November 18, 2013

The view from Germany

Posted in Euro · 126 comments ·

If you want to understand the economic power of Germany, just drive here. You can feel the vibrations of this great superpower on the inside lane of the A1 autobahn from Dusseldorf to Cologne. Unlike motorways in other countries, which can be empty or when full are full of cars, the German motorways are unambiguously part of the industrial infrastructure. They are the manufacturing arteries of the economy and the inside lanes shudder with juggernauts moving goods in and out of this extraordinary trading phenomonen.

The trading success is nothing more than the amalgamation of the excellence of thousands of companies, employing millions of meticulous craftspeople, who through serious application to the business of commerce have made this country what it is.

Sitting in the dark paneled surroundings of the Hofbrauhaus Fruh in the shadow of Cologne cathedral, watching elderly Germans scoff down schnitzel and local red wine, it’s hard to imagine that this generation – Germany’s post-war greatest generation – could have, even in their wildest dreams, conceived of the success they have made of their national enterprise.

A few yards away, up and down the great Rhine, huge barges mirror the inside lane of the autobahn, ferrying manufactured goods up the river and out to the world via Rotterdam a few hundred miles upstream.

Unlike other rivers, this is not a silent place. On the contrary, the Rhine’s background noise is the relentless drum and bass of the barges – tud, tud, tud – all day and all night.

This is the monotonous sound of successful business. This is the repetitive, trance-like sound of businesses doing the same things again and again, brilliantly, day in day out, without drama.  This process is what produces the massive current account surplus, that last week the Americans were complaining bitterly about – which is kind of rich given the Americans have just been caught bugging the phone line of Mrs. Merkel!

But the German current account surplus is a problem in the sense that a current account implies by definition that the country is a massive net lender. This means that German money leaves Germans and cascades into other countries looking for a return. In this way, German banks financed Irish banks and the banks of the other periphery countries. That is what a current account surplus means: the surplus country finances the ones in deficit.

The German current account surplus means that there is a surplus of savings in the heart of Europe. This surplus of savings puts downward pressure on both Eurozone interest rates and retail prices.

The excess savings leave Germany looking for a home and that home might be Irish government bonds, which yield more. But it’s not just Irish bonds, the IOUs of all peripheral governments have benefitted from this German surplus. Long-term rates everywhere have fallen. Could this be more a reflection of the excess of German savings than the notion that the economies of Ireland, Italy, Spain, Portugal or Greece have become better credits overnight? With huge debt burdens in all countries and faltering growth everywhere, a betting man would vouch for the former rather than the latter interpretation.

This week, emboldened by the lower interest rates, our government decided to eschew a precautionary insurance fund and go for the “clean” bailout exit. Let’s see how wise this is.

The government cited the much better financial conditions of recent months, suggesting that we are now in much better times. That may be so, although recent financial history indicates that the worse financial decisions are taken in what appear to be the best of times.

The notion of the best of times is simply an assessment of the ebb and flow of investor sentiment at a particular point in time. The financial markets are always prone to wild swings between greed and fear, between excessive optimism and unbridled pessimism.

Normally the best indicator of where we are is the price. High prices bring high risk, by definition. The higher the price, the more people try to get on the bandwagon, because they believe that high prices are a sign of lower risk but in reality the opposite is the case. As prices fall, risk falls too. Conversely, as prices rise, risk rises too.

In economics, pupils are taught that when the price of something rises, the demand should fall. However, in financial markets the opposite is observed: when prices rise, the herd get on the bandwagon driving prices yet higher, before the whole house of cards collapses and we start again at lower prices.

Anatomy of a typical bubble

Look at the graph. It explains how bubbles start and how they end and where the value is for the savvy investor. This pattern is observed in all assets from the paintings of Francis Bacon and Andy Warhol, to houses with sea views and to government bonds of countries that are dependent on foreigners buying their IOUs.

The progression is similar in all cycles. Initially the asset is unloved. No one wants to touch it. This is the stealth phase. There are far more sellers than buyers. The assets are going for a song. Then we move into the awareness phase, where prices begin to tick up and institutional investors begin to show interest, committing some capital. Look at the mean price, which is the dotted line and you can see we are beginning to move away from it.

Then we enter the mania phase. This is heralded by media reports swooning over the assets telling us “this time it is different”. Then we get the enthusiasm, the greed phase and we are away.

Irish people know how this story ends. Once asset prices start to fall, not only does the psychology of the investor whiplash but so too does the credit cycle. Credit moves from being abundant to become scarce, cash calls are made and the borrower ends up being squeezed. We’ve all seen this happening.

Now ask yourself what makes you think that Irish government binds are any different to any other asset in terms of this cycle? And where do you think Irish government bonds – an asset whose price has sky-rocketed in recent years on the back of old Germans keeping Euro interest rates close to zero – might be in this age old cycle?

As the barges of the Rhine, laden down with new cars made for export, plough up the great waterway and the productive local Germans take their post lunch stroll on the banks, one wonders if they cop onto what is happening in the Irish bond market again, will that gentle stroll lead to a run?

David McWilliams writes a regular economics column for the renowned German financial magazine “Capital”. They can be seen at

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    • Congratulations David on your new work with ‘Das Kapital’ (sorry, Freudian slip – ‘Capital’!).

      Will the articles be translated into English and/or will you be putting them up here?

  1. This great article is written at a time in history that we will read again and compare it with what subsequently happened.

    What will happen next ? That is ever present on our minds now . How will the Gamble have paid off ? Was there an easier way ?

    The Markets were never allowed to rescue our Island Economy and instead Politics intervened and allowed to FUDGE the world around us .This has continued since Bail Out days to Exiting Days .

    Who is really exiting and what ? Who is really being bailed out ? Who will pay ?

    We are at a threshold in history that will be rewritten and what might that be?

    Economist refrain from predicting and so does our host .Some do try the unknown and Galbraith always wanted to challenge its science and provide a new insight . Irish Economics has failed us as a science for predicting and all its peers just do not want to know about it when it does really matter .We need to change that uncultured culture and be more insightful with a new horizon good or bad.

  2. Patrick

    David, I know that you like to talk about the ecomomics but Germans have learnt to keep making “things” not bonds.
    Ireland needs to get back to that, making things.
    The Germans are closing their Nuclear plants. We should generate nice Green wind power and sell it to them
    The Chinese are getting a taste for beef. We need to sell it to them.
    The Chinese dont trust their own Baby formula. We need to sell it to them.
    The Far East sees Europe as the home of Luxury goods. We must sell Luxuries to them. Them we will be like Germany and all the economics will fall into place.
    Can Enda be a statesman and set up the systems to allow this to happen?

    • CorkPlasticPaddy

      @ John Allen

      We know who is being ‘bailed out’ time after time and that is the ‘insiders’ of course and it’s the ‘outsiders’ who get their collective asses kicked every time

      @ Patrick

      Enda couldn’t organize a ‘piss-up’ in a brewery on a Saturday night never mind set up systems to allow what you’ve suggested happen!!!!

  3. That graph looks very like one that Brian Lucey has published on his own blog today in relation to Bitcoin:

    • 5Fingers

      What are bubbles…Slowish Ramp up , cliff- like falloff. They are all the same. Beyond that, they are unpredictable and a previous bubble cannot be reliably used to predict one in the future. Indeed, for all we know we are all on top of a long term bubble (decades or more long) that is ready to fall off a cliff. I do not even take DMWs bubble too seriously either. Smart Money is a retrospective story of those who got lucky…nothing more- I absolutely hate the term and it makes people stupid thinking there is some “magic” to smartness other than luck. Who was to know when a fast ramp up was coming or how long it would last. I follow a rule…get out at 20-30% up and never look back and spin back a fraction for the hell of it….what a much richer place we’d have if all did that.

  4. Pat Flannery

    So, David, you are now predicting that German savings looking for investment opportunities in the EU periphery countries will flood into Irish government bonds driving up our cost of money just as excess German savings created the late Irish property bubble.

    Do you really hate the Germans that much or are you so terrified of them drowning Britain economically that you must distort the facts?

    Every time we forge closer links with Germany you franticly predict our economic demise. You make these predictions in an attempt to deny us the liberating air of modern German thrift and industry and to force us back into the stifling economic cave of “Mother England”.

    You are a very poor ambassador for Ireland because you constantly distort the realities of Irish-German and Irish-UK economic relations. This is one of those occasions. David Cameron couldn’t have done it better.

    • Pat Flannery

      David, you are simply wrong saying that the German current account surplus is a problem for the rest of the EU (other than embarrassing the UK of course).

      You are wrong saying that a current account surplus implies “by definition” that the surplus country is a massive net lender and that as a result money leaves that country and “cascades into other countries looking for a return”.

      You are wrong saying that “German banks financed Irish banks and the banks of the other periphery countries”. It was British securitization bonds that financing the Irish property bubble.

      You are wrong saying “That is what a current account surplus means: the surplus country finances the ones in deficit.”

      The truth is that a country’s current account surplus such as Germany’s can be spent in many ways, investing in its own infrastructure and public services for example.

      I don’t know why you distort facts about Germany. I only know that you do and that you need to stop.

  5. Pat

    You really don’t get it. Why do you think I have devoted many years of my life to learning German, reading German literature and visiting the country? I also write for a German magazine, what part of that don’t you get?

    This article is nothing but complmentary to Germany.


    • Pat Flannery

      My comment above was meant as a reply to this. And please stop patronizing those who may disagree with you.

    • michaelcoughlan


      I think your hinting at a potential bubble in Irish govt bonds yes?

      • redriversix

        Morning Micheal

        is their not a bubble already growing in bonds across the World ?

        We are not leaving any bail out programme..just being transferred to a open prison for model prisoners were the Guards patrol less.

        Hope all good with you today ?

        • michaelcoughlan

          Morning Barry. I’m very well thanks. Yes re bubble in bonds and everything else. It just beggars belief the way things are but they are. In England the UK government will give you a grant towards your overpriced house. Imagine if such a thing happened in Ireland during the boom? McWilliams would give birth.

    • bonbon

      Sure London studies German. Even GCHQ is fluent watching Angelas sms’s.

      That b*s won’t wash.

  6. Are The Germans A Master Race Or Are We So Dumb ? Anyone Would Think The German Surplus Was Donated To The Poor To Pay Water Tax Could Not Be Further From The Truth Germany Gets A Handsome Return For Its Perceived Kindness . And What With Donkeys Paying 40% Of All EU Debt They Should Have Twice As Many Barges Next Year? Germany Learned A Lot Since The Bismarck When A Good For Nothing English Plane Blew The Steering wheel Off It , Sights On Bismarck Set To High All The Rag Tag Plane Had To Do Was Go In Under Em , There’s A Lesson There Somewhere,
    If The Irish Stopped Telling Lies Around Chapel Gates An Talking In Crowds’Around The Dail We Might Get Something Started,

  7. 5Fingers

    Great article. The very true but depressing phrase “recent financial history indicates that the worse financial decisions are taken in what appear to be the best of times” points to humans and their herd mentality. The Insiders know it, the Politicians know it, the media feed it and a lot of us get hammered as a result.

    German money may be sloshing around for a good deal and certainly our higher bond returns will be leveraged. It means Ireland has to produce substance in a very open and MORE unpredictable environment. Balancing input costs to businesses versus sustainable public services will be trickier than ever, but I figure if trade with Germany was enhanced, that could turn out to be a sustained win win – and we might take on some of their business habits as well. Maybe the day of the Shamrock Bowl to the US needs careful de-emphasising.

    By the way, the stuff about Germany and ultra efficiency and thrift and so on is a bit overstated – I see this as an emergent property rather than a planned one. They are not as planned as you might think. Their big big strength is small venturesome multi-generational businesses. They have a lot of long term stuff around that is not going away anytime soon. Experience wins over hype every time. Germans are not into Get Rich Quick…More like, Get it and keep it and own it.

  8. Pat Flannery

    5Fingers: “Great article” does this mean that you buy into David’s assertion that a German current account surplus is bad for the Euro Zone as a whole because German savings must AUTOMATICALLY flow into the peripheral deficit countries driving up bond prices and making them ever more dependent upon Germany?

    • 5Fingers

      I suppose my way of interpretation is that being a problem and being bad are qualitatively different. A problem is like saying I am overloaded with new orders. It is bad if I cannot fulfill them. From Germany’s point of view, they have a load of cash looking for a return and it puts Germany in a politically powerful position that could be played against it. It is also a problem for peripheral Europe if such money jacks up confidence to unsustainable levels and human optimism takes its toll. It could create an unacceptable dependence by the periphery for the Germans. My view is we need to export and strengthen trade with Germany like never before…same for everyone else…including UK. Could the Shannon become the new Rhine? Could Limerick become the new Rotterdam/ Hamburg?

  9. Pat Flannery

    David saying here that a German current account surplus “is a problem” is like saying that a son who is frugal and has his shit together is “a problem” for his siblings who are wasters. If David thinks so highly of Germany he should be saying that we need to be imitating them not blaming them for our “problems”.

    You are right 5Fingers “we need to export and strengthen trade with Germany” – and with the rest of the world. We need to strive for a current account surplus by exporting – like Germany. The Euro Zone is fortunate to have the German role model at its core which if followed would make the Euro Zone the role model for the rest of the world.

    David wants us to follow the failed British and American financial model while Germany wants Ireland to follow it into sustainable economic growth based on exports of real goods and services. The Anglo-American financial model has deteriorated into a Ponzi scheme entirely dependent upon The City of London and Wall Street while Germany lives in the real world. So should we.

    Who should we listen to? David and the Brits or Germany? If this is an economic war, it is a war Germany will win.

    • bonbon

      For sure it is a war, and in Germany there are many who want to open the floodgates to hell – the politicians of a supposed Berlin “coalition” remind one of the Congress.

      To split the banks, especially Deutsche Bank, the behemoth “universal bank” defended by Schäuble as “competitive” with Lehmann (!!) is something most Bundestagsabgeordnete are incapable of conceiving of.

      So DMcW and the Fabians are literally banking on corrupt politicians, capable of destroying the only functioning economy in Europe.

    • 5Fingers

      Pat, using Germany as a son, your argument is sound. Using Germany as a neighbour, I argue you have a different dynamic. And anyway, bitter sibling rivalry is all too common a phenomenon.

      As for the financial model – I think they are all rubbish (and I am not into Hamiltonian or GS or anything else that suggests the world can be so trivially modelled). What is so great about Germany’s financial model really? Ireland takes a huge hit so Germany’s banks stay stable and they maintain their export advantage and the sloshback is starting again!!. And while I do agree with the point that the UK banks had a lot to lose were Ireland Banks to crumple, in the end, the deepest pockets of Germany that was the ultimate source of the fuel (aided and abetted by City of London).

      Yesterday, the DOW went past 16000, S&P is over 1800. It is all lunacy because the P/E is simply lah lah. The result is that real earned money has nowhere to go except to be leveraged as a tool for more financial frothing. The root cause is value of risk is being seriously underestimated and continues to be so as long as policy makers and their advisors keep pulling it out of their collective AR$€s.

      • michaelcoughlan

        “The result is that real earned money has nowhere to go except to be leveraged as a tool for more financial frothing”

        Hi 5fingers. This is the most important observation on this board in a long time. People who want to be productive and earn a living by producing things are forced by the circumstances to become speculators whether they like it or not.

        Even if they are not active in the markets themselves someone managing their pension is doing it on their behalf. RR6 comments about putting family first have a lot more meaning than people here have copped onto.

      • EMMETTOR

        Why IS the P/E so often ignored? By just looking at this you’d decide to short almost every stock that’s on it’s way up but very often this doesn’t pay, because the rational behaviour assumed by most basic economics “rules” is nowhere to be seen. Anyway,one thing I noticed in Germany was that there is a frugal way to live. German electrical appliance shops stock a range of products from dirt-cheap to top-of-the-range, this represents choice we do not have in Ireland and applies across the board. We may look admiringly at the Luas and our tolled motorways but we’re in the dark ages, compared to Germany. Interesting, also, that the S-Bahn in Berlin allows eating, drinking, dogs and bikes, none of which are permitted on the Luas. We’re the men for petty, irritating rules, the Germans are practical and realistic. Very dull, though and some terrible pubs.


      Pat, applying spurious moral positions, “the frugal”, “the wasters”, is a useless analogy. Within an EMU, one region benefitting excessively from the policies pursued by the dictators and enforcers of the union (EU, ECB, etc) is not good news. The Germans were struggling to sell their products because of the expensive DM. You looked admiringly at the German product, before deciding that it was just too expensive, even if good long-term value and so you bought the Korean or Chinese model. While I’m not saying that Germany has been surfing on a wave of consumer good’s sales, the principle applies across industries. With the weakness of the Euro compared to the DM, German manufacturing and exporting has boomed. There is a tiny bit of truth in the US’s criticism of the German model, we can’t all be exporting powerhouses, by definition, somebody has to be importing. Of course, if the EU was actually a “Union” one part of it doing well should be good news for all parts but it’s not a union, is it? You are of course entirely correct about the Anglo-American Ponzi scheme.

  10. Dorothy Jones

    I was in Köln last week too, will be working from there quite a bit over the next few years. Lookkit…even Sunday magazine supplements have been advising to invest in periphery bonds. Articles like this praise investors who have done so. :
    German money is creating a massive property bubble ‘Betongold’ with Banks loosening lending practices and estate agents up to their old tricks of sales’ puff.
    Strangely it doesn’t appear in this column but here’s a taste from wsj blog:
    It would be nice to call this one as well as the Irish bubble that went before :) However maybe that’s not on Capital Magazin[e]‘s agenda.

  11. Dorothy Jones

    Pictures are better though : these are clear as anything…..

    So you think lack of German demand is not a problem?

    Two charts…

    German consumption Expenditure and German Household and Government Consumption Expenditure v rest

  12. bonbon

    Germany has had major productivity over 4 different currencies, Reichsmark, Rentenmark, DM, and now the toxic Euro. Why? Very simple – Bismarck. When he was fired, he warned about a “7-year war” planned and executed. That old geopolitical humbug of the Brutish is today, rather a rattle.

    The UK is getting along quite nicely and building Hinkley Point nuclear reactors, while Angela is doing the Brutish bidding with “renewables”. I’m afraid DMcW it either totally awash on some “red wine”, or simply posturing, posing, a Tiger preening.

  13. Pat Flannery

    Dorothy, if too low ECB interest rates start to lure German investors into risky peripheral bond yields the Bundesbank will simply rein in the free money being pumped into the Euro Zone economy by the ECB.

    Unlike the U.S. where the Fed is controlled by Wall Street not the U.S. Government the ECB is effectively controlled by the German Government. That is what drives people like David McWilliams crazy.

  14. bonbon

    What is driving people crazy is the savage austerity imposed all over the EU ans USA in the name of monetarism. The AfD (Alternativ für Deutschland) campaigned in the recent election on nothing other than National Monetarism, a modern variant.

    What is even crazier is Germany is the worlds leading example of reconstruction, and the memory is still vivid.

    So instead of national monetarism of various brands, including Irish, A Marshall Plan for Greece and the Med. A part of the Eurasian Landbridge, postponed by the Balkan wars, and now by Syria/Libya. We have huge reconstruction to do and Germany has the experience.

    The proof that Germany does not control the ECB is precisely that – all reconstruction is frozen, and instead Schachtian austerity imposed, resulting in the total wreckage for all to see.

    What drives commentators crazy is the inability to understand this from monetarist “logic”.

    • bonbon

      In 1989 close to the Wende, Fall of the Wall, then Deutsche Bank chief Herrhausen had a major reconstruction plan ready to deliver to the UN. Murdered in his driveway, and instead we got the Euro and the behemoth casino known as “Deutsche” Bank, now ahead of JPMC. So Germany has problem number 1 worldwide right on the doorstep. See the (zerohedge) 2012 financial report page 87 :

      At $72.8 Trillion, Presenting The Bank With The Biggest Derivative Exposure In The World (Hint: Not JPMorgan)
      Have a look at :
      German GDP v. Total Derivative Exposure.

      Euro 2.7 Trillion v. Euro 55.6 Trillion.

      But don’t worry, this €56 trillion in exposure, should everything go really, really bad is backed by the more than equitable €575.2 billion in deposits, or just 100 times less. Of course, a slighly more aggressive than normal bail-in may be required in case DB itself has to following the footsteps of Cyprus…

      Have ye any idea of that “bail-in” means now?

  15. bonbon

    What is being done to the transatlantic region is WORSE THAN “WEIMAR”!

    Weimar you may ask? 1923, Germany, hyperinflation. The Torygraph, DT, et al (DMcW) seem to lust for a repeat of Weimar 1923. How this is supposed to fix anything only someone with “pieces of eight” for a brain could fathom.

  16. The current generation has been exhorted time after time to consume.

    We are a consumer society we are told over and over again.

    No mention of production first.

    So we went out and consumed more than any previous generation. We consumed our past , present and future. We borrowed cash on credit to do so.

    Germany has a collective memory of having been so consumed in the past that they know you cannot eat what you do not grow. You can not consume what is not produced.

    Production before consumption should be our new battle cry.
    Investment made from savings earned not credit borrowed
    Sell your surpluses and not your soul is the action plan

    • bonbon

      Germany has Bismarck, who turned the country around from feudalism, after Lincoln defeated the Brutish Empire’s tool, the Confederacy.

      The Choice Before Europe: American System, or Fascism
      There you can see Bismarck’s economist advisor, economist Wilhelm von Kardoff, promoting the American System of protectionism. Lautenbach and Woytinski tried unsuccessfully to revive that in the 1930′s.

      It’s not all about “consumption and production”, but about System and real people.

    • Ryu Hayabusa

      Hi Tony,

      This is the kind of thinking they want to continue to foster to keep their toxic credit merry-go-round spinning… more consumption, more spending, more booting the can down the road.. until the weasal goes pop.

      “Germany has a collective memory of having been so consumed in the past that they know you cannot eat what you do not grow. You can not consume what is not produced.”

      They are fearful of the past but have a selective mindblock when it suits.

      They had no problem with artificially low interest rates to ease the cost of reunification but now suddenly the idea is anathema to them.

      Besides they’ve got their own problems, DB is a ticking time-bomb!
      One wonders how stringent the next round of stress tests will be on them. . .i’m not seeing cudgels or mace&chains being wielded.

      “The law of harvest is to reap more than you sow. Sow an act, and you reap a habit. Sow a habit and you reap a character. Sow a character and you reap a destiny.”

  17. bonbon

    Germany has problem number 1 worldwide right on the doorstep. See the (zerohedge) 2012 financial report page 87 :
    At $72.8 Trillion, Presenting The Bank With The Biggest Derivative Exposure In The World (Hint: Not JPMorgan)
    Have a look at :
    German GDP v. Total Derivative Exposure.
    Euro 2.7 Trillion v. Euro 55.6 Trillion.
    But don’t worry, this €56 trillion in exposure, should everything go really, really bad is backed by the more than equitable €575.2 billion in deposits, or just 100 times less. Of course, a slightly more aggressive than normal bail-in may be required in case DB itself has to following the footsteps of Cyprus…

    Have ye any idea of that “bail-in” means now? It is only insane monetarists that avoid problem number 1. Even if the FED and the ECB together print $85 billion per month it cannot fix this.

    Only splitting the behemoth promptly can open the door to reconstruction.

    • whatamess

      I heard told of black swans in Cairo – on the surface,calm and composed,but under the surface, paddling like hell!!

      and now Cetus re-emerges in Germany …what will be the sacrifice this time round??

      All GS harpooners to the readddaaay !!!!

    • Ryu Hayabusa

      Not only will FED QE not be tapered, it will be extended. You can’t taper a Ponzi scheme.

  18. ‘Anatomy of a Typical Bubble’ concludes with ‘will that gentle stroll lead to a run’ ?

    Can we call that graph a Penis and what comes from that is diarrhoea . What else ?

    • If an Irish Economist were coaching the Irish Rugby team it would always lose because Irish Economists do not project the the forward plan image to a possibility strategic win or lose and only toss a coin that allows the wind decide .Their abstinence to embrace what really matters confuses the masses and and allows useless gossips to prevail most often found in pubs.

      This prevalance will seep into the upcoming match between Irl and NZ and explains that maybe Irish coaches have caught the same virus too .

      Is that what we want ?

  19. redriversix

    Germany is a business

    and the rest of Europe are bad customers..take up too much time & energy for low return.

    Germany will or is developing stronger business relationships with Russia & the Far east [China]. When she feels secure enough she will cast aside the weak & co-dependant Countries of Europe & bring the strongest with her in a new economic pact with Russia & further afield.

    Probably being done as we speak.

    Russian Balls
    German Ingenuity

    Amerika will be pissed


    • 5Fingers

      Germany is 20 years ahead of you.

      But…I would be less inclined to dismiss the collective energies of the non-German 300+ million in Europe. No one likes being discarded and if people are miffed, they’ll get over it. And truth still is America invents, Germany perfects and evolves, China cost engineers and so on. And in many ways, world is a small place in terms of reach and is becoming multipolar. South America and India will definitely muddy the water as well.

      Little Ireland, we certainly need to realise how huge and surprising the world is as well. Here is an interesting random fact…Mumbai area has roughly 100 million mobile phone subscribers – and yet India’s Mars mission is well on schedule for 75Million dollars (way less than the cost of a telecoms network for 100K people). We ALL have a lot to learn from one another and we need to stop telling people how they should live. Opportunity needs to be embraced. Yet the Irish prefer to dodge embarrassment and hide in CYA games.

  20. Pat Flannery

    Far from the Germans coming into Ireland and enslaving us with torrents of cheap loans, as McWilliams and other pro-British writers have convinced the gullible Irish public, it was the Irish Government that lured the German bank Depfa into its unregulated banking/tax haven called the IFSC.

    In fact, in order to attract Depfa into the IFSC, the Irish Government enacted company-specific legislation enabling Depfa to operate from Dublin with zero regulation in the United States. That was hardly a friendly act by Ireland towards either Germany or the United States. The German people ended up taking 100% ownership and bailing out Depfa and its parent company, Hypo Real Estate, for over 100 billion Euro.

    Irish writers need to stop blaming everybody else for Ireland’s problems and the Irish Government needs to stop being an international whore. Ireland needs to enable its own people to be as productive as the German people. The problem with Ireland since Sean Lemass is that it does not trust itself. Lemass had a very low regard for Irish people and that mentality has dominated the thinking of his creation the IDA every since.

    • bonbon

      Very good, as far as it goes.

      One step further is the City’s (London I mean) cats paw in the Euro zone- the Dublin IFSC.

      There you have it, the Inter-Alpha Group’s paw of rather hoof. And that is what FF/FG is destroyed the country to protect, a foreign operation.

      And the German taxpayers, not one of whom ever got a vote for any Euro Treaty, should not have paid 1 cent to bail out these thieves. So the difference between FF/FG and the SPD/CDU is merely the language used in tapes.

  21. Germany’s success? Income poverty / Low wages: One in four!

    Needless to comment any further that McW now writes for Gruhner/Jahr junk content provider Capital. They take anyone who can construct a half decent sentence and supplies them with the idedoloically manufactured mainstream poison.

    The bottom line is that low wages and resulting income poverty are some of the real “success” driving elements.

    Superfluous to explain that the low interest ECB policy continues to destroy the rest of the midle class wealth while the tax- and bailout burden induced by banksters and their political cronies is doing the rest. There is only one country in Europe that has more low income wages and part time jobs, Lithuania. Period!

    Wakety wakey, eggs and bakey, it is massive income inequality resulting in ever increasing income poverty.

    As for the ususal speculation with houses, this too adds the social misery they willingly create in Germany. Brownosing Transatlanticists, Yes-sayers, coaltion talks driven by the financial industry and corporate lobbygroups.

    What a coincidence that the christian democrats received timely and huge donations by the well known suspects, and short afterwards, Merkel blocked CO2 targets for the car industry. Yeah right, what a coincidence.

    The articel is in line with Gruner/Jahr publication levels, economy yellow press that sales men read in the boathroom of their mediocre hotel rooms. Romanticising clichés, warming up cold pizzas, capitalist views with a pinch of altruistic motivations for good measure.

    • michaelcoughlan

      “Wakety wakey, eggs and bakey, it is massive income inequality resulting in ever increasing income poverty”

      And all of that happening in a country which saw the rise of Hitler as a result of that scenario among others.

    • bonbon

      Today the Hitler with the Stache is Barry O’Bama. Germany is much more sensitive to this than Ireland, but a complete blackout on Obama’s destruction is on- now and then a major crack appears.

      Hitler’s economics, Schachtean, was praised by both Milton Friedman and von Hayek. Even Keynes blushed.

      Now look at what Angie did – shutting down nuclear power and energy prices are skyrocketing- that in a manufacturing country! This is a direct result of the Romantic Movement that Heine warned about. what else can anyone call the insane greenie act and the follow-me pitch? Pure romanticism.

      Schäuble has a particular Romantic view of Deutsche Bank’s situation. But shutting down the investment casino?

    • Dorothy Jones

      Hi Georg,

      Did you see this : The Eurozone Profiteers, Wecome to the Casino
      German Banking: Parochial and Overbanked, or Small Is Beautiful?

      Pretty damn good! Gruess D

      • Hi Doro,

        Thanks. I remember when I pointed to Mr. Klaus Regling who lead the so called “investgation”, there never was one to begin with, into the Irish banking mess. It was nothing but a black flag operation.

        He was granted unrestricted access by Irish politicos and the whsiperers behind them, think Brian Lenihan and Peter Sutherland, and his mission was to check the possible damage for Germany.

        This was all they came up with:

        Hell, as extensive as this report was, I’d not be astonished if they already wrote most of it while on their flight from Germany to Ireland. Pretending to work on behalf of Lenihan, he had access to documentation and correspondence that was mission critical.

        This summer he was questioned by Suzanne Lynch of Irish times:

        You were involved in one of the early banking reports on Ireland. There’s a call in Ireland at the moment for a banking enquiry. Do you’ve any ideas of how a banking inquiry might work, and would it be helpful for Ireland to have a banking enquiry?

        Regling answered:
        I don’t have a view on that.

        Today, Klaus Regling is the head of the EMS, the biggest post WW European slush fund… ahem, yeah right!

      • Can’t reach ya, email to both of your addresses were rejected….

        • Dorothy Jones

          Thanks Georg, interesting read… Nope, all 15 or so Email addresses work fine. I got yours and I’ll pop you a line :) D

  22. I must admonish the above contributors to this great article .What should be following from this is about what happens next .This article leave a question mark at the end and this is not been addressed by the contributors .Why don’t we focus on this matter only .

    And to think that no one even mentioned the absence of the ‘ precautionary credit’ that our Minister for DOOM had failed to achieve.

    I think if your contributions were assessed as part of an Exam most of you would fail.

    • Pat Flannery

      What do YOU think Alan? Will that gentle stroll lead to a run? Will German savers and institutional investors “cop on to what is happening in Ireland” and treat Irish government bonds no different from other assets such as Irish property? Will surplus German savings cause an Irish bond bubble as McWilliams is predicting? This is what forums are all about, hearing opinions. Let’s have yours.

    • bonbon

      So address the “question” Examiner in chief !

  23. Adelaide

    A Permanent Slump? (USA)

    Krugman obviously reads this thread as I’ve been saying this here for years and the rascal has gone and plagiarised me. David, you need to have a ‘word’ with him.

    • michaelcoughlan

      Hi Adelaide,

      Here’s my take on it for what’d it’s worth and probably no more than an anus rodentum.

      The best way to explain the complete madness of what’s happening is in the form of a satirical caricature of two madmen like bernanke and bonbon for example. Of course they both suffer from the same genetic defect as the mullingar motormouth which is that their insides are backwards; they speak through their arses and all that comes out of their mouth is shite but I digress.

      Take bernanke for example. He’s convinced that the lessons of the great depression were that because enough money wasn’t printed it made the whole thing worse. Like all monetarists he has no understanding of the difference between money and wealth.

      Wealth must be produced first before money is required to facilitate trade. It really is that simple. Short sharp recessions ARE VITALLY important to preserve the health of a normal economy because they act as a clearing mechanism
      for all of the misplaced capital in the
      hubris before. The bad decisions get exposed and liquidated whereby capital gets returned to it’s rightful owners ie wealth creators and not speculators. Printing money prevents this vital process from occurring so for example when Gsucks were bailed out by warren bluf-it and the us government failure was rewarded and success penalised. The more he prints the worse he’s making it because he is expanding wealth destruction companies. Of course things continue to deteriorate for the ordinary people in the US bit no one cares. Bernanke is not a conspirator he is an ideologue.

      Contrast that with bonbon, similarly an
      ideologue and a madman, but from the completely opposite end of the spectrum. Fantasising about massive public works projects with no basis in reality at all etc. Of the manny examples was building the pyramids with all of the slave labour and Fu”k you if you didn’t get on side with the
      Pharos. Similarly ordinary people become destitute cogs in the wheel.

      The modern-day classical economists are blinded by their grainy because it presupposes that you are trying to improve things for the greater good. Bernanke and bonbon types (in bonbons case as evidenced here on this forum by his own behaviour and that of his followers) don’t give a shite about anyone else and ALWAYS suit their own agenda.

      We are not getting out of the spiral the whole world is in until we accept painful realities.

      I’m hoping this is some way helps to try to explain a very complex issue and I’d love to hear what others have to say. I will of course be ignoring bonbon/whatamess because I bet the two of them that even though it’s my preference that neither of them respond to my post they’ll do it anyway.

      • michaelcoughlan

        Grainy should be training

      • Adelaide

        Hi michaelcoughlan
        I’ll return to read, in the meantime

        “Pensioners in troubled schemes could face cuts under new law”

        Phew, I consciously never signed up to a pension, a mortgage, insurance policies etc. How the tables have turned.

      • michaelcoughlan

        One point I forgot to make is that if a sharp recession is prolonged by monetarist madmen like bernanke even well run companies start to fail for want of cash-flow. That’s what’s happening now in a nutshell.

        • Adelaide

          “Wealth must be produced first before money is required to facilitate trade.”

          I’d go further than saying money is not wealth, money is not a store-of-value. Savings and profits are a delusional by-product of an expanding money supply, they seem tangible to our mind’s eye because they are physical catchments of new money pumped into the system but they can only exist in a monetary model based on emotion rather than mathematics. It is sound mathematics that backs a viable currency, not to be confused with the various mechanisms and commodity standards that puts ‘manners’ on the printing presses, and the perfect timeless currency is based on zero-sum mathematics which perfectly matches exchange and units, no excess units can be neither produced nor stored in a detached catchment, not out of time, it is symmetrical manifestation of the sole function of money, units of exchange that have no existence beyond the duration of each exchange. Research E.C.Riegel for the ideal monetary model.

          • michaelcoughlan

            Superb post Adelaide. However I disagree with your point on savings. If I’m a tillage farmer and i produce 450 tonnes of wheat from 100 acres. Let’s say I cover my costs from the sale of 400 tonnes I can save 50 tonnes of wheat. No money needed. I can choose to barter the 50 tonnes for diesel say or any tangible object I choose to accept in payment. I still don’t need govt issued fiat. The wealth is in the skill.

          • bonbon

            Barter is it now? There is a story within a story in Gulliver about that!

          • Ryu Hayabusa

            Is this going down the road of trading carrots for petrol?

          • michaelcoughlan

            Maybe. The russians and Chinese barter food for gas as far as I know.

          • whatamess

            Nothing wrong with barter,as such

            The point being made is that the empire’s monetary system Forces that farmer to barter like a slave and sets us all back centuries…keeping the slave in his place yunno

            The oligarch system is controlling all the systems within the ‘Matrix’ e.g.Purposefully creating bottlenecks and ‘traffic’- jams in commodity markets and engineering the flow up or down,but to their ends!

            It’s that level of wilful manipulation in this corrupt system of empire that we all want to end,right?Then a new system,whatever that may look like,would emerge and it would be a system where that farmer doesn’t have to ‘resort’ to bartering ,but deservedly gets a fair reward for his produce

            The POWER now is monopoloized , and control is taken away from us..thats empire!

            The end of “the disastrous rise of misplaced power” is nigh, as the Matrix IS crumbling.The plumbing is systemically corroded and is facing metal fatigue everywhere ,but what lengths will empire go to preserve it?? [ enter agent Smith:) ]

            Only one true solution remains and it’s a perfect fit!And THEY know it!

          • michaelcoughlan

            Hi whatamess,

            The banks will be split no question. What no one can predict is when. I think it will happen after a correction not before. I think even If it’s possible to do it immediatly that the knock on effects of deleveraging would be disastrous so it’s better to take the opportunity to prepare and then build a new split structure after the current rotten facade comes

          • whatamess

            Yea you’re right there,no one knows when.

            We are fighting for our freedom,so every inch of progress counts.Our freedom is at stake

            5min video

            and this was posted recently and well worth a read,but lonnng

            in Greece and thought it’d be cheapish yunno…a jet ski for one hour…140 euro ! phew!

      • Much of what you say is correct when referring to the monetarist position that maintains that increasing the money will produce increased wealth.

        However you stop short as you are staring at the giant oak in the forest and not going deep enough into the woods.

        It is true that expanding the money supply does not increase wealth. Wealth in any moment of time is static but if the money supply is increased we are agreed that all that happens is that the medium of exchange (the money) is devalued. This expansion of the money supply is inflation

        It should be apparent to any thinking person that inflation is not beneficial to society as it encourages all the reckless economic behavior we have seen.

        It therefore is reasonable to conclude that a fixed money supply will not be inflationary and in fact is beneficial as all people can rely on a steady measure for wealth and value, and the medium of exchange is not constantly moving in value. It is easier to make long term plans and thus develop a means for generating true wealth by increasing productivity and through ingenuity.

        Gold and silver acting as money were chosen simply because they have the best attributes of sound money. No amount of new math or computer jargon will change this basic fact.

        Gold besides being a store of wealth, is portable for a high value in a small amount. It cannot be added to in supply without a lot of hard work and so has intrinsic value, It is easily divisible to small amounts and is fungible. Paper notes representing an exchange for the money can also be easily used. (I promise to pay the bearer on demand the amount of …)

        The one thing about the current money system you do not consider and which is constantly ignored is the other fundamental property of our fiat currency. This is the fact that every note is issued into existence as a loan. That is the money is an IOU. In effect you have a piece of paper that says I agree to pay the issuer on demand, the sum of….
        This note also bears interest. The insidious nature of this currency is that it does not actually state this although it is true.
        This means that the expansion of the money supply is not only inflation but increases the debt as well. you can see the graphs of the debts rising at the same rates as the increase in the money supply.
        These debts are owed to the issuer, the central bank of the respective country. In addition as has been stated here many times, the currency needed to pay the interest is not issued at the time the debt based currency is issued. Therefore this interest must be paid out of someone elses’ bank notes. The money supply must be constantly increased to simply pay the accumulating interest. This means that more and more of the new currency issued can not be used for investment or consumption but is used to simply pay interest on the past investment and consumption.
        This means that a larger and larger portion of the economy is consumed by the payment of this interest.
        This means that the expansion of the money supply must be ever faster in order to just maintain the status quo, just to stand still. Also in order to not be overwhelmed immediately by the interest costs, the rate of interest must be constantly reduced.

        we have reached the stage where the economies of the world (this is the first time in history that this is a world wide problem)are stifled by the debt and simultaneously suffocated by the interest. That is we are garroted as we are already being drowned. It is like a man thrown overboard into a raging sea and the only line of rescue is tied around the man’s neck and being used to pull him back aboard.

        The only benefit to reverting to a treasury based money supply issued into existence is that it avoids the debt and interest. While significant , it still allows treasury money to be printed into infinity. inflation is still prevalent.

        We have not addressed the larger cause of the increasing money supply which is the practice of fractional reserve banking. This as we know allows commercial banks to lend 10-100 times the amount they have on deposit and no amount of GS will rid us of this inflation.

        It is apparent to me that in order for sanity to prevail there must be controls on the money expansion.
        There is a combination that worked in the past and will do so again.

        All fraudulent practice must be banned and prosecuted. It is fraudulent to sell what is not owned. It is not allowed in any trade except in the production of money. It must also be banned there too.

        Fractional reserve banking must be made illegal and prosecuted for the fraud it is.
        Bare naked shorting in any market is illegal but unenforced in the financial markets. It must be prosecuted and stopped.

        The production of money by the central banking system must be stopped. Issuing money as a debt is a fraud when that money does not exist but is magically conjured into existence.

        Legal tender laws should be abolished as a free people in a free country should be able to use whatever money they desire.

        The state can issue money if it wishes but people are warned that a mandatory currency is used simply to control the populace to pay taxation. (Pay Caesar his due)
        There must be competition in money as in all things. The use of gold and silver must be reaffirmed and not prohibited as at present. When the people are allowed the competitive use of any money they wish then it will keep the state issued money, from the nations treasury, honest.

        Bernanke et al are simply puppets dangling on a string operated by the monied masters controlling the current monetary system through the central banking system. They are the ones creaming off the production off the people.

        Get to the root cause. Close the central banks, ban fractional reserve banking, repeal the legal tender laws and monetize the precious metals.

        Game, set and match.

  24. joe hack

    “The view from Germany” Can ya see your house from Germany.

    We have ghoulish estates here that we soon will not see, yet one is given the impression that no one needs them while at the same time our government pays out money to the homeless to help keep the banking Zombies house well fed.

    Knocking down houses while people are homeless has brought us back to the famine era, whom do we blame this time! What will the history data storage record – what accompanying soundtrack will be chosen and who will reprise the role of Trevelyan.

    Welcome to the living past

  25. Pat Flannery

    Michael, I agree with you that short sharp recessions (which used to be called the business cycle) are necessary. Bull and Bear markets for example require such corrections to enable profits and losses to be realized. You can’t have an endless summer of profits with no losses. Unfortunately Larry Summers and the Harvard Business School taught countless MBAs that you could.

    This endless “Summers” fantasy is now threatening to destroy the world economy. So what is to be done?

    How do we let the air out of the resultant massive asset bubble without bursting the whole balloon? How do we decompress without getting the bends? Tapering was supposed to do it but that seems to have been abandoned. Somebody needs to come up with a workable plan pretty soon. It is too late for the blame game, we are all to blame.

    Somehow we have to set up an international asset resolution trust. Maybe it is time for the United Nations to get involved. The IMF, World Bank and all other purely financial world bodies are too close to the problem to be effective. It may be time for a United Nations Security Council enquiry into the potential of a worldwide financial collapse, with all the security risks it would involve. We can either let the worst happen or try to control it within a resolution trust framework.

    • bonbon

      I think some are getting a case of the Victorian Aires, and begin to hyperventilate at the hyperinflation. Steady on, fainting can’t be far away.

      Now for adults with a knowledge of economic and financial history, imagine that, from before they were born!, it is clear what must be done, with no swooning or flinching.

      Break up the banks as that very non-Victorian, non-Elizabethan, modern American, Senator Elizabeth Warren puts it :
      Warren Says Time To Take On Wall Street with Glass-Steagall Is Now.

    • whatamess

      “How do we let the air out of the resultant massive asset bubble without bursting the whole balloon?”

      well put Pat .

      Derivative iceberg is dead ahead and “leverage magicians” steering are not deviating course from a head on collision??!!

      Some here are not even talking airbags,not to mind SEATBELTS …too busy bedazzled with “money” when economics is the issue!

      The “piss on the fire,MY toast is done” gold and petrol contingency here however are still prescribing “homoeopathic economic medicine when we need antibiotics!”

      I say – flood ALL tubes and Fire Fire Fire at this derivative Iceberg,centre mass with Glass Steagall

      End the Bloodletting !

      EVEN Sandy Weil agrees ….

      “Sandy Weil acknowledges that the elimination of Glass-Steagall was a DISASTER: “I would compartmentalize the industry for the same reason you compartmentalize ships,” he told Bloomberg News. “If you have a leak, the leak doesn’t spread and sink the whole vessel. So generally speaking, you’d have consumer banking separate from trading bonds and equity.”

      • Pat Flannery

        whatamess: maybe the fact that the giant iceberg ahead is identifiable as derivatives the nuclear waste of the Larry Summers era, could be an advantage. Maybe even now we can compartmentalize the damage and save the whole ship. That is what resolution trusts do.

        Even Bill Clinton now admits that repealing GS was his biggest mistake, that he should never have listened to Summers whom only Krugman and the NY Times listen to anymore.

        The fact that he recently spoke at the IMF, which speech so impressed Krugman, only underlines how much ill equipped that institution is to deal with the Summers derivatives legacy. Perhaps it is still suffering from its own Summers years.

        The fact that Obama wanted him to succeed Bernanke is scary. It underlines the grip Wall Street has on Washington. We had a very narrow escape.

        That is why I think the solution will come from outside the financial world, which is no longer compartmentalized and now threatens world peace for that very reason.

      • Ryu Hayabusa

        A Sisyphian task surely.

  26. bonbon

    Someone brought up Krugman.
    Larry Summers: Depression will Continue, until you Die

    — As reported by fellow economist Paul Krugman in his Nov. 17 column “A Permanent Slump?,” Summers emphasized that the “depression-like” (Krugman’s word) conditions enveloping the U.S. economy are the “new normal,” and that no one, including him, has a clue of how to create a real recovery.

    The only thing to do? Keep up the Quantitative Easing.—

    Utter moral bankruptcy from Krugman and Summers.

    Odd that that escaped the commentators here.

  27. Ryu Hayabusa

    Larry Summer’s endgame memo… meeting with 5 banking CEO’s to mould US financial policy.

    Greg Palast, love the Mickey Spillane type fedora.

    Let’s all jump off the banking deregulation cliff…. Wheeeeeeeeeee. . .

    He refers to Larry rather affectionately as the “Typhoid Mary” of Economics.

    One of the people that confirmed the content of the memo was Joe Stiglitz. who was in Clinton’s cabinet.
    He said that Summers would sit in cabinet meetings and when they would talk economic policy he would turn to Ruben and say “What would Goldman think of that, what would Goldman think of this..?” until finally Stiglitz said to him (in front of the President of the United States) “You know, we’re in the West Wing… You know I mean why are you asking what Goldman would think, how about what’s the best policy for the American people?”
    …And they looked at him like, ya know he had just fallen off a Watermelon truck and they got rid of him!!!

    Behold Leisure suit Larry without garb, sans vetements, a puel!

    This is cutting right through the flotsom to the inner marrow.

    What does Goldman think?
    …and what Goldman thought is that the world economy would collapse and they could make a fortune from it!

    If we could wipe Detroit off the map, imagine what we could do betting against the city?
    &and not just bet on it but make sure it happens, MAKE SURE IT HAPPENS!

    • whatamess

      The warships of empire with “their bellies full” are happy to jettison what they currently ‘deem’ as jetsam – i.e. the old ,weak and sick ! That’s not a mantra,rather a TRUE observation of the current status quo.

      Meanwhile All odious debts continue to be repaid!? Financial imperialism,eh! And our political leaders ,as Deco points out, are facilitating this ,as also is the corrupt mind-numbing MSM ! All components of the Matrix of course – Empire!

      Reminds me of Christ Moore’s “on a single day”

      I see creativity, control, reason ,purpose and engineering by the financial elite!

      I see none of the above by our political leaders and no REAL intervention! We desperately need change! Time for a renaissance ?!

      Intervening with GS gives us that hope !

      It boils down to a choice …

      You’re either against empire ,or not !

      12 months ago when I saw Bonbon using the word “empire” , my knee jerk reaction was to cringe and think that’s waaay OTT.

      That was 12 months ago !

      The ‘Enlightened’ Tyler Durden says:

      “”In the world I see – you are all stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You’ll wear leather clothes that will last you the rest of your life. You’ll climb the wrist-thick kudzu vines that wrap the Sears Tower. And when you look down, you’ll see the tiny figures pounding corn, laying strips of venison on the empty car pool lane of some abandoned superhighway.”

      It could never get THAT bad tho ,right??

      Don’t bet on it !!

      • bonbon

        LOL. It looks like that zerohedge guy has seen “Logan’s Run”.

        There the population reduction is explicit, and the vines too, very Greenie.

        And most think that is OTT? As a famous wag said recently, those OTT people have no heads!

  28. Ryu Hayabusa


    “The rise in violence and hate-crimes is no surprise. The official unemployment rate in Greece is 28%, and over 60% among young men. No wonder desperate youths are wrapping batons in Greek flags and beating immigrants: When people are pressed to the wall, they hunt for their tormentors –– and too often find their fellow victims to blame.”

    Economic devastation breeds fascism. No s**t Sherlock! :O

    • Colin

      Almost all the ‘immigrants’ are muslim.

      Greece suffered greatly under 500 years of muslim turkish rule.

      Now they’re creeping back in, illegally of course, and want to build giant mosques, have lots of children and live on benefits. As turkish PM Erdogan said before at a rally ‘the mosques are our barracks, our domes our helmets, our minarets our bayonets and the faithful our soldiers’.

      If you are worried about fascism, then the best way to eliminate fascism is to eliminate the liberal lefty policies which allow foreign enemies of the state in in the first place.

      • The bigotry you bring to the table ever since you post here can only be descibed by a realtiv neologism, Islamophobia, and as usual you are in line with the ultra right wingers such as Golden Dawn, demanding Muslims to leave Greece.

        It is in deed your undereducated and derogative style that is exemplary for the real fascists raising their ugly heads again all over Europe.

        Psychiatric councelling might be a chance for you to free your mind from the poison Colin. You do need help!

        Good Luck.

        • Colin

          more pc claptrap from you georg.

          we know your fellow countryman hitler had a high regard for islamofascism.

          churchill was right, the new fascists will call themselves anti-fascists.

          good luck now georg, bow down to mecca and say your prayers, and believe the lies about mohammad.

          we know that germans are the muslims favourite type of europeans.

          • We?… LOL

            Ah well, treatment for xenophobic disorder is usually best left to a mental health practitioner, there are competent professionals who offer cognitive behavioral therapy.

          • bonbon

            The NSU affair shows it needs more than “psychology”. The poor mum just could’nt stop the son becoming a neo -whatever.

          • Colin

            You keep getting it wrong georg, God love ya. I am happy to live in a foreign country with no desire to change how they live, something a xenophobe would be unable to pursue.

            You’ll never learn….lol

          • Colin

            bonbon, you are a neo-fascist, pro sinn fein, pro ira.
            we know what they do, kiddie fiddling and drug dealing and racketeering. adams family… click click.

    • bonbon

      Amazing how Tiger’s fall for the trick. Bankers Boys, exactly as in 1932 all over again. Guess who funded bankrupt Hitler’s campaign? None other than Montague Norman, Bank of England Chief, and Prescott Bush (well guess what family). And who did Hitler put in as Economics Minister, why none other than Hjalmar Schacht, the Base Bank of International Settlements (BIS) chief.

      Now I wonder who allowed Golden Dawn into an election when they were card-carrying whatever. Why none other than the Troika’s Euro-Enforcer marcher-lords.

      Amazing how the Tiger’s miss this, but not really – what did they just put into power?

      • bonbon

        Basel BIS, that Tower of Babel.

        Tower of Basel: The Shadowy History of the Secret Bank that Runs the World
        By Adam LeBor New York: PublicAffairs, 2013; 336 pages, hardcover, $28.99, ISBN 978-1-61039-254-9

  29. Been on this site for almost five years and have been saying this from the early days – didn’t need Russell Brand and Morrissey to tell me but more people will listen to them:

    Voting is a charade and a total waste of time. The best way to vote is not to vote at all.

    • bonbon

      And some complain about Glass-Steagall. For 70 years we had it and only recently has it become top issue number 1.

      Vote for Glass-Steagall !

  30. whatamess

    The contagion decimates USA and now heading,with intensity, to PRC

    “But it’s fairly obvious that this step would lay the groundwork for full privatization of the banking system down the road.”

    We surely don’t need John of Patmos or The Oracle to tell us “The 6 trumpets” are the wake up call, right?


  31. Deco

    Just a thought…if this economics blog was in Germany…and the contributors were German…..would the comments be so loosely grasped in common sense, logic, rational analysis, or even relevant reality ?

    Some of you simply watch too much RTE, to have developed any useful intellectual models for parsing the reality where we find ourselves.

    Yes, the Anglo economic model is based on Ponzi-economics. The three losers of WW2 are banned from joining in the power sharing arrangement of the Ponizi racket. So they became producers, instead of imperialists. Same applies to the loser in he Cold War. Except Russia (plus Ukraine) was pulverized by the “assistance” it received from the Anglos. And then the KGB decided to have a second coup – which suceeded. How it will work out is anybody’s guess. But it will be different because it is in China’s interest that the ex-KGB continue to control Russia.

    Ireland is also exporting enormous volumes. Per head more than the Germans, Japanese, Italians. But it makes little difference to us. The real winners of this recession are US multinationals on low tax rates (much less than the official number) – who get the politicians at their beck and call. We are selling ourselves, for a song. We can get away with robbing ourselves (given our inability to stop our habit of punishing ourselves and our children) but we will not get away with robbing the French of “their” income tax.

    Ireland itself is now veering back towards the one economic model that the establishment can agree on as satisfactory – being a property hedge fund, sustained by the illusion that we are getting rich on the back of transfer pricing. The whole thing is an illusion.

    First question of Irish soveriegnty – who owns Ireland ? Yeah. Exactly. How exactly are the government telling us we are getting richer, when we own less and less of Ireland ? Maybe it is because they are spoofing ? Same applies to London. Much of England is a variation of the same model.

    The real problem is that we have a massive leadership problem. We also have authority structures in place that place somebody in positions of authority because he is a member of a certain golf clube, etc…

    We might have gotten free of this if the banks got radically pulverized of their in-house idiots, and a newer generation took control. That is not going to happen.

    Save Ireland – save with your local credit union.

    And folks please switch the TV off, and read books. Because television is making this country stupid.

  32. Deco

    David is right to give the “bubble” example. Massive problem with the current “recovery” which never involved any defaulting – unless you were Cyprus, it is not cleaning the system of it’s stupidity.

    Capitalism is supposed to be a competitive system. Currently, the banks are competing for lobbying access in Brussels. They are no longer looking inside their own systems. Perhaps this has something to do with organization politics. Perhaps it might even be derived from labour law. And of course, a lot of it is the idea that creating internal disenchantment will result in some media organizations getting the inside stories. I suspect that many of them are more interested in simply not interrupting the advertising revenue they get from the banks.

    The current recovery policy framework is nonsense. The whole model is based on increasing debt levels. And so is the recovery. The Student debt bubble in the US is now pased 1 Trillion. If there was a default here it would help the housing market. But there is none. Therefore housing is not lifting much.

    But perhaps the biggest bubble of the past twenty five years – essentially since it became clear that the West no longer needed to prove anything against the USSR, was the bubble in bull sh1t.

    And boy has this been massive. The economics profession in particular seems to have really excelled. I am thinking of bank economists and the usual collection of fools that you hear on the weekend between 10 AM and 2 PM on the radio (with the exception of DMW, Constantin Gurdgiev and like minded sorts). I can even remember Sean Fitzpatrick on the MF show throwing out some astounding BS. And this is across the entire idelogical sepctrum. Who can forget Pat Rabbit promising tax cuts in 2007, whilst also promising more welfare spending.

    The biggest problem that we face in our current predicament is the prevalence of bullsh1t in the media. I can remember journalists saying “we are not to mention the “r” word” (recession). Because it would undermine the bubble in real estate.

    Janet Yellen, (perhaps the biggest fool to ever be given any serious responsibility in US history – she is worse than Dan Quayle) is about to run the Fed. It could have been Larry Summers – but the Democrats were afraid that the Republican TEA movement would have too much fun at his expense.

    The Bubbles are about to get even bubblier !!

  33. whatamess

    That’s an interesting read Adam,thanks.I wished they would just stick with GS and not amble down the by-roads of all other ,impotent,regulatory measures,especially now when time is running out!

    From “TheDog&Frisbee”

    “Modern finance is complex, perhaps too complex. Regulation of modern finance is complex, almost certainly too complex. That configuration spells trouble. As you do not fight fire with fire, you do not fight complexity with complexity. Because complexity generates uncertainty, NOT risk, it requires a regulatory response grounded in simplicity, not complexity”

    So keep it simple,stupid is the recipe to bake this particular cake.Glass Steagall is exactly that – a simple 30 page recipe. [ as distinct from Dodd Frank ,whose toe maybe ought to be tagged]

    “Fully defining future states of the world, and probability-weighting them, is beyond anyone’s cognitive limits. Even in relatively simple games, such as chess, cognitive limits are quickly breached. Chess grandmasters are unable to evaluate fully more than 5 chess moves ahead. The largest super-computers cannot fully compute much beyond 10 moves ahead.”

    Most real-world decision-making is far more complex than chess – more moving pieces with larger numbers of opponents evaluated many more moves ahead. A guy called Herbert Simon coined the terms “bounded rationality” and “satisficing” ( the latter not too dissimilar to my use of the word “pacifier”) to explain cost-induced deviations from ‘rational’ decision-making. Basically, he is saying “institutionalized” mind-sets are limited by their conditioning and the obvious realities !!


    Lest we forget, the banking lobbyists are doing their very very best to suppress GS …please don’t believe their trash!

    and they will attempt to craft a Kayser Soze type spook story to keep you AFRAID!!!!!!! That’s control! That’s empire !


    Well i’m off for a Mars Bar , maybe a Twix ;)lol

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