July 6, 2015

Greek crisis: Debt forgiveness must be part of the healing process

Posted in Sunday Business Post · 96 comments ·

It is difficult to overestimate the seriousness of the Greek crisis, not just for Greece, but for Ireland too. Let us be very clear, the choice being presented is between amputation or recuperation.

The German plan, which is what the rest of the eurozone governments are supporting, sometimes gleefully, is to kick Greece out of the euro if it defaults. This is the amputation solution.

The other choice is the recuperation approach favoured by the IMF – and you would expect most reasonable people. This revolves around more debt relief and a plan to keep Greece in the euro and give the country time to try to turn the economy around.

The cold financial fact is that the Greeks don’t have the money to pay, so they will default again. In reality, the credibility problem for Greece is not that it has already defaulted – as argued by mainstream European politicians – but that it hasn’t defaulted enough.

The IMF has already said that Greece needs another €50 billion of debt relief. The US is privately supporting that view, not least because the US has seen these default crises before, notably in Mexico, and understands that debt forgiveness is part of the economic healing process.

But Germany is digging its heels in and is behaving as if only the reckless debtor is responsible – rather than the reckless creditor too. Unfortunately, this narrative is not only false, but for a country like Ireland – with, let us not forget, the highest total debt-to-income ratio in the world – very dangerous. If interest rates were to rise sharply, for example, do you think the 400,000 people on tracker mortgages would be able to pay? Where would we stand on debt deals then?

As has been the case in Ireland, getting into too much debt didn’t happen overnight. It took years of appalling government, here and in Greece, to go bust. We have only managed to grow because Ireland isn’t really a European economy at all. We are part of the Anglo-American economy – that’s where we trade, that’s where investment comes from and that’s where our people go to in an economic crisis.

Because Britain and the US and the likes of Canada and Australia grew strongly from 2012 onwards, they dragged us with them.

Our big bet is that the English-speaking world continues to grow and we will be okay, more or less, because we earn revenues by exporting to these countries and some of that revenue can be used to pay down debt.

If you don’t have revenue from the growing Anglo-American world, you are snookered – which brings us nicely to the European continent.

On the continent, things are much more complicated. Greece has been going slowly bust for years and German political opinion has been slowly becoming more unforgiving towards its debtors.

Ironically, because there is always a surplus for a deficit and a creditor for a debtor, the extent of Germany’s foreign debts is a reflection of its own massive current account surplus. It really is a victim of its own success.

As the German surplus got bigger and bigger, the amount of money available to German banks to lend also got bigger and bigger and they lent more and more to countries that were not getting stronger, but actually getting weaker and weaker.

Then suddenly, echoing Hemingway’s observation that you go bust two ways – “gradually, then suddenly” – Greece went bust. However, it is important to appreciate that the process took years of bad decisions on both sides. The Greeks are doubtless culpable, but so too is the EU for allowing this debt spiral to happen.

Now we have a stand-off between a bankrupt country and a German political elite, which has backed itself into a corner by promising the German people that Germany will not tolerate a default. In essence, Merkel has promised the German people that she will get all their money back, but now she is realising that there is no money.

As a consequence, the only way she can win politically is to turn Greece’s Great Depression-style catastrophe into an easily digestible morality tale for her electorate. So we end up with a piece of theatre pitting the feckless, lazy Greeks against the stoic, efficient Germans. Like all theatre there is an element of truth to the yarn, but a yarn it is.

For the German electorate, hard-working Germany must be seen to punish indolent Greece if it votes today to default. But how can Frau Merkel do this?

The only way Germany can be seen to win politically is if it pushes Greece out of the euro. At least then, Merkel can sell a “don’t fuck with us” story to her electorate. (Sorry I couldn’t put it more politely.)

Unfortunately for the Germans, they don’t seem to want to admit that it is actually illegal to force Greece out of the euro and Germany, much as it would like to be rid of Greece, has a small issue of democracy and legally binding treaties to get around.

For a country that was destroyed by a strange little man with an odd moustache who stated that treaties were “nothing more than pieces of paper”, such a high-handed approach to international law might appear, at best, forgetful.

When you stand back, you can see that if the Greeks can’t be forced legally to leave the euro, they won’t. This means that the IMF view should prevail, but in the next few days, the Germans have the Greeks by the short and curlies and the pressure is being felt in the collapsing Greek banking system.

The Germans know they have only one chance to force the Greeks to leave, which is by collapsing the Greek banking system with rumours that a No vote means leaving the euro – which it doesn’t.

Doesn’t it strike you as distasteful that the richest country in Europe should try to destroy the poorest country in the eurozone by actively encouraging a bank run which would eviscerate Greek people’s meager savings?

And furthermore, doesn’t it make you a bit queasy to know that our government has become Europe’s most vocal pom-pom girl, cheerleading this grisly spectacle?

In addition, doesn’t this approach strike you as particularly odd when the entire strategy upon which this government was elected was to get “retrospective bank debt relief” for Ireland?

Ireland has most to gain from the IMF view that, in countries where there is far too much debt – personal and governmental – the only way out of a crisis is co-responsibility, where debtors and creditors do deals.

Quite why we are taking up the German cause with such gusto when it’s not in our interest is beyond me. Can you figure it out?

  1. “Quite why we are taking up the German cause with such gusto when it’s not in our interest is beyond me. Can you figure it out?”

    Because ‘we’ are spineless, cowardly lick-arses.

    • DB4545

      Just look at the lack of quality in the governments that we elect, drunks,thieves,political eunuchs and schoolteachers and it’s not hard to figure out the lack of quality in their decision making processes. They rob the taxpayers who elect them and pay themselves vastly inflated salaries and pensions while selling off taxpayer assets via crony capitalism in Nama.

      The Irish political elite in the 17th century sold the Country out with the Act of Union. The Irish political elite of the 21st century sold the Country out by colluding with the EU elite to deliver the Lisbon and other treaties for an EU Union. Less than 99 years since we made a decision to leave one empire our gombeen politicians have embedded us in another empire.

      In 1940s Ireland when a world war was raging and we hadn’t got a pot to piss in we were able to built good quality public housing. In the 1950s we were able to clear most of the slums and put people in decent living conditions. This in an era when most people barely had a primary education. In 21st century Ireland with a generation achieving educational qualifications and wealth being generated that would have staggered their grandparents the popes grandchildren are again paying their rent to foreign landlords.When will we ever learn?


      • madman

        Well said DB, your comment should be posted on every lamp post in Ireland. Quisling politicians being elected all the time.

      • Deco

        +1, DB. You hit the nail on the head.

        The “leadership” in this country has become increasingly irresponsible in the last three decades.

        They have also become increasingly reliant on Irish oligopolies/oligarchs for their power.

    • Adelaide

      To quote Frank Zappa. “… because politics is the entertainment division of the military–industrial complex.”

      That’s why Syriza is such a shock to the establishment, they’re not in it for the well-remunerated amateur dramatics sponsored by Corporatocracy. Their mere presence shames the soulless lackeys in suits, hence, earlier, Greek Finance Minister Yanis Varoufakis announced his resignation.

      In a statement, released via his twitter account, Mr Varoufakis said he had been “made aware” that some members of the eurozone considered him unwelcome at meetings of finance ministers, “an idea the prime minister judged to be potentially helpful to him in reaching an agreement”.

      • Mike Marketing

        And back to David’s excellent article Greek crisis: ‘Debt forgiveness must be part of the healing process’.

        As an Irish taxpayer let me add my tuppence worth to the debate.

        On sacrificial lambs I guess that Yanis Varoufakis is the first major casualty of the Greek resistance. That is the first trump card played in what will be prolonged negotiations.

        Now that the Greek government is half back in the tent the EU governments (Germany & France) will be running their slide rules over the costings (financial & political).
        1. How much if Greece leaves and
        2. How much to make it worth their while to stay?

        That tot will decide the EU’s position in the negotiations.

        I guess many readers are a WW2 baby and so need to reflect on some European history. The illegal invasion of Poland by Germany on September 1st, 1939 lead to the death of 60 –>85 million people and many multiples of that injured.

        What financial damages estimate do you put on that one?

        Let’s all think about a workable/acceptable win-win solution for the Greek nation, in dealing with their indebtedness to the Euro-Group. I believe it should be creative and include some debt write-off.

        Ironically, post World War2 Germany had to settle up with Europe for the devastation that Hitler & his Nazi gang caused. They got an unbelievably good deal.

        These reparations were very flexible so as not to obliterate the citizens of the losing post war country.
        One clever idea was to insist that the Allied Powers purchased the maximum amount of goods and services in the period 1945 – 1955 from Germany in lieu of cash, which they just didn’t have.
        This was the salvation of Germany’s economy and has taken them out of defeat to where they are today.

        A similar solution (Greek holidays (+tourism products), film making, olives, olive oil, wine, honey, cheese, alcohol (Ouzo), beer, fish, vinegar, herbs, spices, rice, nuts, confectionery, cotton, carpets, rugs, leather goods, jewelry, marble, cement, solar products etc) could work here and the increased production to meet the incremental orders could reduce their 49% youth employment figure.

        This to be done hand in glove with the vitally necessary and long overdue reform programme. The main target of reform must be the Greek Government taking action on the endemic corruption of Greek society from
        the bottom to the top.
        Any future agreed solution must be predicated upon Greece agreeing to extirpate bribery and corruption.
        This must be written into any agreement and signed by Greece. This is and has been rampant in the public sector. The system is knackered and needs rebuilding from the bottom up.

        If serious, the EU Group must insist that the radical programme be overseen by the EU Scandinavian countries who have integrity and the most honourable and honest governments in the world.

        It could swing it and keep the Greeks dignity intact and allow them continue as members of the EU and Euro.

        United we stand, divided we fall?

        Time for Alexis Tsipras to get on his bike and prove his good faith.

        PS. The stats tell us that on a per capita basis, the Irish total debt is almost twice that of the Greek. So when all is said and done who needs a just solution most?
        In fact the Irish carry the second largest debt burden in the world.

    • paddythepig

      Maybe read this first before jumping to conclusions.


    • Daithi7

      `Quite why we are taking up the German cause with such gusto when it’s not in our interest is beyond me. Can you figure it out?`

      Who is this we?! We,as in the Irish people, are most certainly not taking up the creditors cause with such gusto (though let’s not forget we are actually a creditor in this Greek case). The reason our over pensioned, employment protected teacher /taoiseach is cheer leading with such gusto is Real Politik i.e. If a hard left Greek govmnt can be seen to extract a better deal from it’s EU partners than we could, then that would cost FG & public sector crony Labour big time at the next election. And that’s it really.

      Tbh, my own opinion fwiw, is that it’s a bit churlish to now denounce the ‘Germans’ (in reality the EU creditor countries led by its largest) for now insisting on reforms to go with more lending, when the author acknowledges that bad lending was one of the causes of this sorry debacle I.e. Is it too simple to suggest that EU c creditor countries just want a badly governed country to actually engage in reforms so that it has a better chance of repaying it’s loans and hence a better chance of a better future.

      Of course debt forgiveness (through extensions,etc, etc) will have to be part of this solution for legacy debts, but new debt will have to be loaned with a realistic expectation of being paid back. This won’t happen without reform no what the commies would like to have us believe.

      • coldblow

        Good point about Realpolitik. Do you mind me asking if you read it somewhere or worked it out for yourself? It never occurred to me.

        • Daithi7

          It’s a political reality mirrored in Spain, Portugal, Italy and right across Europe. The deal available to debtor countries who are in trouble is to implement reforms in tandem with an agreed do in the cost of credit by extending loan terms, reducing interest rates, promissory notes,etc, etc, etc

          So that is what is attainable in Europe. For me what is so frustrating in the Greece situation is that their Governments have appeared to ask for all the credit concessions without offering to implement any of the reforms. That will not cut it, sorry. If they reformed their public service to retire at 65, and if they set up a proper revenue commissioners to collect taxes they might be some way down the road to regaining credibility and indeed fiscal viability. Creditors will have to play their part by extending terms,etc, etc So Greece can get herself back on her feet.

  2. johngkelly71

    Quite why we are taking up the German cause with such gusto when it’s not in our interest is beyond me. Can you figure it out?

    Well there are a number of potential reasons:
    1. They are absolute idiots
    2. There are economic reasons.
    3. There are political reasons
    4. Bribery

    While I believe 1 to be true I don’t think that is the reason they are selling us out. Reason 2 doesn’t stand up as you have pointed out. Reason 3 has some credibility. They perhaps don’t want the Greeks to succeed because it will make them look bad. On balance however I have got to go with 4. I fully expect Enda to end up with a very plush office in Brussels. This is how politics works.

    • cooldude

      It would seem to be the only logical conclusion. Noonan in particular seems to be in his element ranting at the Geeks who have merely exercised their democratic right.

      If the krauts and Noonan keep up this hardline approach it seems the Greeks are going to print their own Euros and send them to the banks to keep the ATM’s working. This is not allowed under ECB rules but it would have support and is the moral thing to do. These bullies have to be taken on because we could well be next.

  3. http://www.theguardian.com/world/2015/jul/06/greek-finance-minister-yanis-varoufakis-resigns-despite-referendum-no-vote

    The bully is still the master of the playground, insisting that they will not talk to certain representatives of a not yet sovereign nation.

    Not until the Euro is rejected, but not just rejected but replaced with proper money, will Greece recover. Replacing the EURO with another central bank fiat currency is simply poison from the same jar.

    Talking of debt relief is a fools quest when the actual system of indebtedness is still in place.

    When do we get to debate the real reason for the depressive state. when do we debate the indebted state of all the nations. When do we debate the cause of this and the associated interest payments draining the economy.

    Not until we get a return to honest money will there be any improvement.

  4. Grzegorz Kolodziej

    Good article.
    Lots to think about.
    David’s two crucial claims for me are:
    “Because Britain and the US and the likes of Canada and Australia grew strongly from 2012 onwards, they dragged us with them.” and
    “this narrative is not only false, but for a country like Ireland – with, let us not forget, the highest total debt-to-income ratio in the world – very dangerous.”

    As to his first statement, in the country which borders with the UK it’s been often overlooked that the UK (and Australia) are re-aligning themselves from the US towards China so this begs the question what kind of geopolitics should Ireland pursue?

    Just to illustrate my thesis and to reiterate what I had written before, as a result of UK drifting away from both the EU hard-core and the US, China invested -£14bn in Hinkley Point C nuclear power station
    -£42.8bn in UK’s High Speed 2 airline
    -£800m in Manchester City Airport and
    -£1bn in the Asian Business Park.

    That this goes against the US’s interest, it’s clear from their official statement:


    As to David’s second statement, following closely German debates on Greece I can say that since Ireland’s position is so accommodating of Germany, suddenly Ireland’s reputation in German media has grown. We (I say we because it also relates to my projected life on this island) are suddenly contrasted with Greece as a positive example of a country which overcame the recession and implemented reforms (readers would take it with a pinch of salt as myself). The buzzword they now use to describe Ireland is “the European hot-spot of investment”.

    On the contrary, as soon Poland has chosen a President which is likely to adapt a hard line on Germany and in all likelihood it will choose a German-skeptic government in October (with God knows who in coalition), negative articles on Poland appeared in German media (hitherto praised as a top of a class learner in Europe in terms of how to run an economy, which sounds as ridiculous for me as it sounds for you, but then again let’s not forget that the former Polish Prime Minister’s grandfather did serve in Wehrmacht) and transit restrictions on lorries from Poland.

    Why did I find it necessary to inform you about the change in how Poland and Ireland are talked about in Germany (previously: Ireland bad, Poland good; now Ireland good, Poland bad)?

    Well, do not quote me on that but perhaps the answer to question as to “why we are taking up the German cause with such gusto when it’s not in our interest is beyond me” is a simple as an answer to a question why Polish government is taking up the German cause: a little bit of inferiority complex combined with a little bit of bribes from German foundations.

    Special attention should be paid to David’s statement I most agree with from this whole article:
    “As the German surplus got bigger and bigger, the amount of money available to German banks to lend also got bigger and bigger and they lent more and more to countries that were not getting stronger, but actually getting weaker and weaker.”

    W. Godley’s co-researcher, Randall Wray, accommodated that in a short, elegant equation:

    Domestic Private Balance + Domestic Government Balance + Foreign Balance = 0

    That means that huge public debts of peripheral countries have to be compensated with huge surpluses in their private sectors. As neither in Greece’s nor in Poland’s this is the case, the surpluses have to be in sectors of foreign countries, mainly Germany. These surpluses cause deficits in peripheral countries.

    On another yet related note, this is from wikileaks:


    • The huge public debts can only occur with unlimited borrowing allowed. Mostly this is the result of unlimited credit available through central bank unlimited production of money.

      Without the unlimited credit interest rates would rise, debt harder to accrue, and deficit financing less likely. surpluses would be less easily earned as the economy would be more balanced.

      • Grzegorz Kolodziej

        Tony, look – I agree with you on everything you say about unlimited borrowing due to unlimited credit available, public debt and a need for a sound money system.
        But it is what it is and in the situation that there is I believe Wray’s equation holds.
        For the system to change it would require not me or you blogging, but some major powers interested in creating a new money system, the most severe fault of which is, as you pointed out and as predicted by Hayek almost a century ago, unlimited credit.
        The dominant force in the EU, Germany, is not interested in that for reasons outlined by me above, although paradoxically Germany is out of all countries in the EU is most prepared to leave the EU (not only in economic terms, but in legal too – but it would take too long to explain it now).
        The empire which might be and probably will be interested in it is China which is accruing gold, hence my emphasis that Ireland needs to rethink its geopolitical alliances even more so because the UK did.

        As to Bretton-Woods, the reason I see it a turning point at least as big as 1913 in the US if not bigger is because of system of trust which crumbled down after a) pegging dollar to gold ended, even if it was based on trust rather than reality and b) US stopped being a trade-surplus country and it was forced to operate using other countries surpluses through Wall Street and petrodollar.

        This is what we see in Greece and Europe today: the trust is gone. Bear in mind that Poland, a huge country courted and bullied in turn by Germany, has now the second most EU-skeptic society after the UK according to Eurostat.

        • Hi Grzegorz

          For the system to change it would require not me or you blogging, but some major powers interested in creating a new money system, the most severe fault of which is, as you pointed out and as predicted by Hayek almost a century ago, unlimited credit.

          I agree with the first two clauses. Nothing I do will change anything. However very few people are aware of what the actual problem is. A politician advocating change in a singular fashion will be isolated or assassinated. That is why it is important that you appear and advocate on this blog or any other as you educate others one by one. As a critical mass of the population become aware then change can be effected.

          After that a people are likey to be subjected to a coup as suggested in the posting by cooldude. An educated people will not be denied in the longer run as this is a matter of a choice between freedom and slavery.

          It is mankind’s oldest battle against the forces of evil. Not too many are yet aware.

          I think we, basically, are in agreement.

          • Yes the only way is to try to influence people on a one by one basis, or in small groups, or as David does with his higher profile.

            That’s unless you want to enter the pit of vipers known as politics – no thanks.

        • Grzegorz,

          “Ireland needs to rethink its geopolitical alliances”

          Haven’t you realised it yet Grzegorz? Ireland doesn’t do geopolitics – it doesn’t even ‘think’ (or rethink) about doing them – Ireald does what it’s told by the Yanks, the Brits or the Germans – take your pick depending on the given circumstance and how much arse-licking is required.

          Even the governments of the Commonwealth of Dominica, and Antigua & Barbuda (two places I have lived) had more guts insofar as they recently aligned themselves with Cuba and Venezuela in the ALBA organization – much to the annoyance of the Americans.


          That’s two small Caribbean islands with populations of approx. 90,000 and 70,000 respectively. And they have more guts than the spineless cowards over here.I’ve met both of the Prime Ministers of the two countries and you’d gladly have a beer with either of them whereas I’d spit on Enda if he came within 10 feet of me. They are also less corrupt than Enda and his cronies and that’s saying a lot about two real-life banana republics (although Antigua doesn’t produce much in terms of banana produce anymore).

    • coldblow

      Interesting WikiLeaks document. If genuine it shows a range of approaches. The US had a role in our own response to the crisis, though I think information is sketchy. I suppose their overriding aim is to save the world financial system and I can’t imagine they are not trying to influence what happens in Europe.

  5. DB4545

    The head of the IMF Christine Lagarde said that the “IMF is standing by ready to assist Greece if requested”. Christine Lagarde is on a tax-free salary of approximately 500,000 Euros plus other significant benefits and now wants to impose penal tax rates on Greek Citizens who earn less than 1/25th of her salary.

    The German Fuehrer Herr Merkel says that there is “no basis for an agreement with Greece”. This from a woman who was a Citizen of a failed State called East Germany which was bailed out at huge expense by Western European Citizens. I don’t remember Irish Citizens being asked or complaining when we had to put our hands in our pockets for that particular episode. I don’t remember US Citizens complaining when they had to bailout another failed State called Nazi Germany.

    The Greek finance Minister resigns because “other European leaders don’t like him in the room for negotiations”. A member State of the EU gets to dictate which representatives of another member State are permitted to be present for negotiations? Herr Merkel obviously prefers compliant and craven political eunuchs like Etna(who allowed himself to be bitch slapped by a french midget called Sarkozy)or drunks like Brain.

    Who do you think you are kidding Madame Fuehrer?


    • The memory of Enda being bitch-slapped by a French midget cracks me up every time.

      • DB4545

        Four years as a teacher and so talented they made him a school principal and then straight into Daddy’s old seat. It cracks me up but for different reasons Adam.


        • There is no need to denigrate the teaching profession. Half my family were/are teachers and they are basically fine people and valuable to society. It is incidental that Kenny was a teacher.

          • DB4545

            Tony Brogan

            Unfortunately you’re incorrect on that Tony. It’s far from incidental that Kenny was a teacher. I only wish you were correct.I wasn’t denigrating the teaching profession most of whom I admire and are dedicated and essential to our economy and society.

            I was denigrating a particular type of political animal who operates and takes advantage of special conditions afforded to members of the teaching profession in Ireland which are not available to the rest of society. The politically ambitious and well connected use these conditions of service within the teaching profession to further their ambitions.

            They can take “indefinite leave of absence” to take up political office. They then pay a substitute teacher to “cover” their teaching post. The substitute is a temp and gets no pension benefit. The pension accrues to the newly minted politician. This can go on for years which is why Enda Kenny can collect a teachers full pension despite having only worked as a teacher for 4 years.

            Indefinite leave of absence allows a politician to return to a taxpayer funded teaching post if the electorate kicks them out of office. In essence they have a job for life and a substantial pension if they fail as a politician. Therefore entry to politics is a very low risk and highly rewarding career move for a teacher with ambitions. And all completely fully funded by Irish taxpayers. Which is why so many Irish politicians started out in the teaching profession.

            I hope that clarifies the situation for you.


          • Illuminating, thank you. But the poor temp is also a teacher. It would seem that it is a cosy nest for politicians.
            Are any other profession similarly affected?

          • DB4545

            Tony Brogan

            I’m not aware of any other groups who have such extensive benefits and advantages but I’ll stand corrected if anyone can point them out to me.


  6. Wills

    The art of the printing of iou’s in this case the euro and flipping it into a funny money Monopoly money Ponzi scam would explain the self serving interests buttressed inner circle keeping guard over it across all nationalities binding them all together in a nod and wink club.

  7. michaelcoughlan


    “In essence, Merkel has promised the German people that she will get all their money back, but now she is realising that there is no money.”

    Are you not convinced that it’s the banks she made the promise to?

    The people will do what they are told especially in a fatherland.


  8. Deco

    There is one certainty with regard to Michael Noonan, and the responsibilities that he is given. And that is that, ultimately Noonan will fail badly.

    Does anybody remember his spell as FG leader. He was such a clown, he should have been finished forever. Now, we have the media saving his blushes. Because everybody in official Ireland needs to pretend all is well.

    Noonan will wreck Ireland more than Cowen yet. Debt is climbing upwards. The cost base is going out of what. And the state system is garnering in more money, and generating the same abysmal performance as before.

  9. Deco

    Concerning the EU, it has been screwed up by two Frenchies who represent the reason why many French people left France, for other places (London, Canada, California, NYC, Munich, and Ireland). They were never interested in “egalite”- they were interested in saving useless morons who were running French banks recklessly.


    Sarkozy wanted the EU to “bailout” the lenders holding Greek debt, and he got his way. Cowen was second up to demand this, because he knew Irealnd would be the next country needing a 2bailout”.

    The EU has become a stinking farce. I feel sorry for the people in Poland and other Eastern countries who were promised great things, and just sucked into another continental scale scam to suit the already loaded.

    The rich call the shots in the EU.

    Well done Greece for fighting back. But it is not enough. The same needs to happen in Italy.

    • StephenKenny

      Everyone’s in a corner. If Greece devalue, as they have to, then every other Eurozone country will stand around aghast, as Greek produce, services, and holidays, fall in price by 50%-80%.
      This is deflation to worry about – not a rise of a couple of a percent the savings rate, but a 50% fall in prices. Everyone would be forced to follow – they’d be a real race for the exits.
      OK, it’d be almost impossible for a Greek to buy an iPad, at least for a bit, but we’d let market forces off the leash to do it’s stuff.

      • Reciprocated by a 50% (if that is the percentile) inflation for all goods and services needed to be imported. Only the very richest Greeks would be able to afford foreign purchases and travel abroad.

      • DB4545


        This is exactly what Iceland did. They told the global bankers to go f**k themselves and sing for their money. A few global brands like McDonalds pulled out because their business model couldn’t withstand devaluation but this generated opportunities for indigenous businesses who filled the gap in the market.

        With a devaluation on that scale most of Europe will holiday in Greece next year. With the dangers of Islamic terrorism on the rise Europeans are taking their holidays within Europe and this would also bode well for Greece. Like you said market forces. Iceland had two painful years (better than a decade of austerity or poverty as it should be called) and are in the process of jailing the people responsible and are now in a better place for it. What’s not to like?



  10. Tony, one for you:

    “Forget Gold, Bitcoin is Backed by Time”


    • Backed by time? I am not sure what they mean, except the number of bit coins is predictable.

      “Milton Friedman
      He proposed a fixed monetary rule, called Friedman’s k-percent rule, where money supply would be calculated by known macroeconomic and financial factors, targeting a specific level or range of inflation.

      If they propose that bit coin follows this rule then gold is better. Gold in circulation would be regulated by the market demand or lack of demand.
      No algorithms or government agencies required. It is self regulated and produces no inflation. No inflation is better than inflation no matter how low the rate. Zero inflation is the optimal for wealth preservation and a stable economy

      • I’m neither agreeing nor disagreeing with him.

        It’s just another opinion.

        However, gold doesn’t ‘circulate’ Tony – it gets stuck in vaults and people exchange pieces of paper based on its given or current value. And we all know what that leads to.

        People en masse are not going to start carrying around gold coins either, apart for devotees like yourself – it’s too much of a security risk.

        An algorithmic digital currency protected by unbreakable cryptography is a far better option for the 21st century and that’s the way we are moving.

        Some of the bing banks are trying to get in on the act now (create their own version of bitcoin) but it won’t work because Bitcoin is completely independent, decentralized, transparent and incorruptible.

        • Gold is not and seldom was the currency of day to day use. It is the reserve of wealth and currency for the large entities, the nation state or mega corporation.

          Silver is the currency of choice for day to day transactions for the people.

          bitcoin may be a viable choice in the electronic age but one still cannot carry bitcoin in ones pocket and use it for a cash transaction. If the electronics fail there is no bitcoin currency available to use. It is too easy to turn off the money supply if it is all electronic. That is why the banksters want us to move to a cashless society. Better control and manipulation of the people. Total ownership of the money occurs. This not withstanding the independence and security of bitcoin, it can be cut off.

          • “Silver is the currency of choice for day to day transactions for the people”

            No one is going to carry around silver in this day and age, for the same reasons they aren’t going to carry around gold.

            “but one still cannot carry bitcoin in ones pocket and use it for a cash transaction”

            This is wildly incorrect, check Google for a million articles explaining why and how bitcoin can be carried around – I’m tight for time sorry.

            “it can be cut off.”

            It can’t – again check Google.

            Cheers Tony.

          • I can not find any physical bit coin for sale that does not have an encryption on the coin that needs to be verified online to ascertain the validity of the value of the coin.

            There is a gold bitcoin but it is valued at one bitcoin and like all precious metal coins inscribed with a fiat currency value immediately goes out of circulation and is saved or hoarded as some describe.

            Silver coin is/was carried around just as is the base metal coins today. I would rather carry coins that keep value over time than the inflationary currency currently used.

            If one does not have internet access how can one continue to use bitcoin as money?

          • “I can not find any physical bit coin for sale”

            What exactly do you want a ‘physical bitcoin’ for Tony? As a collector’s item?

            “There is a gold bitcoin but it is valued at one bitcoin and like all precious metal coins inscribed with a fiat currency value”

            There’s no such thing as a ‘gold bitcoin’ – that’s a contradiction in terms Tony.

            Bitcoins are not ‘inscribed’ with a fiat value – if they are then it defeats the purpose at best, or it’s a scam at worse. Bitcoin has its own value which fluctuates daily against fiat currencies – see here for live details: https://bitcoinaverage.com/#CAD

            “I would rather carry coins” – fair enough, that’s your choice, but the rest of the world isn’t going to go back to that. That era is over Tony.

            “If one does not have internet access how can one continue to use bitcoin as money?”

            If the internet goes down we are all screwed in any case Tony.

        • https://www.google.ca/search?q=physical+bitcoin&oq=physical+bitcoin&aqs=chrome.0.69i59j69i60l2.8529j0j7&sourceid=chrome&es_sm=0&ie=UTF-8

          I tried a search for physical bitcoin and viewed several postings.

          What do I want physical bit coin for.
          simply I do not trust electronic money as the sole source of currency. bitcoin is entirely electronic. I wish to have cash as a standby. There are many stores here who do not even take credit card so I must revert to cash in these place. If I use bitcoin I am restricted in buying for cash, at the local bakery or the many farmers market stands.

          When I look at the sources of physical bit coin I see that I still require an electronic source of verification of the validity of the bitcoin or division of the coin represented.

          If the electronic go down we are not all screwed! but close. Subsistence farmers will live and eat. So will those with a local secure source of food. The best place for that is your home stockpiled with months of staple foods just in case the “seven lean years” arrive. Water will be useful too.

          I see the practical application of electronic money but I do not want to rely on it for my sole souce of purchase of goods.

          If the internet and electronics go down then it will be a cash and barter situation yet again.

          Is this likely to be a scenario I need to worry about? It is hard to say but is more likely today than at any other time of my life.

          Many in Greece and the Ukraine are wishing they had had a little gold or silver this last few months. Not many wish they had had bitcoin. More wish they have enough food to eat.

          Interesting discussion Adam

          • This is the way we are heading Tony – relentless and radical innovation leading to a myriad of dencentralized ways of varying degree to circumvent the banks, which bitcoin (the currency app) can already do – while Bitcoin (the protocol) also has the additional potential to completely circumvent the creation and supply of money.


          • Yes I agree that there will be a myriad of local currencies but there must be a universal currency that allows trade from one region to another. Maybe bitcoin will, can work for that but there is still the problem of electronic failure. There will be a substance that is acceptable by the world for the final settlement mechanism.

            As I have said before to absolutely no response either negative or positive, the Real Bills doctrine works effectively as long as there is a final settlement money.

            China and three quarters of the world are accumulating gold and silver for some reason so I suspect they view them as money.

            It is not my call. as I pass on what I see reported.

            If money is totally electronic then an adverse power can jam the electronics anytime and screw up a nations infrastructure and trade in minutes.

      • Grzegorz Kolodziej

        Just to explain to some readers who might not know what the Friedman’s k-percent rule is, the rule “would specify that the Reserve System should see to it that the total stock of money so defined rises month by month, and indeed, so far as possible, day by day, at an annual rate of X per cent, where X is some number between 3 and 5” (Milton Friedman, ‘Dollars and Deficits”, Prentice Hall, 1968, p. 193).

        A major problem with the Friedman k-percent rule, which is aimed to eliminate fluctuations in money supply which he believed caused the Great Depression, is that we are still going to have an expansion of money out of thin air. The main premise of Friedman’s monetarism is that demand for money is static (I do not want to go into details as to what Friedman meant by money as he was constantly broadening his definition but for the sake of simplicity basically all money aggregates, from cash to more sophisticated forms of fiat money).

        My major arguments against Friedman’s k-percent rule are as follows:
        1. Demand for money is not constant. This discovery forced Lady Thatcher to abandon monetarism after her policies gave rise to a major recession in the early 80s UK (though still relatively mild compared to Greece today or Poland between the late 90s and around 2005, so basically after Poland’s implementation of the EU law combined with huge and rising trade deficits with the EU – look at Randall Wray’s equation in my post above – and before the tax cuts of post-communist Miller and then liberal minister Gilowska in Kaczynski’s government).
        What we are seeing today belies Friedman’s assumption – we see a very low demand for money. In case of US government bonds the demand is the lowest in US history, in case of the UK lowest for over 300 years – so much so that their governments are basically buying their own bonds.
        2. Friedman’s k-percent rule was proposed before the collapse of Bretton-Woods and sophisticated versions of derivatives and its definition of money (constantly broadened by Friedman as he was struggling to catch up with modern financial instruments aimed at creating fiat) it’s therefore obsolete. Hayek thought it was bogus in first place – perhaps you might be inclined to read his pamphlet against Milton Friedman titled “Full Employment At Any Price?” where Hayek wrote: “he has become used for statistical purposes to draw a sharp distinction between what is to be regarded as money and what is not. This distinction doesn’t exist in the real world”.
        3. Friedman’s rule will still lead to an expansion in the money supply out of thin air, although Friedman would answer that “one shouldn’t allow the best to be the enemy of the good” and argue that the k-percent rule is not optimal but it’s intended to limit the damage done by central banks.
        4. Friedman’s diagnosis of the Great Depression is misleading – I won’t go into details though I could. In one sentence, Friedman did not blame FED for intervention but rather that it did not intervene enough by injecting money into economy.
        5. On the other hand, David’s McWilliams’s Keynesian diagnosis that the economy is in a slump despite stimuli packages because banks are hoarding money is also flawed. Banks are not hoarding money but on the contrary, they spend it on what the Austrian school (von Mises, Hayek, Rothbard) called “non-productive activities” such as buying government bonds (due to low demand) which raises the likelihood of an increase in banks bad assets. For that reason alone sustaining a constant money rate of growth is impossible.
        6. Friedman’s assumption that increase in money supply = increase in inflation is largely valid, but there are interesting anomalies (I use the word “anomaly” as meant by Thomas Kuhn) monetarism cannot explain. For example in Poland in 2000 there was a sharp decrease in demand for money but money supply slightly increased and so did inflation (monetarism would argue inflation should decrease). In 1998 there was a sharp increase in money supply and significant decrease of inflation rate.
        7. There is another problem with k-percent rule called “time-inconsistency problem” as described by Kydland and Prescott. They conclude that at any given time, the k-percent rule is likely to involve either an excess demand for cash or an excess supply.

        As to gold and silver, I think that Adam is partly right when he writes that gold does not ‘circulate’ Tony – it gets stuck in vaults. What he forgets is that historically gold system was accompanied by silver system and silver did circulate. The essence is that the healthiest money system would be a system based on commodities and/or free banking (as advocated by the Austrian school). The second best system would be some sort of return of Bretton-Woods, but for that to work we would need an empire with trade surpluses such as Bretton-Woods period US – otherwise such empire would use other use other countries surpluses (as advocated by Paul Volcker in his 3 page report to Henry Kissinger, then a national security adviser “if we can’t remain hegemonic by handling our surpluses we should do it by handling other countries surpluses” which is the first major case in the history of mankind of an empire expanding its power by expanding its deficits using the precedent established in WWII Germany which run huge deficits during World War II by forcing occupied countries such as Poland, Czech Republic and Greece to use heavily distorted exchange rates: Albrecht Ritschl German internal wartime statistics suggest that when calculated at realistic rates transfers from Europe on clearing account were actually closer to 90% of Germany’s 1938 GDP) and which would require such empire to go and invade some countries occasionally like the post 1971 US in order to prop up it’s inflation-export mechanism.

        Perhaps Adam is right, perhaps he is wrong advocating Bitcoin rather than gold as a better currency (I believe some of Adam’s position comes from his skepticism of gold standard ever coming back). However the advantage that gold has over Bitcoin is that unlike Bitcoin, gold and silver currencies have some underlying value based on commodity which Bitcoin does not have and are thus not as volatile as Bitcoin. I mean what’s the point of having a crypto-currency which is (let’s assume, though it is a big ‘if’) perfectly independent from central banks if that currency can suddenly, within a few days, devalue from 30 USD to 4 USD as in May 2011, if that never happened in the case of gold or silver? I would have a currency which I would be able to use worldwide, but I would be poorer by 85pc. The value of Bitcoin has increased by over 100,000 times: this looks very similar to a dot.com bubble, when investors were ready to pay for internet companies up to 300 times more than their annual incomes. Make of it what you think, but I would bet dollars against peanuts that gold will never devalue 85pc in a few days.
        Secondly (this is only minor doubt compared to my first one), I wonder if Adam ever considered that the 100,000 pc increase of Bitcoin’s price might not necessarily be a sign of this currency being successful but on the contrary, it might be a sign of central banks pumping the Bitcoin bubble in order to attract inexperienced investors and then trigger Bitcoin-panick one day, thus eliminating the competition.

        Also, Adam might be wrong when he wrote in one his previous posts from a couple of months ago that gold standard ain’t coming back. If anything, I’d rather say gold or silver standard coming back is far more likely than Bitcoin replacing dollar as the world’s trade currency. Look at China hoarding all their gold: China imports 1200 tons of gold a year via Hong-Kong and it exports food and weapons for gold (20 tons that way in 2009, 100 tons in 2013). China does not export gold – no gold bars from China on the market. Not only there are 4600 tons of gold in China, but also 1300 in private hands as jewellery for the last 5 years – so more than the entire gold of Switzerland or Japan. This is coupled with emergence of new centres of gold exchange in Hong-Kong, Moscow and – what might become the world’s gold exchange centre – Singapore. The property boom in China will not last forever, on the contrary, the last three months saw a rapid decline in what is the biggest property bubble in the world. So far the Chinese government has been refraining itself from the Obama-style intervention, but possible bankruptcies of Chinese banks may give rise to Asia dumping their holding on Wall Street, particularly if China and Russia issue bonds secured by gold which would result in no one wanting to buy Western bonds.
        In 2012 President of Chinese Central Bank announced that his goal is to accumulate 10,000 tons of gold. What does it sound to you if not as an announcement to embark on the gold standard in near future? And why is China investing so much in its army? Did currency wars not lead (historically) to military wars?

        As to you Tony, my major problem with the gold/silver standard is that it whether money system is sound depends not only on the actual system being used (i.e. fiat v gold), but on who controls the currency.
        Take the Roman empire. So what it had the gold/silver standard if the currency was being constantly debased, starting from Nero who debased it to 90pc of silver in a dennar coin, then Trajan to 85pc, Marcus Aurelius to 75pc, Septimus Severus to 50pc, around 250 AD there was only 5pc of silver in a silver coin during the reign of Claudius the Second only 2pc. No wonder that the price farmers had to pay for grain increased from 7 drachmas in 2nd century to 120,000 drachmas during Claudius (overall the inflation between Claudius and Constantin was over 1,000,000pc so much so that people started to use barter, all of that in a gold/silver standard system).

        By the way, everyone here is excited about Greece while there is a bigger-scale crisis going on China. This crisis might be more relevant for Ireland than Greece’s because China is the only country able to introduce a gold-backed currency (or bonds) with an army soon matching the US (forget the figures you heard on that blog about how much the US spends: Chinese $250bn v US $640bn is more closely matched if we consider what a dollar buy for Chinese army and how much dollar may lose should China dump all US bonds) and it would be interesting to see whether their bubble will prompt them to do carry out mad Obama-style stimuli or rather attempt gold-standard (even partly backed):


        The reason why I am advocating considering sticking up with China is because even if their over-inflated markets go down as I predicted they would, the US is much more dependent and vulnerable than China (the eurozone crisis might be obscuring it). China has real resources (like gold and commodities deals in other countries), it has influence on Russia bigger than the US and it has army which, although still obsolete in some aspects which in some cases is technologically more advanced than the US and growing (which I do not want to prove to save space).
        The US has only 3 things:
        - the US Army dependent on wobbly dollar (controlled by China)
        - petrol-dollar deals safeguarded by their army
        - ridiculously leveraged Wall Street and FED also partly dependent on China

        The whole situation reminds of the England-Prussia relation prior to WWI with Prussia as an exporter with a weak currency and London’s stock exchange as today’s Wall Street

        Getting real busy now so might be not blogging as often but I’ll keep reading your posts while commuting

        Cheers :-)

        • Actually, as far as I know many gold coins circulated. The British sovereign being one.
          But silver is the coin of every day transactions.

          Talking of the Romans being on the gold standard in the same breath as saying they reduced the precious metal content over time, to zero, is an oxymoron.
          The Inflation Rate showed that it was not a gold standard. It was fiat currency constantly debased just as today. If the content of gold in the coin had been maintained there would have been no inflation. That is the gold standard. No increase in the money supply and a constant standard of purity and a constant weight = constant pricing of goods and services. The exception is some deflation reflecting the improved efficiency and inventiveness of the people. All were or would be more wealthy as they benefit from these efficiencies.

          • Grzegorz Kolodziej

            “The Inflation Rate showed that it was not a gold standard. It was fiat currency constantly debased just as today. If the content of gold in the coin had been maintained there would have been no inflation. That is the gold standard”

            What you have in mind when you talk about gold standard is a 100pc bullion reserve system, in which each banknote is backed by an equivalent amount of gold bullion in a vault. Well, I have bad news for you Tony -that kind of system has never actually existed and it probably will not exists. Take the British gold sovereign, which is a good example as it was probably the closest to your ideal. I am not sure what gold sovereign you are talking about as the content of gold in gold sovereign did in fact change from time to time (i.e. the gold content of the Crown of the Double Rose was reduced to only 83 percen in order to regulate the money supply since Parliament has always been loath to lend the King money for wars), but I suppose you mean the Victorian era gold sovereigns.

            The most comprehensive analysis of the economic history of the gold standard was written by Arthur Bloomfield and published in 1959. It’s called “Monetary Policy Under the International Gold Standard: 1880-1914″ and you really need to read that if you want to know how the gold standard worked.

            Basically, even in that golden era of the gold standard (which would be a benchmark also for me) people mostly used paper banknotes and bank transfers, just as they do today (even silver coins become token coins).

            What Bloomfield does is that he provides references to major central bank balance sheets around the world (including not only gold bullion but also foreign exchange reserves, i.e., bonds denominated in foreign gold-linked currencies).

            The reserve ratios, on this basis for 1910 – so the peak of the gold standard – were
            -46% in Britain,
            -54% in Germany,
            -60% in France,
            -41% in Belgium,
            -73% for the Netherlands,
            -68% for Denmark, 80% for Finland,
            -75% for Norway, 75% for Switzerland, 55% for Russia,
            -and 62% for Austro-Hungary.

            (btw, in 1914, 44% of global net foreign investment was coming from Britain and only Germany 13%).

            Reserve ratios for gold bullion alone would be, naturally, less than these numbers.

            What made this money system superior to our systems (well, apart from the fact that inflation is basically fraud and QU is fraud times 100) was that there were no fiscal limitations or centralized governing bodies, such as the Eurozone has today.

            In the US gold coins comprised $591 million out of total currency (base money) of $3,149 million in the United States, or 18.7%.

            So that’s the first thing for you to understand.

            The second thing to understand is that when I talk about the gold standard I do not only have some theoretical model in mind but I also try to envisage as to what mechanisms should be built into that system so that it’s more difficult to debase it.

            “Talking of the Romans being on the gold standard in the same breath as saying they reduced the precious metal content over time, to zero, is an oxymoron”

            Oxymoron would occur if they reduced it to zero, but I never said that. They reduced it to 2%.

            Btw, 24k gold coins are paradoxically also prone to natural debasement because of their wear factor (ever thought of that?), therefore governments debased them to (harder and more robust) 22k coins.

            Try this for a change to find out more about the gold standard:


        • DB4545


          Jesus H Christ Grzegorz I don’t doubt your intellect or your research but you read like Constantin Gurdgiev on half a kilo of coke. Can you polish it up a bit and turn it into a narrative for dunces like me?
          Kind and respectful regards.


        • coldblow


          Interesting to learn about Volcker’s memo to Kissinger. Michael Hudson (Super Imperialism) goes into the trick of the US in turning a massive deficit to their advantage. (I have only read a bit of it so far so maybe he mentions this memo himself.)

          Talking of Kissinger, Chang (?) and Halliday’s biography of Mao is scathing about the way the Chinese walked all over him in the 70s.

    • cooldude

      Thanks Corkie. That is the most accurate description of the this whole “bailout” carry on that I have read. Economic hitmen one and all and the politicians are their paid for messenger boys. This is all happening as John Perkins explained and the assets that are stripped always include the rights to the water supply. Irish Water will be sold in a few years and the huge debts they are creating will be paid for by the tax payer. This is much more of a banker versus the rest of us situation than a German versus Greek one. But that is the last thing they want us to hear.

  11. mcsean2163

    Sadly preaching to the converted, Varoufakis is a principled politician fighting for his country, Noonan is converting his stocks to gold….

  12. Just a thought on the powerful forces arraigned against Greece and democracy in general.

    “A little research on the internet shows that collectively the countries of NATO far exceed the capabilities of Russia. The GDP of NATO is seventeen (17) times larger than Russia’s. NATO military spending beats Russia by ten (10) times. The population of NATO is six (6) times bigger than Russia’s. The idea that Russia represents a threat to NATO and the US is mere propaganda.

    To those who cite Russia’s nuclear arsenal, if Russia didn’t have a powerful nuclear deterrent by now NATO would have reduced all major Russian cities to rubble.”
    Hank Fellerman on Lemetropolecafe.com

    • cooldude

      I hope they have the balls to do it Tony. Better than accepting being a debt slave for the rest of their lives. At least they are trying not to seize their citizens deposits which is what the ECB want. By far the best government in Europe presently although thats not too hard especially here with the shower of gobshites we have looking after everyone except their own people.

  13. sravrannies

    Gurdgiev always his his finger on the pulse…


  14. cooldude

    It seems that the US and their Euro colleagues are not taking any chances on Greece. If they don’t sign a deal which suits both NATO and the banks a military takeover will be played out. Seems Victoria Nuland has already paid a visit to organize the military takeover if it is needed. All of this is textbook IMF policy and is exactly as John Perkins explained in his book Confessions Of An Economic Hitman. Democracy is only tolerated when the vote suits their agenda.


  15. joe hack

    The Greek government did what others governments feared to do and what if they are successful were will that leave those other governments and countries, as result other governments follow Germany – the Merkle folly – the Greeks can’t pay now and austerity means they can never pay, wake up Merkle and stop saving your ass.
    When one owes the bank a Euro one worries, when one owes the bank billions the bank worries…

  16. abutler

    Ah lads, regardless of all the love here for Tsipras, I really do not know what kind of a clown he is; on a high after the referendum result could easily dictate some sort of terms, yet comes with no homework to one of the most crucial EU meetings in years.


    You have to appreciate why he is driving everyone nuts is he a spoofer or what….

    Or maybe the laziness of the Greek diplomats are are microcosm of the whole Greek peoples mess. These guys obviously don’t work to late…

    • I would imagine he’s barely slept in recent weeks.

      ‘met with anger’ – that says it all really. Were there no adults in the room?

      • ‘Normal commerce is now impossible in Greece. Small businesses, lacking use of credit cards or money from bank accounts, were left to rely on cash coming from diminishing purchases from customers. But Greeks are holding on tight to what they have. And suppliers are demanding that businesses pay cash up front.’

        One other recommendation is to remove all saving from banks and bank deposit boxes. Keep enough cash at home to last 3-6 months expenses. Perhaps they can still use bitcoin here as the web is still up!!?? If a business will accept it.

      • abutler

        That is so lame.

        Country on the edge of an economic precipice, he has been in government for months and there is no wish list, ideal end game plan anywhere…

        You would imagine they might even copy the IMF homework that helped with the NO vote.

        Jesus even a cut and paste job from economic wikipedia or dare I say from this website, Paul Krugman etc etc but nothing not a feic’en thing, hands hanging, come on…

        • DB4545


          They’re in place for five months and they’re making the EU elite sit up and pay attention. The previous government in Greece bankrupted the Country by socialising the losses of PRIVATE banks and making Greek taxpayers responsible for PRIVATE debt. Not unlike somewhere closer to home if your memory is functioning correctly. There’s no need for a cut and paste. There’s a template that works. It’s called Iceland.


    • Daithi7

      He is a joke at this stage, which would be done way funny if it wasn’t so effing serious. And it is most serious for his own people. He should have come with his demands in a discussion document, that would be a minimum. Just saying no to a previous EU position is not enough, he is the one negotiating from a position of weakness. Greece are already costing Euro zone countries, they are already upsetting EU partners, but they are taking the complete piss if they think showing up without a negotiating paper will cut it, it’s not even close, nor should it be.

      • abutler

        100% agree, whole thing is daft I actually think Tsipras is just running down to clock so Merkel will blow a fuse toss him out of the Euro and he will blame it all on the Germans.

        Of course all here will just lap it up and demonize the Germans, EU, ECB and write some more in the hope of EU strife and revolution…. be careful wishing for such events.

        • DB4545


          Einsatzgruppenfuehrer Merkel doesn’t have that power. She might like it but as history demonstrates other Europeans may be reluctant to grant such powers given the track record of that particular State. You may remember we were demonized ourselves just a few years ago as part of the process of getting us to accept the bailout. Unfortunately we didn’t get the luxury of voting in a democratic referendum to ensure that the government had a legitimate mandate for their actions. Stranger still that we should collude to bully another Member State. When the bully has found another useful idiot to support its activities we may find the Greeks and others have long memories.


  17. Home Counties Girl

    I read this piece by Ashoka Mody (In bad faith) late last night, provides some respite into all that Greek bashing of late. It is a lengthy piece but well worth a read, I’ve copied and pasted an extract from it below:

    To see this, we must go back to a lesson that American economist Irving Fisher taught in 1933. He says—in italicized words—on page 344 that “the more debtors pay, the more they owe.” (debt deflation cycles). That pathological condition arises in the midst of Great Depressions, such as the United States in the 1930s and Greece in the last 5 years.


    He clearly outlines the failings of the IMF, and how the IMF has influenced the poor narrative on the bail out talks.

    I think I’m starting to square why this guy is no longer at the IMF ;)


  18. sravrannies

    he’ll go far!

  19. coldblow

    An interesting post from Peter Hitchens today:


    ‘But Germany, and its many desperately sycophantic self-abasing clients in the ‘new’ formerly Soviet-dominated EU states [What about Ireland??], whose leaders would have been ready for their people to eat thistles if it was the price of getting into the Euro, continues to support a policy of exemplary punishment for the rebels. I think all this gives a clue as to what the EU really is, deep, deep down.’

    Let the Greek b*stard have it!

    • DB4545


      Thanks for the link to this excellent detailed yet tight analysis of the Europe that we really live in and not the one that we’re sometimes deluded into thinking we live in. I try not to waste people’s valuable time with pages of horses**t so I try to keep it tight. But sometimes we can over-simplify and this is clearly an example where detail is needed. When you consider the dangerous sycophants at work in this State this article is a wake up call to all people who consider themselves to be both Irish Citizens and good Europeans. Well worth your time to read.


  20. Any country that wishes to remain sovereign must have its own currency and be self contained in mind and deed. Living within ones means is crucial and then only export surpluses and buy imports with the earned income. Avoiding debt is paramount and that requires a currency that is not debt based as all fiat currencies currently are.

    There is no escape from debt based bondage if we insist on using a debt based currency. It matters not who we are aligned with until that problem is addressed. The bankers control the world as they control the currencies and consequently dictate policy.

    Greece would be better off with its own debt free Drachma but not with one issued by bankers from the central bank. Issuing currency directly from treasury , debt free, at no interest is the key to independent prosperity.

    Incidentally the Chinese stock market has just plunged 25%. Crude oil is down 15%, DOW is off 9% and commodities down. All countries are indebted and economies in decline. There is no safe haven. Greek debts can not be paid and the dominoes start to fall. Greecian contagion will spread.

    • michaelcoughlan

      It will be interesting to see if the Chineese govt confiscates the gold of its citizens and if bitcoin rallies in price!

      • Hardly likely Michael as they only recently legalized the citizen ownership of gold.


        China now has the Shanghai gold exchange for physical gold only , no paper allowed to be traded.
        Volumes are reported to be at a rate well in excess of 2000 tonnes per annum. Where it ends up is a little obscure but there is reason to believe that China may have well in excess of 10,000 tonnes of reserves plus citizen owned gold.


        • michaelcoughlan

          Many thanks for this Tony. What’s happening in China will wash out here. Getting really serious about leaving Ireland. So sick of it. The ECB has just told Irish banks they can’t reduce the penal variable rates they are charging customers.

          Much of Ireland Tony is still in the Deflationary phase of the curve. We know this preceeds hyperinflation but we are not in hyperinflation yet. Wages for ordinary people still dropping.

          • Michael, the grass is always greener over the fence, and it is not always the best move to leave where one is.
            I look at my friends and relatives who stayed put whereas I moved. They all did well and lived well.
            Take a couple of trips out and about, and talk to those you know who live in different jurisdictions.
            On the other hand, my brother who is of limited means has moved to Bulgaria where he says he lives way better than staying in the UK. BUT it is a new venture with a new start at age 70!!! Takes guts or there was no other choices for him.
            Anyway, put aside your aggravations and get out the pencil and paper and review all the pros and cons. You may find that despite all the annoyances you are as well off where you are as anywhere else.

            I can not talk with any authority as I have made plenty of errors for myself. Whatever you decide, take care of yourself.

            Wages dropping for ordinary people is, I think, a world wide problem as we adjust to cheap labour and “free trade” pacts.

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