July 20, 2015

There was no Irish miracle, just a very big overdraft

Posted in Sunday Business Post · 51 comments ·

It could have been 2002 all over again. There was Bertie in the dock running rings around his inquisitors and just up the road, the social partners were at the new-fangled National Economic Dialogue discussing how to divvy up the spoils of the economy. All we needed was Robbie Keane to snatch a last-minute goal against the Germans and we’d be sorted once more!


Forget the football for a minute, because that’s another story, but in the economic world, although most of the bearded ones in Dublin Castle don’t realise it, Bertie Ahern isn’t the only thing that binds social partnership and the banking/credit boom together.

Much as the leftist leaning members of the partnership are loath to admit it, you can’t have social partnership without a banking boom.

The trade unions need another banking/credit/housing boom to have any possibility of resurrecting social partnership – because that’s where the money came from.

Maybe they are clever enough to realise this and don’t want to admit it, or maybe they don’t see the connection, but let me be clear: social partnership was enabled and prolonged by the extravagant tax revenue that stemmed directly from the credit boom.

In short, had the banks not fuelled the housing market by borrowing and then lending billions into the economy, the country wouldn’t have had the Bertie Boom and the attendant tax revenue.

With all this revenue bonanza, Bertie was able to buy off the various social partners and in the process, allow them make up a narrative that in some magical way, social partnership was responsible for the Irish miracle.

It wasn’t. There was no miracle. It was just a very big overdraft.

During the Bertie Boom, banks borrowed from foreigners, this money was then lent to Irish people in order to buy over-priced houses. Lots more was lent to developers to build these houses and speculate on land in order to release more land on to the market when prices had risen sufficiently. The borrowed cash was simply recycled back into the state coffers via stamp duty, Vat and of course, massively-increased income tax receipts associated with practically full employment.

The more people spent the borrowed money, the more indirect and direct tax spilled into the coffers.

King Bertie divvied up the spoils – with the complete support of the social partners – and thus created the illusion of a new economic model when all it was only a large term loan which had to be paid back. That was about it.

Since then, the national narrative has changed to one of heroes and villains. Those who from 2002 to 2007 were calling for more spending have suddenly turned into paragons of prudence. They weren’t.

Today, the rhetoric deployed by the more angelic of the social partners – the ones who have never done anything wrong, ever – is that the bankers were all terrible and in contrast, the partners were beyond reproach.

But social partnership is/was a product of the specific economic dynamics of the Bertie Boom. It can’t be resurrected without another credit/housing boom.

So the lofty aspirations of National Economic Dialogue are hostage to the harsh reality of bank lending. You’d never know it from all the talk this week about a new economic model and the like, but that’s the fact.

So they are discussing how to spend a budget deficit – how to spend borrowed money actually – without appreciating that what they are talking about is the end product not the starting point. The budget deficit or surplus is simply the figure that drops out of the national economy after all the activity is counted.

It is the residual not the kick-starter.

The kick-starter is how is our society going to generate the cash to pay the wages of the partners.

I have rarely been more confident about the Irish private sector. We could be about to enter a golden era for Irish entrepreneurship.

We are in the right part of the world, semi-detached Europeans rather than being continental. The US and Britain, our main trading partners, are doing fine and there is enough mobile cash and capital looking for a home here for us to make a good fist of the next few years. Remember, we are tiny so we only need a tiny bit of the global action to be okay. The country is producing more competitive businesses than at any other period.

The recession and an overvalued exchange rate have forced many small companies to compete vigorously in export markets and this experience has made them exceptionally flexible and able to deliver. The stats bear this out.

But given that the National Economic Dialogue is a product of the government sector, the question is what happens to these guys. Will the private sector provide enough revenue to feed all the mouths?

With the housing boom, there was a large overdraft so we didn’t have to earn the cash, we just borrowed from tomorrow to pay for today. We can’t do that again, surely?

I don’t know where this cash is going to come from. At the moment, we still run a budget deficit and there is no real prospect of billions of extra shekels raining into the state.

The private sector will grind out export revenues from trade, but the notion that there’ll be Bertie-style largesse is not credible.

I know it’s not fashionable to say, but for the left-leaning process of partnership to work, the trade unions need a banker-driven housing boom again. Otherwise, they simply won’t have the revenues to match their rhetoric. The only solution might simply to adjust downwards their expectations of what can be delivered.

Failing that, they could always have Bertie back. Now there’s a thought.

  1. Antaine

    Subscribe :-) beat you to it Adam

  2. patricia03

    Could someone please explain to me how this all jells. We are told by the Bank of England that 93% of all money is created by the Banks when they lend and then we are told we are in Queer Street because the Banks borrow from overseas and lend it to the people! If they can just “print” money why would they borrow? I can see that Banks cause bubbles by their unregulated lending. After all that is just the free market religion but why would they borrow!! It doesn’t matter whether a country is in the euro or not the principle is the same. Please, someone explain all this to me.

    • Adelaide

      “If they can just “print” money why would they borrow?”…
      My understanding is banks to need to reserve (a legacy from the fractional reserve days) on their books a fixed percentage of the money that they had lent/created/printed, indeed the more ‘reserves’ permits them to lend out more so they borrow money and book the borrowed money as ‘reserves’ which enables them to legally lend out a multiple of that ‘reserve’.
      It’s all nonsense.
      Secondly, I may be wrong but when a bank is insolvent it means it has no reserves left.

      • Adelaide

        ps Greek banks are presently restricted from making new loans, which suggests they don’t have the legally required reserves, and so are insolvent.
        Please correct me if I’m wrong.

      • patricia03

        Thank you Adelaide. That makes sense. I will have to think because Ireland and New Zealand, where I live in live, are very different places. But, on the basis of your explanation, if there were a property crash the Bank’s asset base would be worth less and so in order to protect those overseas investors the banks would have to call up the risky mortgages they are holding in order to repay some of those loans they have borrowed from overseas. I will read David’s article again and try to make sense of it in the way you have explained.

    • Grzegorz Kolodziej

      Dear Patricia.

      Your question is very relevant.

      If I were to answer in one sentence, I would say that there is no substantial difference between printing money and borrowing it from overseas and both are done in order to:
      1. keep bubbles alive in the stock and property market (and it’s easier and more inconspicuous to do it via the electronic transactions or buying bonds than physical money printing).
      2. win the elections (some interpret Keynes’s “General Theory” as the election winning manual).

      What central banks do through QE is that they expand the banks reserves at the central bank (money which cannot leave the central bank).

      “Banks cause bubbles by their unregulated lending. After all that is just the free market religion”

      But Patricia, what’s been happening in the banking sector worldwide is the exact opposite of free market and unregulated lending.
      If there was a free market, the interest rates in the US would probably be trading at around 5%-6% (if not more) then it would be not cost effective for corporation to borrow money and buy their own stock.

      First of all, both the US and the UK governments have been MANIPULATING and DISTORTING “free” market by pushing interest rates to a near zero level (Greenspan’s easy-credit policy coincided with the upswing in the housing boom) and this was followed by ECB (and out of all European countries, Ireland has been most influenced by it due to its dependence on the US/UK; initially the effects of artificially cheap credit had bearings on Ireland via the worst form of foreign direct investment – property speculators (scale-wise perhaps the only similar property-speculation happened in Latvia; by the way, in Krakow the second biggest property speculators after the Germans were… the Irish – beating the English!).
      Secondly, when lending stopped it had more bearing on Ireland than most other countries.
      Thirdly, we see the repetition of the effects of market manipulation in form of money going to fungi properties in Dublin rather to jobs, wages and innovation (and let them not fool you with the employment figures – the only meaningful employment statistics is the labour participation rate (the number of persons in the labour force as a percentage of the working age population) and measured as Q4, that has fallen in 2014 to 59.8%, down 0.3 percentage points from 60.1% in Q4 2013 and it is full 490 bps below the historical maximum (RTE does not include emigration and early retirements) and the labour participation rate in the US is now lowest since 1977).

      Because of the near zero interest rates it is cheaper for companies to borrow money to buy back their own stocks to in order to push stock prices higher (because the earnings that companies would make would be divided into less shares because more shares would be own by the company) than to invest money in hiring people and paying them better.

      In the 60s US 40% of companies borrowings and earnings used to go into investment. Now it is only 10% – the rest goes mostly to shareholders payouts which nearly doubled since the 1980s as a share of corporate assets.

      Greenspan’s easy-money policy coincided with the upswing in the housing boom. Other example of market distortion (in the US) was the Community Reinvestment Act (CRA) strengthened in 1995 and used to pressure banks and thrifts that enjoyed deposit insurance into lending in all neighborhoods, including low-income, the so called NINJA (no income, no job, no assets) black districts (that’s not me being racist, just stating the fact).

      Bear in mind that it was Fannie Mae and Freddie Mac which were able to bolster the secondary market for mortgages and allow applicants who otherwise would not have qualified to obtain mortgages and these two institution pocketed most of the £9tn that President Obama gave them:


  3. StephenKenny

    Nice to have some clarity back on this subject. This sort of article makes me feel like digging out a copy of ‘The Popes Children’. Someone gave me copy in 2006, and having read it, I called into the bookshop Dundrum, picked up every copy they had, and guess what everyone got for Christmas.

    The weakness in this piece is the reliance on the US & UK ‘doing OK’. Everyone is back in 2005. The UK is currently running a budget deficit of about £90bn a year, and it’s falling. This would be good sign of ‘doing OK’, were it not for the fact the secured consumer (property) debt is rising again. It’s risen about £35n in the past 12 months. Now although this isn’t back to 2006 (it rose £126bn in that year – that’s £1bn every 3 days), it’s still more than accounting for far more than all the growth in the UK economy. Add it together, consumer & government deficit, and you get an increase in outstanding debt of about £120bn in the last 12 months.

    Let’s not forget, that $100bn in net borrowing is spent in the shops, and the people in the retail sector also spend their wages in the shops, and everyone pays loads of taxes – giving a benefit to the GDP figure of about 1.5 to 2.0 times the amount of money originally borrowed. So in the UK this is about £200n – a total of about 12% of GDP, and something like 15% of the UK government’s annual budget. To add insult to injury, when a government tries to cut it’s deficit, it causes a fall in it’s tax collection – just run the numbers and you’ll see where that one heads.

    The same applies to most other European and American countries.

    We live in a global economy, and the global economy cannot export it’s way out of trouble any more than the global economy can default on its debts. It’s all being borrowed from future tax payers, and recipients of future spending. Young people and pensioners.

    The music’s playing, so we all have to dance, but nothing has really changed – it’s just 2005 (or 6) all over again.

    • EugeneN

      Yes, eventually most countries will default. It’s that or screw the future.

      London property is starting to turn sour, will there be that most mythical of beasts, a “soft landing”.

  4. PAC Concert is liken to a current festival in Transylvania seeking from the concert goers ‘pay with blood currency’ as an effort to shore up their national blood bank and entitles to the participants to visit Count Dracula the vampire .

    The experience entitles everyone to take full responsibility for everything except their regulator , central bank , bankers, piggy banks and river banks as long as no one can find out what they were excessively paid to do in the first place when in office and in retirement .

    What were they paid to do and did they do it ?

  5. DB4545

    That’s a fair analysis in essence the good ship Republic of Ireland has a lot of passengers on board who are not paying their way and we have the bizarre situation where the crew have to pay for the most unproductive passengers. Time to ditch some of them overboard or cut their rations so the ship stays afloat. Let’s start with:
    1. Obscene pensions of politicians and the upper echelons of of the civil service. A pension cap equivalent to the average industrial wage. These people put us in danger when their duty was to steer the ship safely. F**k them overboard they’ve shown that they’re loyal to a different Navy anyway.
    2. A retrospective review of all private pension plans and contributions (targeting the banking/financial services sectors specifically) made in the last 20 years and placing cap of 2 million Euro on pension provision. A windfall tax to claw back funding for revenue in excess of those caps. The government have no problem implementing this for most of the population why exclude those who have bankrupted us? It would still provide a very comfortable retirement for most people.
    3. Taxpayer funded foreign direct aid to non government organisations. This costs us 650 Euro million annually and doesn’t benefit the crew in any way. We can’t afford to hand over this money for some abstract feel good factor of being nice people.
    3. Eliminate most welfare fraud with a national ID system linked to the passport system. We fund welfare for people who need it not for thieves. If you want and need help from taxpayers provide proper ID. ie a card with photo and fingerprint. We have to provide this information anyway when we travel in Europe/USA. Sign on daily/weekly if fraud is suspected by welfare authorities no card no welfare the end. There is potential annual savings for taxpayers of 300 million Euro.
    4. Tax fraud on road fuel. Co-ordinate and equalize duty rates for road and agricultural diesel with Ireland/UK Revenue. Allow a revenue based accounting system for all sectors affected to claim back duty. This would save approx 400 million Euro annually in this jurisdiction and equivalent amounts in the North. It would also free up approx 400 Customs personnel to address the following issue.
    5. Tax fraud on imported tobacco products costs taxpayers approx 500 million Euro annually. Confiscation and fines for people found in possession of tobacco products in excess of allowance levels. Fines to be a high mandatory multiple of the value of duty applicable i.e. duty owed 1000 fine 5000 and a ban on receiving welfare payments for those involved. We have people “earning a living” in this way receiving full welfare benefits while defrauding taxpayers. The crew can’t afford it any longer.

    There is a potential saving of 1850 million Euro of taxpayers money on an annual basis without even factoring in the pension aspects of it. It requires some legislation and could be integrated within our tax/welfare/passport systems without requiring additional personnel. It doesn’t require a miracle and the Crew of the good ship Republic of Ireland would see the tangible benefits. We can’t afford passengers.


    • Mike Lucey


      I agree with all you suggest to bring about “a potential saving of 1850 million Euro of taxpayers money on an annual basis without even factoring in the pension aspects of it.”

      But when you say, “It requires some legislation”, this is the problem. Before getting appropriate legislation we have to have appropriate legislators in place to deliver same.

      A FG/FF (Paddy Power offering 11/10) coalition will not deliver the required legislation. Maybe a FG/FF/Any other party(s) (Paddy Power offering 7/2) might offer some way forward but I won’t hold my breath.

      The only way I can see any hope of something happening is for Independents to form a united block under common aims and force reform of the political system.

      The small group of hard working and high profile Independents are currently doing a great job without being in Government. Imagine what a united block could do if they had bigger numbers?

      The quicker we get rid of Party Politics the better. The old excuse of Parties being the only group capable of delivering and implementing a ‘Policy’ is wearing thin in this age of instant communication and mass media.

      We need far more ‘Ask the Audience’ which is capable of delivering correct answers 90+% of the time and Independents are the ideal conduit for such a democratic system.

      We ALL need to be part-time politicians for true democracy to work.

      • Deco

        The next government will be very similar to the “take instructions from the ECB” government in Italy. The wagons will be circled.

        The ECB, is in no mood for insubordination. Brussels is in even less of a mood for insubordination.

    • Deco

      Of course there is squandering – just look at the composition of the cabinet. Can any one of them speak in public without an instruction sheet in front of them ?

  6. No change. Borrowed money in the trillions is sloshing around, mostly in the financial economy of stocks and bonds. Economic activity is negative in real terms.
    The problem is that the economic output is measured in currency units and not physical output units. The amount of money as new debt is increased by multiples from 2008. This has only caused a small increase in measured economic output.

    The money supply has been increased at near double digits per annum. GDP has increased at 1-2%. Subtracting one from the other gives a real growth of negative 5-7%. The real economy is contracting. The amount of outstanding debt in the same breath is multiples higher as the annual growth of debt is exponentially increasing.

    There is no recovery. Just the illusion of one.


  7. McCawber

    Something that has never really been commented upon is the fact that the Civil Service bench marking payment of 20% approx was a direct result of the property boom.
    It was given so that CSs could afford the overpriced Bertie House.
    Houses prices collapsed subsequently (as we all know) so most CVs can now afford to buy a house without a pay increase. In fact including their pay cuts etc they are probably still ahead of the 20% BM increase.
    The only fly in the above ointment are the CVs (and others) caught in the -ve equity trap.
    So rather giving everyone a general increase in pay the government should be trying to come up with a plan to help the -ve equity holders only.
    A related issue is some banks (foreign), as they fled the country, dumped their loans into financial houses in such a way that it is impossible to transfer the -ve equity loan to another loan as one can do with AIB for example.
    So these are some of the issues that need to be addressed rather than fixing up overpaid teachers, CS pensioners (including retired pensioners) whose pensions are still tied to the salary of the grade they retired at, rather than CPI or some other formula.
    I’m retired and haven’t had a pension increase in 6 years but my taxes have gone up to pay for better pension for retired CSs.
    Retired self employed (if they exist I hear some of you say) are even worse off.
    Not looking for sympathy (I know I won’t get any) but a bit of equality of treatment is long overdue.
    I wager none of the above will be discussed at the “Forum”

    • McCawber

      (including retired pensioners)meant to say (including retired politicians)

      • Mike Lucey


        I was getting a bit worried there as I will be a retired ‘self-employed’ pensioner next year that will have to remain working part-time at least for years to come due to the stupidity of the Celtic Duck.

  8. McCawber

    As for David’s comment about Bertie running rings etc.
    The politicians are in control of this particular piece of business.
    It’s an ass covering exercise.
    The right questions aren’t being asked and that’s not an accident.
    The politicians have decided they’re not responsible and that been the case they have to finger other groups for the fall.
    Bottom line the politicians have done a very poor job of governing this country since independence and it just took the convergence of Bertie (“Nothing to do with me”) and the creation of the EZ to get us into the economic meltdown that occurred.

  9. Deco

    Here is a link worth reviewing.


    There is a graph, which indicates the current Debt to GDP ratio of Ireland’s economy. And of course GDP is a massive over statement. We are CURRENTLY overleveraged, to an even greater extent that in 2007.

    Yes that is correct.

    Not only was the “boom” a massive overdraft.

    So too was the “Recovery”, a massive overdraft.

    Source McKinsey Global Institute

    Debt to GDP Ratio 390 [ Number 2 position]
    Real Percentage debt change 200-2014

    Financial sector -24%
    Household -11% [ private sector debts are still almost 90% as high as in 2007, in other words austerity is NOT working]
    Corporate +90% [ a bit of a shocker ? ]
    Goverment +93% [ clearly out of control ]

    Total change in debt +172%

    It is almost certain that we are number 1 in terms of debt to GNP. And it is almost certain that we are number 1 in terms of Debt to national income from active employees in the economy.

    THE OVERDRAFT IS GETTING OVERDRAFIER, to paraphrase a useless politician.

    The current government are fixing NOTHING. It is all BS. State spending is clearly out of control. The Welfare state has been realigned to prop up the incomes of the crooks who lied their way through a real estate mania.

    Ireland is heading for Greek territory. And nobody is saying a word about it. Because if you say it, the Irish establishment will go mad, and will shut you up.

    • Deco

      Right now, debt is out of control, in Ireland.

      State policies, as they current exist are designed to drive up new private sector debt in the real estate market.

      It is like as if EK wants to be Bertie 2.0. And he is restrained by the credit markets, and the state of the banks.

      The Irish establishment has not accepted the nature of the problem. Instead there is complete denial.

      The Irish establishment is still loaded up with Berties, and wannabee Berties.

      • DB4545

        Deco & Mike Lucey

        As Mike said time for the electorate to break up the party system as it’s a menace to democracy. FF managed to destroy itself so let’s break up the rest of the parties or at least keep them in groups of 5-10 max and under control. Larger groupings serve party machines and vested interests not the electorate. It’s time for some of Schumpeter’s theory of creative destruction to be applied to the Irish political system. In the greater scheme of things who’s achieved more or served the electorate better? The Catherine Murphy’s/Tony Gregory’s or the Bertie Ahern’s/Enda Kenny’s of the Irish political system?

        • Deco


          Anything but party machines. Inside many of them stink. Most people remember that the most obnoxious assholes in third level all joined political parties as a sly way of getting access to funding, and in some cases easier marking in your exams.

          Let’s starve the party machines. They are a cancer on our society.

          They are nothing better than gangs of parasites waiting for a way to worm their way into the system.

  10. CorkPlasticPaddy

    And the Irish electorate will still go on voting for them despite all messes made by them down through the years! What this country needs is a benign dictatorship that will get rid a lot of the trash we have at the moment. After a period of 5 years we could then go back to normal democratic ways and proceed on from there having sorted out the problems of having dickheads running the country.

  11. DB4545

    Just one question, how do we vote out a benign or any other type of dictator?Look at the assh**les in charge do you really think there’s some magic saviour out there?We need to take control back not hand it over to another bunch of di**heads. We seem to get a much better quality politician wit
    h an independent as Catherine Murphy and others have shown. It seems to be the best route forward for value for money for taxpayers. Maybe flood the market with Independents and move away from party politics as someone has suggested.


    • Mike Lucey


      I’ve heard of benign dictatorships but am not aware of any that over time actually worked well. We would need a ‘saint’ in power for it to work but the only ones I’m aware of are all dead! If we got the ‘perfect’ dictator he / she could have a lifetime job as far as I’m concerned. Then again, haven’t we had dictatorship of sorts at least since the adoption of the Euro?

      Another option might be to make it unconstitutional for political parties to enforce the whip system. In a way this system is against free speech anyway, one of every citizen’s rights.

      Also we actually elect individuals and not party members under a whip system. TDs that ‘loose the whip’ still remain as TDs! Under whip TDs cannot fully represent our interests (bottom up) under this system, only more or less, partially represent us in local matters. As a priority they ‘take orders’ from ‘above’ that are more often than not serve vested interests, big business etc etc.

      A non whip system would get rid of ‘top down’ power and leverage more ‘bottom up’ people power which would be a step in the right direction. What would be the problem with 166 TDs not under a whip system plus a Ceann Comhairle elected in much the same fashion / terms as the President. Surely the ‘Ask the Audience’ phenomena would prevail, best common policies, best Ministers for the job etc.

      Any FG or FF TDs that I see being asked if they would go into coalition are saying, no way. For pure pig iron I will ask any FF / FG canvassing candidates to write this and sign same on the back of their canvassing leaflets. I don’t expect any will.

      We need to get articles 47 & 48 back in play giving power of Referendum back to the People. This would be a great start. There are a few organisations trying to move this along on Avaaz but not getting much traction. A big independent name like David’s is need to get this moving.

      • DB4545

        Mike Lucey & Deco,

        The electorate seem to sense that voting for Independents is the logical direction to go as there appears to be a trend in that direction. If you think about it most employers don’t recruit groups or parties they recruit individuals. Let them get elected as individuals and let us as their employer determine the degree to which they can organise within the Dail. If they prove that they can work together effectively to serve our interests they get re-elected if not we f**k them out on their ear. But the party machine and its funding by taxpayers and vested interests and associated top down management, tribal politics and the patronage that goes with it is not fit for purpose and must go. As you say outlaw the party whip system.The electorate culled one party already let’s finish the job and clear out the rest of them.

  12. goldbug









    • Mike Lucey


      The more they tighten the spring the higher it will leap when the tension overpowers the locking device!

      • So we think alike there Mike. The question is ?? All the BARE NAKED shorts are illegal but the regulators look away. There will be no requirement for the shorts to buy what they already sold and will settle in cash.
        That is there will be no buying pressure from the covering shorts as they will not be there to add to demand.

        “He what sells what isn’t his’n
        Must buy it back or go to prison”

        Seems not to apply any longer. Corruption rules!!

  13. Adelaide

    So the IMF labelled Greece unsustainable. Will it be airing its views on the other PIIGS shortly. Can’t wait for the headline. “Paddies In Peril – IMF labels Ireland More Knackered Than Greece!”

    • McCawber

      It won’t happen but, in Europe, the IMF should be paying a lot more attention to the FIGS. France Italy (Greece) and Spain because their economies are much larger than ours.
      France in particular are a problem because Hollande has made no attempt to address his country’s economic problems and actually reversed Sarkozy’s decision to raise the retirement age which given what we’ve seen in Greece says it all.
      What, if anything, did the IMF say about that.

  14. McCawber

    The problem with politicians, including independents, is that they want to get re-elected.
    And to do that they ALL make promises they can’t (have no intention) keep.
    The only solution that I can see to this is that we have constitutional constraints placed on the budgetry/debt planning.
    And to backstop this, the budget should have to be signed off by the president.
    The whip system is a necessary evil but is abused.
    We get the politicians we deserve – I have absolutely no doubt that this is a fact. So we are the problem too and the only way to change the system is from within and that ain’t easy.
    DeValera gave the politicians a head start over the electorate. He placed all the power in the hands of one man, the Taoiseach of the day (a de facto dictator, none of them have been particularly benign).
    To counter this to an extent I would change the constitution so that a Taoiseach can only serve a maximum of 7 years no matter how often his party gets re-elected to power. This might have saved us from the worst excesses of DeValera and Bertie.

  15. Deco

    But given that the National Economic Dialogue is a product of the government sector, the question is what happens to these guys. Will the private sector provide enough revenue to feed all the mouths?

    Excellent question. The institutional state is over extended. We see this in the latest NAMA revelations by Mick Wallace TD. The state has have more power, than money, and it also have far more money than ability.

    The Institutional State culture of the Bertie Binge era never ended.

    And for that reason – IRELAND IS EN-ROUTE TO BE ANOTHER GREECE !!!!

    The debt figures are getting worse, the inefficiency is increasing, competition is being stifled in many sectors, productivity is static, and state policy is being directed to bailing out the two pillar banks without reforming them.

    IRELAND – DISASTER 2.0 in sight.

    All that is needed is another Nasdaq crash, and you will see a flood of money into euro accounts in UK banks. And shortly afterwards the authorities here will go after them in an effort to criminalize working people who take their savings out of the reach of the institutional state.

  16. Peter Atkinson

    The classic “Christmas economics” model. You go without all year in order to indulge for two weeks. Come January you flagellate yourself and the process starts all over again. Translate that to the life cycle of a government and there you have it.

    Our governmental Christmas is due at budget time and it’s the great giveaway. The only problem is the buggers are once again giving us other peoples money which of course has to be repaid with interest.

    We’ll have our period of partying, spend the giveaway and the new government will revert to type, austerity. Austerity is far less riskier than the alternative.

    A model taught by generations seems to be catching on in a big way again, “neither a borrower nor a lender be” and it seems if you neither borrow nor lend the only way to thrive is through hard work or good fortune. On the other hand, he who makes no mistakes makes nothing.

  17. StephenKenny

    A nice summary of the global situation:


  18. ‘and thus created the illusion of a new economic model when all it was only a large term loan which had to be paid back.’

    Expand this to “All money(except coin) is a loan and thus a debt to be repaid at interest. The problem with the money system is that if the debt were to be “Paid Back” there would be no money in circulation.

    Thus the bankers can play the economy like a fiddle, back and forward, expansion and contraction as the money supply is expanded and contracted.

    The result of contraction is to slow the economy and put into recession/depression. Expansion of the money supply leads to booms. Thus booms and busts are a product of the bankers manipulation.

    Throw interest in to the mix which also has to be repaid. Thus more money must be withdrawn from the economy than is introduced if interest is added to the debt. This causes a permanent contraction of the money supply as debt plus interest is repaid and results in recession/depression.

    The only adjustment to this is to expand the money supply again by issuing more loans. Not just loans to replace those paid off but bigger loans too in order to cover the interest paid. Bankers find that the money supply must be constantly expanded in order to maintain a steady economy.

    The have conjured the stated 2% inflation (annual increase in the money supply) as being good while less or more inflation is supposedly bad. They are however mere mortals and prone to error, as there system is disintegrating.

    The amount of interest in the economy grows as it can never be paid off as there is simply not the money to do so. This accumulated interest adds to and becomes a part of the debt. Thus the debt continually expands. This requires ever increasing amounts of money to be issued just to maintain the economy in a form of equilibrium.

    The amounts of added debt (new money) added to the economy finally overcome it and kill it. This is where we have reached today. No amount of added money will be able to be absorbed and used in such a debt based scenario.

    We are in the final death throws of this money system. It is being sustained by the bankers at all costs as it is the source of their power. If is collapses their power is destroyed unless they manufacture another system of control which we fall for.

    The great reset is coming quickly and it is fundamental to our freedoms and prosperity that we revert to an asset based, rather than debt based, money system.

    Bemoaning the fact that the Celtic Tiger boom was based on a debt based borrowed money supply is a glimmer of recognition of the overall problem. Recognizing that it was not unique but applies world wide is the start to solving the real problem. The problem is the world wide adoption of debt based money by all peoples of the world following the model of the Bank of England set in the 1690′s and polished to perfection as implemented by the Federal Reserve in 1913 and subsequently adopted by every country.

    This is collectively called the fiat money system. This money is an illusion as not only is it issued as a debt but it does not actually exist at all except in the mind of the user. It is the so called Mandrake Mechanism. It is conjured in to existence out of thin air. It has no substance. It is valueless, but it binds us all with the added interest and it is issued as a debt for which real assets are pledged.

    These real assets are seized by the banks if the debt is not repaid on schedule.
    As the debt is impossible to repay then our hard assets are destined to be foreclosed upon regardless. Thus we are lead into a trap from which there is no escape. Assets will be taken and the population, peoples, individuals reduced to serfdom in the indentured service of the banker elites.

    Greece is the first of the European countries to run up against this reality. Everyone sees that Greece cannot pay off the debts. Not yet said is that neither can anyone else.

    The solution cannot be more of the same. The solution is adoption of an honest money system and the abandonment of the criminal Ponzi scheme we currently use as money.

    Blaming the politicians or the people as feckless is a diversion that prevents seeing the reality. There is nothing the people or the politicians can do until they break the chains of bondage of the bankster elites.

    • StephenKenny

      Of course they learn. They’ve learned that whatever they do, however much money they lose, they’ll get bailed out by the taxpayer.

  19. Mike Lucey

    @Tony Brogan

    I agree, “Blaming the politicians or the people as feckless is a diversion that prevents seeing the reality. There is nothing the people or the politicians can do until they break the chains of bondage of the bankster elites”.

    Only question is, how can this be done. I read an interesting article by Dmitry Orlav, ‘So you say you don’t want a revolution?’ http://cluborlov.blogspot.ie/2015/07/so-you-say-you-dont-want-revolution.html#more

    Dmitry’s last few paragraphs outlines a ‘One, Two Punch’ that Greece could have delivered instead of futile attempts at renegotiation, maybe Ireland should take note of a possible Plan X if the country is put under the vice like Greece.

    Quote: Dmitry Orlov

    1. Immediately announce an open-ended moratorium on all debt repayment, taking the position that Greece has no legitimate creditors within the Eurozone—it’s all financial fraud at the highest levels.

    After a few months, the fake bail-out financial entities that magically convert garbage Eurozone debt into AAA-rated securities (because they are guaranteed by Eurozone governments) are forced to write off Greek debt. In turn, Eurozone governments, being pretty much broke, balk at refinancing them out of their national budgets, showing to the world that their guarantees aren’t worth the paper they are written on.

    There follows a bond implosion. Shortly thereafter, the Euro goes extinct, and along with it all Eurozone debt.

    2. Start printing Euros without authorization from the European Central bank. When accused of forgery, make the forgery harder to detect by changing the letter at the front of the serial number from Y (for Greece) to X (for Germany).

    Flood Greece and the rest of the Eurozone with notionally counterfeit (but technically perfect) Euro notes. As the Euro plummets in value, institute food rationing and issue ration cards.

    Eventually convert from the now devalued and debased Euro to a newly reintroduced Drachma and reestablish trade links with the now “liberated” former Eurozone countries using trade deals based on barter and local currency swaps with gold reserves used to correct any minor imbalances.

    Could this have been done without any “red terror”? I doubt it. Greece is very much oligarch-ridden; even the celebrated former Syriza FM Yanis Varoufakis is the son an industrial magnate.

    The Greek oligarchs and the rich would have had to be rounded up and held as hostages. Numerous people in the government and in the military have a split allegiance—they work for Europe, not for Greece. They would have had to be sacked immediately and held incommunicado, under house arrest at a minimum.

    No doubt foreign special services would have run rampant, looking for ways to undermine the revolutionary government. This would have called for drastic preemptive measures to physically eliminate foreign spies and agents before they could have had a chance to act. And so on.

    This wouldn’t have been a job for fluffy mini-poodles. As Stalin famously put it, “Cadres are the key to everything.” You can’t make a revolution without revolutionaries.

    End Quote

    Dmitry obviously doesn’t think much of how current Greece leadership handles matters from a revolutionary perspective.

    I think most here will agree that some form of a revolution or at the very least strong reforms are badly needed. This will not have a chance of ever happening until the ordinary citizens of every country are educated about the current financial system that we are controlled by. Again, Henry Ford’s words come to mind,

    “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning”.

    I wonder if TV3 would be interested in producing a David McWilliam’s production on ‘The Real Banking and Monetary System that the Ordinary Man on the Street hasn’t a clue about that is slowly killing him!’ ?

    I remember the Irish bank strikes back in ’66 ’70 and ’76 https://en.wikipedia.org/wiki/Irish_bank_strikes_(1966%E2%80%9376). My parents where running a busy filling station and shop during the strikes. I don’t remember any major problems but again there were no credit cards and not everyone had a bank account and the Internet did not exist.

    Wikipedia comment:

    “The Irish bank strikes between 1966 and 1976 were three strikes of about a year’s total duration which closed down all the clearing banks in the Republic of Ireland. The strikes provided economists with a unique opportunity to study the functioning of a modern economy

    The longest strike was of six months in 1970. The Central Bank made limited facilities available to non-associated banks to issue cash. Not just financial transactions were affected, many property deals were also affected because the documents were kept in the banks. The country came through reasonably well in business terms despite the bank strike, a large firm (Palgrave Murphy) failed when the strike ended and settlements were made but its failure was probably inevitable anyway. The strike had little effect on the main economic concerns which were unemployment and industrial unrest caused by inflation.”

    The sky didn’t fall at the time.

    • “I think most here will agree that some form of a revolution or at the very least strong reforms are badly needed. This will not have a chance of ever happening until the ordinary citizens of every country are educated about the current financial system that we are controlled by.”

      Agreed Mike. The people must be educated on the current banking system. They must demand the changes before anything can happen.

    • McCawber

      Dmitry forgot to mention you need plenty of placards with “This Way To Chaos” printed on them.
      I wonder how many people died during the Russian Revolution that released the Russian people from the yoke of the TSars and gave them their “Freedom”.
      The same Russian revolution that gave them the aforementioned Stalin, a man responsible for obliterating even more people off the face of the earth than the Nazis.

  20. ” An “Out” vote in a British referendum would be a major historic geo-political and economic event, perhaps even comparable with the fall of the Berlin Wall and the subsequent collapse of the Soviet Union and re-unification of Germany. It is time, therefore, that the UK explores the process of withdrawal and its economic and political consequences.”

    Discussion of a Brexit. This has significant consequences for Ireland.


    • McCawber

      Ireland should already be thinking (Actually doing something) about reactivating it’s membership of the Commonwealth, regardless of a Brexit but it would be a worthwhile repositioning and it might give those pompous wasteful EC non-elected officials some food for thought.

  21. McCawber

    The chain of bondage is created by the politicians.
    Politicians of all ilks overspend our money but the socialist ones are the worst.
    You only had to listen to Roisin Shortall on the Vincent Browne show last night for a demonstration.
    Affectively she and her fellow socialists are quite prepared to write themselves a blank cheque to pay for all those wonderfully progressive things they want to implement. In simple terms a massive increase in (inefficient) public services. They were quite arrogant about it the sense of their entitlement to do so was palpable.
    But when the subsequent and inevitable austerity that follows such largesse arrives they will be first ones to denounce the implementers of the austerity and blame the banks for lending the money and not doing due diligence etc.
    And rightly so I hear the clamour but what happened to the imperative for them to spend that borrowed money prudently.
    They also talked about political reform but no meat in that sandwich.
    Turkeys (if they had a vote) wouldn’t vote for christmas and politicians won’t vote for any kind of political reform that is meaningful.

  22. DB4545


    A socialist is someone who owns nothing but is willing to share half of what you own with you. I heard that from a West German when the Ossies arrived in force after the Berlin wall came down. We and every other EEC Member State contributed to that sharing. I don’t remember it being optional and I don’t remember complaining because I understood it to be for a greater European good. Strange then to witness the hostility of Germany towards the Greeks when they need help. As you may have witnessed on the news we have Greek children in dire circumstances in orphanages as a consequence of austerity. If the European Union has any purpose it’s to create the economic conditions for prosperity not to feather bed an elite. That elite are willing to allow us to share half of our wealth so they can live an Armani and charvet lifestyle at our expense. They’re an EU politburo with taxpayer funded expense accounts, platinum cards and private clubs. For 364 days of the year turkeys are under the illusion that life is good and never ending and from the perspective of a turkey it is. The farmer and butcher have a different point of view. Roll on Christmas. And for two Romanians that’s exactly what happened on Christmas day. We live in hope.


    • McCawber

      I should also have added that Shortall and the rest of the socialists were also bleating about so many of our young people having to emigrate.
      News alert Roisin, they won’t be coming back to Ireland anytime soon if you get your way and increase taxes to pay for your policies.
      Half of Nothing, Roisin, is nothing and that’s what you’ll get from them.

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