December 19, 2013

The economy cannot be transformed by 'doing nothing', Enda

Posted in Banks · 130 comments ·

The Government’s new economic strategy was unveiled yesterday. It is supposed to outline new thinking for the next decade. Yet it seems very much like everything else that we have ever seen before.

It is long on things we “must” do, making it read like an early new year’s resolution list. It is not so hot on the things we are actually “going” to do. It’s full of good intentions like promising to go to the gym, eat less chips and cut down on pints, without committing to actually getting up on the treadmill at 8 this morning.

The document, written in nice, big-spaced green writing, with lots of bare white unfilled pages, reads like more of the same. This unsatisfactory feeling was backed up by the quotes from the Taoiseach, saying this was “no time” for change.

It is the perfect time for change because change is a constant. It is the one certainty in life. In a globalised world, countries that embrace change succeed because globalisation forces the pace and scope of change. The world isn’t waiting; it is revolving.

In our own work lives, those who embrace change tend to have successful careers and meaningful, if somewhat stressful, lives. But an element of stress is important and probably essential. Life isn’t easy. It isn’t meant to be without worry and stress, but these concerns are made tolerable by flexibility and adaptability.

The idea of transforming the economy by doing nothing new doesn’t wash. But we could transform the place.

If we consider the four big government objectives, there is ample room for simple initiatives that could help the Government achieve its aims quickly.

The first aim in the document is never to go back to the boom/bust economics of the 2000s characterised by far too much credit to the property sector; the second is debt sustainability; the third is to reduce taxes to encourage people to work and to employ; and the fourth is to create conditions for the maximum employment possible.

How might you go about doing these?

Lets start with speculative cycles. The best way to stop boom/bust and speculative urges is to limit credit being funnelled into property. Without credit, there can be no bubbles and without excessive leverage, there can be no speculation.

Tomorrow the Central Bank could move to stop this booms/bust cycle so that we never, ever have a property pyramid again. It could do this by limiting the value of the collateral against which the banks can lend.

When you look at all property markets, they are driven not by supply and demand, but by excessive lending against collateral. As soon as prices rise, the ‘equity’ in the houses rises and banks feel that they have permission to lend more and more cash because they have the buffer of equity.

But this only ensures that yesterday’s rising prices leads to tomorrow’s increased lending.

A suggestion to stop this price/lending spiral was tabled by Israeli economist Amos Rubin. Imagine that regulators instructed lenders that the combined maximum loan amount should not exceed 70pc of the moving-average value of a property, offered as collateral, over the preceding 20 years.

This would wipe out any future house-price nonsense at a stroke, and the socially insecure would need to find another asset through which to display their endemic inadequacies.

By preventing money going into property, we liberate that money to go into other investments, which have the potential to create jobs and opportunities for Irish talent, particularly young talent.

The second government aim is to stabilise our debts. The best way to do this is reduce them. The main debt dragging the economy down is not government debt but personal debt associated with too much housing-related mortgage debt.

Irish mortgage debt could be wiped out overnight by using the same tool used to pay off the bondholders of Anglo.

Anglo had no money so the Irish central bank used “magic” to invent money for the shell Anglo in order to pay back its creditors. The central bank did this by accepting an IOU from Anglo and depositing real money in Anglo’s account in return. Anglo used it to pay the bondholders.

This was the famous promissory note. It was a promise to pay. The Government underwrote it. But instead of paying it late March, the Government negotiated with the ECB that we’d pay it back in 2038.

Why not do something similar for mortgage holders?

Fund the cost of mortgage debt relief — via a debt for equity swap — where the banks take ownership of 50pc of the house with a massive promissory note. This promissory note could be paid back when the houses are sold. The banks can recoup the money sometime in the future.

This would take the boot of debt repayment off the necks of hundreds of thousands of citizens and would kickstart domestic demand overnight.

If it’s good enough for Anglo, surely its good enough for you? As domestic demand starts up again, we could address the third problem of reducing tax on our citizens by demanding that the multinational pay the 12pc they claim they pay but don’t.

The multinational are corporate welfare tourists, coming here so that they can get the best tax deal in the world.

They don’t pay 12pc. In reality, they pay 2.5pc.

According to the US Bureau of Economic Analysis, US multinationals in Ireland reported net income of €95.6bn.

On this “taxes other than income and payroll taxes” payable in Ireland in 2010 amounted to €2.4bn, giving an effective rate of tax of 2.5pc — far below headline rate of 12.5pc.

If these companies were to pay tax at the very low — by international standards — of 12.5pc, the exchequer would net €10bn in corporation tax per year.

You could give a lot of tax cuts to the ordinary citizen with this money adding to domestic demand and investment just at a time when the debt deal reduces personal mortgage-related debt.

These changes to the way we do business would not only be fair and just, but would create the demand to lift many hundreds of thousands of people off the dole queues. And imagine, this could be done without any house price inflation.

We could have a people boom not a property boom! Now wouldn’t that be the productive result we are all looking for?

This is what real transformative change looks like.



  1. An excellent article, David. Complex topics explained with simple language. Skill! You spoke about some of this at the final show of Kilkenomics. Accepting your Techno-Cornucipianism within a BAU economic scenario ‘going forward’as a given:this all looks fine as proposals, but I can’t see Fianna-Geal hegemonic hyrbid Establishment adopting a sensible strategy now. They’ve avoided it since they trashed the foundational vision of an independent Ireland. But let’s hope they at least read and digest your analysis.

    Like the new site

    “David Mc Williams’ daily thoughts on a big world from a small city.”

    but it took a while to find as Indo has typo in address! Lulz. You’ll be slagged here for offering the ‘elite’ this advice when the poor beggars can barely afford a Man U season ticket, etc.

    I’m moving forward from BAU comfort blankets to prepare for the next leg down and researching ‘gift economies’ as when 90% of folk have no money (or gold or Bitcoin) then new thinking will be needed. It also allows me to research Brehon Law and follow up on JohnALLEN’s startling revisioning of the past. John, my response is with Santa! On its’ way.

    “Sacred Economics with Charles Eisenstein – A Short Film”

    Carry on The Christmas!

      • And to you Adam! Just exchanged season’s greetings with DC. See you both in 2014, whether in Dublin, the Marble City or Manaus if the Bitcoin story plays out in your favour. Very interesting China Syndrome situation there, but let’s keep on topic, at least till the Gross Seagull Goldbugs arrive on horseback for a shoot-out!

    • Great article David would you agree bank bonus played a big part in housing bubble and must be changed to concentrate bankers minds on there duty to there employers. Would you also agree that doing nothing about 2.1/2% effective corporate tax rate Is very unfair to Indigenous Company’s and Is directly related to the tolerance of massive corruption In all walks of Irish Life. It’s a sad day David when we no we have people who can change all of the wrongs and none of them are In the Dail,happy Christmas To all -:)

    • Andrew

      Many thanks I am looking forward to this read from you .

  2. dorn

    Such change requires a whole new type of politics in ireland as none of the existing parties are capable of taking the initiative required to do new things. Change is the antithesis of irish politics. While its good to see possible solutions posited like this in a clear and approachable manner, the main point it outlines is the gulf between our current political clique and the real people and thinkers of Ireland.

    • Griff

      Permitting recourse ONLY to the property which is the subject of the loan would “self-regulate” the finance houses. Called, I believe, “non-recourse”.

      • Non-recourse loans in many states didn’t stop the credit binge in the US. When credit is cheap to print, house prices rise and banks know they’re too big to fail. Nothing’s changed. House prices are are set by price/availability of credit: nothing else. Oh, except ‘artificial scarcity’ like in Dublin. Nice NAMA / Bank prosecutions stuff playing out, shame it’s 5 years late, but better late than never, I guess.

        • GF

          Hi Griff and Andrew

          I don’t often post on this site but I read it daily and all the comments which I find so insightful, funny and basically educational.

          But Griff mentioned something that I simply have to comment on as I agree with him on so many levels = Non-Recourse Mortgages.

          If our government (or central bank, not sure who would do it) passed a law/rule that all mortgages on principle private residences had to be Non-Recourse I truly believe we would never be in this position again.

          Andrew, your point regarding cheap credit causing a property bubble remains valid, but I guarantee you that it would not have been so bad (as large a bail out) because the banks would have had to factor in some element of their own risk on the residential side when lending (actually I can’t guarantee that, most senior bank executives are journeymen awaiting only 4 to 6 huge yearly bonuses before they move on). But there is a possibility that Non-Recourse would lower the lending amounts somewhat (arguing against myself here).

          But what I can guarantee is that the debt hang-over would not be there. People could hand back their keys and be done with the negative equity mortgage without having to desperately hope prices go back up again – they could/would simply move on at the banks loss.

          The reason, I think, this is not being implemented is because of NAMA (and by NAMA I mean a government who sees the only chance of getting that bail out money back is if property prices soar upward again, and they give NAMA its remit). I feel, unfortunately no proof, that NAMA has been instructed to make sure prices go back up again at any cost.

          In summary I truly feel Non-Recourse mortgages would be a fantastic lease on future potential property bubbles, or at the very least erode the impact of the aftermath.

          I am not an economist, or financial wizard, so please be kind in your responses if I have completely and utterly missed some well-known economic concept that makes my above points idiotic.

          But I would love to know if I am wrong and more importantly why (a little free education would be lovely), cause I keep going on about Non-Recourse Mortgages in the pub and I think I am beginning to lose friends :)


          • Hello ‘GF’. You’re very lucky you’re not an ‘Economist’as they are eejits mostly. [David punches screen] Ditto the suited’n'booted ‘financial wizards’ who are all hat and no cattle, caused the mess and now try to re-jig their spells and Powerpoint presentation blizzards to try and justify their screw-ups. That’s why DMW is so effective as a writer as even I can understand what he’s talking about.

            Here’s a couple of links that seem to prove that non-recourse changes nothing as Banksters just choose a different sort of extortion racket in response:

            “But here’s the key point: 12 states are “non-recourse states.” In these states, the bank is prohibited from going after a foreclosure victim for the balance of the mortgage post-foreclosure sale. The non-recourse states include large ones hit particularly hard by the foreclosure crisis.So how can the bank get credit for waiving a deficiency judgment, or doing effectively the same thing through a short sale, in a non-recourse state? There’s no prohibition against it. But what we’re saying in that instance is that banks are given credit for paying a “penalty” by not collecting the balance of a mortgage after the sale, something they are PROHIBITED BY THE STATE FROM DOING..This is a handout to the banks. represents $5 billion these banks could never collect, $5 billion they’re barred by collecting by law. Banks should never have been allowed to count deficiency judgment waivers or short sale forgiveness in non-recourse states. But they are, and they’re doing it in big numbers.”


            and this one which is a bit wonk but scrub the jargon and it’s basically querying the validity of the premise as well:

            “we would very much welcome a descriptive analysis of the differences in borrower behavior between recourse and nonrecourse states. But establishing a causal link between recourse and foreclosure is a challenge that we believe goes beyond the data and econometric techniques that the authors have used.”


            I’ve no idea if DMW’s reads this stuff, he’s probably pissed at some Christmas lunch with other superstar economists as I write, but maybe he could have a look at the data and answer the question: would making mortgages in Ireland non-recourse and therefore not giving banks the bankruptcy Sword of Damocles over Middle-Ireland stop another credit-spiral as part of a package such as he’s advocating?

            Nobody’s points/point of view is ‘idiotic’[well, bonbon/whatamess sometimes] and everyone can learn from everyone else’s perspectives. I don’t have fixed views and came here years ago to learn because I coudn’t make head nor tail of Economics. It took me a short time (weeks) of intensive study to realise it was, mostly, a crock. Though I don’t throw the baby out with the bathwater, as some models clearly have limited explanatory power. It’s just when the various cults (gold, state, libertarian, baseball bat wielding homophobe batshit crazy Larouchers) start throwing their dummies out of their prams that it gets a bit of a pain in the pisser.

            Merry Christmas ‘GF’ Post again and often and anyone gives you any gip, they’ll have to deal with me. I can do ‘bouncer’. Don’t need muscles, got a Stanley, etc. Metaphorically, of course! As anyone who’s met me will tell you, I’m a sweet, shy retiring BrummieBoy who wouldn’t say boo to a goose, certainly not to a bankster or a ‘celebrity economist’ like there was in limos in Kilkenny, etc. *LOLs!*

  3. CorkPlasticPaddy

    What can you expect from bull shitters only just more bullshit!!!

  4. Bamboo

    David, your articles are easy to understand for the ignorant like me. You are exposed to data, you talk and listen to others of similar caliber, with similar interests and passion as yourself. In all your articles there is logic, common sense, intelligence and pragmatism – leaving all religious and political matters aside. There seems to be an absolute truth in this article.
    However, with all this logic and common sense, our leaders don’t see that – in fact they see the opposite. So is there another opposite logic and common sense that our leaders are tapping from?

  5. The Luddites on here are not going to like exhortations to change.

    Just getting on a flight to Chicago, have a good Christmas lads.

  6. These are brilliant ideas David that would work but will never get implemented with by the shower of incompetent that ‘run’ this country. Not in a million years. We need to get rid of them immediately.

  7. Reality Check

    I loved this article – a clear understandable blueprint for the economy.
    Happy Christmas all.

  8. Reality Check

    Btw David this link isn’t working
    Reality Check

  9. cooldude

    Interesting article and suggestions although I doubt Enda and Michael will pay any heed.

    I had a gander at your new daily and have some alternative predictions for 2014.

    Bank holiday to be enacted in the US in the first half of 2014.

    Bail ins to be instigated across the board with a large portion of the $10 trillion on deposit being either confiscated or turned into bank shares.

    $Dollar to resume trading ar a 20-30% devaluation to all major currencies including the Euro.

    Civil unrest to break out across the US which will be followed by martial law. The DHS are well prepared for this and have openly purchased 2 billion rounds of hollow point bullets to “quell” any civil unrest.

    The nest leg of the global depression starts across the western world.

    China launches a new gold backed currency with a view to becoming the new reserve currency.

    Huge political changes to occur in relation to this new currency.

    These are all very real possibilities for the new year. Have a great christmas folks.

    • do you have a specific trigger for this? tapering of QEInfinity has begun but will obviously be reversed. I see chaos when the Shale yr-on-yr depletion/drilling costs is show as Ponzi and the truth about Cheap Peak Oil re-emerges. If the recession is over, why does it still cost so much to fill the car/heat the house, etc?

      • michaelcoughlan

        Hi Andrew,

        The trigger event could possibly be the runaway increase in price in bitcoins. It’s a ponzi scheme sucking in enormous amounts of capital which could possibly destabilise other forms of currency and whole economies like when the pyramid selling schemes collapsed a few years ago in eastern Europe. Keiser said recently he wouldn’t
        be surprised if bitcoins reach an eye
        watering $200k EACH!

        It beggars belief that no one is articulating the portal to unimaginable destruction bitcoins are opening up. Remember absolute power corrupts absolutely. The idea that it is free from control is a nonsense. The fed could well have bought up half them already!

        • Michael, Bitcoin has crashed, halved in value in last 48 hours. Yes, it’s a tulip, but it’s also a clear threat to the established order, which makes me assume that someone/something very powerful is behind Satoshi Nakamoto. My assumption is that it’s a Vatican Bank Opus Dei ‘supernumerary’ cryptographer working within NSA/GCHQ.

          If the roller-coaster price ride leads to the crash of the metals, then someone/something will buy them up at fire-sale prices, then crash Bitcoin by leaking the ‘back-door hack’ which I am sure is either there by dint of ‘Satoshi Nakamoto’ putting it there or by ‘someone/something’ ensuring that no cryptocurrency platform is ever able to achieve global hegemony against the 5EyeSpy Machine Economies £$€.

          Italy has a lot of gold. A hell of a lot. And might need to sell it. Ditto lots of other ‘nation-states’ in thrall to corporate overlords.

          There’s always a geo-political script to unravel as well as an ‘economic’ one. I could be wrong but I assume that the Catholic/Protestant divisions are irrelevant at the highest levels of Empire as what David Cameron absurdly calls the fight to win the C21st ‘global race’ gathers pace.

          The Fed have the Silk Road Bitcoins they seized but as far as I know can’t unlock them from the vaults. Presumably the Fed aren’t ‘in the loop’ about the back-door hack or it’s just P.R spin.

          Gold can never be challenged because a single high-altitude explosion can erase most of the Internet/telephony as could a rogue sun flare. I’m not sure how you’d trade a thumb-drive of crypto-currencies in a war zone. Depends on your view of the next decade or so. I’m afraid I’m pretty pessimistic on that level, whilst being blissfully optimistic on a personal level:

          • cooldude

            Hi guys, I really don’t think Bitcoin is that important in the big picture at the moment anyway. The total market of all crypto currencies is around $10 billion which even after the little bit of tapering the Fed is creating every week. So it’s really just small change although I find it a very interesting experiment in non centrally controlled money which is one of my main areas of interest.

            I’m not too sure what could set off the bail in scenario but it could well come from the foreign holders of treasury bonds off loading them in ever increasing amounts. The Fed already purchases over 70% of new bonds and is probably buying up the ones the chinese are dumping as well. It wouldn’t take much for this extremely unstable situation to go very wrong.

            The bond market is a huge bubble at the moment and this is probably the”black swan” that causes the sheizer to collide with the fan.

          • bitcoin can drop 2/3rds of its high and still be in a bull market. The suggestion of waiting last week as the graph looked like a bubble seems correct in hindsight.
            Now we wait and watch what mr. market says. Likely a 50% recovery and another drop even lower. Who Knows? I sure do not.

          • McGoo

            I’m not a fan of Bitcoin, but I have to correct you:

            1. There is no “back door hack”. The inventor(s) or Bitcoin did not write software, instead they published the mathematical details of the cryptography involved so that others could write the software. How it works is totally in the public domain.

            2. I see no reason to believe that that a powerful organisation must behind Bitcoin. Why would they do something that might destabilise the system that they are part of? And inventing bitcoin did not require any financial investment, just one very smart person with plenty of spare time, pizza and beer.

          • bonbon

            It’s moved to Quarks now. Even M.Keiser had a show on it. If anyone believed this will reconstruct a shattered economy, they must have found the magic number. But where have I heard that before?

          • michaelcoughlan

            “If anyone believed this will reconstruct a shattered economy, they must have found the magic number. But where have I heard that before?”

            No one believes it will reconstruct anything. It’s just your dogma blinding you. Where have you heard it before? Part of the brainwashing you receive in the cult your part of.

  10. breltub

    I think this article is flawed in it’s premise because it recognizes government policy as what leads this country. I believe this to be wrong.

    To give you my perspective:

    1.Your vote no longer counts as the government is owned by it’s debts to the bank guarantees.
    2.The banks are therefore in control of all government fiscal policy.
    3.This give the citizen the most democratic power ever, because your bank account is now how you vote.

    To bring the government/banks to immediate attention is a simple 3 step process.
    Once at attention then a system can be rebuilt to suit how the citizens wish to create their state.

    To deal with the first problem, that of getting the government attention is very simple.
    Remove your capital from the bank, as it is a vote of no confidence. In effect create a bank run, and this will also cause a bit of worry in the Euro. So withdraw your money in Dollars or Pounds to profit from the move, maybe Gold or silver, or even bitcoins. I don’t want to get into too outlandish a plan for the ordinary citizen.
    A move like this would need to be coordinated over a number of weeks to bleed the banks before they realise what is happening. It needs to be a mass movement across all of society, so that people are motivated to create something better through using the system they are part of peacefully. It’s is simply an act of not engaging with the enemy, and removing their weapons.

    Remember, the main aim is to make sure that the people hold the capital, not these corrupt institutions, so that when the late adopters to this plan panic, and the hollywood bank run does occur, the majority of people are not worried by it, as they have their capital somewhere, either physically, or abroad, where they feel its safe in the interim.

    At this point, the government and banks will be in mass panic, and that is when they are weak as they will be unable to meet their obligations. This is the moment when because the citizens are holding the capital, they can exact some real reform demands from these institutions.

    So the three steps are:
    1. begin the accumulation of capital in the hands of the people.
    2. Squeeze the banks into a full on run.
    3. Then twist the nose of the government/bank to pay attention to demands, that they are in no position to say no to.

    Articles like this one David wrote, where a different “state” system can be engineered, may then be worth the server they are hosted on, but until the primary problem is addressed, they are nothing more than waffle.

    I have many issues with some of David’s general Keynesian theories, but all talk of “how things should be” is not addressing the need for change, and I do think David does genuinely want to see positive social change to let us all live in a vibrant, opportunity full, economy, and by extension a pretty healthy place for society.

    So I think the first step needs to be, lay out a plan to make change happen, it’s not going to happen just writing about what coulda, shoulda, woulda and making people all warm with the idea of some kind of theoretically equitable and just society engineered and controlled by the structures that fail chronically every time.

    Apologies for not going into it more, a bit busy in work at the moment.


    • Great plan Brian. Count me in. I don’t have much money at the moment as I’m a student but most of it is in bitcoin and I run my business through that so at least I walk the walk.

      • enjoy the flight and US immigration. remember to smile. best advice for most is to make sure they don’t keep above insured amount in any one a/c. Preferbly half the limit as to overtly rob the little guy will be avoided, but anyone silly enough to keep over 100k yo-yos in one a/c will be banjaxed as ‘rich’ or ‘elite’ by, erm..the rich elite!

      • There is no plan , Adam, just the repeated suggestion , that I also agree with, to remove your ass(Where you park), assets form the banking system.

        Not only will it stress the banking system but will protect the individual. It is the first step in self preservation.
        Everyone should do it tomorrow for personal reasons. Use the local CU or post office instead.

        The banks will not fade from this action as the central bank will loan whatever the bank needs to survive by increasing the bank reserves to whatever.

        Amazing how it keeps coming back to the only way. That is to fire the central banking system. Nothing else will work until that is done.

    • michaelcoughlan

      Hi breltub,

      This is probably the best post I have ever read on the blog. A pure pleasure to read. So grounded in realpolitik with real world suggestions and solutions to real world problems. If you launch a website to coordinate an assault on bank deposits let me know so I can coordinate with you.

      Have a good Christmas.


      • bonbon

        The Bail-in assault on depositors life savings will happen before you get you’re act together. Asmussen wants it done in a weekend, and is now in the German Government, along with a cosy nest of Austrian Schoolers (even Weidmann is one).

        Now back to reality – Glass-Steagall.

    • “I think this article is flawed in it’s premise because it recognizes government policy as what leads this country. I believe this to be wrong.”

      Very basic observation and disbelieved by our host and the Andrew Mooney described eejits, mores the pity. Not understood by the great unwashed either. Government policy destroys more often than it creates. Some wise statutes are ok but mostly government should stay aside.

  11. michaelcoughlan

    Hi David,

    When I read this post the though crossed my mind are you becoming as mad as bonbon.

    Know why? Mrs Edna the tuirseach, still pays himself a salary bigger than Barack embarrassment in a country still in negative cashflow to the tune of 10bn and you take him serious? The article is well thought out etc but useless as a thorium powered time machine.

    Read breltub above for real hard-hitting policy options.



  12. joe hack

    “IMF calls for greater efforts on mortgage arrears, joblessness” – Irish Times. This presupposes there ‘is an’ ‘efforts’ we don’t even have one singular effort never mind a group of efforts.

    “’doing nothing’, Enda” is effortlessly hard work~ Effort connotes hard work but it is subjective:
    If we make one big effort out all the little efforts, we will still end up with an effort even if the effort is made up of “greater efforts” we still end up with an effort.

    Enda awards himself a gold star for a subjective effort/s is he not been a bit coined to himself.

    Anyhow who does the IMF think they are Ireland is a sovereign nation? Thanks to Enda’s big pair of efforts.

  13. dwalsh

    Good stuff David.

    I think you are definitely going in the right direction with those suggestions. I hope that kind of thinking can inform policy in the years ahead.

    The mismanagement of monetary and fiscal policy and practice caused the crisis; but as you know the source of the policy lies in the global banking system and transnational corporate sector. The policies were coming from the highest level in the global system. They ensured that even the regulations which were in place in our country and others were ignored.

    My point is that we are suffering from a global malaise called neoliberalism; a cancerous form of capitalism; and since as a nation we have only limited sovereignty we are reliant on other nations also realising what the problem really is and acting together to deal with it.

    The only people who can deal with this global crisis rationally and humanely are our political classes; but for now they are under the spell of neoliberal ideology and the power of the transnational banking and corporate elites.

    This crisis may well work for the greater good of our world if it forces people to wake up to the necessity to act together through our political institutions to bring rational and humane order into the global economy.

    • joe hack

      x infinity^ and a little more infinity for the following: “we are reliant on other nations also realising what the problem really is and acting together to deal with it”

      How can Ireland control or manage it’s economy when we are interdependent on the actions of other giants, this is a major reason why the euro sucks. At present we can only react, we need to be able to act much more.

      • dwalsh

        I dont think we can go it alone on this one Joe.
        But even if we could my concern is for the entire world; not just Ireland. The only way humanity can face and resolve the multiple crises facing us is together.
        The greatest threat at this time is the power of transnational finance capital, aka the market – which is really a cartel of cartels.

        • bonbon

          The vast majority of humanity is now targeted for a cull. Detroit and Greece being merely a taste. Tell it as it is – that is what we face. “Cartels”? Oligarchy. All of them through history did this. This time it means billions eliminated.

        • joe hack

          YES, I hear you loud and clear but we were alone before and we were never this much in debt, during this period we managed to house most ‘Seán Francis Lemasses ballyer’ etc. There is more immigration now than there was in the fifties.

          Times have changed, I agree, and we can never really compare what might be with what was.

          But New Zealand has done alright and it’s 1,000 miles from nearest customers we are just 50 miles away from ours and it’s a bigger customer.

          The problem with a one world situation – it may start out soft, left or right, but this may reverse. There would be nothing to counter balance it that might keep any madness that might happen from a dictate or even incompetence’s, which effect all, as is the case right now?

    • “but as you know the source of the policy lies in the global banking system and transnational corporate sector”

      Totally agree.

      Few on this blog see the basic problem.
      control of the world’s money is by a criminal cartel. no need to name it otherwise. Although criminal in actions politions have made those actions legal. It is legal fraud. Deliberate fraud is a criminal offence whether legal or not.
      Until it is destroyed all other efforts are futile.
      It will never be destroyed unless people, including our host, start looking beyond their nose.

      “This crisis may well work for the greater good of our world if it forces people to wake up to the necessity to act together through our political institutions to bring rational and humane order into the global economy.”

      I agree :)

    • bonbon

      The “global malaise” needs to be diagnosed properly. Neoliberalism and nneoconservatism are two sides of a Fabian coin from the Mont Pelerin Society, Friedrich van Hayek’s sandbox. This is now part of the Club of the Isles. Both are fascism, with smiles, nudges and winks.
      “Malaise” is not quite the word to describe the intention if these so-called elites, rather murderous genocide. Their openly state policy, not in polite Tiger tea-parties of course is prompt reduction of world population.
      One could say Travelyan’s malaise cleared after the 1846 famine when he remarked the problem was solved. That’s the trouble with Malaise, poor chap.

  14. Pat Flannery

    I agree that imposing a limited loan-to-value ratio on lenders is the best curb on credit. The nice thing about it is that, as you point out, it is available as a tool to the central bank right now.

    This idea is not just another pie-in-the-sky aspiration either, although I believe Amos Rubin, whom you quote, proposed an 85% maximum LTV based on a moving-average value over the preceding four to six years not twenty as you wrote. Rubin’s very practical idea can be based on any one of numerous independent home price indices e.g. Case-Shiller, which I personally like. In fact some American lenders have actually used it voluntarily in the past.

    I also agree with you that the “magic” applied to Anglo debt should be applied to personal mortgage debt. But I violently disagree with you on the un-dead “debt for equity swap” monster you constantly resurrect like you were writing a horror movie.

    Far from lifting “the boot of debt repayment off the necks of hundreds of thousands of citizens” as you put it, your “debt for equity swap” monster would make economic slaves out of the entire population and snuff out whatever embers of personal rights and freedoms remain in Ireland.

    Further, I agree with those posters here who see “recourse mortgages” as one of the great “boots” on the necks of the Irish people. I don’t remember ever seeing you address that particular “boot”.

    So, drop your “debt for equity swap” monster and your misguided “blame everything on the Euro” crusade and I can agree with most everything else you write. See, I don’t hate you. This is what healthy discussion is supposed to look like.

    • bonbon

      Why in the world would someone from Dan Diego want to protect the Euro is beyond me. Unless of course it’s the wallet or paper. The Euro is a massive problem for all remnants of former sovereign nations. It is a Goldman Sachs hobby.

      Freedom from want is being snuffed out alright, and in Detroit.

      • Pat Flannery

        I think you know by now bonbon that I actually live most of the year in Ireland having retired there from San Diego where I still spend the winter months. I just got off the phone with my family in Ireland who told me horror stories about the recent high winds.

        As for the Euro, I wonder how Alabama, Nebraska or any other small American State, bigger than little Ireland, would do with their own currency. If you want to go back to the thatched cottage and the donkey cart by all means leave the Euro and enjoy maidens dancing at the crossroads to the jingle of their own virginal currency adorned with pictures of Kathleen Ni Houlihan.

        Merry Christmas bonbon in your Celtic twilight otherworld.

        • bonbon

          Ah I see that Californians think the EU is the U.S.E. Well considering who they elect I am not surprised. Considering who we elect, it is no surprise that the U.S.E is sold both to hasples Americans and gullible Tigers, even though it does not even exist.

          I suppose it would be news for most Americans that the U.S.E was Sir Oswald Mosley’s project, the leader of British fascism. And more news, to chat about around the turkey, it was Austrian School von Hayek’s Mont Pelerin Society “Pan Europe” that became the current disaster. Looking at the GOP, Tea Party and lots of Dems one notices the Austrian School shine in the eye.

          I hope that sheds light on the foggy dew that descended on some.

          • Madness and vitriol ooze from your pores bonbon.

          • breltub

            Jesus Bonbon, You’re like one of those religious nut jobs who chase people down the street and tell them they are going to hell if they won’t believe in your god. The Almighty Glass Seagull, come to separate banking into good and evil!

            I sometimes wonder if you are just an algorithm!

          • bonbon

            I’d go easy on the moonshine in the foggy dew there goldbug. Ye might see visions of a U.S.E. and not notice the bear.


          Utah already monetized gold and silver coin. You can spend it with a debit card. Beats bitcoin or fiat in the long term.
          A dozen other states are planning similar legislation


          How about Utah with gold and silver depositary able to be spent with a digitized debit card.

          Ireland can easily do the same or Michael’s coop.

  15. bonbon

    Still DMcW baulks at splitting up the banking system, even though he plainly wrote just before about “unexploded landmines” and immanent bail-in’s. DMcW desperately knows the importance of credit, and cannot reconcile it with an inevitable next bubble. Moral Sentiments, as dictated by hero Adam Smith just will not cut it – remember the language of the filthy Tapes. It is as if those gangsters were actually mocking the grip Adam Smith has on the necks of bankers politicians and depositors.

    And to top it all, there is a lurking belief in “magic”, that fiddling with tax would produce flowering landscape.

    Magic, and sentiment are just about as good as Enda’s nothing. DMcW used Amos Rubin’s argument before also.

  16. Paul Divers

    A Chairde,

    A1. The writing is simple and unpretentious in the slightest.

    The article is inspiring because it sounds like a plan and reminds us that it is time to think of New Year resolutions. ‘The Christmas’ means time off, which is nice, but it’s about children. New Year is the big one for adults because it is profound and becomes more profound with age and as a fellow Braveheart you will understand it’s significance

    I would like to wish you the best of luck in 2014 with your new idea and hope you continue to show us what one man can do. In 2014 I will be looking out for Irish people who have the imagination to get up off their arses and inspire us with their spirit. Real people who get things done and not just talk about it

    For my own sins I am enjoying the internship at Leitrim County Council but after that who knows. All I can say is I am excited about the future again and know it is all in my hands. Cometh the hour, cometh the man and all that craic. Just doing my bit for Ireland!

    I produced a video for an inspirational woman from Donegal who is doing amazing work in schools engaging children and making them aware of mental health and positive thinking.

    This is innovative (for Ireland) and it shows that one person really can make a difference. Give Judy Buckley a huge round of applause Irish Brothers.

    Mise le meas

    • michaelcoughlan

      Thanks for the link Paul. This lady isn’t waiting for bail in or outs, banks to be split, sound money or the armageddon to do something proactive. Good on you and good on her.


    • dwalsh

      Great stuff Paul.
      Thanks for the link.

      • Paul Divers

        Thanks lads. Apparently it was shot on a mobile phone by one of the girls and they all mucked in to create the set. They had never done anything like this before and the feedback Judy has been getting is amazing. It was them who did it. I just done the editing (using free and open source software of course :-)

    • Dorothy Jones

      Change of tune there…

  17. “If we consider the four big government objectives, there is ample room for simple initiatives that could help the Government achieve its aims quickly.

    The first aim in the document is never to go back to the boom/bust economics of the 2000s characterized by far too much credit to the property sector; the second is debt sustainability; the third is to reduce taxes to encourage people to work and to employ; and the fourth is to create conditions for the maximum employment possible.”

    It is evident that the current political arrangements dictate policy must be from Brussels. The monetary union (EURO) removes national sovereignty.
    Therefore the national government can do nothing meaningful which is perhaps why they DO NOTHING.

    The first aim of removing boom/bust economy entails being rid of the Central banking system. The central banking system expands and reduces credit (debt issuance of money) at will to expand and contract the money supply creating booms and busts. The money supply must be fixed in volume to avoid booms and busts. This cannot be left to the control of bankers or politicians and so needs to be fixed in the constitution. The chance of achievement is close to zero.

    The second goal debt sustainability. Partly achieved by removing the current fiat money system which is done by closing the central bank. Not having the currency issued into existence as a debt would be of the greatest help here. Fiat currency can be swapped /exchanged for treasury bills issued free of encumbrance (debt free). Initial repudiation of that classified as odious debt will halve the national debt and cast the zombie banks adrift to finally die. Then just bury them.
    The balance of the national debt can be paid off with treasury money.
    National debt is now eradicated. Chance of achievement almost zero. The EURO must be dropped and the country use a national currency.

    The third goal of lower taxes is now easy. Income tax is perfidious. It taxes work, enterprise, and innovation and productivity. With the the removal of income tax all are encouraged to work and produce without the penalty of tax. Also the removal of the income tax is an effective wage raise.

    The forth goal of achieving conditions for maximum employment has already fallen into place. AS LONG AS the government steps to one side and contents itself with the planning of infrastructure that benefits the people as a whole. Government can not, should not try to micro manage the economy.

    This requires Ireland leave the Euro and conduct itself as a sovereign nation rather than a vassal state of the NEW WORLD ORDER.

    The chances of any change are close to zero so it is up to aware individuals to try to protect themselves until there is a general uprising for change as the population can no longer tolerate the dissolution of their lives.

  18. dwalsh

    The creation of the Irish Financial Services Centre and the globalised financial casino industry it respresents in Ireland is a Trojan Horse. It destroyed our economy and our sovereignty. I am convinced this was planned – not accidental.

    The neoliberal notion of the free unrestrained market is a delusion. A system made to measure for sociopaths and criminals. We cannot build a rational or humane world on the basis of unrestrained greed.

  19. “I am convinced this was planned – not accidental.”

    Much if not all the economic mayhem is planned. You as a rational person, and concerned, have observed and come to a conclusion. Very little is accidental. nobody can be stupid enough to make those mistakes. World wide it is so. Planned mayhem. Out of chaos people seek order. thus are their freedoms systematically curtailed. The government big enough to give you all you want is equally big enough to take it all away.

    GATA has been accumulating information on the precious metal and financial market and have evidence to support your conclusions. Total manipulation in all markets.


    So let us leave aside all labels and describe what we see.

    A cabal of banker crooks manipulating markets and buying politicians and news outlets and mega corporations and providing educational foundations. They now control nearly all the worlds money supply and a full 30% or more of the industrial, commercial output.

    Russia now provides the “Free Press” and not the West. what a turn around from the 1960′s

  20. You skate around the issues David like a kid on a frozen pond. Stay close to the bank or you might fall in. you just make me angry as you never address the fundamental issue of money formation as a debt bearing, interest demanding loan. Either you agree or disagree. What is it?

    Otherwise I conclude it is a waste of time pursuing this blog. I learn from here that few have the guts to tell it like it is. Kilkenomics is a waste of time except for the socializing. It is a foregone conclusion there is more of the same pabulum that fails , has failed and will continue to fail.

    print, print, print, spend, spend, spend is the mantra. Bunch of overpaid losers and charlatans.

    What a complete waste of time.

    Too bad. Back to the farm. Back to sanity. Back to the sailboat. I’ll put my energy elsewhere.

    Merry Christmas to all
    May you be showered with blessings

  21. In his press conference Bernanke reiterated the FOMC Communique’s false narrative that persistently low inflation could harm the economy. We cannot believe that Fed academics still believe in the economic alchemy that holds that economic growth is related to inflation. Fed academics, like Soviet apparatchiks, have purged the economic history of the Seventies, Eighties and late Nineties in order to maintain the promiscuous credit policies that keep big banks and big government functioning.

  22. Please note that the initial response to Fed tapering drove the S&P 500 below and important technical level (or two) and someone immediately appeared to rescue stocks by driving SPHs higher. We have warned incessantly that this scheme has occurred repeatedly since the financial crisis of 2008.

    The Fed and the Government have unleashed an unprecedented amount of manipulative control over the markets – all of them, not just the precious metals market.

  23. The truth is the Fed is absolutely terrified by gold. When the price starts to move up like it did from 2008 to 2011, it signals to the world that something is wrong. The Fed has spent considerable time and resources since September 2011 working to keep the price of gold as low as possible. More on this soon, as I’m working on an article about this. But the fact stands that what is occurring right now and has been occurring in varying degrees for decades is the extreme manipulation of gold for the purpose of defending the U.S. dollar’s reserve currency status.

  24. Follow the new Zealand example. Growth is so good it is the strongest performing currency this last ten years.

    Ireland should follow the example of New Zealand and build industrial exports based on it agricultural output

  25. David Schectman

    We spend half the year in Aventura, Florida. From Thanksgiving on, the traffic and shopping is unbearable, as the snowbirds descend on Miami Beach and the surrounding areas. One of the biggest attractions is the Aventura Mall, about two miles from where we live. We avoid it like the plague, this time of the year. Parking is impossible and the pre-Christmas crowds are impossible.

    On Wednesday morning, Susan drove there to pick something up at Nordstroms. The parking lot was half empty. The mall was empty. The employees at Nordstroms couldn’t understand where all the traffic was? Every year, at this time, it is a mad house. Not now. I wonder if this is a barometer of a very weak retail Christmas season. If so, this doesn’t bode well for 2014, but that wouldn’t surprise me at all. The healthy economy is really mostly smoke and mirrors. Here is an interesting article from Zero Hedge:

  26. Andy Hoffman
    I mean, can you imagine the gall of this ivory tower failure claiming the Fed’s strong suit has been communication; let alone, that it could receive “support of the broader American public?” No entity is more despised globally; and in time, even comatose, reality-show addicted Americans will realize, too, that the Fed is not only the cause of its problems, but in fact, the nation’s mortal enemy. Even a government agency would have difficulty screwing up so royally; but then again, to the private banks that own it, inflation is exactly what they seek. Only financial assets benefit from Fed-induced inflation – temporarily, that is – whilst the broader economy, in time, is decimated. Financial serfdom is the net result for the unwitting “99%”; and as for their kids and grandkids, hope is something they may never experience.

  27. Everyone lies. It’s an engrained corrupt habit.

    In June, the USFed Chairman Bernanke expected to start pulling back before the end of year, but that appears out of the question. The public statements undercut the USFed’s credibility and even contradict their own inaction. They await more evidence of progress. They see none. They talk of the USEconomy continues to expand at a moderate pace, which is a lie. If it did, they would halt the $85 billion in monthly financial welfare with economic food stamps. They talk of labor markets showing some further improvement, which is a lie. If it did, they would halt the $85 billion in monthly financial welfare with economic food stamps. They talk of the housing sector sagging, which is an under-statement, and therefore also a lie. It is collapsing despite absurdly low home loan rates as subsidy. It is simple. As long as the USFed continues with QE and the extraordinary measures with huge monthly bond monetization purchases, they are liars when citing any recovery or growth or labor market improvement or housing sector stability. The QE continues for the basic reason that the US financial structure is fundamentally broken and the USEconomy wrecked, neither able to stand on its own.

    To read the full article, please subscribe to Hat Trick Letter

  28. redriversix

    Debt enslaves the majority….

    enriches the minority…….

    this is the goal..more debt for the majority,more taxes,less health care & eventually no state pension…even though your paying for it less rights,less & less sovereignty.

    Countries are or will be owned by Corporations including Banks..

    Democracy is ending just like communism…replaced by socialism for failing Corporations and Capitalism for failing families.

    your life and the lives of others across the World are now part of a business better be productive.

    Wars are planned like Corporate buyouts or hostile takeovers..even as expansion plans.

    This is the future…hell ! it may even be today..

    Have a nice day

    • bonbon

      I’d watch that crystal ball-gazing and soup stirring, it can lead to Kenny Chants

      All Witches together now :

      Double, double, toil and trouble;
      Fire burn, and cauldron bubble.

  29. paddythepig

    If Santy did economics plans ….

  30. michaelcoughlan

    Hi David,

    I just watched your excellent video on punk economics re hostages and QE. Id like to respectfully highligh an error in the message.
    You say that the rich get richer when assets go up as a result of QE because you correctly point out that the inflationary effects are confined to the markets.

    However rich people AREN’T getting richer in this manner. Let me explain; When an asset rises in price as a result of QE it’s VALUE remains the same. The real reason the rich are getting richer is because wages which remain the same are REDUCED in value because of an increase in the money supply meaning ordinary people have LESS purchasing power.

    This value versus price observation is the real crux of thd matter and in my view is why chartered accounts should never be put in charge of any organisation. They simply DON’T understand the difference between price and value. As a consequence they don’t know when their balance sheets are hopelessly disconected from reality.

    Hope this helps.


    • michaelcoughlan

      The increasing disparty in wealth between asset owners and wealth producers (workers) could be of course compensated for by rising wages as QE continues but we know that won’t happen to facilitate the idelogues aim of keeping inflation low (at least in their PowerPoint presentations).

      The whole world is decending into feudalism David.

      I don’t always agree with Tony brogan but he makes huge sense. One if the most important points he makes is that free people are free to choose what THEY want as money. If gold and silver are corrupted then isn’t it time for knowledgeable commentators like you highlight this. Couldn’t a large hedge fund of commodities be created from people’s savings and scrip issued to circulate baked by the fund. Couldn’t covered call options be written against the fund to provide income to cover the cost of administration. Couldn’t the deposits in Irish banks be used to establish this fund and the scrip issued to the banks be the collateral they use to maintain their balance sheets meanwhile depositor funds would be at arms length in the event of bail in or bank failure?

      We need to think outside to box to survive what’s coming David.


      • cooldude

        Michael the reason none of this will ever happen is because the banking system is a parasite feeding off and destroying the physical economy. Firstly it robs tax payers through making them pay for bailing out it’s own banks who were behaving recklessly and deserved to be shut down for their gambling behavior. This came from the top of the banking cartel and was implemented everywhere with the honorable exception of Iceland who grew a pair and put their people before their banks. Note Trichet’s call to Brian Lenihan where he ordered him to save the banks “at all costs”.

        Next the hungry parasite will rob our deposits to keep the ponzi system going. This is now inevitable as all of the large western banks would be insolvent if it wasn’t for schemes like QE and LTRO to keep them afloat.

        So to expect the parasitical banking system to help out in any solution to the problems this system is causing to our society never mind the economy is unrealistic. What is needed is to do an Iceland and demand the loans that were given to recapitalize them be repaid and when they fail to do this to shut down this corrupt system and start a new one which is run for the benefit of the people and not for the benefit of the cartel.

        • michaelcoughlan

          I agree re Iceland. I was suggesting that ordinary citizens take it upon themselves to implement the suggestion outlined above.

          My stockmarket skills are rudimentary but improving and I can assure you that if they become sophisticated enough I’ll try and do something like this on my own.


  31. SMOKEY

    Anyone else receive an email saying David’s email hacked?
    I didn’t open it, as well as the last few as I usually delete them and come straight to this site.
    Anyhoo…if there is any veracity to this let me know.

  32. Because of the latency I discussed, it’s not being noticed but the central banks, bullion banks, and the sovereigns are taking the long side of that (trade). They are taking delivery on an unleveraged basis, and it will show up, but it’s in the hundreds of tons, especially as we moved sub-$1,200 (on gold). That’s why sub-$1,200 is unsustainable, despite what the likes of Goldman Sachs and all of these shill bullion banks are saying.”
    Andrew Maquire

  33. It’s not fair!! It’s not fair!! Wasn’t my fault

    Ireland was unfairly treated when dealing with failed banks: The FT noted comments from the IMF’s former mission chief to Ireland, Ajay Chopra, who played a key role in designing Ireland’s bailout. He said Ireland was treated unfairly when it was prevented from burning bond holders, putting all the burden of supporting banks on domestic taxpayers, while senior bond holders got paid out. The article noted that Ireland pumped €64B into its banking sector that eventually led to a bailout with the EU and IMF.

    S&P reaffirms Ireland’s rating at BBB+/A-2: Reuters cited S&P’s rating review on Ireland, which was broadly positive and noted ongoing budget consolidation, asset sales and an improvement in the domestic economy. It said the outlook remains positive and there is more than a one-in-three chance that it could raise the long-term rating on Ireland in the next 18 months.

    Reported from

  34. Mexico opens the lending floodgate to potentially die of debt suffocation and simultaneously be strangled by the interest payments on that debt.

  35. bonbon

    Thick as they are, Kenny and Gilmore must surely feel totally humiliated -

    Barroso – “In fact it was the banking sector in Ireland, that was one of the biggest problems in the world in terms of banking stability, let’s be honest about this.”

    So now the entire Euro fiasco in the world is Ireland’s fault. So much for poster boys and girls.

  36. bonbon

    For those who have understandably great difficulty making any sense of the idea of credit, and know something must urgently be done, here is a good starter. The monetarist onslaught from both banksers and goldbugs must be put aside, however rudely it takes. The politicians are gutlessly unable to be rude to that noisy gang, and find it much easier to insult voters with pabulum.

    Generalizing the Principle of Government Credit: Non-Mechanical Economic Cycles

    Most here, and including DMcW, will never have heard of this, the true history of credit. It is time to make this actual now.

    • bonbon

      “Today the idea of setting up a credit corporation by the government is something people do not have a clear sense of at all because they are thinking in a monetarist view. They are thinking ‘what has happened has happened, and its not our job to come in and control the process.’”

  37. bonbon

    For all citizens who must understand what credit means, and who know that the current monetarist nightmare trumpeted from dark corners is utter tripe, humbug and bunkum, Michael Kirsch has a good video here on Franklin Roosevelt’s Credit Principle

    Michael Kirsch of LaRouchePAC discusses Franklin Roosevelt’s credit principle, as expressed in his use of the Reconstruction Finance Corporation, which evolved from his broader plan to re-instate a credit system of economy, as was facilitated by the first and second Bank of the United States. Roosevelt’s proposal for 12 credit banks for industry, his various lending programs, and excerpts from his budget addresses of 1934-1940 are discussed. Reference is made back to Hamilton, as well as to Jackson’s “simple machine” of government, which replaced Hamilton’s system.

  38. bonbon

    While praising the efforts of the Irish people, Borroso said the euro was “the victim” of irresponsible practices in the Irish financial sector.

    Poor Borroso, I can hear the knuckle dusters ringing as he walks. Some think it’s the spurs, no, it’s the arms swinging right to the pavement.

  39. bonbon

    As anyone who in involved in the design and production of complex machines knows, Andrew Jackson’s “simple machinery” of government is bound to bust itself, or for the more technical, diverge under stress.

    So dump the scandalous kow-towing to Andrew Jackson in various schools and dark corners, and get with advance government, active promotion of economic progress, be done with simple machinery. Hey we live in a complex world and understand much more than rattling horse carriages.

    • Andrew Jackson caused the national debt to be paid off. good thing to do I’d say but not you with your credit schemes!!

      • bonbon

        For those interested in truth The Condemnation of Andrew Jackson for Treason

        documents in full the Jackson operation to destroy the U.S. Credit System, of which the Bank of the United States was the chief arm and means of the Congress from 1791-1836. It addresses the urgent necessity of rallying a team of patriots before the next election which can save the nation–a team which understands the essential difference between the U.S. System of Public Credit vs other populist proposals.

        Background historical articles are made available on the precise workings and role of the Bank of the United States in achieving economic sovereignty, and carrying out the economic purposes of the U.S. Constitution.

  40. Wills

    For anyone interested in the mechanics of pOnzi banking criminal rackets read article above.

    Best article yet on the critical core reality powering EVERYTHING else in terms of the nightmarish economic status ante;


    The pros and cons of agriculture.

    “From 2005 to 2008, the worldwide price of food rose 80 percent — and has kept rising.” Today, along with the cumulative index, the Standard & Poors GSCI provides 219 distinct index “tickers,” so investors can boot up their Bloomberg system and bet on everything from palladium to soybean oil, biofuels to feeder cattle. -”

    and you are told the cost of living increases less than 2% pa.
    My grocery bill has gone from 350-500 a month; much more in line with the 15% per annum range.

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