to the benefit of a very small minority.

      • bonbon

        The core of the problem now brought on by the Tiger affinity for British liberalism, must be faced. The denial of ideas, as President Higgins aptly named “anti-intellectual attitude”, is crippling. Remember Eire is the only country I am aware of that elected a President that bravely values ideas.

        It is essential to break away both from Dionysian irrationality, and induced pessimism, both of which are rampant in the blog. To fight these pandemic illnesses gets one pilloried. But it must be done.

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