By Philip Pilkington, a writer and journalist based in Dublin, Ireland
Speaking with a senior figure in Fianna Fail (the party that were kicked out of government last year by the Irish people) earlier this week something dawned on me for perhaps the first time. Namely, that the leaders in Ireland might know exactly what the issues and the problems are in Europe but they remain completely powerless to solve them.
“We’re probably the most pro-European party in Ireland,” said a senior figure within Fianna Fail. “But there are major problems with the way European leaders are handling this crisis.”
Fianna Fail seem to broadly recognise that the cause of the current crisis is that the European Union does not have a properly functioning banking system. Specifically that the European Central Bank does not function in a capacity of being a so-called ‘lender of last resort’.
From what I could tell in saying this the senior figure meant that the ECB is not backstopping the sovereign debt of Eurozone governments. So, even though his terminology is off (as is most of the commentariat today) he is essentially correct.
The senior Fianna Failer also noted that the current attempts to write austerity into the constitution is “madness” and that any serious changes that take place in Europe need to be subject to referendum, otherwise the European leaders seriously risk alienating voters and turning them toward more Eurosceptic parties.
This all sounds very oppositional, but you can’t help but thinking that the rhetoric sounds almost identical to the sort of empowered self-delusions that those who are now in government nursed prior to their being elected. Would Fianna Fail really be able to make good on their sensible analysis if they were in the position that they had to walk into a room full of Eurocrats and expound on their ideas? My guess is: no.
The source took issue with Taoiseach Enda Kenny’s tendency to only meet with French and German officials, saying that we need to reach out to other European countries in order to build a base of solidarity. The source also took issue with the present government using Greece as a scapegoat to avoid dealing with more serious underlying issues.
“When the Taoiseach says “we’re not Greece” its not very helpful,” said the source. “The way the rest of Europe are treating Greece is wrong. What’s essentially happening is that cash transfers are being taken from the periphery (in the form of interest payments etc.) and being moved to the core — that is not what Europe is supposed to be about.”
Again, all this sounds good — when you’re talking off-record and not in power. But it doesn’t really mean much when the real world is considered.
One point that the source constantly danced around was that this might be a power-grab by the Germans pure and simple. He simply wouldn’t listen to that harrowing idea — because it might burst the bubble. You can be as reasonable and well-informed as you like, when you come up against raw force such virtues fly right out the window.
Ireland is in a truly hopeless position. Our leaders know what’s going on… to a point. But, having entered into political maturity with their European compatriots by their sides, they simply cannot see what many see so clearly: namely, that the political and institutional structures are currently breaking down in Europe due to a thirst that certain leaders within the union have for power.
Is it really a thirst for power? The way I see it Europe has the basic structural problem that the Euro is a foreign currency for every member. Some members, such as Germany, are on top now and thus in a position to influence things and they are using it, but not with the goal of either helping Greece or the zone they are instead, like the FED, pushing to help the banking class get their cash at all costs.
Here the power grab is less about Germany wanting to dominate for the sake of domination but them wanting to dominate so that their banks can get paid.
Yes exactly. And I believe many of the most vulnerable banks are state owned. The is a straight savers versus borrowing insolvency fight. Don’t over interpret it. I’ve seen the discussions on Der Spiegel, most Germans really don’t understand what is going on in the periphery. Wolfgang Münchau got it 100% right here
– but he gets almost no understanding from his fellow Germans.
That’s the line the FF adviser took with me. I don’t think that interpretation makes sense any more. The German economy is slipping into recession. They can no longer be said to be pursuing their economic interest. Something more nefarious is at work.
Just wondering about the vulnerability of German banks (many which are state owned) because of stg Michael Hudson said: That lenders went into Greece under color of international law and took over state owned enterprises to satisfy debt due. Maybe German banks are vulnerable to the same treatment. And with everyone essentially “defaulting” Germany has decided to save its own. This really needs to stop.
Whereas private banks and enterprises have the protection of bankruptcy and reorganization and at least 5 years to turn things around.
..succinctly noted, “C”..
from one who has lived there..and has relatives living there…
FACT: Ireland’s real PROBLEM revolves around 100% adherence to Ayn Rand
“free market should regulate itself” economics, while things went well…I can’t
see any circumstance whereby it is valid to give up “transparency, oversight, accountability” of government or economic dynamics…
weakening transparency, oversight, is in interest of profiteer$-monopolizers, colluding…
Lets remember that the US was united in its early days only due to external presures. The fissures in pre-bellum america were far greater than in Europe today. Andrew Jackson ran against central banking in a way that would make Ron Paul blush.
A think of beauty is often forged in great heat. I have hopes for Europe.
Europeanism being exploited by the parasites of Europe. How ironic.
Europeanists must kick out those who don’t want to share the pain and only look to their own selfish narrow interests, like Merkel or the UK.
The US needs to do the same. Will either succeed?
More shall be revealed.
what do you make of Gerry Adams and Sinn Fein? From the outside looking in it seems like the only party criticizing the austerity measures being taken. Just wondering how seriously Adams and the party as a whole are taken in Irish politics.
Thats Northern Ireland and Thats (by virtue of force)British property and a whole other ball of wax. PP, is a resident of the Irish Republic. Also i doubt your going to find much Ideological sympathy for any old school Sinn Fein big shot from Pilkington. If you read more about Adams and the politics surrounding his life and career, his noting that about Greece and the rest of the periphery is not only right and proper but consistent.
I wasn’t looking for “ideological sympathy” from Pilkington, just his opinion. Adams is currently a TD for Co Louth and one of 14 Sinn Fein members of the Dail Eireann. Only yesterday he commented on the economic situation:
As I said, I’m curious about how seriously he and Sinn Fein are taken. I’m not really interested in turning this into a discussion about Northern Ireland, the troubles, etc.
Adams is a TD for Louth in the Republic of Ireland – not the northern statelet.
Sinn Fein’s position has more to do with a nationalist focus and the loss of power to EU institutions. Of course this has an economic dimension but the actual economic implications are only, imo, beginning to have an affect on Sinn Fein’s pragmatic policy outlook. Yet, they do have a tendency to dither on certain issues when confronted by the austerity orthodox ideology now currently peddled across Europe. Again, just my opinion.
As for the main theme of the article, I’m sure that ‘naked power plays’ form at some substratum of the political dynamic, but I don’t think it’s so cut and dried. There is a very real global tendency by many strata of the intelligensia with some significant support from certain cohorts of the electorate which desire that nations be ruled by a so-called enlightened technical class that will ideally, somehow, be non political and neutral.
Good luck with that.
Sinn Fein are indeed a party in the Irish Republic. I’ve met quite a few of them, met with their economic people etc. They’re impractical, unoriginal and, from what I’ve seen, completely incapable of leadership. They like being in opposition because they can spout rhetoric and avoid real issues. If they were handed the levers of power they wouldn’t have a clue what to do with them.
Also, I suspect that the younger members of the party together with most of their advisers are Marxists.
I’ve met several dozen of their people, including people who form their economic policy. On that score, they are making some progress. Their budget proposals have been critised on political grounds but generally accepted as coherent by even their fiercest opponents. I detect more than a slight political bias in your assertions.
As for being Marxists, wherefor do you draw such a nonsensical conclusion? Their biggest problem, and it’s a problem for any Western political formation that tries to develop an economic program that in not solely business oriented, is that they have a strong pro-business base (mostly localised businesses) whilst having a rhetorical social democratic platform.
I’m somewhat surprised that you roll out such analytical nonsense when your more mainstream analysis is at least insightful and debate worthy.
Then, again, noting coming out of Ireland should surprise me anymore. The place has just become surreal.
In the last election Sinn Fein was the second party of Ireland, ahead of Fianna Fail. It will be decades before Fianna Fail comes back from their baffonery.
“The way the rest of Europe are treating Greece is wrong. What’s essentially happening is that cash transfers are being taken from the periphery (in the form of interest payments etc.) and being moved to the core — that is not what Europe is supposed to be about.”
Thats the way Europe has operated since before alphabets
Well, no. The Romans and then the Roman Church shifted a great deal of wealth from north to south.
Wasn’t the North a periperhy in Roman times? And wasn’t Rome the Center-In-The-South to which Northern wealth was shifted? From the periphery to the center?
Just a second.
When did Germany (or France, or the UK, or the US) hold a gun to Ireland’s head and force it to allow its people and banks to go stark raving mad in a lend-and-borrow-and-spend consumption boom that blew its banking system to the Moon? Who forced anyone to join the EZ to begin with? When was the German public informed that the reason for it to be in the EZ was to fund a riot of bad lending in the periphery? How did peoples who had never been wealthy, or well-off, or for far too many, even well, suddenly come to believe they had hit a global jackpot that did not exist, and could not POSSIBLY support that level of debt? Why is it not the responsibility of the educated public in every debt-drowned country to AT LEAST demonstrably hold their own elites accountable first, and THEN go looking for someone higher up the chain to tangle with? And why on earth are we to suppose Irish, or Greek, or other political elites that are scared stiff to oppose the German face of the giant global banks are made of superior stuff as compared to a German political elite that is every bit as frightened by our soon-to-get-out-the-whip Mr. Market? (You can book an upcoming correction of as much as 20% (likely less), but one which at no time is even close to out of control – the real thumping comes after the final rounds of global “easing” sputter and die a can-roll down the road having achieved only further distortions finally destroying the credibility of the policy response of NOT dealing decisively with the financial mob from the get-go).
Greece should’ve dealt with its own miscreants and defaulted. Ditto Ireland. And others. They should still do so. The German public, which is no more at fault in this than the people of New Zealand, is already screwed for trillions. The best thing this moment for Germans themselves would be to deal with THEIR elite’s treachery and cowardice, leave the EZ, and tell the US-centred banking mafia at Head Office to eat it. And the American people should go down to Wall Street and Washington, and deliver the message from people everywhere….
But it’s far easier to just say “It’s those f-ng Germans” or “Those Teutonic idiots just can not understand the essential funkiness of Anglo-American musical chair money”. Better to leave all OUR lizards in place, play their game for them, and create as “anti-” a pan-European peoples’ solidarity atmosphere as possible.
You nailed it
Why should the government step in to rescue the batshit reckless Irish banks? There was no obligation to do so. The head of the central bank (who was on an important EU committee) basically sold out his country. Even the IMF wanted the Irish government to repudiate the bank debt. (Yours truly posted on this, if I didn’t need to turn in, I’d track down the links). It was out maneuvered.
Get on top of the facts before resorting to prejudice.
The Irish politicians – mainly Fianna Fail gangsters – were in cahoots with the banks and property developers. The only people surprised that Zanu FF sold the country down the swanny are the brain dead gombeens that voted for them all these years.
I find this comment puzzling, to say the least.
1) I cannot see how it is even remotely possible to take from my post that I was in favor of the Irish or anyone else bailing out those darling entities we all know and love – the banks. But to be clear, I’ve been against the public anywhere being put on the hook for the doings of criminal financial elites ever since the Third World Debt Crisis of the early ’80’s (20 years of insane violence and pain for already badly oppressed former colonies with the IMF manning the Rack).
2) I have no idea what you mean by “prejudice”. The only “prejudices” I might detect in my post I wear proudly: I have an abiding bias in favor of human decency, amelioration of suffering, a commitment to the common good, the best that we can be and infinite respect for all Life with whom we share this planet. I take a rather dim view of those whose only goal is to amass wealth, status, position or power, private or public, to serve their own narrow interests without a care for anyone else or the planet as a whole. I also have a distinct distaste for the sort of hypocrisy that provides cover for all those who benefit greatly from the current arrangements but refuse to acknowledge that they do so nor have any positive duty to take action to rectify utterly grotesque levels of injustice. Unfortunately, that encompasses a rather sizable percentage of our “best”.
3) While I would not trust anything coming out of the IMF for public consumption as far as I can sweat, I am pleased to hear the IMF advised Ireland to repudiate its debt after the Irish banks were duly bailed. Very Christian of the US (40) and UK (105) who hold nearly 150 billion euros vs the 82 billion euros owed Germany – wait, the UK also owes Ireland roughly the same. So, that’s wonderful the US was willing to forgo 40 billion euros (couch change) for ole St. Pat. Has the IMF extended the same degree of understanding/support to any other distressed EZ sovereign? How is the privatizing coming along?
Argentina paid its creditors 35 cents on the dollar. Greece is paying 25 cents.
Ireland can unilaterally declare that it will pay 15 cents on the dollar.
Yes, please do get the facts, Yves, and don’t just retweet that defamatory and untrue old chestnut. Anyone with knowledge of the matter knows that the Central Bank Governor had nothing to do with the bullying tactics of the ECB which has made paying the senior bondholders a condition of the bailout funds.
Those banks of Irish name were German and British owned, essentially. If the Republic of Ireland would have let them collapse and only guaranteed smaller deposits (all of which is just normal, within the law and within reasonable expectations about the role of states in the capitalist system), then the problem would be of the owners/speculators in the City and Frankfurt and not that of the Irish People.
But the Irish politicians were induced (how? bribed? blackmailed?) to make an awful and radically unfair deal for Ireland and now the Irish People is expected to pay for the holes of German and British speculator/capitalists/banksters.
C’mon! There’s no fairness in all that at all. It’s just a scam induced by core Europe’s legal mafiosi. And it’s not too different in essence (although it is in form) to what has been poured on Greece: indebted to (mostly) French banks to pay for military purchases to France as well, all conveniently hidden by the same Goldman Sachs whose men run the show at European and global scale today.
All those politicians and banksters should go to jail for decades or even for life. But they live luxury lives while the peoples they rule over suffer their excesses and mismanagement and then come some like you, Fiver, and spit on them, and insult them and blame them for all.
Their only blame is naivety and sheepishly subservience to the status quo, having faith in a system that is obviously only meant to suck their blood.
“Those banks of Irish name were German and British owned, essentially. If the Republic of Ireland would have let them collapse…”
Hypo Real Estate, the German bank that was entangled in the Irish mess, was bailed out by the GERMAN taxpayer to the tune of 102 billion Euros.
The Irish bailed out Allied Irish Bank, Bank of Ireland and Anglo Irish Bank. All Irish banks.
These are the facts as far as I know it. If you have different facts, please provide links.
“The Irish bailed out Allied Irish Bank, Bank of Ireland and Anglo Irish Bank. All Irish banks”.
I’m talking of who were the stockholders of those “Irish” banks before nationalization (without the necessary preliminary bankruptcy process, i.e. nationalization of all loses). Most were not Irish as far as I know but British and German essentially.
In any case states should never bail out banks: they should collapse naturally and let the stockholders and lenders take the hit of their speculative risks. It’s absolutely immoral and impractical and socio-economically suicidal to transfer private loses to the public budget and make the citizens pay for it.
“I’m talking of who were the stockholders of those “Irish” banks before nationalization […] Most were not Irish as far as I know but British and German essentially.”
And I’m supposed to take your word for it? So far I found nothing that would suggest that these banks were the subsidiaries of foreign banks. In fact, they appear to be Irish banks that are themselves invested in and own foreign banks.
One “Irish” bank that was owned by a German bank was Depfa Bank, which was owned by Hypo Real Estate. Depfa used to be a German bank but moved headquarters to Ireland for tax reasons in 2002. HRE, along with its subsidiary Depfa, was bailed out not by the Irish but by the German tax payer.
So far I have seen no evidence whatsoever that the three nationalized Irish banks were owned predominantly by German or British banks. I think you’re making stuff up just because it fits into your narrative.
I may be wrong: after checking I may be confusing the issue of Depfa. Anglo Irish former major owner, Sean Quinn, is technically Irish.
It is unimportant because there is absolutely no reason why the Irish People as a whole should take the burden of these failed private investments.
It is precisely my point that peoples everywhere have been screwed blue by THEIR OWN “best and brightest” in collusion with those B & B thugs all up the chain.
It not only cost all these countries everything they lost (and will lose)in terms of assets, but also at least a decade’s worth of having NOT made the sorts of investment and other choices that might’ve provided an alternative to this insane global race to the bottom. I see no path forward that is good for all of us that does not include serious changes in our material consumption-driven lifestyles, but by no means does that mean deprivation. Cripes, whenever I see these tracts of enormous homes with all the bells and whistles outside and in, for 2 adults with maybe a kid or 2, I am simply freaked at the outlandishly wasteful nature of our social displays of status.
Coming from you, that makes me mad. Do you deliberately misread everything I say?
What I did was assert that far, far too many intelligent, capable, “responsible” people, the people who comprise perhaps the top 30% of the income-earning population, went all in on a bogus fantasy being peddled by other people, their own and foreign, whose credibility in terms of looking out for the individual or pubic interest of Ireland, or Greece, or Italy or Spain or America was approximately zero. Those who with some thought would’ve and could’ve said “No Thanks. This just looks too good to be true.” didn’t bother to give it 5 minutes because the keys to Fantasy Island were dangled in front of their noses. For THOSE people, the ones who had both personal cause to be wary and a positive obligation in terms of providing leadership within their own societies, I indeed have a bone to pick. They participated fully in the RUIN of their countries by failing to use all the considerable advantages both nature and society had bestowed on them. Please note this phenomenon is widespread throughout the developed democracies.
The various peoples still face essentially the same choices – capitulate to those who have NO INTEREST whatever in their nations’ peoples’ well-being, or accept the responsibility that goes with being the most capable of their brethren and pursue the only possible route by which each people individually and together can throw off both their internal and external chains of debt and subservience – to finally rise to take on that Beast that is global financial/corporatist/military power.
I told you the other day this was going to be a long, tough struggle for Greece no matter what path is chosen, and that if you wanted that path to be one of independence, justice, decency and pursuit of the common weal, it was paramount that people be told the truth – ALL of it, including how badly “WE” dropped the ball. The world is headed for a future that will consider maximum mass-consumption economies insane. We need not be poor, or in any way at all deprived of full, rewarding lives and well-being. But we have to say “No thanks” each and every time some sleazy elite slick says “Just listen to me, and we’ll all be rich” in a world where billions count themselves lucky to have made it through another day at all.
I agree, well said. This summer will not be pretty because a lot of us ‘get it’ now, but the corporatist state has got it’s riot police and domestic military in place to deploy, e.g., watch Chicago G8. Rahmbo showing he knows his masters and peers.
Thank you, sir.
Maybe the US Federal Government should have forced bank bailouts to be undertaken at a state-level? What do you think, Fiver?
What’s more, maybe the US should stop federally spending EVERYTHING. Maybe they should force states to fund all their social spending themselves — military spending included. What do you think? How long do you think it would last?
Believe it or not, Mississippi, New Mexico, and West Virginia have run deficits with the federal government averaging 12-13% of state GDP over the past 20 years. If they were independent countries they have racked up debt/GDP ratios of 250%. And people say the Greeks are spendthrifts – they only got to 150%!
Well, that’s the point of the whole arguement. Those three dirt poor American states are the beneficiaries of a transfer of wealth within the U.S. My wife and I personally benefitted from some of that after Hurricane Katrina. Some expenses are not forseeable. Some politys are not large enough to accumulate sufficient funds to insure against those unpleasant surprises. Thus a socio-political ‘economy of scale’ comes into play. To cover some disasters, very large scales of association and organization are required. One small impoverished U.S. state isn’t going to have the resources to deal with even a middling disaster. A large United States does.
I would suggest that the idea of a United Europe is feasable. What is lacking at present is a unified vision, and a unified system to carry it out.
Mr. Pilkington is giving us evidence, anecdotal I agree, but good sound evidence nonetheless, that the ‘movers and shakers’ within one small European state are waking up to the problem confronting them. How they deal with the situation will determine the fate of the Pan European experiment.
One small impoverished U.S. state isn’t going to have the resources to deal with even a middling disaster. A large United States does. ambrit
Good point but why are those states chronically impoverished? If Japan can be prosperous with no natural resources then why not Mississippi?
The interesting thing is that even within a single country with a common language and completely free movement of people and capital fiscal imbalances seem to persist indefinitely. Despite long-term federal subsidy, Mississippi is never likely to become truly competitive with Connecticut. Nor should it have to be to get highway funding, decent schools, disaster assistance etc. But that’s the medicine that Greece has to swallow. No more assistance until they magically find the ability to pay their own way.
Re. j.grmwd: I suggest that Europe hasn’t taken the last step into total integration. As commented upon above, there is no European Central Bank, (or perhaps more corectly, EuroFed,) to act as ‘lender of last resort.’ In the U.S., at least the individual states have Federal level organizations to resort to in times of local crisis. Despite all the rhetoric of ‘self reliance’ and ‘austere state budgets’ being thrown around today, any resort to true ‘you’re on your own’ thinking by the Feseral Government would be an admission that the Confederate States have finally won the “War Between The States.” Talk about your “Southern Strategy!”
If I were conspirationally minded, I would almost suspect that the ‘Austerity Drive’ being pushed upon the Greeks was designed to drive them out of the EuroZone. That would leave a ‘leaner and meaner’ core Europe, without all those pesky ‘different thinking’ small countries. And also, without such a great requirement for transfers of wealth from the core nations to the less well off perhipheries.
To repeat, if Austerian Economics was to be meaningfully applied in the United States, the end result would be some sort of dissolution of the present Federal System. I don’t know about you, but I don’t hold out much hope for the success of a new Articles of Confederation.
I must admit I don’t think there is any total integration option for Europe. A common currency area should share a common culture and language so that workers have the option of moving to where there are better job opportunities and so that fiscal redistribution doesn’t become a political issue. That’s just not the case in Europe.
Why not get to the crux of the molded biscuit. End the Fed.
Kant said:”It always remains a scandal of philosophy and universal human reason that the existence of things outside us … should have to be assumed merely on faith, and that if it occurs to anyone to doubt it, we should be unable to answer him with a satisfactory proof.”
We nwver should have bailed out the banks, and the Europeans shouldn’t either. This is the “categorical imperitive”
I was against any of these bailouts except insofar as vital bank functions be continued while the magnitude of the mess was sorted out, with the people responsible held accountable and the dead assets written off. What we saw instead was nothing so much as a rotating, serial rape of the public interest – moving from on to another country, back, forth, crisi, bailout, crisis, here’s the keys to power, crisis, he’s my first-born…etc.
As for your dragging the States and the Federal Government into this, I see no relationship whatever to the discussion. Still, I’ve nothing against Federal efforts of all a manner and description – so long as they’re conducted with the eye on the public interest, not a collection of parasites.
Our, to put it terser:
Irish went on a decade-long housing bubble fueled lend-and-spend binge:
“We’re the Celtic tiger! Hear us roar!”
Then, when the party is over and it’s time to pay the piper:
“It’s a nefarious German power-grab!”
Ridiculous. I was calling the housing bubble years ago. The Europeans facilitated it and talked the country up at the time.
Enough of this crass moralising.
Oh, so the Europeans made you do it?
Let me give you a dose of reality, Sir:
In the real world, nations still have to EARN their prosperity. Enjoying a standard of living that has been artificially increased by reckless borrowing does NOT make your entitled to that standard of living and it certainly does not obligate the Germans or “the Europeans” to pay your way.
You have been a net recipient of EU money for decades, paid for by those German devils and other European non-deadbeats,
and in return you know blame them for your consumption orgy. “Oh, but the money! It was so cheap! How could we have resisted?”.
The gist of your narrative seems to be that the Irish are the innocent victims of a German power grab. Crass moralizing indeed. I’m really beginning to get a wee bit frustrated by the “Ze Germans did it!” canard.
That ‘reckless borrowing’ was sanctioned by the EU. It was implied in their SGP growth models.
So that’s your story, basically: you were dragged kicking and screaming by the “Europeans” into loading up on debt, private as well as state, so that the Germans could assume power over your little Island.
Get a bigger tinfoil hat.
Do you understand how sectoral balances work?
We kept the budget in surplus in line with the SGP. This led to massive private sector leveraging. The Europeans championed this model.
Read a book. Seriously.
Enjoying a standard of living that has been artificially increased by reckless borrowing does NOT make your entitled to that standard of living … Kiste
To a large extent the Irish created their own higher standard of living. Real goods and services were produced with Irish labor and skills. And now should those goods and services decay because the lifeblood of an economy – money – be in short supply?
No. The Germans are not at fault either. The money system is at fault.
You had to blow up a housing bubble because the Europeans/Germans forced you to not deficit spend so much on a state level?
The element of personal choice and responsibility does not even figure into your version of events?
We conformed with the European model. I disagreed with that model. But we followed it and that’s that.
This has nothing to do with morals. Only narrow-minded fools speak in such terms. This has to do with policy. EU policy was bad. We followed it. Now we have to fix the problems that it caused. We need to fix these problems at an EU level. But some of our brothers prefer to cause trouble by jockeying for power…
Oh, that, the “real world”. The world where those with the political upper hand are free from all kinds of responsibility, most notably lenders’ responsibility. The world where those who made a horrifically bad bet can be swiftly bailed out with fantasy money, all the weight of which gets dumped on some local people somewhere, such as the Irish. They are “obligated” to do that, right? Only in your twisted Calvinist world.
Why do people like you just never stop describing lending as if it was some sort of a charity?
We are talking about a country which Jean-Claude Trichet praised to trumpet his pet theory of the “death of Keynesianism”. The Irish case is even more obscene than the Greek one for that reason.
This has nothing to do with morals. Only narrow-minded fools speak in such terms. PP
Careful with that brush! It’s a bit broad.
The definition of a fool is someone who refuses to learn. But at some point one has to reach some conclusions too, especially in the realm of morality.
Actually, assuming you’re American let’s compare debt burdens, shall we:
Oh look! Almost identical. Come on so, stop making excuses. Pay up…
It’s not the USA that has problems funding their deficit. It’s Ireland. So what’s your point again?
Because Ireland is stuck in a dysfunctional currency union. We could fund our deficit if the central bank backed it (as happens in the US). But the Germans won’t allow this to happen because they’re jockeying for power.
Catch up. Please.
Let’s see if I understand you correctly:
Ireland could fund its deficit if you ECB lent you money? As much as you want, I assume?
The same “solution” would then, presumably, also apply to Greece, Spain, Portugal and Italy, yes?
At what point does a lender of last resort become a lender of permanent resort?
“Ireland could fund its deficit if you ECB lent you money? As much as you want, I assume?”
No. I didn’t say that. Have you actually read up on this at all? You seem hopelessly ill-informed.
If the ECB announced that they were backstopping debt (as happens in most currency unions) the markets would do the heavy lifting and buy up this debt. The yields would fall and solvency would no longer be an issue.
Read a paper or something. Jeez…
I wonder what policy you’d suggest for making West Virginia pay its way in the Union?
It’s that simple? Just announce that the ECB will backstop the debt of Ireland, Greece, Spain, Italy, Portugal and the problem would be solved?
And the reason why this supposed silver bullet is not used is because the Germans are jockeying for power?
Woah! It looks like Kiste just caught up with the debate. Welcome to 2012.
Excuse me if I remain skeptical. Sounds like bullshit to me.
Well, let’s hear your critique Kiste. Come on. See if you can articulate yourself without resorting to silly moral language about ‘responsibility’.
Why won’t the backstop lead markets to buy 100% guaranteed debt?
If the backstop will — and even Merkel has admitted it will — why aren’t the ECB doing it?
Did Mario Draghi hint that he might do it when he became president of the ECB and was he told to shut up by the Germans?
If so, why are the Germans doing this? It’s clearly hurting their economy because their exports are falling off.
Do enlighten us, Kiste…
Why insist on putting a moral spin on what inevitably happens within every common currency zone, including the USA. Regional fiscal imbalances lead to fiscal transfers from surplus to deficit regions. On a per capita basis the citizens of states like West Virginia receive far more than the citizens of Ireland ever got from the EU.
“If so, why are the Germans doing this? It’s clearly hurting their economy because their exports are falling off.”
The Germans are doing this not because they want to lord it over some island on the periphery. They’re doing because it would blur the lines between fiscal policy and monetary policy while doing fuck all with regard to addressing the core problem of unsustainable debt and lack of competitiveness. In fact, the moral hazard introduced by a ECB backstop (more cheap monies!) seems to be counterproductive in the long run.
I don’t get that impression at all. That would mean that the German leaders are truly as thick as bricks.
Kiste you are clueless, drop it and learn the facts before you enter a discussion.
All that crapp happens all the time internally in between nations and no one makes a big fuzz of it, ask yourself why… the current eurosystem was predicted to fail 2 or 3 decades ago by the people who knows how “the real world” you claim works.
And I’m tired of creditors high moral-ground about how righteous they are and how everybody should be enslaved to pay their foulness however they can. In this La-La land no one can default but no one can backstop the problem using sovereign monetary policy, how in the hell this is supposed to work?
Answer: it won’t no matter how long you spin the moral card but the world just doesn’t work that way. So one cna only assume that the other party trying to force the situation is either: imbecile (hard to believe) or has ulterior motives (most probable).
I’m not making any “moral” arguments. What I’m saying is this:
If a credit bubble has inflated a nations standard of living (wages, social services) artificially for more than a decade, while the country is essentially non-competitive, then this artificially increased standard of living must come down again because it’s simply not sustainable and often the very reason for today’s non-competitiveness.
This is not a moral arguments, it’s a statement of facts and no amount of kicking and screaming and whining and blaming the Germans will change that.
The affected countries have 2 options:
– harsh austerity and cutting wages
– default, leave the Euro and inflate their own currency
Both options ultimately yield the same result: the people end up much poorer. One of these options must ultimately be the end result.
Asking the Core to assume the risk for the uncompetitive periphery countries (which is what it ultimately boils down to, no matter what kind of Eurobond/ECB backstop/ECB monetization wizardry is the current fad of the month among the Anglo “experts”) will NOT change this inevitable outcome.
To assume that the Core will agree to this without any stings attached is utterly naive. No creditor writes blank checks.
“Both options ultimately yield the same result: the people end up much poorer.”
Nope. You’re just wrong there. Inflating the currency leaves people only a *little* poorer. Why? Partly because inflation hits the rich harder than austerity, and hits the poor less hard than austerity.
The whole EU should simply inflate the Euro, which would solve most of the problems in the Eurozone. But the ECB won’t do it *because it’s controlled by very rich people*.
“Pay up…” Philip P
“No problem! Here, let’s just transfer your savings to your checking account. Done!”
“Kiste you are clueless, drop it and learn the facts before you enter a discussion.”
Oh, “facts” like the Germans having ulterior motives, which you can’t really specify or elaborate on? If that’s what passes as a “fact” on NakedCapitalism these days…
So it’s fine and dandy to load national balance sheet with bank paper and not let, never ever, have writedowns, nor quit the euro, not anything except ‘paying the debts’ to stabilize the financial system at the expense of the real economy.
BTW Ireland has a trade surplus, so much for ‘competitiveness’ and ‘leaving beyond your means’ bullshit; but don’t worry, a couple of years of capital destruction trying to sustain the parasitical zombi financial sector at all means and Ireland will be in a worse shape and ‘uncompetitive’ just like what is happening to Greece.
What you really have is an over-leveraged system and a lot of creditors (Irish or German, does it matter?) interested in not moving forward and reducing leverage because they would be wiped out, something that is virtually impossible.
The point is that there is no way out of “the Greek” problem “the Irish” problem or “the Portuguese” problem. The only solution that does not imply the economic destruction of the deficit states – see Greece – is through a wholesale reform of the euro system. At a guess there few senior European politicians who fail to understand this. Most of those who do not understand seem to be in Berlin. Equally there are few who can see how the necessary reforms could be implemented, not least because gaining the support of the European electorates appears to be such a daunting problem.
The Fianna Failer senior did not address another fundamental problem in Europe which is the lack of fiscal harmonization which is another distortion that deliverately creates current account as well as other imbalances in the Eurozone. Ireland has its own way to get advantage of these kind of distortions.
Perhaps Ireland should have replaced the proverbial “R” in its name for reform through austerity to a “C” for capitulate into bankruptcy or total debt relief, like Iceland.
Greeces will eventually anyways, after they are sucked dry by the vampires. How do you like your torture, slow and agonizing till death, or quick painful, but overwith?
Please Ireland. See what is really happening. Iceland is much better off now. Greece, not so much.
someone should do a study contrasting Ireland’s actions in picking up the bank debt by the government and Iceland not doing so
GNP before and after debacle
governmeent debt – ditto
% debt to GNP public / private
private bank equity / debt before / after
future “free” (of debt payments) national income to the citizens over next twenty years
foreign exchange reserves before and after
etc – other metrics relevant
while im sure they are not directly comparable – for everything – the study would show the value of a referendum (direct democracy) and the value of representative democracy – or the lack thereof
Yes, someone should do it. But they won’t (or won’t get publicized) because it’s evident that Iceland, who did the right thing (but was at the brink of doing as Ireland), works more or less, while Ireland is bound to be an economic disaster for a decade or more only to pay the private debts they should have never assumed.
That a country is suicided by their political leadership that way, just because of foreign pressure, should amount to high treason.
Ireland, Greece, Iceland, Argentina, and even Russia should be compared along the lines suggested by Damian. In 2 words, it comes down to energy-sufficiency and exportables.
Yes, it all comes down to the importance of net international trade flows, and the demand for currency in the exterior (and how strong can be the internal finance system be backed up by that currency) or exterior financial capital investment.
But in any case adjustment settles one way or an other and things get better usually faster if you ‘wipe out’ the situation. Anything else is kicking the can of an unsustainable situation, that’s all we see in Europe nowadays, can kicking infinite and making the problems bigger with meaningless non-solutions.
The problem is not the “leaders”, it is the people who keep electing the Failers on all sides. There is no German powergrab – German politicians are unable to see anything happening beyond the borders outside the context of their next upcoming election, and German voters are unable to understand that they are not better – and, soon, no better off – than the “fellow” Europeans they are deriding.
Ireland is in a truly hopeless situation because, when it mattered, the voters didn’t stand up for themselves, they voted. That was not inevitable – Iceland demonstrated it. Iceland might still fail, but unlike Ireland the people there at least hat the gumption to try.
Doesn’t matter if they knew. They should have NEVER caved in to TROIKA demands that the Irish people guarantee foreign, private, liars loans made in Ireland. Capitalism & contract law are based on the premise of investment at risk. Without that, all lending becomes predatory. Until Ireland & all Europeans repudiate that, the predatory bank-cat is out of the bag, and literally everything looks downhill.
You’re just re-learning hard lessons your grandparents learned, and your parents forget (or weren’t taught), and that your ancestors learned/forgot REPEATEDLY throughout the last 500 years (at least!).
Gotta save bankers from themselves, and your citizens along the way.
Ireland: DEFAULT!!! Totally!! All this blather
The more nefarious thing going on here is kleptocracy. It isn’t Greece vs. Germany or Ireland vs. Germany or even the periphery vs. the core. It is the kleptocrats vs. everyone else.
What was being described in Ireland is the same dynamic we find in the US. The choice is between corporatist Republicans serving the kleptocracy and corporatist Democrats serving the kleptocracy. Differences between them are all atmospherics. In Ireland the choice is between the party, now out of power, who sold the Irish out, and the party, now in power, who is currently selling them out.
All the talk of reaching out to other European countries is a dodge. Note how the source from Fianna Fail doesn’t say what the party would do using Ireland’s powers as a sovereign state, which as we have seen even with tiny Iceland, are considerable.
As I so often say, what politicians know is beside the point. It is what they should have known. If the Irish political class is still dinking around this late in the game acting as though they are powerless and don’t have the tools to address the crisis, while with the example of Iceland before them, the commentary and analysis of sites like this one available to them, and, of course, it being an integral part of their f*cking job to know this stuff, then they can only be acting in bad faith.
It seems to me that part of the problem is that too many citizen-peons harbor one or another version of the “central bank to the rescue” fantasy, instead of running out into the streets, banging their pots and pans, yelling “ice the mother eff-ers!”
A little knowledge can be a dangerous thing.
Fed envy. China envy. What’s next?
People will tolerate a lot of pain and suffering before they’ll start the French Revolution.
Our idiot leaders seem intent on making things bad enough that people WILL start the French Revolution, however.
Occupy is just a warning sign — a “shape up now or things will get much much worse”.
Yes, exactly Hugh.
The currency union design is the creature of the EU financial elites, the most powerful of which probably reside in Germany but it’s hardly relevant.
It was always about neutering the power of individual countries’ governments, and placing the power of the ECB & largest financial players even further beyond the reach of democracy.
At every turn, the interests of the major creditors have been sacrosanct, and that applies to the latest Greek ‘bailout’ too.
What incentive is there for any of the major parties to actually challenge this? Far easier to just go along with it & keep collecting the salary & pension. There is no serious alternative offered to voters with any chance of gaining power. FF, FG & Labour all know that.
There’s a perception problem. Nobody can see that the export surplus Germany gleans from Euro member countries is actually a fiscal transfer draining money out of those countries. The EU is a Union in name only.
Absolutely, Schofield: that is the real problem. It has taken us more than a decade to realize (because of the bubble mostly) and I wonder how long it will take us to solve this problem (presumably by kicking Germany out).
All three major parties FF/FG and Labour are essentially the same party in revolving governments.They are all pro EU and they all supported the overthrowing of the peoples decisions in the first Nice and Lisbon referendums when we voted no to further integration and EU government.
The Euro and the EU are failures as is the Irish political and legal establishment.
What is needed now is pragmatism and an Ireland first policy.
Vigorous nationalism is where we need to go.No doubt the eurofascists will be brandishing meinkampf and hysterically denouncing such aspirations but unfortunately as with everything else they have taken control of they are completely wrong.
Ireland now has to have a ‘revolution’ and replace its government to abrogate the obligations that government made wrt paying bank debt to banks and the EU.
No particularly big deal. Iceland replaced its Constitution after their debt crisis, on the basis that things were seriously out of adjustment in relations between the gov and the people.
There is no need for the new state to assume ALL of the obligations of the old.
I believe most of the governments of the world are now illegitimate by the measure of ‘public trust and support’. Germany is much better than most, it seems to me from the outside.
Here in the US, the illegitimacy is more fundamental at both state and national levels : legislatures do not represent their constituents and they ignore their Constitutions.
Let’s hate Germany, yeah!!! And we’re fighting for freedom, you know?
Feels good, doesn’t it?
Iceland. Preferable to the road your on Mr. Pilkington. No?