text:
September 1, 2010
I AM sitting outside a lovely bar called De Prins in Amsterdam, looking out over the canal, past the cyclists, toward Anne Frank's house beyond.
The crowds are lined up again, as they are every day, to bear witness to the most unspeakable crime and the most magnificent courage. We know that the effervescence of a lively young girl was snuffed out by evil, but we also know that Anne Frank's legacy eclipses those individuals who betrayed her — those cowards who pushed her on to the train; the sadists who shaved her head, starved her and who eventually whimpered like children, implicated each other and sang like canaries when real men came to liberate the camps.
The story of Anne Frank is well known, but what is often overlooked is the attitude of the victors. I don't mean the attitude to the Nazis, but the attitude to Germany in general.
Having driven through Germany twice this summer, it is not hard to marvel at the wealth, placidity and friendliness of the country. But it could have been so different.
Imagine if the World War Two victors had applied the traditional economic and financial sanctions to defeated Germany. What would have happened if the Allies had penalised Germany with reparations? How soon would the German economy have collapsed again, leading to yet more political chaos?
The far-sighted generation of American public servants and politicians who negotiated the Marshall Plan realised that they were in a new era and that the idea of collective punishment of a nation would not serve any purpose.
Instead, the Americans in 1945 did something no one could have predicted: they rewarded the average German with cash. They subsidised the recovery of Germany and Europe, thus ensuring a recovery and the emergence of the EU as a peaceful political project. Without US money and the US military umbrella, there would be no EU.
Of course, after World War One, it was the Versailles Treaty — rooted in French and British thinking that Germany should remain economically subservient — which catapulted Hitler into power. In fact, his rants about international Jewry being behind Versailles resonated right up to the war.
The only economist who foresaw the disastrous implications of reparations was Keynes. He warned that reparations would force the Germans to become so competitive that far from securing the French and British economies, they would undermine those countries through the mechanism of free trade.
He also twigged that Germany would become a huge debtor because maintaining the German mark on the Gold Standard would mean that Germany would have to borrow from tomorrow in order to pay for yesterday. As a result, Germany would either become a huge borrower or it would leave the Gold Standard. In the intervening period, Keynes predicted that Germany would destabilise the system because the system was destabilising Germany.
It is clear now that reparations led to disaster. The key difference between the Marshall Plan and the Versailles Treaty is forgiveness. The architects of the Marshall Plan did not encumber the Germans with any more financial hardships.
This was the price the Allies were prepared to pay in order to buy stability and loyalty in Europe. The thinking behind the Versailles Treaty was precisely the opposite and ultimately ruinous.
NOW keep the idea of reparations in your head and let us switch to the thinking behind our Government's banking and economic policy. Consider the bailing out of the banks and encumbering the citizens of the country with a massive bill as a modern-day, peacetime equivalent of reparations.
However, our Irish bank reparations dwarf those of Versailles. The Treaty of Versailles demanded that Germany pay €318bn in today's money. From a German population at the time of 58 million, this equates to €5,482 per person in today's money. If bank bailout costs are €50bn, then this will work out at €11,235 per head — or more than twice the cost per head of the Treaty of Versailles to the average German.
Let that sink in a bit. Remember what we know about how reparations destroyed democratic Germany and just imagine what our bank reparations will do to us.
Now consider the other factor, which rankled with the average German after the Treaty of Versailles. One of the most contentious issues was the fact that Germany and the average German had to take sole responsibility for the war (despite the immediate cause of the war being the Austrians declaring war on Serbia).
In a similar sense, the way our Government has given us the bill to bail out foreign creditors is akin to telling the Irish people — many of whom didn't borrow a farthing and have nothing to do with the banks — that we the people are solely responsible for the Irish banks, rather than the banks' creditors, who actively lent to them.
Not only is the economic cost too much for any nation to shoulder, but the Irish people are not responsible for the behaviour of private banks licensed in Ireland by the European Central Bank.
The Irish bank reparations are financial lunacy and they are politically unacceptable. Anglo's results yesterday only substantiate this view.
Is there any way that Irish society can cope with the bank reparations?
Ireland's bank reparations will cost us €26,315 per worker in the economy. Is there any way that social peace and cohesion can be maintained when the average worker — who is entirely blameless — is being asked to cough up €26,315, while every foreign creditor, who is (in large part) to blame, is being subsidised by the average worker?
The financial implications of reparations are straightforward. Countries lumbered with excessive costs will default. This is what eventually happened to Germany. Furthermore, countries with excessive debts tend to leave whatever currency arrangement they are in, as Germany eventually did when it left the Gold Standard.
This is the lesson from financial history when excessive and unfair reparations are imposed on a nation. The endgame doesn't have to be terrorising schoolchildren in Amsterdam, as it did with Hitler's Germany — but the negative implications for economic and social stability are blindingly obvious.
My understanding is that Ireland did not claim any benefits from the Marshall Plan eventhough many Irish men fought and died in the battlefields.This is a thought to remember for Marshall Plan II .
I was watching the programme 'who do you think you are ' last night and a British black celebrity was doing his family search and it took him to Barbados and Jamaica .He discovered that his great great grandfather was a white slave trader who bred his slaves in captivity and that black mother became a prostitute and one of her issues, his grandfather ,became a policeman .The celebrity was ambarassed with the findings but what he was amazed about was 'what they had to do to survive'.
My point is 'what will our children and their children have to do to survive' as a result of the rape by the Irish Government and Banks.
Great article.
@John Allen
Ireland certainly get some Marshall Aid funds. In his history of the Dept of Finance 1922-58, Ronan Fanning points out that "from 1948, Ireland's dollar deficit began to be covered by Marshall Aid" (p. 389). If you can find it, it is worth reading what Prof. Fanning account of the European Recovery Programme on p. 411. As an example, I quote "Ireland's interests were handled exclusively by External Affairs for the first few months and, from the outset, Finance were highly sceptical of the benefits which might accrue to Ireland under the Scheme: 'we cannot expect any measure of salvation from the so-called Marshall Plan'…"
Anecdotally I believe Marshall Aid funds were used to set up An Foras Talúntais(AFT) – the agricultural research institute now merged with Teagasc, the Institute for Industrial Research & Standards (IIRS) which functions are now split across Entreprise Ireland, the National Standards Authority(NSAI), the Sustainable Energy Authority(SEAI) and perhaps a few others.
I also gather that farmers bought tractors, while housewives bought fridges. I know of one such fridge that is still in daily use!
Brollachain – thanks for your contribution.It is still my opinion whatever we received was only a stippend and not a real contribution like the Allied Forces in Europe.
Ok David. So you are saying, like you have said over the past year or more, that we should 'bring all the "foreign" creditors into a room' and tell them they will only realise 10% or 5% or 0% of their investment in Anglo?
Now I'm no expert but who are these big bad "foreign" investors? I don't think there are any left. The State owns the bank and through the NTMA it has been firing money in to keep it going. Therefore the state is the major creditor and 100% owner. What is the % of credit outstanding to these external creditors? I would say its near to 0%?
So if we run the "bring em into a room" scenario – that is just a Government debit default – given we own the thing.
Is that not worse? Think of the implications on international markets? On our sovereign debit repayments. etc. etc.
I think all the last 10 years has shown us that booms occur based on the smoke and mirrors of 'confidence' and as Greenspan would say, "irrational exuberance". Then when confidence switches in the herd instinct to fear, we get the big bust.
I am sure that growth will return if and when confidence returns, be it based on actual facts or on nothing more than 'good sentiment'.
So you see, its not about sorting out Anglo or who pays for it. Its about making it LOOK like we know what we're at!
Basically the governments plan with Anglo is just a massive bluff at an international card table, if they win international money flows back into the Irish economy based on 'confidence' in the Irish plan.
Easier pay for all this if unemployment is 4.5% based on international and laterally i guess, local investment to create jobs…
Sorry but your thinking there is part of what got us into the mess.
"So you see, its not about sorting out Anglo or who pays for it. Its about making it LOOK like we know what we're at!"
No, Its not about looks, that's for peacocks. It is actually ALL about who pays for it.
As a taxpayer, you and your children and their children will soon enough know about this. If you don't, S&P will let you know through a series of sliding downgrades that already have begun and we havn't even started paying for it!
Blame and anger won't put ur kids in jobs.
S&P are guys paid a lot of money to analyse sentiment. They showed pre-bust that they are pretty bad at it. We just need to fool those rating agencies again and recovery is on the cards.
Nope, moving beyond blame and anger including the fooling of yourself and others is the way to go, the fooling part is government policy up to now!
Objective, empirical evidence and proper scientifically verifiable conclusions is what we're after.
Surely the evidence is mounting from S&P ratings and widening bond spreads, and NAMA valuations indicating they are running scared too, that the wrong path has been taken! The New York Times and FT mag imho in the face of our austerity measures so far are just too polite to tell us this.
Our cowboy elite and FF are taking us to the cleaners to wash their dirty linen!
Aided by the celebrated inquiry work of Justice Kelly and good journalism we have some info on Irish banking loans e.g info on Glass Bottle site shenanigins eg drop from €445 ml to aprox valuation now of € 20 ml. But in spite of media work there's still huge gaps in what we know of Anglo's toxic loan portfolio. However, because we are on tranche 2 of 5?, we should have concrete information on Anglo, though its still incomplete, perhaps it will be by Feb 2011 or late 2011. Could we have the complete list please of all toxic property loans commercial and residential loans so far processed by NAMA with summary description. Could we also have evidence to prove the loans were actually spent on acquisition development of these properties?
Plus could we have the list of bondholders for Anglo and the other banks with their individual exposure, subordinated and senior debt.
Do we know if bondholders were insured against Anglo losses? Lets know Anglo's risk policy and inquire Anglo's risk policy in taking insurance on its loan portfolio?
In particular, there's deafening silence on Credit Default Swap CDS Anglo liability. Its possible significant losses upward of €13 bn exposure could accrue from this area, let's know about this. Anybody know if FOI can access this information.
Perhaps some voluntary group needs to be set up to acquire and publish any files/documents relevant to this information on the web? I do recall great anxiety on the setting up of NAMA regarding the powers vested in the minister in particular from the point of view of transparency of NAMA.
Great article.
One of the key differences between the Marshall Plan and the Versailles Treaty and our Go(to)morrow Plan is they knew what they were paying for. We don't.
'Commercial Sensitivity', mysterious behemoth NAMA, they have all the paperwork that hides the dirty linen.
I object to paying the bankers' debts. And I strenuously object to the lack of receipts that itemise everything I'm paying for.
Welcome to the new Socialist Banking Corp of Ireland Inc, previously the democratic Republic of Ireland.
John Q. Public
Whatever happened to personal responsibility? There are hugh swathes of Irish society out there with nobody to blame but themselves, so let us balance the arguement a little bit. Public and private sector unions have made it very tough on the wage-payers. Idiots who took out huge loans and mortgages crippled themselves. So maybe Irish society should take a long look in the mirror first before pointing any fingers.
I've always been struck by the observation of the Jewish philosopher Hannah Arendt when attending at the trials of the nazi perpetrators… she said that one by one they stepped up and professed that they 'were only doing their duty', and 'were only following orders'…
When I hear the current incumbents speak, not from the heart, but from the 'script' set out by state and other institutional authorities, I think to myself, will we never learn… If the day ever comes that we get these guys on trial, there is not much doubt about what they will say.
Loyalty to the party above all else, eh Cowen?
TINA = 'There is no Alternative'.
There always are alternatives, but they are not allowed.
Tull McAdoo
Yes David on the ball again, we got our Treaty of IBEC which saw the SS officers over at the Dept. of Finance try their best to push our old age pensioners and special needs children etc. onto the train and they continue to spin this even as we speak.
We also got our Treaty of ICTU over in Croke Park, more SS union pigs who got it all their time to drag their jowels out of the trough long enough to shore up their own poition with more borrowings.
There is'nt a backbone between the lot of them, snivelling slugs. Jim Larkin, God rest him would clear the whole lot of them out of it before his breakfast.
The ECB is the root of all the problems we see.The banksters create money out of thin air ,which is then supplied by the ECB printing machine.The ECB is the cause of inflation and deflation ,it controls the price of money and it's supply, it creates the bubble and becomes the pin that pricks it.A bunch of elites trying to figure out what's best for 350 million people of different cultural mindsets.
God don't those politician in skid row street love these money printers when syhte hits the fan.
We have deflation now but wait until the printers around the world start working 24/7 then when the paper mula starts filtering into main street get ready for loadsa inflation and crippling interest rates.
Gege Le Beau
@ David McWilliams, we must be careful of historical romanticism, it is one of the true enemies of the historian, looking back with rose tinted glasses. No country acts benevolently just for the sake of it, every country acts on the basis of self-interest, it is one of the most basic truisms of international relations.
Firstly the allies probably excessively smashed Europe, including many a French and German town. Historian Howard Zinn spoke several times about an episode when he was a bombadier for the USAF.
They were sent on a bombing mission of a French town towards the end of the war where a few thousand German troops were keeping their heads down, waiting for the final surrender. Zinn said the air force flattened the town and killed God only knows how many civilians needlessly. Apparently the raid was used to test naplam. Zinn visited the town years later where the full horrors of the raid were revealed. We also know from studies that the carpet bombing of Germany did little to nothing to shorten the war.
As for reparations, yes the Versailles treaty was an aberration, French Prime Minister, Clemenceau, commented in 1919 that the deal guaranteed war in 20 years, he was out by a month or two. Keynes spotted the trouble as you correctly state but his common sense could not/would not be heard.
After the Second World War, the US knew that in strategic terms it needed a strong Europe which would act as a bulwark against the Soviet Empire and you couldn't have a strong Europe without a strong Germany as we all know. They also knew the ending of the war put them in the unprecedented position of world dominance, they were in the unique position of being able to recreate smashed countries in their image and Germany was a willing pupil.
The Americans provided the Marshall plan, but it was not some giant give away, they rebuilt economies along Western capitalist lines and thus created new markets for US exports, so the money given out came back through European consumption. For the harder side of US power during that period, see Western intervention in Italy and Greece post 1945, where hundreds of thousands of people (especially those on the left were slaughtered).
The extent to which the US could play hard ball with 'allies' was best illustrated when Britain sent an economic negotiating team to the US to plead for funds designed to prevent complete bankruptcy. The Americans sought to break up the British Empire (potential competitor) and thus drove a very hard bargain. The negotiations were so difficult and stressful that Andrew Marr in his interesting series on the history of Britain in the 20th century, comments that they killed off Keynes (he died very soon after the negotiations were completed).
The US then created the postwar institutions known as the Bretton Woods system – the UN, GATT etc – again attempting to remake the world in its image.
Andrew Marr's History of Modern Britain – Episode 1 (Pt 1)
Yet again, Professor Noam Chomsky shines the light of academic truth on this supposedly benevolent plan:
"The favored illustration of "generosity and goodwill" is the Marshall Plan. That merits examination, on the "strongest case" principle. The inquiry again quickly yields facts "that `it wouldn't do' to mention." For example, the fact that "as the Marshall Plan went into full gear the amount of American dollars being pumped into France and the Netherlands was approximately equaled by the funds being siphoned from their treasuries to finance their expeditionary forces in Southeast Asia," to carry out terrible crimes. And that the tied aid provisions help explain why the U.S. share in world trade in grains increased from less than 10% before the war to more than half by 1950, while Argentine exports reduced by two-thirds. And that under U.S. influence Europe was reconstructed in a particular mode, not quite that sought by the anti-fascist resistance, though fascist and Nazi collaborators were generally satisfied. And that the generosity was overwhelmingly bestowed by American taxpayers upon the corporate sector, which was duly appreciative, recognizing years later that the Marshall Plan "set the stage for large amounts of private U.S. direct investment in Europe," establishing the basis for the modern Transnational Corporations, which "prospered and expanded on overseas orders,…fueled initially by the dollars of the Marshall Plan" and protected from "negative developments" by "the umbrella of American power."
Gege Le Beau
If you have 8.5 minutes……………
A People's History of American Empire by Howard Zinn
Hello Gege,
Your points are well made however if you ask me to chose between an administration like the Nazi's or one like the soviets and all of the people who died under those or the administration and one of the US there is only going to be one choice and it most certainly isn't the Nazi's or the Soviets.
Gege Le Beau
@ Michael – The lesser of two evils is never really an appropriate 'choice', bit like the 'better Obama than McCain-Palin', I think we are better than that.
We should seek none of the above, but work towards a fairer, equitable and more peaceful world. Is such a creation impossible? Are humans by their very nature aggressive, greedy and violent? Do the 'strong' (i.e. those prepared to use force) always conquer the weak i.e. peaceful, bridge builders?
These are fundamental questions. No doubt there are psycopaths among us, as one woman put it to me, put one drop of acid in a glass of milk and you will ruin it. I still hold out hope for humanity. The Nazis, the Soviets, the British, the US et al have all clearly demonstrated their true natue, we need a new world, it begins in the hearts and minds of people, with education playing a critical roll.
HI Gege Le Beau,
Although we have indeed the vices you described we are also, loving, warm, compassionate, loyal, generous, creative, spiritual, charitable, giving etc. etc. etc. It is worth also remembering that with Human beings you find what you look for.
Well done on painting a vivid analogy of the situation we're in. I do wonder if Ireland would break down politically since the Irish people seem incredibly passive in the face of persistent incompetence and corruption from the institutions of power.
FUBAR. That`s what the economy and Ireland is. We will default. No question about it. People like professor Mogan Kelly are now being proved right contrary to all the naysayers and spin from government. There is no end in sight to this bank bailout insanity. That`s the most frightening thing of all. No cap. Just bleed and bleed some more billions, Mr. Taxpayer without an end figure in sight. This is the most incompetent handling of an any economic situation, in the history of the Universe. Even with "competent" new government and a complete re-structure of the incompetent state, across all sectors, we are in too deep now to get out. The bank bailout, if one could call economic suicide that, is only the icing on the cake. We have a massive state sector pension bill which is growing exponentially every year to 100`s of millions. Coupled with the cost of lending, bank bailouts and running the over bloated state, we do not stand a hope in hell of repayment long term. Once we default, and that is a certainty now, we won`t be able to lend the price of a bread roll. We will end up at the bottom of the list, under all the banana republics that now exist on handouts. The DoF forked out 7 million to consultants who advised against the bailout, and then did exactly the opposite of what they spent 7 million of our money being advised to do. This is the mindset that is handling our economic nightmare.
Eamon O`Cuiv`s master plan for economic growth and job creation is to force people on the dole to go to work in menial jobs, with no choice about it, like indentured servants or slaves. So until we get some competent qualified people that actually have a brain in their head, to run Ireland, we will go further and further down the toilet and default is certain.
Excellent post simple accurate and to the point.The big problem in this country is the ostrich syndrome(head in sand) .The people in this country think that all this can be wished away with some magical thinking by our gombeen politicians.
Agreed with every thing there my friend except FUBAR.
SNAFU would be far more apt methinks.
Versailles did indeed spawn Hilter, David, and likening its far-reaching ills to bank bailouts is quite apposite. We do need Marshall Plan thinking if we are to solve financial distress, but no such ideas can be expected to emerge from the Powers-That-Be.
Writing off debts would play a positive role in resolving financial collapse, and a catalyst also needs to be found to kick-start world economies.
Interesting to note that when Lloyd George suggested a land tax as that mechanism in the UK 'People's Budget' of 1909, the House of Lords broke with convention to vote from their pockets to veto it – only to lead the charge to war with Germany shortly thereafter. So, the aristocracy's preference to send men to war rather than pass a fiscal measure seems also to ape the primal Treaty of Versailles.
All of which makes Marshall plan foresight incredibly remote now that we've left the same moneyed interests that sponsored this collapse in control of the levers that are be needed to remedy it.
What's to be done when the fight between power and reasoned reform is so unequal?
The 1909 finance bill veto led to the Parliament Act of 1911, which removed the House of Lord's right of veto. It is interesting to note that Lloyd George had the support of the King in this, who had all sorts of ancient powers over the Lords. I forget the detail of that, but the world was evolving, and the decreasing importance of land (rather than productive capacity – i.e. capital) had signaled the decline in the importance of the House of Lords anyway, decades before.
Laying even part of the blame of the outbreak of WW1 on the UK House of Lords is interesting. I've heard many things blamed, even railway timetables, but never the UK House of Lords. Were it the case, it would be highly ironic, given the wholesale slaughter of the officer class (leading from the front) that took place during that war.
Gege Le Beau
@ Stephen – Bryan Kavanagh is highlighting the priorities in the House of Lords at the time, which is useful, in that respect they had a lot more in common with their German counterparts, it was this group after all who probably did most in the push for war, working people were too busy struggling to survive to be involved in weaving a complex system of alliances, an arms race etc.
Those in the higher echelons of the British establishment probably also engaged in the jingoism that predated the war as they were completely unaware of the industrialised slaughter that was about to descend on them and swallow their sons, something the British Imperial/aristocratic system struggled to recover from, but then they were not alone in the wholesale slaughter.
Watching Conor Lenihan last night on TV3 his defense is always – maintaining stability,security, confidence and when asked about by-elections he says : 'thats a matter for the cabinet to decide' .
Have we the electorate lost lost our command of english that we are unable to demand our constitutional rights as deco explained in earlier contributions .
Isn't democracy great.
That is a theoretical point.
Democracy would be great if we had some.
The by-elections are being shoved out to prevent the government parties taking a hiding.
Democracy is a figment of people's imagination .You get to vote once every five years ,the pleb elites in centralized government making rotten decisions without asking their employers(the people). Robbing them blind shafting and spin like the spivs they are.
We really are a docile lot in Ireland
Another good article. In truth altruism was not the main reason for the Marshall Plan. Countering the possible rapid spread of communism into a ruined Europe also played a large part, however, the idea of reparations is one that is close to my heart.
As taxpayers for the last 25 years, initially as employees and latterly self-employed, both myself and my wife have been here during the bad times and the good, and have been happy to do so. We ran two small businesses, employed a few people on a full time and part time basis and paid our VAT, PRSI, Rates, Corporation tax etc.. However, due to the nature of our businesses the banks were not at all interested in providing capital, so we grew the businesses ourselves using cash flow and lived very carefully within our means.
It was nice living in Ireland, but as our parents got older and we had a child, we had cause to use the health and education services a lot more. Our experiences with the health service were the most frightening, but the final straw was finding out our child was going to be educated in prefabs – like we were thirty years ago. Then came the banking guarantee and NAMA, I expected people out on the streets and a change of government. It was at that stage we realised that someone was pissing down our neck and telling us it was raining. We had had enough. We wound up the businesses and moved. The country we have settled in is not perfect, but the health system is great, the schools are made of stone and we will pay more in tax when we go back to work. On the plus side I have a child year that now has three languages.
We were very lucky that we were debt free and had always rented, but that was our choice. We were doing okay despite the financial mayhem but have now contributed to the shrinking tax base. It strikes me that we can't be an isolated case, we haved moved out of choice, rather than necessity, a form of regional arbitrage if you like. The ability of the government to borrow and repay its debts surely relies on its ability to persuade people that it's worth their while to stick around and help them out. The coming default will, I feel, be a product of the populations unwillingness to keep giving the government blank cheques rather than the government running out of resources. Anyway good luck.
Dear Goneaway,
Call me a rat leaving a sinking ship but I'm responsible for the welfare of my 3 kids (and not for the country) so for the last 2 years me and my wife have been tentatively planning to exit FFland. We are now more active and resolute in doing so. (foreign language is one main obstacle)
Can I contact you on another forum (eg email) for tips and pitfalls you have experienced? Maybe you've landed in the same country we're considering!
[b]GERMAN MILITARY THINK TANK STUDY ON INSTABILITY 1[/b]
by coincidence, I know this place you were sitting, been there myself.
On Instability in a broader sense:
Yesterday a document leaked to the german magazine Der Spiegel. Tis document was created within the german Bundeswehr, military think tank future analysis, part of the think tank responsible for the Transformation of the Bundeswehr.
The title was significantly chosen as: PEAK OIL – security implications of declining resources
The study was not meant to be presented to the public, but has been verified as authentic by government authorities. The editor in chief however refused an interview.
In the UK, something similar is in the works but has not leaked yet, and officials keep it secret.
However, the german study can be summarized as follows:
The political and economical results of peak oil for germany were the main concerns of this study, and as such they can be described as a first.
The key statements are:
Oil will be the deciding factor in the ways international relations are currently transformed. The relative importance of the oil countries will increase in an international context.
The oil countries will utilize the increased importance and advantages to push their current and foreign political agendas, to exploit and enhance their power structures in a local context or even strive for a leading global position.
For Oil exporting countries more competition on the remaining resources will open opportunities for them, because the countries competing for these resources will try to please them.
This is a "small window of opportunity" they can use to enforce their own political, economical or ideological agendas. Because by nature, this window of opportunity is time restricted and has relatively narrow time frame, a more aggressive approach to push their agendas can be expected.
As a further result of the declining resources and the sub consequent difficulty to supply, the Liberalization of the markets will decline. The percentage of free traded oil on international markets will be reduced, and the percentage of bi-national contracts will increase.
The global market for oil will no longer follow free market rules, but bilateral, conditional and privileged trading partners will become more important again.
The authors paint a bleak picture as a result of peak oil. The transport of goods is dependent on oil, hence the trade of goods will become much more expensive. As a result severe supply problems will start to hit countries all over the world. The supply of food is critical and endangered by the described effects.
Because oil is directly or indirectly required for the production of 95% of all industrial goods, price shocks can be expected in all aspects of industry production. In the mid term, first single markets and then the entire global markets will collapse. the entire organized global economy will collapse.
A shift to other forms of production, more independent of oil will not be possible in all regions of the world. Many countries will not be able to secure the required investments. The economical collapse in other parts of the world will have severe implications on Germany as well. Germany is a closely linked factor in the complex economical structures.
Further, the think tank is clearly worried on the future of Democracy. Parts of the population could understand the dramatic changes that peak oil will trigger as a system inherent crisis, this can give them the scope for ideological extremist ideas to be suggested as an alternative to democracy.
A fragmentation and polarization of the people will more than likely become a direct result, and open conflicts could become a reality as well in a worst case scenario.
Good to see you on here again, always a good read, your comments on the matters at hand.
Thank you Wills, and apologies for an earlier comment I made to you several weeks ago, you know what I mean!
Forgotten about laughinbear, no worries whatsoever. Our passions and organic responses run high on these unbelievable events, as I see it.
laugingbear – your contributions are like your photos 'colourful and insightful'.
Aha, you are back with your tail between your legs. Lol. Look forward to your 'good' posts:) Great to have a German speaker able to translate what Der Spiegel are saying about us once again!
Georg, good to hear from you again.
You are right to 'pan out' onto the geopolitical level. Do the Wehrmacht also have secret plans to invade Belgium and cut off supplies to Eurodisney?
But seriously, we could add global warming to the list along with energy and natural resources. A lady in my pidgin German class tells me she stayed in their holiday home in western Germany this summer for 4 weeks with temperatures consistenly reaching 41 degrees with no air conditioning, sleepless nights, and spending the days indoors with the blinds pulled down. She spoke of pensioners 'shopping' all day long in the supermarket to keep cool without buying anything. (Funny that, they used to sit in my local all night long without buying a drink, just listening to the music.) That won't exactly put them into good form to extend us any Marshall Aid will it? Not the way we let Seanie's crew blow the savings they worked so hard for. (Not to mention DEPFA.)
I don't think you're a Lovelock fan and I'm a climate ignoramus, albeit of long standing, but our likely status as a climate "life boat" might give us a couple of small chips to play with at the geopolitical table?(Although I think I hear Stalin's ghost jeering in the background: "How many divisions do they have?")
On Irisheconomy.ie I hear (Michael Hennigan) that Trichet recently announced that there will be no bail out of defaulting economies.
Also on the same site, just by the way, there are a couple of good posts from LorcanRK about Central Bank funding 'on the sly' of Anglo, which we'd probably forgotten about. It's all right, it's just a few 10s of billions – they might even get most of it back! It's so hard to keep an eye on all the balls in the air!
Just to reiterate earlier post, you wn't find in that report anr matchup for individual assets/liabilities to identifiable institutions/individuals. Most you'll get is fuzzy rubbish that gives little or no information along the lines of eg:
"Specific provisions against loans and advances to customers by geographical location and industry sector
Ireland Kingdom USA Total
€m €m €m €m %
Retail 491 259 38 788 13%
Office 335 121 142 598 10%
Mixed use 127 82 18 227 4%
Industrial 53 70 – 123 2%
Residential investment 73 10 137 220 3%
Residential development 62 41 2 105 2%
Business banking 1,177 1 – 1,178 19%
Personal 871 2 7 880 14%
Leisure 659 303 282 1,244 20%
Commercial development 149 32 13 194 3%
Other property investment 586 1 1 588 9%
Fund investment 72 1 – 73 1%
Unzoned land 14 1 – 15 0%
4,669 924 640 6,233 100%"
re similar thread earlier,
To make this even more clear, have a look at the excellent Kathleen Barrington post here: http://bit.ly/ddqpNO
regarding 'AAA' Dutch ACCBank on tracker bonds.
But the fact is ACCBank are going after developer loans.
We have virtual silence from Anglo, AIB, BOI, INBS etc in the pursuit of their developer loans.
Who is providing cover for developers in the Irish banks guarding developers from pursuit of their debts and/or bankruptcy proceedings. Surely the courts should be full of proceedings such as above on a daily basis?
Plainly another set of lies!
Hi Colm, did you see Lorcan's posts?
thx, on your urging I took a look. Coincidentally I blogged this am on Honahan report about which there is none of that detailed information re Lorcan on CB 'pig in a poke' transactions propping Anglo. Clearly Honahan report the more time goes on is appearing more and more of a PR exercise to protect Lenihan, obviously the incompetent daddy of not only Anglo, but the Central Bank as well. The quicker Whine goes the better, he's the most incompetent Minister of finance in Europe at present. We do need to get beneath the hood to examine things with the detail on a micro level provided transaction by transaction by Lorcan. Same with the stuff on the developers. Why arn't they in court spilling the beans against their toxic loans, what individually they got, what they did with it, why they shouldn't be bankrupt or behind prison bars. The Honahan Report is only a sterile exercise outlining the nature and extent of the problem. I know it was meant to be a preliminary tour of the area with a detailed followup to follow, what happened to that. The Report is being touted by Ryan of the Greens as a defense of government policy? Either he's incompetent and blind or he's corrupt to the core, choose your juice!
Welcome back Georg. How are things up in Tir Conaill?
Its probably worth noting the Americans (or Marshall Plan) werent really forgiving the Germans, they were in fact buying an Ally for their upcoming war against the Soviet Union. They would have pulled out of Europe and left Britain and France to deal with Germany had it not been for the threat off the rise of Communism in Eastern Europe. So calling the American Public Servants "far sighted" may be a little generous….
I read article as a connecting of the dots on the overall reality at play for the *insiders* and the reality at stake for the *outsiders* using history as a frame of reference on the substantive points David is pointing at, which is that, the econ system is rigged and been Kerchinged by the insiders to fill their boots with dosh.
If one is in power, and one has ones *fingers in the till* / hand on the money making machine switch and one is part of an insider crony network then of course the stuff outlined in the article is inevitable with the way greed, vice and corrupting nature of power operate in the human condition.
This is why, money must be sovereign and treated as a utility. If money issuance is left in private hands its like giving the keys to the candy making factory to a select few. Why in the name of jaybus would anyone in their right mind do this.
Very interesting historical analysis David, one that I would largely subscribe to myself, even if we have to ignore America's treatment of leftists in southern Europe, its distortion of democratic politics in Italy, its destruction (along with the Brits) of democratic politics in Greece and its denial of any democratic politics in Spain/Portgual (all part of the PIGS, not so coincidentally enough).
The dangerous politcal vaccuum that will exist with the destruction of the Irish economy could lead to the erosion of our democratic instituions; not that they aren't rotten for a long time anyway. The existence of the emigration "safety valve" – a disgusting euphemism for clearing the land of its people to pay for the mistakes of our elite – has long been the main solution to Irish economic problems, but with the world in a state of slow recovery, and a monetarist Tory Government in power in Britain, even that option is being closed off. That might be no bad thing, as it might force us to confront our problems rather than bury our head in the sand and hope the storm blows over.
The one thing that you don't take into account is the ingenuity of Fianna Fail and its nativist supporters to lay the blame on anything or anyone that can capture the nastier side of the populist zeitgeist. Last year, we saw this with the whole public sector versus private sector war (it was a war between the management of the public sector, backed by the insider part of the private sector, most of whom have destroyed this country, against public sector workers, most of whom had little or nothing to do with such destruction. But I fear that is only a taste of things to come.
If the Fianna Fail movement senses total wipe out in the run up to the next election, then expect dog whistle politics on immigrants, asylum seekers, "scumbag" drug dealers, euroscepticism, welfare cheats and "faith based" issues in health and education. FF fights culture wars better than any American red neck, and all for the right to appoint their mates on State boards and bail out their gombeen auctioneers and developers on the quiet.
A respectable defeat is all they want, followed by five years in opposition ferociously opposing every and any initiative proposed by a morally weak and indeologically incoherent FG/Labour coalition.
I'll tell you what I reckon will happen.
None of the parties in the Dail want power after the next general election. Certainly not the "European Liberals" sub-party.
Gege Le Beau
Forgive me if I misinterpret, but it does seem like you trivialise US actions in the immediate post-war period. In Italy, for instance, a country which had recevied praise from US administrations for the manner in which Mussolini was managing affairs, the 'good business' environment', we so often hear about, appalling crimes were committed against those on the left who had fought the fascists and were attempting to create a new social order and did not want to see a return to the monarchist/corporate model.
US corporations and banks did deals with the fascists across Europe, indeed, so called Western democracies have a disgraceful record when it comes to the Spanish Civil War (1936) in particular. Hitler and Mussolini were useful tools of foreign powers, it was only when they started threatening the Imperial systems of Britain and France that these powers decided to make a stand (their positions were clearly demonstrated at Munich with their policies of appeasement), indeed, Hitler often spoke about his admiration of the British Imperial system which offered something of the model for his would-be Empire, after all Britain was notorious for starting the concentration camp system during the Boer War (1900-1901), where literally the concentrated large numbers of Boers in appalling conditions, if we take it a step back we see that the yellow star was not a Nazi creation but appeared in the streets of 12th century London (Edward I (1272-1307) of England's Statute of Jewry prescribed "the form of two Tables joined, of yellow felt of the length of six inches and of the breadth of three inches".This shape – two separate strips or two joined round-topped rectangles – was particular to England.)
During the war, leftist partisan groups were effective in organising resistance against the Nazis, this was true right across Europe and found some expressions in Yugoslavia where under Tito large areas were no-go areas for the Nazis and their collaborators. In Greece and Italy too towards the latter days of the war this was the case, and these groups began implementing policies which sought to end the fascist-landlord system (private ownership etc) which so threatened the Western powers. British and US intervention in Greece certainly turned politics to violence, and Greece suffered later under military (Western backed) dictatorship and now again.
I don't think these are mute points, they go to the heart of the kind of world we live in and explain in part why we are where we are.
In relation to postwar Germany, sure a few leading Nazi criminals were hanged at Nuremberg (that made the papers), but what is not often mentioned is the level of collaboration that took place, with thousands of SS men in particular being relocated to the US, or others with the help of the Vatican creating new lives for themselves in Latin America (I think it no co-incidence that the latter also witnessed the emergence of brutal, Nazi style, military dictatorships, based on the supposed premise of fighting Godless communism). The US benefitted from Nazi military and scienific know-how, most of the leading German industrialists who used slave labour got very light sentences while others had their cases hushed up.
The US corporate role in pre and post War Germany has never fully been examined, there is one book I came across 6 years ago on IBM and the Nazis (to do with the punch card, computer system allegedly used in the Holocaust). We could naturally expand it out to examine the role of the Swiss banking system, among others. There are few hands without blood and as the old adage goes 'truth is often the first victim'.
IBM and the Nazis
It is interesting to note that General Curtis LeMay (US Airforce) commented to Robert S. McNamara, that if the allies lost the war they would have been tried as war criminals for the carpet and fire bombing of German and Japanese cities respectively, I doubt this indictment would have been dropped in light of the double and unnecessary atom bomb attacks on Hiroshima and Nagasaki.
As I said previously, one must be aware of romanticising events.
The Yanks were amazed @ the level of wealth gathering dust in Irish banks in 1945 /49.Hence, Irl received lttle aid.Don't be surprised if FF win most seats @ the next election!
We are already half way through the banking crisis, money spent so far is "sunk" we will never see a penny of the 7 billion we gave to AIB and BOI and the money paid to Anglo and INBS has been written off against our deficit.
What David is saying is that we should never have gave any of them a penny….letting them go to the wall. In hindsight that would have been the best solution. Then other banks would have come into the market buying up what remains of the banking infrastructure.
In effect David is crying over split milk its too late to turn back the clock, the money is "sunk" …gone forever. All those developers have got off the hook nobody is repaying loans not even the interest. It is truely amazing that the banks lent this money in the first place that is the real cause of our situation.
David always looks back never forward. How are we going to repay our 95 billion national debt? How is NAMA going to get to the end game? How much more will we have to pump into the banks?
I suggest it will be the EU/IMF who will govern Ireland over the next few years as we will be forced to call upon them to bail us out. We are in a hole and are digging deeper.
What will happen when the EU/IMF are in charge ? For a start the public service will be paid alot less and that large scale redundancies are going to happen. We need to decrease our current account deficit to 4 billion from its current 19 billion. The 3 billion of cuts in the coming budget is just a small jesture. We really need to cut about 5 or 6 billion for any real effect.
Interesting article. Retribution results in revenge. A cycle of militarist folly formally started in the 1600s with the Richelieu doctrine, based losely on Machavelli's The Prince. (Incidentally Mussolini was so in love with Machavelli's work that he insisted on writing the preface at one stage). With Richelieu, barbarism became a fine art, a mark of sophistication, and a study in grandeuer. The knightly class were made technologically obsolete by the invention of the musket, and the long pike. It was a serious problem. A means was required to justify the lifestyle requirements of aristocrats, and there were only so many aristicrats any territory (and it's peasantry) could support. England and Spain could send them to the New World. Holland could make them into merchants. But other societies need a new career path for people who did not want to get their hands dirty. That career path was the military. Within a generation every country in Europe was playing games of intrigue, deceipt, aggression and militarism. Mostly it was the concern of young aristocrats who did not inherit land and who were not interested in religion. The military became the business of state of all Europe's states. It played out for three hundred years until it reached the point that no slogan-maker or propaganda artist could cover up the misery it created. In the end the entire society was playing the game, under Fasism. The people got played out with state imperialist misadventure. In this period the state became the career option of preference for opportunists, and stayed that way for a long time. And in many ways it still is. State power, a class who needed war to access resources, and a culture of militarism were a cocktail that proved a disaster. It was a recipe for meglamania getting the better of civilization on repeated occasions.
The lesson was that the structure of society, and the stupidities that it creates for itself can result in disaster. Short term stability can create long term ruin.
As Churchill commented "We shape our houses and they shape us".
Thank God the yanks had to good sense to put an end to it. The Americans had a different concept of state power, and a different concept of civil society from the nonsense prevalent in Europe. In the countries that were previously Fascist, they created Federal structures, with decentralised power, constitutional limits to militarism. They also required former enemnies to co-operate and see good sense. And there was far more free trade than before.
Currently, ordinary Americans are in trouble, and Europe might decide to do the honourable thing and help them out in return. This is not the same as bailing out an administration that is ignoring the concerns of the citizenry so as to serve the interests of a clique. In other words America has sucumbed to the intellectual disease that ruined Europe. As Eisenhower prophesized – "the military industrial complex".
The problem with Europe from 1600 to 1945 is that it needed war, or fear of war, to keep the governing class in a position that they could access the level of resources that they were accustomed to in their aristocratic upbringing. If there was no war, then things would change. As a result intellectual culture became subservient to the need for war. If you wanted to dissent you could leave. Eventually the intellectual culture was totally poisoned to the point that Fascism could be seen as a respectable political option. Of course in different eras there will be different political diseases.
Intellectual dissent is necessary, especially any critiques of the motives and agendas of those who are drawn to state power. We need intellectual dissent to tackle the behaviour of cliques who are driven by the 'something for nothing' approach to using the state as a means of extorting resources from others. We need intellectual dissent to ensure public debate and to undermine any deceit that exists to justify abuse of power and influence. In particular we need intellectual dissent to prevent the dumbing down of society, and the consequent concentration of power in the hands of the few.
Biffo and Whine are trying to keep their hold on power, and are dismissing any current misgivings from the FF back benches. This is a big problem for the GP.
If you want to see embarrasment in the GP, just watch what happens when there is even the slightest chance that FF backbenchers might side with the public with a government minister is making "tough choices". ("tough choices" is a euphemism for many things – appointing failed GP councillors to state jobs is certainly not one of these tough choices).
The result of the current impasse will not be the dissolution of the government. FF will have a parlaimentary meeting and Cowen will tell the backbenchers to shut up or put up. That is how dissent is handled. This will keep the GP on board. There are to be no rogue FF TDs undermining the GP's hold on power, or the GP's efforts to control the perception the public has of the GP.
Nope, they are holding on by their finger nails at the moment. There's more bad news to come, pressure is only beginning to build, bank losses will continue to escalate. Budgetary woes will soon kick in. Basically, even all the people can only be fooled some of the time:) Their fall will kick off recovery and will be a matter of celebration rather than sorrow.:)Things can only improve when they're gone!
I wish it were the case that they would go and that there would be an improvement.
Problem is that the opposition is even more dire. Listened to Baby Brute today on the radio. I mean he is the qualified economist in the Dail, and he never seen an asset bubble. Instead he seen opportunities lost at spending money. And he is in good company in the Dail in this regard. All of the opposition lamented that not enough money was wasted a few years back.
I suppose we all have to figure our own way through this. And ignore the spin coming from the authorities.
Malcolm McClure
Total US grants and loans to the world (including the Marshall Plan) for the eight years 1945 – 1953 came to $44.3 billions, much of which was eventually repaid. That sum would be worth about $250 Billions or €200 billion in today's money.
At the end of 2009 Ireland's National Debt was running at €75.2 Billions. By now it has probably reached at least half of the Marshall Plan loans to all countries of western Europe, with little or no prospect of repayment.
Irelands national debt is now around €110 billion because you have to add NAMA now to the national debt.
Add Greeces €100 billion loan that it has to pay off in three years time and now you have enough for the Marshal plan of over €200 billion :-) LOL
And there are three times as many Greeks to pay off the debt as there are Irish to pay off our national debt.
Basically, we are finished. Either the debt is inflated (which means that wages are worthless) or the debt gets absolved.
The smart economy way to deal with the debt was the way the Koreans and the Thais handled the debt crisis ten years ago.
Oh…but….we are sooooo much mouehr sohhhhffffissssstickahted than that….
When your options for negotiations go to zero, you are cornered. Dangerous times. Deco is spot on.
Devs Eyes –
We are at the crossroads now where FF is dancing and the little people are just fodder cheaper than hay.FF is the best party because it has achieved what we never believed possible :
1 We have 15% unemployment ( not including those that have left and never to return again) and rising and it is the policy of that party to allow it to rise until we become like our cousins in North Korea ie skeletal; and
2 This party will continue to support the fat cats and feed them until they forget their names ; and
3 This party will continue 'to rule'where cromwell will seem like a saint; and
4This party will support the rising debt of all the little people and to load it with all our fat expenses till they drop ; and
5 This party supports misery to every household in the country and to send a local representatives letter to each and every household to hand over what ever they have left to the local FF office , or else; and
6 This party's policy will continue to deny 'basic rights' to every Irish citizen and to lie to the teeth whatever they look for; and
7 This part will strive to criminalise legal rights and to remain in denial you ever were there in the first place ; and
8 This party just does not give a damm and its supports those ideals because it knows neither do you.
If this article was called 'Paying for our banks, our overpaid public service, our quangos, our thousands of makey-up jobs, our thousands of wasters who've never tried to get a job .. is a recipe for disaster' .. it would be a more accurate title.
David consistently avoids alienating his audience, biting the hand that feeds. People don't like to be told that they are part of the problem. This consistent omission takes away from his message ; in fairness I always learn something from his articles, but at the same time I also come away with a feeling that only part of the issue is being addressed.
I have just come to the conclusion that the next decade will be an absolute disaster.
At some point in the middle of decade, in the midst of all the social chaos, mass unemployment, substance abuse, community breakdown, suicide epidemnics, ghost towns, abandoned hospitals, and 'beer and circuses'… jobs will be moving out of Ireland and the prop that is the big assumption in the elites plan of 'recovery' will pulled out. There will be an almighty mess. The jobs will go to an economy where everything is not already sewn up by IBEC/ICTU/SIPTU/FF/FG/GP/PFPAI/ILP/SF cronies…
The West is in decline. And this time it is the real deal. By the time the West has learned the errors of it's arrogant ways, China will be dictating terms.
I wish I had Decos command of phrase, just a thought.
Furry – you have very good command of language yourself. And you thought us about Art. 45 of Bunreacht na hEireann which clearly proves that government policy with regard to market regulation, finance and competition policy, to be an abdication of responsibility. Probably a deliberate abdication of responsibility, for the benefit of corporate concerns. I mean these things never happen by accident :)
1) Think as carefully as possible about what you are trying to communicate.
2) Rephrase if necessary.
3) As much clarity as possible. This is important. A lot of people are trained to be unclear because they are always trying to go around the truth.
Hmm. Wise words indeed. I shall consider appropriately and revert in due course.
It is very possible that there will be a massive war with debtor states on one side and creditor states on the other, or a proxy war between debtor states and resource rich states. It is not absolutely certain that we will be neutral. The Lisbon Treaty in particular leaves it as a grey area, to enable 'participation'. And when the time comes IBEC will be wanting participation.
War – what is it good for ? absolutely nothing.
Of course, like the WMD nonsense, we should expect a big build up to build the moral case for war. Ah yes, provide justification to ensure that the recruits are clamouring to serve the state.
There is NATO, and there is SCO – the Shanghai Co-operation Organization, consisting to China, Russia, Venezuela, Cuba, etc….
I only hope that we do not get involved. If we do, then you can carry a copy of Michael Martin's "cast-iron gaurantees" on nuetrality, and the Lisbon Treaty, with you when they ask you to sign up !!!
See what I mean………….
The usual well ascribed and elucidating comment.
Malcolm McClure
Calm down Deco. We are nowhere near having a hot and bloody war between debtor and resource rich states. According to your thesis, Canada, Australia, Saudi Arabia and Nigeria are going to send a gun-boat to retrieve their filthy lucre from Ireland, Iceland, Greece, Spain and Portugal? –The very idea is ludicrous.
Go away and read 'Confessions of an Economic Hitman' by John Perkins and discover how the real world works.
I have been a frequent admirer of your contributions over the years but they are beginning to get a bit shrill. Try to get more sleep.
Perkins describes very well how EHM operates on behalf of global conglomerates whereby 3rd world nations are offered massive billion dollar loans for infrastrucural projects to e.g finance electrification of cities and rural areas with dam projects on the false promises e.g this will lead to enormous growth of GNP and rising standards of living. Inevitably, such loans lead to crippling reparations and even lower standards of living for the population of these poor countries.
All we have is ghostland estates to show for our loans!
But there's a danger in becoming overly fixated and addicted to conceptual information of this kind, no matter how real that information is. After all, 'the best lack all conviction'
I would'nt advocate aloof indifference, but a balance should be sought between overly fixated involvement in eg posting on every topic and the contribution of balanced informative information that doesn't absorb too much time. Perhaps less is more or Yeats:
"TURNING and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity."
Anyways, expect less from me in the future. But I am preparing a little something on Honahan report via blog.
Colm, you mention the billions of dollars in aid.
Now, what can the recipients, or their central banks, do with all these dollars? They have to get shut of them or risk driving up the value of their own currencies and pricing themselves out of the export market. They can't buy "strategic" assets in the US (US won't allow it). So what do they do? They buy US debt. All right, the US has to pay interest, but that's easy, they just have to print more dollars. In other words, the US gets the rest of the world to finance its massive debts.
Re comments, I wouldn't worry about anyone going into detail as the readers will just skip. How else can we try to work out what the **** is going on? It's awfully slow and frustrating sometimes, not to say repetitive, but there is no alternative in my view. Alright, you can read books and articles, choosing the authors carefully. But as for exchanges of views you won't get anywhere in casual chats down the pub over a pint, or around the fire. Apart from that you're at the mercy of Pravda etc.
Hi ColdBlow
Re what do they do with the dollars: Forgot to mention that. The dollars go back to the engineering and construction firms of the donor countries:) 'We'll not only do this for you we'll give you the money and our guys will do the job':)According to Perkins, Iraq happens to you, or you get liquidated, and the same happens only more nastily!
Malcolm – I am not trying to be alarmist.
A war being debtors and creditors will happen if the debtors need an external distraction and resources to maintain the order within their society. Creditor nations are already 'winning' and therefore do not feel the need to change matters. The debtors are always more inclined to take aggressive action.
But countries where financial circumstances do not support their aspirations, and where the aspirations are not for negotiation, are possible aggressors. (As Dick Cheney said 'the American way of life is not up for negotiation'). Kunstler has warned that somebody will emerge politically who tell Westerners that they should not have to downscale any of their expectations, and that they definitely should not have to upscale their work ethic. (In Ireland we have Gilmore fitting into this vacuum, telling us that no step downward in our aspirations is acceptable, and that we are entitled to many things that we have not earned.
The wars of the 21st century will be over resources.
The predicament of the USD in particular is of relevance. China has stopped buying US Treasury Bonds. In fact the one thing you will not hear about in the Western Media is the cooling of relations between the Chinese and the US Administrations, since Obama became President. In Ireland the media tells us continually informed that the Democrats are living saints. Politicians like Blagovitch, and Mayor Daley (well, he doesn't exactly sound Italian does he) get practically zero coverage, compared to the latest soap opera minutae about the Palins. My point is that the US is stumbling at the moment, and this is not covered. I do not know who is paying for the current US stimulus program. It is possible that the money is simply being printed to buy the bonds.
If this is true then it will mean expensive oil within a year. An increase in the price of oil provides a lot of impetus for war over hydrocarbons. We had an article in the NY Times two months back talking about the wealth of resources in Afghanistan, and how much demand existed on world markets for these resources. When I seen it I thought to myself, 'oh no – here is justification for a keeping the war in Afghanistan in operation as long as possible, no matter how necessary'. Somehow or other, I think that the Afghan warlords will be much more inclined to continue producing opium, than turning to mining or drilling for oil.
I cannot figure out which the West needs most – drugs or hydrocarbons. Mind altering substances, or lifestyle altering substances.
Malcolm McClure
Deco: I accept that some of the points you make above are valid when viewed through the lens of history. However the war in Iraq changed the nature of war itself. Modern warfare concentrates on economic pressure points regardless of civilian casualties. Let's suppose Israel bombs Iran's Bushehr reactor, which is very close to the Persian Gulf. Iran could hit back not at Israel but at western oil interests in the Gulf. It could close the straits of Hormuz, and rocket the oil installations in Abu Dhabi, Qatar, Saudi Dammam and Kuwait, which are virtually unprotectable from a planned salvo.
China India and America are aware of their dependency on Persian/Arabian Gulf oil, which is sufficient to supply its share of world needs at present levels for about 200 years.
So much for an energy crunch based war. It will not be allowed to happen.
I can see the logic of your argument and it is compelling. Basically there will be no war with Iran because of the affects on the world oil market. That would see to make sense.
Re 'China has stopped buying US Treasury Bonds.' That's true but the fact is China is a major investor already.
There's an interesting take on this, source since forgotten, that shortfall was being poured into Greece. That this amounted to China support of the euro against an effort by Goldman etc to short on Greece thus attacking the euro. Perhaps China realises the euro zone is a market it should cherish just as much as US market. Think of it. ECB prints money and China pours money into the PIIGS and the euro?
We use the money to buy more noodles, everbody saved? Time to learn Mandarin and play Mandarin the Magician again:)
It may turn out the soup we are in is going to be Peking Duck soup after all:)
The phrase "never a lender or a borrower be" is coming to mind.
I am also reminded by a speech from Ron Paul where he tears into the neo-con element of the GOP and ridicules the idea of borrowing money from China to give to military run states like Pakistan and Egypt, when ordinary Americans are on food stamps.
It is getting highly absurd and ridiculous.
Gege Le Beau
What is neutral about Ireland?
The use of Shannon?
Irish companies exploiting the resources of developing countries?
€1 billion euro in arms or 'dual use' products especially in the IT/electronics sector?
McDowell signing legislation:
"The agreement, signed by Mr McDowell and US Ambassador last week, will give both countries extensive powers to discover documents, conduct searches and search bank accounts in each other's jurisdiction."
Ireland's role in the Paris club.
Ireland's role in the Trilateral Commission.
If you are saying that Ireland has already sold out on neutrality, then you are correct. Gay Mitchell, MEP, went into hysterics when Lisbon 1.0 was rejected. Mitchell, as Phoenix Magazine notes, is a long time NATO fan. It is his life's ambition to stick us into NATO and get those kids off the dole and into uniform (so that they can come home killed, maimed, and shocked). It was like as if Ireland had rejected his life's work. Mitchell brought us into Partnership for Peace (a nice Orwelliam phrase for sending people around with killing devices), because he figured NATO was something that we were not yet ready for yet.
If Ireland is highly reliant of hydrocarbon consumption (a result of planning laws, and broadband oligopoly) then we can assume that Ireland is not in a position to be nuetral.
Gege Le Beau
Irish 'neutrality' is up there with Orwell's 'war is peace, freedom is slavery and ignorance is strength!'
People are prepared to believe anything, dangerous stuff.
Gege – I would actually give the people some credit. They refused to sign up to Lisbon the first time because they smelled a rat. (French plans for a military strike force actually).
The sheep were the people who rushed out second time to make some sort of afirmative statement to the effect "we are voting in favour because we are better than the working class".
For the second Lisbon Treaty debate, the actual contents of the treaty were completely ignored and it all became an exercise in the expression of your membership of a particular lifestyle/consumerism group.
"Vote Yes for Jobs". Well, Suds Junior got a job out of it but I can't see anybody else who got a job from it….
In an attempt to simply understand what should have been the proper solution can someone tell me if this is accurate or over-simplistic:
1)The bank guarantee should only have be placed on the high street banks so protecting Joe Public's money and preventing a run on the banks.
2)Anglo Irish as a private investors club should have been let collapse without the Irish state having any part in it so saving the public from any financial burden.
3)Some large bank like Bank of Santander would offer peanuts to Anglo's shareholders and bondholders who would have had no choice but to say thank-you very much.
4)Today Anglo would have been a bad news story (for those involved) from over a year ago, there would be no milestone around Ireland's neck and so the cost of borrowing and Irish bond spreads would be a lot lower.
You can write/postulate all you want guys…They've gotten away with it and we're left holding our 'flute' in our hand.
Not one of the 'intellectuals' who are responsible for the predicament in which we find ourselves will suffer any loss…either financially or time served…the 'four gold mines' will see to that.
The best part for the 'perpetrators' is that WE PAY!
I strongly urge you to vote Number 1 for me in the next election.
NYT August 31st
"This is out of control and the markets see it now," said Peter Mathews, an independent banking and real estate consultant here, who for the last year has been waging a furious one-man crusade, warning of Anglo Irish's escalating losses and calling for the bank to be liquidated – with bond holders, not the Irish taxpayer, taking the hit.
The report concluded with recommendations to the government that I personally find remarkable. In a nutshell, they conclude that due to the increase status quo of oil producing countries, foreign policies and diplomacy should pursue a what I would call softer approach.
They even recommend certain sacrifices to be considered in foreign relations. The good relationship with Russia should not be endangered by Germany's eastern neighbors and potential Russian foreign Interests.
The same recommendations were made towards the Middle East politics, where Germany's position to Israel would need to be re balanced in favor to better Relations with Saudi Arabia and Iran and other oil producing countries.
In other words, risking frictions or damages to eastern neighbors to favor a positive Relationship with Russia, etc.
x x x x
The short sighted views presented in this study are mind blowing. While they acknowledge Peak Oil to be a reality, they focus on very short term geo strategic relations, typical for a think tank from a military background.
A complete failure to address the underlying problems and reasons, such as over population to be the key factor for our predicament, then again, it is a military think tank with strategic thoughts on security.
Remarkable was that they mentioned the possible total collapse of the entire organized global economy, the destabilization of Nations, decline of democracy and potential open conflicts in a worst case scenario.
Since Club of Rome, and since the Global 2000 report initiated by the Carter administration, these scenarios are nothing new, only that today they are about to become our reality.
Still the public is left in the dark, and voices that are warning about these events to unfold were ridiculed or had unfortunate accidents, depending on the loudness of their voice and quality of their informations.
Today we live in a world where we have WikiLeaks http://wikileaks.org/ and other groups of organized and concerned people who are trying to help, this is a good thing in my book, and reason for hope that we might be able to turn some events around.
However, I am under no Illusion that time is against us, and a lot is at stake, I really should say, everything is at stake.
Peak Oil=Peak Everything
95% of our industrial production is based on oil, transport of food and other goods so crucial for social stability and security is based on oil, and the decline is rapid. Other factors such as the global financial Heist, which I personally consider to be a massive "Let's cream it one more time!" event, climate change, cataclysmic weather events, price shocks etc. will increase social stability and security on many fronts.
What really is required is a global dialog with maximum participation to tackle the challenges we face. May be other forms of participation, inclusion of larger groups of people from all nations are required. To date, if we looks at current examples, the climate talks, they failed to deliver, G20 and G8 talks, they failed to deliver.
What is happening right now on the energy front, and I am involved on these issues, can be described as another form of "klondiking', within the same old structures. In Ireland Gombeenism is the driving force behind energy concepts, and not a much needed and well considered plan for future energy supplies, on the contrary, politically connected special Interest Groups, and you will find the same old names coming up all over again, they very same names that were involved in the housing bubble, are klondiking Ireland at the moment for short term profits, backed up by government policies and quickly moving goal posts on local as well as national levels.
I am going to start my own website on this particular energy issue asap and will continue to post informations as I receive them and investigated them myself. I already have a good amount of presentable data and Informations collected.
So may be one day another important document can be released before it is too late…. "Mapping the Green Circle!"
price shocks etc. will decrease social stability and security on many fronts.
Launch of The Irish Energy Co-op
A personal summary of the event:
This morning before you start to work and before you ask yourself, have you put on fascial moisturiser, think for a moment .Just a moment , because today before you start to believe in your contribution to this state whatever you do something else will happen regardless how you think or what you do.
On stage this morning to day your government will cost you €42,000,000 down the floozie .A throwaway fast junkie food price.Now that is before running costs are even contemplated .Should we just stop for a moment and think again ?
Light the corners of my mind
Misty watercolor memories
Of the way we were
Scattered pictures
Of the smiles we left behind
Smiles we gave to one another
For the way we were
Can it be that it was all so simple then
Or has time rewritten every line
If we had the chance to do it all again
Tell me – Would we? Could we?
May be beautiful and yet
What's too painful to remember
We simply choose to forget
So it's the laughter
We will remember
Whenever we remember
The way we were
So it's the laughter
We will remember
Whenever we remember
The way we were
I remember Ireland as it was, incredibly prosperous with a blindingly bright future – we had stepped up to the plate and were an important link in the global economy. During one of my visits home, around 1995 I dropped in to say hello to a guy who I used to do some work for in the 80′s. He had been very successful and now owned a medium size manufacturing company in Dublin. He was all smiles, telling me that you'd make money falling out of bed at the moment. On another trip home, I sat with dad in the living room at home and watched TV as Albert Reynolds, alighting from a plane from Brussels declared the '8 billion was in the bag', more money from Europe. Our politicians were like peacocks, no more-so than Pee Flynn, striding the halls of the European Parliament. Now, the future appears so bleak. I really can't believe what I'm reading about the state of the economy. I knew it was all too good to be true, but never did I consider that the country would fall on such hard times. Thankfully, I made my escape. I learned my lessons during the hard years of the mid-to-late 80′s. When times get tough in Ireland, it's Joe Public who gets it in the neck. I returned for a brief few years in the late 90′s early '00′s. Picking up a degree, paid in full by the Irish government & by Brussels, in a way I feel I recouped all the taxes I had paid in my early working years and was getting back what was mine. I left before the mad peak of the property market & haven't been back since. I have only one message for the youth. 'Get Out Now'.
I'm trying to pick up that degree now LKSteve. Luckily enough it's still free and I paid my fair share of taxes too as did my folks and brother and other family. Luckily enough the education is still free. I start Monday – wish me luck! I've been away for 20 years but I may stay on for a few years after the university and try to make some sort of contribution. I won't be dying here though – back to the heat of the Caribbean for that!
What has Ireland to offer with such large debts. What is the quid pro quo and what is it worth?
The 80s was a source of graduates – the brain drain.
The 90s was a source of low cost high skills.
The 00s was a source of good craic and loadza money.
The 10s looks like we need to come up with a new story. The 80s strategy is now being pursued. But the jobs are not out there abroad either.
The Web has dumbed us down a lot I think. We have entertained ourselves to death (a Neil Postmanism) while believing in a never ending party financed by debt and on the backs of poor labourers in other countries whose laws permit practices of taking advantage of people which would never see the light of day where jobs are lost.
Our run to property was a run to security to hedge for a rainy day when secure jobs were ebbing. How do we knuckle down and back out? It has to start at a community level with strong local government. Is there any practical way of doing this and in the process ignoring the present arrangement? Could Europe help provide a model?
Social Ice Age
The income levels for 90% of the US population did not change significantly since 1973.
The 1979 average income was at USD 45K, the average income in 2007 was at USD 45K.
The top earners income levels tripled. More than 30% of all profits earned in the USA went to 1% of the richest people in 1979. In 2010 more than 60% of profits went to the same 1%.
Back in 1950 a CEO earned 30 times of the average industrial worker in the US. Today he earns 300 times that much.
The richest 1% now owns 37% of all american wealth today.
This above described Gap is of immense proportions, and it has not been that dramatic since the roaring twenties.
The job figures in the US speak of 9.6 % officially, however, this is a question of how it is calculated, if other figures would be taken into account as well, it is more than likely around 17%.
Bernanke continues to pump money into the market, the american debt is now at a staggering 13,4 Trillion USD.
In Colorado Springs 1/3 of the Streetlights stay dark at night to safe on energy costs. The middle class is disappearing rapidly and many find themselves in dire situations. I remember my time in the US well, and on my first visit I was astonished to learn how many families in this middle class segment have to work two jobs to support the family.
This phenomenon that has hit the US now has a name, the working poor! Below that treshold there is 61% of the US population that does not have any savings, they are dependent on their weekly pay cheque, unemployment is the straight road into poverty. This new american reality is an explanation for the popularity of the tea party of course, and they play this with full force.
While some climate change models predict a high probability of a new ice age, I am very concerned that we might see the phenomenon of a social ice age much earlier.
Tull McAdoo
I wonder what the wealth distribution figures for Ireland would look like.Something tells me they would be shocking and very revealing.!!!
But Tull, havent' they already told us they don't have any money any more. It's all gone. Don't you believe them?
It can probably reach all the way to Perth or wherever you are. It's coming from 100,000s of Irish people. Just listen for a second… Can you hear it now? That's right: nothing. The Great Silence!
Well, we know that Mr. "Swiss Cheese", (not using his real name because of the libel laws in this country) is hiding in the Alps with his mountain of cash from the good times. He knows where the Revenue will not be able to track him down. In fact, he knows a lot about Irish tax law. It was, you could say, his first love.
Dunno who that is. I thought it might be Denis O'Brien because he just springs to mind. Anyway, it can't be him. Thank God. Because he is resident in Malta (tax reasons), according to Wiki, following his sale of Esat in 2000 when he was resident in Portugal (tax reasons). They say he is worth $2.2bn. The Portuguese closed some tax loopholes after his departure. *Fair play to him.* Can't be Lowry 'cos he's still in the Dáil representin' his loyal constituents… Can't you give us a clue, there are so many to choose from… Politician? Solicitor? Is he a captain of industry, or just another one of them developer c***s? (chaps) What does that leave? Ah… you can't mean Noddy surely!
This is killing me. I'm off now to google irish gombeen switzerland.
By the way, I know you're not a fan of Will (Hutton) but his "The World We're In" had an interesting section on the 'roll out' of the telecoms infrastructure in the 90s or whenever, especially as regards the ideological (or even *ideological*) context that proved so stimulating, so rewarding, for entrepreneurial activity. My book's in storage, but has anyone else here read it and could give a short recap? I'm sure it would make a lot more sense in the light of events.
Jeepers! Just came to me. Is it a banker?
My google search threw up a certain "Bertie". Not him is it?
I just googled irish tax avoider switzerland. It's a musician isn't it!
Brollachain, thanks for the info. Great article – some interesting names: barristers, consultants, even musicians…
I withdraw my ref to Noddy above.
Is nothing sacred any more?
(wrong gender anyway)
Laughingbear – So what binds the top elete to the very top at the expence of the middle class .Somethings come to mind that may need re-defining:
Land Title,
Copyright Title,
Trademark Title,
Sovereign Rights ,
Company Rights
etc endless
Re-defining new definitions new ideas and new dreams .Until then we decimate .
Hi David.
There were a couple of excellent comments above on the historical 'simplifications' in your article. We realize of course that you are merely providing a parallel for the present self-defeating policies as regards the Irish situation.
Just to add my own tuppence worth(!).
From my own reading it seems clear that the overriding cause of the excessive reparations demands from Germany on the part of Britain, France and Belgium was the inflexible attitude of the US in relation to the repayment of its war-time loans to its erstwhile Allies: the whole principal plus full commercial interest. Britain and France had to squeeze every drop out of Germany to pay these debts. The US never conceded that there was any link between these Allied Debts and Reparations as this would imply their own responsibility for the fate of Germany. Remember, at this stage the Americans were isolationist (despite their status as the world's largest economy) and liked to look down their noses at the European warmongering imperialists! At the end of WW1 they were in an unassailably strong creditor position and used that position ruthlessly out of a mixture of short-termism, geopolitics (cut down its biggest trade rival, GB, to size), inexperience, bureaucratic obscurantism, slavish adherence to the traditional view of creditor-debtor relationship.
Roosevelt's New Deal was, as you realize, a new departure in that it took a debtor-oriented view of this relationship, a realistic one. However, America continued to enforce the oonventional interpretation of its creditor status abroad, and this contributed to WW2.
After WW2 the US realized it would best further its own interests and security by means of international free trade, drawing up a system in which it had vetos in the IMF and World Bank and where it could secure concessions for its own strategic industries, including agriculture. That's not to say the results of this were all bad (they could have been far worse under the hegemony of any number of countries) but they were still bad enough, and shockingly so in some areas as previous commentors have correctly pointed out.
Keynes could see the dangers of this lop-sized free trade where you couldn't protect yourself with exchange controls, protection or imperial preference. He wanted to get his own vision of an international economic architecture accepted and the British did not push hard enough in negotiations with the British (they could have threatened to default over repayment of Lend Lease), and once they capitulated the rest of Europe fell into line behind them.
Just to add, that the US having used their overwhelming creditor status to the hilt after WW1 and 2 in later years went on to use their overwhelming debtor status in later years in a novel way that nobody had foreseen (while at the same time continuing, through IMF etc, of course to force swinging austerity onto debtor states). Nice deal if you can get away with it!
Debtors and debts. You just can't get away from it…
Hudson (Super Imperialism – 1972, new ed. 2003) says it better:
"As America entered World War II the idea of economic gain broadened to become more enlightened and long-term — and for that reason, more powerful. America's overwhelming creditor position enabled it to gain a controlling interest in the International Monetary Fund and World Bank, which it used to transform international finance to serve its interests when it moved into an almost unbroken series of deficits after the Korean War.
"By 1971 the United States was virtually daring Europe and Asia to cash in their surplus dollars. Doing so would have forced up the exchange rates for their currencies against the dollar. Foreign countries were no more able to develop a countervailing strategy than they had been able to do in 1934, even though it was they that stood in the creditor position. Neither Europe nor East Asia was prepared to take an integrated region-wide approach to achieve the scale needed to provide an alternative to following the U.S. lead.
"In 1933, European countries did not even attempt to develop a strategy to make a virtue of their debtor position. They could not threaten that their default would bring down the U.S. economy, as America would threaten Europe and Asia after 1971. They did not owe money to America's banking and monetary system, but to the U.S. Government, which did not really need the money at the time.
"An even deeper problem was Europe's worldview regarding debt, in thrall to a creditor-oriented mentality that led its governmentss to pay the United States even at the cost of deranging national exchange rates and imposing monetary austerity.
"America was different. Roosevelt spoke for the rural areas whose debts threatened to result in widespread mortgage default. His palliative was to revalue gold in the hope that this would reflate farm prices and incomes to their 1926 levels, that is, to where they had stood when many of the mortgages originally were taken out.
"The idea of a financial system being debtor-orientated and pro-inflationary was so alien that, except for Keynes, few Europeans were able to understand Roosevelt's scuttling of the London Economic Conference. Europe's policy-makers still failed to grasp the debtor-oriented logic in the 1960s and 1970s, when the United States used its debtor leverage to conclusive advantage. Europeans expected debtos to acquiesce in whatever their creditors demanded. This is why both the Allies and Germany in the 1920s sacrificed their economies trying to pay their war debts. No such logic led the United States to abandon its global, even imperial military spending in the 1960s or subsequently. Rather than sequestering the private investments of American companies, the government encouraged them to go on acquiring European firms, while erecting unilateral trade barriers without regard for international law and its principles of symmetrical economic practice.
"The debtor's power lies in the ability to threaten the system, bringing down the creditors by their default. Once this wrecking power is recognized, the debtor is able to lay down the law. America has used this strategy for the past thirty years, but the Third World, the former Soviet Union and other debtor economies still have not grasped it. European nations had not a hint of this potential power in the 1930s. Much like Third World countries in modern times, they subjected themselves to an economic depression from which they were rescued only by war spending. It proved easier to go to war than to join together to create an alternative financial system."
The next installment might be 'print, baby, print'…..
"The debtor's power lies in the ability to threaten the system, bringing down the creditors by their default. Once this wrecking power is recognized, the debtor is able to lay down the law"
This is the point that David has been making with regard to the Irish Government's dealings with the various banks in Europe. I hope the Irish Government takes heed and regains it's confidence.
The country with the best army and winning wars has also been the richest throughout history. Even Alan Greenspan says the war in Iraq was about oil. Hopefully we won't see the States drumming up another war in 5-10years if things don't pick up. Oil rich countries like Iran and Venusuela would appear to be the obvious targets as they are already the subject of a completely one sided unfair media bashing from the states. Why don't they spend so much time bashing poor countries with much worse human rights abuses and no oil? If the republicans get in who knows?
Name me one of these "other countries" whose leader threatened to wipe Israel off the map?
Everyone, including the US, buys oil. No one gets it for free unless its produced in your own land. If the West wanted free or very cheap oil, it would conquer oil producing lands like Saudi, Iran, Libya, Nigeria etc….
In fact, the West shows its weakness by not acting in its best interests. You can be sure if the tables were turned (i.e. Wealthy Superpower Iran v Poor Barely Self-Sufficient US), the Iranians would not need to think twice about attacking the West to get its hands on their mineral resources.
But you have the luxury that affords you do say what you said, and not have to fight to defend what is Western Civilisation's greatest nemesis, the Islamic World, which by the way, demands to be top dog in the World because you and me are only mere kuffars or dhimmis in their eyes.
Doesn't matter very much. The only difference is the time frame. The government deficit is around 20 billion a year excluding the banks http://www.thepost.ie/newsfeatures/the-key-hurdles-now-facing-ireland-51323.html .
They haven't lowered the deficit at all even with the cutbacks.
No stamp and employment, etc. have scoobied receipts. So why not speed up the default instead of having a long drawn out affair?
The sooner the better, default, INF in & government out!
Where is that guy with the placard saying 'the end is nigh' .
Full marks for him .Was he an economist?
Gege Le Beau
John 3:7.
Good link.
Anglo must be closed asap, remaining assets transferred out to remaining banks, liabilities dealt with senior bond negotiation under ECB bank bailout umbrella.
Simples. Do it and move on.
Debt for equity swap? 100% of nothing is still nothing problem.
Sovereign debt problem and default?
This is complicated by our euro membership. Then its part of a wider PIIGS problem. ECB when push comes to shove can print its way out of that problem! To make this palatable through austerity they firstly have to make PIIGS squeal!
Ireland is a mess. The government have no idea what they are doing.
Time to get your money out of the Irish government-backed guarantee – they will not be able to cover the guarantee when it all comes crashing down.
I think there's a good chance of a run on the banks within a year.
Finally FF lives up to its name …..it Falls …we should have known that all the time …it just shows you how much we believed all the crap they fed us.
Now where are the Pigs
So if Ireland's debt was cleared tomorrow and it received Marshall type funds, do you think the Irish would build a better country. I don't. Because we never learn. The culture of nepotism and favours for the lads would land us in a mess again. Until the Irish start taking a closer look at themselves (and not just their government) a country with great potential will consistently be brought to its knees.
John. Fair point.
The money would be pissd up against walls the length and breadth of the land. The mentality has not changed sufficient. And then when it is all gone, it will back to whinging, envying, and the usual negativity. It is just too much effort to learn good habits with money.
Just watched Alan Dukes and what went through my mind was 'did he ever inhale when a student', cause I thought his tonsils were stuck in his throat through the programme and he was clinging awkwardly to the chair.He does not convince me he knows anything and he lingers into the unknown unknowns as opposed the unknown knowns.I have lost confidence in Logic in general for some years now and only see it as a factor to just do a job and not an end it itself .Were we lucky to have a good leader then a renewal would appear .Sadly that will not happen.
So this is why I rely on my astrology and it is a good friend to me .However , at the beginning of the programme what stunned me was to see the old Ship in the dock in what appeared in front of Anglo Bank.This is the old 'Galway Bay' CIE owned ship that sailed the routes to the Aran Islands from Galways docks in another time.I travelled alone on that every year since I was twelve years and stayed on Inish Mor.This was the beginning of my love affair with Dun Aengus .Is this an omen that Anglo should be sited beside that wreck as in Ozymandias as shown in the book Da Wu Yu Code.The whole thing is so uncanny and sureal and seems destined to something greater than disaster and I do not have a word to describe what I mean.I am lost to explain what I believe truly that lies ahead.
I thought of the poem 'Death The Leveller' and Debt The Leveller' where all old money swims away to the oceans and those who are left just cling on to their clothes they wear.
Tull McAdoo
@Fiona Hand….. "There can be little question that the single currency has contributed to Ireland's woes. Unlike Greece or Portugal, the country wasn't looking to the euro to modernize a backward economy before it was introduced. The Celtic Tiger, as it was known, was doing great all by itself. Nor, like the Italians, was it attempting to swap a permanently weak currency for a stronger one. The Irish pound was doing just fine"
or so say's Matthew Lynn over at Bloomberg (link below to article).So what do you have to say to that me auld flower…..
Tull McAdoo
Sorry Jonh Allen that comment was for "ManoFiona" at the bottom of the next page, who by the by thinks we might be a little adolecent.Well all I can say is "I'm BRINGING HOME THE BALL" SO HA!!!!.
The single currency has nothing to do with the mess we are in, it is our corrupt political system that has us in the mess, the amount of credit flowing around could have been controlled easy but our government and backward thinking population where only too happy to pump the property bubble up and up, with 100 percent mortgages and all. The Irish people are the only ones to blame, anything that comes out of the US or the UK about the single currency is just the media trying to deflect the spotlight from there economic mess to our economic mess, simple. Iceland was not in the sigle currency and they have been wiped out in a similar fashion, Irish people always have to have someone or something to blame things on, the bottom line is we are the problem.
Agree with you about money and blowing up property bubbles, Paul, but only up to a point that we ourselves are entirely the problem. Only insofar as we continue to fall for the bulldust to which we have allowed the elite to indoctrinate us: i.e. "Justice demands that we have a duty to pay taxes for necessary public expenditures, including, of course, looking after our under-privileged."
Just try to capture publicly-generated land or mineral resource rents back for the public coffer, though – as was recently suggested here in Australia! "Shock!" "Horror!" "Scandal!" (Often from ignorant two-bob toffs, up to their necks in impossible mortgages.)
Seeking to corner the public's land rent has always been the covert game played by Privilege. It says It pays taxes on Its incomes and purchases, too, but every red cent (and then some) is clawed back by virtue (?) of the increased value of their landholdings. The middle class and the poor can't do this.
As Michael Hudson shows, and David has hinted, banks have joined in this game up to their armpits, realising that uncollected rent means higher land prices; means the banking system captures capitalised rent per medium of interest. Maybe banks privatising their obscene profits and socialising their losses is the very the definition of 'moral hazard'?
We're just ignorant, Paul: but they're bastards. Don't believe the class war is over until we can capture far greater land and resource rents for public revenue and less tax on our earned incomes.
Enjoying David and the conversations here, particularly as Ireland now is Australia's future, IMO, because we had an even bigger real estate bubble than you lot did.
The low interest rate regime of the Euro currency was the primary contributing factor towards the asset bubble. The government could not create the asset bubble, though benchmarking did create an environment where income levels in certain sectors were hiked above those in other competing countries in the single currency regime.
Low interest rate regimes cause asset bubbles more than any other factor.
We have corrupt politicians since the 1970s. All through the 80s and 90s there were corrupt politicians running Ireland, in one form or another – Dublin Corporation being the most corrupt of all. We have inept politicians for the same length of time at least.
Therefore incompetence in the political establishment was not a new factor which was introduced and created this problem. It existed before the binge era. Unfortunately, we are stuck with this now and it means that until we get a complete cleanout of the various political options, with better replacements, we are bunched.
The political establishment actually is really a rubber stamp for a range of policy demands by a collection of bodies, from the EU Commission, to the ECB, to IBEC and to ICTU. The influence of the government tends to be accentuated in certain areas, and is often an expression of lobbying behind the scenes by well connected, and well financed lobbyist organizations.
I disagree completely with your assertion that that "low interest rate regime of the Euro currency wast the primary contributing factor towards the asset bubble." IMO, it was the failure of government to respond to the low interest rate regime.
What consideration, if any, our Government (elected and appointed) gave to the issue raised for discussion by the 1999 IMF report on Ireland.( http://www.imf.org/external/pubs/ft/scr/1999/cr9987.pdf) "If the risks of overheating and a subsequent hard landing to a more sustainable rate of growth is a concern, what policy actions can be taken in the context of monetary union?"
IMO, the Press Release issued with recent NESC report "The Euro: An Irish Perspective" (http://www.nesc.ie/dynamic/docs/NESC_121_Euro.pdf) says it all "In the past decade, Ireland's approach to fiscal policy, prices, costs and financial regulation were not sufficiently adapted to the disciplines of a single currency."
As the Secretary General of the Government chairs NESC, this is tantamount to an admission by government that it was out of control, smug and lazy.
Consider this from the 1999 IMF Executive Board opinion on Ireland…
"In light of the rapid growth in credit and strong housing price increases, a number of Directors expressed concern about the risks of an asset price bubble and the potential vulnerability of the banking system. Directors stressed the need to enhance the forward-looking aspects of regulatory policy and, in this regard, welcomed the supervisory authorities' recent initiative to assess the financial system's vulnerability to specified macroeconomic shocks. They felt that a peer review, particularly by supervisors from a country that had undergone a real estate boom, might be helpful….."
(Source: http://www.imf.org/external/np/sec/pn/1999/pn9979.htm
What this peer review done?
Who/what group did it?
Was the report published?
If not, why not?
For years I have been under the impression that Irish government policy was to try to join a currency regime that had lower long term interest rates and control of inflation in order to provide cheaper finance to the internationally traded sectors of our economy, indigenous and FDI. This I understood to mean getting away from the exchange rate volatility associated with being tied to £Sterling.
Hence the decision to join the €uro and before that the ERM. But our government's response – in terms of fiscal policy etc – was to ignore all that and not use the means available to it to try to avert an asset price bubble funded by "cheap" €uro.
The 1999 IMF shows that we were warned. What is worse is that nothing appears to have been done to follow the IMF advice, as a precautionary principle.
It is not clear how well prepared government was for the complete loss of funding in the wholesale markets after the Lehman Bros collapse.
I totally disagree with you on this, if low interest rates where to blame for the asset bubble why are all the other states that use the euro not bankrupt as well, where are there massive property booms?. We had a boom up to 2001 without the euro (2002), then our bankers/politians thought it would be a great idea to give people multiplues of there salarys for mortgages. If people where only given max 5 times there salary (which is being done now) we would never got into this mess, house prices would have matched wages increases, this did not happen. I used to live with a bloke who got offered 270K, he earned 30K a year, now whats that got to do with interest rates, thats banking policy.
Its like saying that someone gets behind the wheel of a car and does 100 miles an hour in an 40 zone, hits someone and kills a person, there defence was "the car hit them not me", sorry mate, you where driving the car. We as a nation have massive corruption and this is the main issue, the euro could have been great for us, but we, (well not all of us) the stupid Paddy screwed it up due to his own greed.
There was an asset bubble in the other PIGIS.
So yes, there is a connection between low interest rates and asset bubbles. [ I am not defending the Kildare Street Circus]. The EU had a low interest policy. It created a masive housing bubble in Spain and Ireland.
Can you please explain the current predicament of Spain ? [yes, the Spanish government is also responsible - but the primary factor is the interest policy]. But interest rates in Spain dropped to a lower level than experienced in living memory and there was a housing bubble.
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