Is Ireland’s Number Up?

Constantin Gurdgiev and I offer different views on Ireland’s capacity to avoid default in today’s Irish Examiner.  Articles here.    The articles follow an introductory piece by the paper’s political reporter, Mary Regan.

209 replies on “Is Ireland’s Number Up?”

I suspect we will see a greater amount of IMF involvement than there was with Greece. Those guys with crewcuts must think the Europeans are amateurs.

I wonder when the announcement will come? 2-4 weeks? Sooner?

According to the BBC: Irish officials have not denied they are in talks about accessing the EFSF but instead say “it makes no sense”.

I believe this is what is known in legal circles as the Chewbacca defence.

@ John

You are becoming, right or wrong, more and more important to the future of our economy every day. The other side to the doomsday scenario needs to be explained, and you seem to be the only ‘independent’ economist willing to do this . Thank you, as always.

The key statement for me in the article is Constantin’s statement that if we expect high enough growth to avoid default there will have to be “structural reforms of the economy (not just budget cuts)”, so what are these structural reforms that must happen for growth? Public sector reform: shared services, easier redeployment and renegotiation of employment contracts -hours/wages, default transparency – all accounts and minutes to be published unless there is good reason to not to do so, lower the high wages at the top of the public sector, temporarily stop increments to pay and get rid of bank time for cashing checks that people don’t need to cash. Taxation reform: water and some form of land/property tax. Oireachtas reform: half list system, reduced Seanad, financial oversight committee, end of whip system. Help me out here, what else? What structural reforms are needed if we are to get the growth we need to get avoid default. Will the four year plan contain these structural reforms?

Economists differ. Does the the patient live or die?.
A now elderly woman that I knew responded to her son who suggested borrowing more money back in 1970s.

“No one ever got out of debt by getting further into it”.

This woman was not schooled in economics or finance but had the responsibility of running a farm. She is still alive.
Clearly her son’s generation did not listen.
I wonder what her advice would be now.


Good question. NCB’s Brain Devine recent note is very interesting in this regard. He assumes 1 percent GDP growth for 2011, and an average of just 1.7 percent out to 2014. This compares to 1.75 and 2.7 percent in the the DoF’s recent projections, and also well below the recent QEC. Brain’s calculations show that these conservative (?) rates would be sufficient to stabilise the debt to GDP ratio if we can meet the deficit reduciton targets. I know you pessimistic on growth, but these rates seem achievable for an economy coming out of a deep recession — notwithstanding the headwinds that we face.

Brian’s note can be downloaded here:

@Eoin & Holbrook

You are very kind. But it you keep saying things like that I will have to stop 🙂

I actually don’t see such a huge gulf between the two positions; differences yes. What are the key ones/
As KO’R has spotted, a big difference is around the growth consequences of 6bn cuts. JohnMcH thinks that they will be significanltly less adverse than does Constantine G. Put another way, one economist is much more optimistic than the other about growth, given the budget. Call this a model-based difference: each economis either has a different model of the irish economy.
Another difference is the budget itself. John’s position is, essentially, that if the polictical system can do what it has never done before, shows no sign of doing right now, we can deliver a bond-friendly budget. This is about the special pleading and parish-pump stuff that characterises the way we behave. John seems to think that this is all about to magically disappear. Constantine is saying ‘good luck with that’. Call this a difference in perceptions of reality.
Finally, there is the point picked up by Holbrook, above: structural reform. I suspect that the bond market will only start behaving if we do. And that means structural reform, something that I think has been talked about since before the British left.

John McHale seems to be of the opinion that our bond rates will come down to acceptable levels if we persevere with the 6bn budget and 4 year plan…but that has been out and about for the last few weeks and our interest rates have soared, the only time they have taken a backward step was friday when all the serious talk of an imminent bailout began. so i dont see how anything other than guaranteed borrowings from the bailout fund will help bring irish bond rates down. that seems to be the message from the markets whether we like it or not.


thanks for picking up on the structural reform theme – Constantin reckons we won’t succeed without it and I believe him. This must form the guts of the four year plan, reforming the country for growth, getting better value for our taxes, making the public sector more productive, business and consumer friendly. Making politics work – getting rid of the whip system, introduce list voting, strengthen a slimmed down local government that is made accountable to the electorate. Here’s a page on a side project wiki on the four year plan – feel free to chip in ideas/contribute if you like,

Excellent piece of op/ed!
Rare these days.

However, how relevant is the question in terms of choice of action?

The solution for our situation is political, which makes the problem potentially even worse.

At the core of this is the debate that isnt happening in Ireland on Governance. To what ends through what means?

Listening to the candidates in the Donegal election last week each tell how they would use Govt to improve their constituents interests lowered my optimism, as they still havent got that they are the problem.

We have each party in a system that only looks after the parties telling the people how they can take money off them, invest and spend it wisely and the citizen will have benefited, but the reality is diminishing returns.

All the parties play the same game of Gombeenism!!
There is a need for an articulation of an anti gombeen political ideology be it on the coal face with a political ideology or at least in the declaration of political ideals.

In saying this, it is hard to imagine the Irish population voting for the candidate that says they are for a Govt that does less for the citizen, and by doing less more will be achieved…

@John McHale

How much growth is needed to bring unemployment down to sustainable levels? Without a dramatic fall in unemployment a great deal of private debt will swamp any recovery. A low growth rate may replace the natural wastage each year in the labour market but it will hardly make a dent in the figures as they stand. And facing up to corporate debt is still to be done. On top of all this, the property market has not bottomed out. I just don’t see how the government can trade its way out the miasma it has dumped the economy into.

The Doomsday scenario is based on the assessment that Ireland can’t get out of the hole by itself. And that is debatable. And if the markets don’t believe it there won’t be any fresh debt. But I think it is still to play for.

Dr Gurdgiev assumes the EU will do nothing. This is key to his whole argument.

Now this article by highly respected PIMCO bondwalla Mohamed El Erian is very interesting. His point is that EU policy to date isn’t enough.

“So far, Europe’s response has consisted of two elements: peripheral countries (and particularly Greece and Ireland) embarking on ambitious austerity programmes; and, simultaneously, these countries receiving external funding through access to the ECB’s balance sheet and, in the case of Greece, loans from the European Union and the International Monetary Fund. But the lesson of numerous crises in emerging economies show that this approach simply kicks the can down the road. It does not deal with the basic problems: the overhang of debt (an acute problem for Greece and Ireland in particular) and poor competitiveness. ”

Austerity alone isn’t enough. And in fairness the Irish government has been doing what it has been told for the last 18 months.

So more is required. Now this isn’t just an Irish problem. I was reading the chat on FT Alphaville on Thursday and there was lots of talk of an Irish collapse as infecting stronger Euro economies.

It seems as though the Germans got spooked by Thursday. So something seems to have changed.

Bush’s biography is out this week and it goes in detail into the whole mess around the TARP which was strongly against most of what remained as the principles of his Republican party (and probably ultimately lost a lot of centrist Republican votes to the Tea Party) but was central to saving the US economy in 2008.

I think the EU is facing a similar TARP moment and the price of inaction is the fall of the Euro.

So “gile mear” in the form of the EU to ride to some sort of rescue but not solely for the sake of Ireland.

@John McHale
As hoganmahew says I think the most appropriate measure for the Irish economy.

How do you see the GGD/GNP ration developing over the next 5 years including all banking related costs?

Merkel and Schauble now coming to a painful realization …..the system has to be reset. When it is, “reset’ mortgages are going to have to be reset too. How?

The only way the system can be reset is for the losses of banks….mortgage losses, to be transferred to the ECB who will (must) inflate the problem away by printing Euro’s. The only bank that can print Euro’s is the ECB. Ireland needs 100bn up to 2013 but the people of Ireland don’t have a hundred billion or 1 billion to spare. The ECB are buying both our government and bank bonds but the delivery mechanism is still not working as it should. The money is being lent at rates too high and the Euro itself is too strong and needs to be devalued. The Piigs cannot devalue but the ECB can by loosening monetary policy still further. The Germans dread this because they know it can go badly wrong, leading to higher interest rates and inflation, the last thing that the EU needs at the moment. However, a balance must be struck otherwise sovereign default will occur, and if this happens before the EU’s ducks and drakes are in place the Euro will fall. This is Irelands trump card and it must be played as soon as we get rid of the current administration and replace it with genuinely new politicians. That means no Gilmore no Enda.

Ireland’s banking system is still insolvent but the pockets of the ECB and EU are deep and as long as “the Germans” still believe in the Euro we will be alright, but not without accessing EU emergency funding. This funding must come with serious strings attached (Croke Park must go) otherwise the idiots and profligate fools who have led us here will not only be rescued they will be “rewarded”, that is an outcome that neither suits the people of this country or the EU.

In other words, our crisis continues to be more political than economic. The EU can throw more money at us but unless we change our political system and reign in our union savants and our highest in the world public sector salaries, it will continue to be squandered and “there is the rub” this crisis has the potential to rock our world and spin our calamity into something seismic. Even the bold Morgan Kelly was quiet about the state of his own over generous remuneration package and of course other academics were hardly going to remind him of that.

I say debt forgiveness…. Anyone paying six years or longer on a loan needs to be given a clean slate.

@Robert Browne

great post, this has always been about Europe from day one, and you are right generous remuneration, especially at the higher end of the public sector must end, the public sector must become lean and productive and so too must the political system. this crisis still has the potential to reform Ireland for the better and set us up for the next century of Ireland’s development.

If the commenters on this blog were a representative sample of voters, there would be no problem. The discussion about reform could be had and it could be enacted.

If the commenters on this blog were represesntative of TDs, either incumbent or sortly to be, then there would be a reasonable likelyhood that the political debate could be steered onto this topic and the electorate, after quite a lot of hard work and patient oratory, persuaded that it has to happen.

I think there is little chance of more than half the TDs REALLY believing (within say 6 months) that fundamental reform has to happen. I think it is currently no more than 10% of them – some of the rest might pay lip service to it because it has to be said, but the thinly veiled hidden agenda throughout the land is always talk the talk but grab what you can.

As for the populace, I think it could take a while – possibly as long as a generation for them to cop on. Don’t forget that Ireland has had wind at its back for many decades with EC money, then the 90’s boom, the Euro-inappropriately-low-rates boom, the capital and immigrants boom. Most people literally have no clue about macro economics, and don’t want to either. For them, their experience has conditioned them – probably subconsciously – to regard the current situation as a blip, maybe even a super-blip. It isn’t, it’s tidal.

People in Ireland still can’t see that there is anything wrong with being among Eurpope’s highest paid – and that includes quite a few university employees. It used to be the case that that craziness was answered by “so? We have Europe’s most successful economy, so why not – what makes you think we’re not 20 – 50% better at what we do than the British or the Germans?” That was a mirage but nobody will give up the spoils – just look at the refusal even among politicians never mind public sector workers, to accept that the Croke Park agreement was for another scenario that is not going to occur.

Prices are sticky going down. That applies to perks , working practices and salaries – everybody is going to hold out, make a big noise, put people on the streets to make sure someone else gets clobbered (ergo the economically weakest and society’s most vulnerable) We are talking about a country where everything the government wants to do has to be negotiated, and culturally, IMHO criticism is often equated to abuse.

You will have politicians, even the front benches of whom are woeful, trying to change half a century of economic culture among an electorate who won’t want to know.

@ john. given that the market price of irish debt has collapsed over the last 4 weeks in the absence of any new information i think its important that we have reasoned and objective pieces like this out there.

the speculative and smart international crowd are now experts on the ”insolvent” ireland. the large tail risk in the banks balance sheets is not a new ”fact” to anybody who has even a basic understanding of mortage and commercial debt in an economy facing the current issues ireland is facing. yet we now have californian hedge funds on cnbc quoting the yield on 10 year irish debt as proof that the ”game is up for ireland”. morgan kellys piece was easily the most talked about op ed in an irish newspaper amoung the international finance set ever. advanced economies are not built to operate at elevated levels of soverign risk. the longer they stay at these levels , the greater the risk to rational investment and consumption. the current dynamics in ireland (negative sentiment driving higher risk spreads driving further negative sentiment) are now at risk of resulting in a path dependency of increasing the risk of further negative outcomes. a banking system that cannot lend rationally, a private sector that cannot invest with confidence and a consumer that will put saving ahead of normal consumption could end up with a worse case outcome in the end. we are not helping ourselves here. many seem to wallow in the vortex of negative international market pessimism. we dont see the 10yr portugese bond yield quoted on portugese tv every night. we dont see spanish economists laying out the possible but not probable risk in the spanish banking system (u think we have mortage and CRE risk? the one trilion of assets in the spanish banking system currently have reserves or cumulative write downs of less than 4%) i agree with john that with a bit of luck our debt load and trajectory is sustainable. i also think the use of a muti-lateral bailout is not binary. what matters is a stabilisation and lowering of funding costs in the economy for both the state and the banks, thru self help or external help.

@ owen – i’d also agree with owen that a bailout could look very different for an ireland than a greece. we could be out of it within 2 years and given the central focus in europe on cutting the contagion risk of ireland playing out over months , we could get a package that keeps our flexibilty in industrial policy on FDI.

I think you underestimate people’s understanding of the required changes, it just has to be presented to them by politicians who can communicate a process of how we get from A to B. How we must become competitive, innovative. Irish businesses have poor online presence, let’s fix that we retraining people in online skills. The public sector needs to be reformed – some significant people are saying that if Croke Park doesn’t deliver soon it will have to be superseded by something else, the govt will have to give up on partnership and start putting in place the required reforms. Political reform has to become a serious issue in the next election. Make changes, shake it up, less TDs, no more whip system, greater transparency from all departments. Time limits for by-elections, genuine discussion of FF/FG amalgamation as the centre right party, so much to do!

What a tragedy and it might have been avoided had the government never given the bank guarantee . . . which had the effect of putting all the people of Ireland on the hook for the debts of all the speculators and their fellow travelers. Its disappointing that the Irish intellectual economic horsepower was not up to the task of guiding the country through the morass. With hindsight, anyone with a glimmer of sense should know that you never take the word of a banker or a builder. Ireland Inc. got sold a bill of goods and now the price is being paid. The tragic think is that FF is still hanging onto power with brutal arrogance. The SOB’s that caused this should be paraded in public in sack cloth, because its the vulnerable in Ireland that will pay the heaviest price to sort this mess out.

@ Michael NJ USA
FF will get their kicking soon, you are focusing on the tragedy in the past, the real question is how do we reform and work things so this doesn’t happen again? the planning act was a good start, some movement on bankruptcy laws, that’s good, more community orders instead of prison time, that’s good, redundancies in clerical and admin roles in the HSE (although i still retain the right to be sceptical and will only believe it when i see it)… what should the next government do, that’s the question?

Mary Regan made a false analogy.

If you consider Ireland as a household, and knock off a few zeroes this is its problem. It is earning an annual salary of €35,000 but spending €55,000 a year.

If Ireland is a household one child blew €35 billion, and a parent (govt) stood in to pay that back. The bottom line for the household is the Current Account, not the fiscal deficit. The parent now tells another child it will give it money to scrap his old car.

Its because the government doesn’t understand the relevance of the Current Account (especially as its taking on private sector debt) that we get ridiculous policies like the car scrappage scheme.

@Holbrook you are correct.

However I do think that those that contributed to this need to be held to account. A lot of Irish people made money out of this, legislation needs to be enacted to go after these speculative windfalls and if need be assets need to be seized. This is not unreasonable, and whatever gets brought in can go against the cost of this bailout.

Structurally the economy needs to change and Ireland needs to start making stuff, the Irish balance sheet while benefiting from foreign investment has the falsehood of foreign investment in that the contribution is marginal against the contribution to the economy that comes from real indigenous growth.

Ireland has a balance of payments surplus but it not worth a damn because ultimately it exists because of taxation sleight of hand and the profits are not organically Irish.

The Ireland I see has very few national industrial champions, al lot of the traditional ones seem to all have gone out of business or are no longer Irish , instance Waterford Glass, Youghal Carpets, Guinness, Irish Biscuits. The Guinness we get here in the US is imported from Canada, and Jacobs biscuits come from England.

Ireland has to change and dramatically. And dare I say it, a good start would be to give Irish emigrants the vote, I think the emigrant experience would be positive in that we would not unquestioningly drink the Irish political lemonade.

@ Rory O’Farrell

I am not sure what you mean. The current account as I understand it relates to balance of payments exports/imports. Ireland has a positive current account, albeit full of falsehoods relating to foreign investment and with the high level of external debt interest payments. The fiscal account being the one relating to government expenditures. I think the fiscal account is the one that needs to be address first. . .am I wrong?

@Michael NJ USA

Yes, give first generation emigrants the vote, good idea – absentee ballots for emigrants – excellent – i reckon it should be included in any party’s next manifesto.

the new irish companies are or could be in software, agri-business, clean technologies, waste management, mobile technologies and applications, online gaming, educational software, tourism, food, drink, pharmaceuticals, medical devices, building materials, airlines, high level support staff, multilingual support staff, lots of potential to grow industries if we get education and business policy right. we need to up our skills and start selling to europe and the world while building a fair, stable society.

‘so i dont see how anything other than guaranteed borrowings from the bailout fund will help bring irish bond rates down. that seems to be the message from the markets whether we like it or not.’

The difficulty with that is Greece got 120b and their bond rates in the secondary market continued at around 11.5 despite the bailout. If we get three year money at a reasonable rate there is no guarantee our yields will tighten significantly.

\Dr. Gurdgiev recently posited that an appropriate rate for Irish 10yr based on an IMF study (I think, from memory). was 9%.

The other problem is if we get 3 year money then when we have to repay/refinance it will be with the new variety bonds which will be subject to haircuts (when Angela gets her way). God only knows how the dreaded markets will react- it is likely they will be a lot more expensive.

@Michael NJ
Good point. To be honest we do revolution behind our rulers backs. They know we’re badmouthing them and in this country that’s all that really matters. That is how we communicate.
To be honest though there were 2 stages to this crisis. The first boom period really could not have been predicted (imagine you’re in government – the people think you’re great, the markets think you;re great and the other Europeans think you’re great – very hard to stop!). The later steering the country into depression was much more avoidable.
Our government still sees itself as an agent of some foreign power (doesn’t care which one really). During the boom it used the international commentators in the markets as it’s reference point – during the bust it used the same reference points but added the European Commission.
We lack a little confidence in running this country. We are not good at using our own populace as the reference point of our own performance.
It will be good for us to be taken over by the Eurocrats for a while. If the terms are good enough we can pick ourselves back up and fight another day. If the terms are bad then we’ll end up leaving the Euro as we exemplify the fundamental discordance at the heart of the European experiment.
Any interest rate on the EFSF at over 4% and it’ll be the second option.

Current Bond rates , EFSF Bailout speculation ………are all secondary to the fact that most of the debts that are crippling this country were not the debts of this country to begin with.

The only Bailout already in place is the bailout of EU Bondholders by the Irish People and if let continue as is , spells economic wipeout.

Yes, Ireland needs to get its budgetary position in order but with a reduced bank debt on the sovereign balance sheet , options on budget reform and economic stimulus increase significantly.

Without speculating on their motives

FF transferred enormous debts of Anglos Bondholders onto the Sovereign state of Ireland and made the potential losses of Euro Investors , the permanent debts of the Irish People.
Without any say in the matter, Irish people are now expected to take the enormous financial pain , make the sacrifice and pay every last cent so that the Euro Investors don’t lose a cent from their dealings with Anglo.

Therein lies the problem folks, any new Government needs to represent the People of Ireland and in so far as is legally and politically possible renegotiate this absurdity.

As it is now clear however, that Irish People simply cannot afford to pay it without turning Ireland into an economic quagmire for the foreseeable future.

In the event that Europe insists on a continuance of the Anglo Bondholder bailout. We would be better off saying enough is enough to Europe, transfer as much of this debt as possible back to its rightful owners , significantly reducing the amount of debt on our balance sheet and talking to the IMF

Ireland is behaving like it has no grounds for negotiation when no other developed country in history has ever agreed to such a huge bailout of foreign private investors. For the sake of this Country Its time we strike a better bargain

Is Ireland’s Number up? – looks like it if the latest from Bloomberg is accurate-

‘Germany is pressing Ireland to seek aid before a Nov. 16 meeting of European finance ministers to calm market volatility and win agreement on making investors help pay for future bailouts, a German government official said.

Unless investor concerns about an Irish default are allayed, Chancellor Angela Merkel’s plan to require investors to take write-offs in sovereign rescues as part of a crisis- resolution mechanism to take effect in 2013 will be jeopardized, said the official, who declined to be identified because the talks are private.’

Dr. Merkel is hell bent on transferring the risk back to bondholders so can Ireland realistically resist. I think not.

@ CP

Thinking this out, if the german plan goes ahead then Bond buyers will have to factor in the risk of future bailouts, which will be an extra cost.
How can the euro periphal at risk countries then afford this debt?
This action is not in our interest!

Kind of depressing report.

Figure are frightening -including NAMA, they see a peak debt:GDP of 134.2% (in 2012) with a figure at end of 2014 of 130.6%.

So in 2013 when we have to refinance any bailout money our debt GDP ratio will be about 132%. Wonder what the new Merkelbonds will cost.

Our posts crossed. I am of the same view.
Looks like the new regime could be twin track Euro Sovereign bonds.

@ CP

It looks like a more formalised punishment than the current one….
Some sort of economic appartheid.

It concerns me that our current leadership might not have the frame of mind to distinguish between the national interest and the supra-national. And they will continue their euro sponsored ultra marathon depleting our resources while been cheered on along the side lines by our Euro partners.

Prof Honohans statement to the Dail committee during the week seems to have been the only streak on independent thought in this whole mess….

@Mickey Hickey

Ta. Great article. Calculated Risk today draws similar conclusions:

My guess is if Ireland accepts aid, then Ireland’s bonds will rally (and the yield will fall sharply) – however this will probably lead to a “buyers strike” for Portugal’s bonds. And then Portugal will have to ask for aid. Then Spain and / or Italy would be next in line … and I think that is the real concern.

“the speculative and smart international crowd are now experts on the ”insolvent” ireland”

Ireland has spun itself internationally as economically quite right wing, low tax rates etc. It got a pavlovian response for a long time and, since Iriish assets are generally a tiny part of portfolios, escaped scrutiny. That scrutiny really began a couple of months ago and a lot of investors are quite surprised at the reality. Suggest not to take too much notice of CNBC’s US output.

“John McHale seems to be of the opinion that our bond rates will come down to acceptable levels if we persevere with the 6bn budget and 4 year plan…but that has been out and about for the last few weeks and our interest rates have soared, the only time they have taken a backward step was friday when all the serious talk of an imminent bailout began”

Think it was also the removal of perceived threat that bailout access might be conditional on resheduling of the bonds – hence the disproportionate markdown of the shorter end. The boys in the green jerseys out there a the mo are thinking to themselves – now hold on lads, if that was the main reason spreads came in on Friday, sure, can’t we se if we can get away with it.

Merkel’s backpeddalling might lead them to think bond dealers will be able to go back to the status quo ante – betting on the likelyhood of a default on each of the terms of gilts out there before each of them matures, instead of on the chances of an early, bailout induced default.

They might think that if Monday sees yields go down, then that game might be on again and long-fingering out to next March might allow a fortuitous upturn in global GDP to take the pressure off. What Irish government Minister wouldn’t want to take that gamble rather than go cap in hand to a bunch of socialist foreigners. A gamble would make a nice change.

Making no sense indeed! Very useful for driving down the Euro, though!

Ireland is a useful foil for this purpose. Consistent with that, there will be no “rescue” for months! The EZ seem to be sending messages about Ireland with a purpose or else they are incompetent. I doubt the latter.

This is just a show, albeit disconcerting for the natives. Stupidity it seems has consequences beyond the obvious. Or was it all intended? It also takes attention away from Greece, Port and Spain. So, all in all a good thing!

@John et al.

Focusing purely on the economics and not the political considerations for the moment I have some observations and questions on the NCB forecasts. On a recent “Teach Yourself Debt Dynamics the Easy Way!” exercise I came across this article on the Greek debt crisis, which contains the following condition for debt stabilization

π ≥ λ(r-g)

where π is the primary balance as a fraction of GDP, λ is the ratio of debt to GDP, r the interest rate and g the growth rate. The λ term means that the primary surplus required to stabilize the debt/GDP ratio is a function of the initial debt load itself (i.e. for the same growth and interest rates it is easier to stabilize the debt if you start at a debt ratio of 20% rather than 120%, which seems intuitive). The formula used in the NCB report does not contain the λ term. Given that the NCB foresee debt ratios around 114% this omission does not make a huge difference (i.e the multiplier is 1.14), but it would seem important and starts becoming more significant if the debt ratio gets higher, and indicates the importance of tackling the problem sooner rather than later. While I have no doubt that there are many complex formulas in use, my question for the economists here is what is the most appropriate/common formula to use for debt stabilization (for the class of ‘simple’ formulas) – the NCB one, the one above, or something else?

John wrote:

Brain’s calculations show that these conservative (?) rates would be sufficient to stabilise the debt to GDP ratio if we can meet the deficit reduciton targets.

It seemed to me that the NCB calculations showed that the debt to GDP ratio would not in fact be stabilized by 2014, but that some further consolidation would be necessary. More specifically that a primary surplus of 2.9% would be needed for stabilization, while a primary surplus of 2.0% was expected (with interest rate of 6.9% and growth rate of 4.0%). Overall some of the numbers in the text did not seem to match the numbers in the tables so I may have misinterpreted something – it would have been easier for the reader and more informative to present all the data in table format as in the article above.

Overall the IMF forecasts I have seen predict both lower interest rates and higher growth than the NCB report, so they are more optimistic. However based on the NCB numbers it looks as if the primary balance will have to go from about -€15.5bn this year to +€3.5bn in 2014. This is a larger ‘adjustment’ in actual government spending on the economy than the €15bn commonly talked about. So is the true adjustment needed actually closer to €19bn because a greater proportion of future government revenues will be taken up by interest payments?


I would love to be able to agree with you, and while I belive as you, that Irelands position to borrow more (a mistake, but!) what has been proposed as a four year austerity plan is unlikely to come about and even if it did would not be sufficient.

The economy will continue to shrink. Morgan Kelly appears to have gotten the unemployment figures wrong, but that is easily explained. He never thought that the banks would be kept going, to reduce the amount of money in circulation, for so long, without cutting costs by shedding surplus staff. It seems that these staff have been kept on by subsidy of money from the public purse, one that will soon end. Unemployment will stabilise but then increase, despite emigration of the best educated. As this is a depression, they are unlikely to return as they will have two decades of exile in which to put down roots, if they are lucky.

Much of the pain could have been lessened by an appreciation of just how badly things are going to get. Then the banks could have been abandoned and land values would have rapidly become “competitive”. But magical thinking is so seductive for the weak of mind. So easy to hope and make the hope into an argument that can beguile those who are unable to think for themselves. Instead, only a fool would buy land now or until all the NAMA land is dumped. That process will be slowed down as bad news is anathema to those afflicted with magical thinking. The chaos will last for decades, of itself a massive disincentive to deploy capital productively, while land awaits a true market value. The bust will overshoot and the worse overshoot will occur if the resolution is delayed, as capital will move elsewhere and be committed. The speed of resolution clearly has an impact on recovery. But magical thinking is so beguiling? Heroin use will increase too!

The strong of mind will do well eventually, while those who refuse to face the facts of the easy credit binge slowly lose their minds. Accidental deaths/suicides will increase and the longer it goes on, the more will die.

Change lifestyles now. Form co-ops and create networks. Time will seem to pass more slowly as there will be less to do while decisions are postponed.

Selecting decision makers might be a good idea? Current “leaders” are of the type who got Ireland into this mess and do not have the ability to understand how bad it is. Even if they did, their first instinct is to look after themselves. Shrinking government is overdue. Those suited to hard times can be found, but someone has to look!!!!!! Oh dear, this one will run and run!

The title of the piece is very loose!

Allegory and analogy is the refuge of those who do not know how to express the true situation.

What are the consequences? No one will lend, except at rates of over 10% or so. In a deflationary spiral that would be still worth borrowing, as the lender clearly would be going out of business soon!

If all external funds are shut off then the task for politicians is clear? Taxation is a way of reducing the pay of all public servants, retired and serving!!!

Taxes! TAXES!!!!! Lots of taxes and soon! NOW!!!!!


That Telegraph article actually makes sense to me. The fact that this view is plausible shows why yields have shot up since Merkel’s announcement. They are only making it up as they go along; never figured out how to change from old rules to new rules; and are now trying to backtrack (e.g. Lagarde – “There are many, many ways to address this point of principle”) and keep everybody happy, which is not possible.

Just imagine the international acclaim if we turn things around?

Massive taxes for a few years and rueful smiles all round?

Getting to grips with our own resources in the ground and under the sea and making Ireland wealthier than ever?

Written in 2001! Ireland successfully ignored many, many warnings. The type of mind that dismisses warnings?

The danger for Ireland is a demogogue like Shinawatra! There are parallels with certain “businessmen” in Ireland. Promises along the lines of Thaksins “verified” by O’Mahoney and others will get them elected. But then what? How can that be prevented from happening?

Can’t see how we can go on without default/restructure/haircuts otherwise this just becomes an exercise in keeping investors/Eurobanks in clover while killing off Ireland and its people (and whoever is next on the list… Portugal? Spain even?).

I wonder if Germany does force us to go asking for help, whether the real cost of the bank bailout here will then come out.

@ Alchemist

How much growth is needed to bring unemployment down to sustainable levels?

Growth forecasts beyond 2011 are simply guesses at this time.

Who can credibly say what growth will be in the US, Eurozone and UK in 2012 or in succeeding years?

The US Conference Board, which has a former Dutch economics professor as it chief economist, said this week that the global economy will grow at 4.4% from 2010-2020, about 0.7 of a percentage point faster than 2000-2010 and 0.3 of a percentage point faster than 2000-2008. Advanced/ developed economies will account for less than 1% percentage point of global growth from 2010-2020, while 3.4% percentage points will come from emerging economies.

However, while we cannot reliably forecast growth, there is enough of experience from the overexcitement about green shoots in the spring of 2009 that recovery will be a slog for at least 2-3 years more.

As for Ireland, dependent as it is on US FDI, there isn’t a significant engine of growth, despite rising exports.

This is why a jobs strategy which is devoid of delusion and spin is urgently needed as is structural reform.

Why does the latter evoke so little apparent interest, including from academics?

IMF says Ireland can ‘manage’ its financial crisis well; Can we avoid the Fund’s embrace?

@ Drumroe

I say debt forgiveness…. Anyone paying six years or longer on a loan needs to be given a clean slate.

This is either a joke or you believe in the tooth fairy!

@Michael NJ USA

Our trade balance is in surplus (and has been for a long time). However the Current Account measures the trade balance plus other regular items like money leaving the country to pay an interest bill, or repatriated profits.

Its because we have so many multinationals that we have to run very fast just to stay still. Despite a close to €10bn quarterly trade surplus we still have a Current Account deficit because we have to pay over €10bn on interest, repatriated profits and so on.

This is important as the Current Account measures the total amount the nation as a whole is borrowing. It’s always important, but its even more so as the government has guaranteed the banks. In my view when assessing policy options the government should assess how they will impact on the Current Account so they don’t make false claims like the car scrappage scheme is boosting the economy and self financing.

@John McHale,

One can only applaud the eloquence and conviction of your plea to the powers-that-be and other opinion formers to screw their courage to the sticking place, but I fear that Ireland has become the tip of the battering ram being used by bond investors to force clarity and certainty from the political forces in the EU led by Chancellor Merkel. Sadly, for its own safety – and for the safety of others – Ireland needs to be taken into protective custody. Unfortunately, the EFSF, as currently structured, offers only safety, but no real prospect of redemption, rehabilitation and release. Devising something more useful than the package imposed on Greece may be causing delay.


Good point on the unemployment.
The first step would be to relook at existing ps employment and the savings there would generate how many jobs?
Wrong side of an election for that to happen..

Good morning,

I would like to offer a few, may be somewhat provocative thoughts from the standpoint of an observer.

It seems to me that we developed a string of dependencies that shaped policies in certain ways. Some call it lobbyism, others call it rigged markets or outright fraud.

‘The Markets’ want this, ‘The Markets’ want that, but who the Heck are these markets? Are they the new Pol Pot, a new religion, something out of area 5 or are ‘they’ simply an excuse for political agendas forced upon nations?

Most of you fine people here have access to data and knowledge of analytic tools to engage in endless discussions on models and predictions. I do not wish to make any of those model predictions, but rather offer an observation from the events that already unfolded.

If I am not mistaken, and I plug a number from memory for the sake of an argument, today the entire global financial market is round about USD 200 trillion, of which USD 120 trillion are traded debts.

I would like to go back to 2006/2007, before the so called crisis happened, which I am more inclined to call ‘the perfect crime’, or simply, a heist!

In 2006 global financial assets were at roughly $167 trillion. In 1990 it was $43 trillion.

From 2006 to 2007 alone, the global markets grew another $29 tln to $196 tln. This includes both, private and government debts, deposits and equities.

Yesterday a quick press headline noted that Angela Merkel plans to loosen the tights on weapon system deals, making it easier for the manufacturers to sell their ‘goods’ on the global markets. Germany, already being number three in dealing weapons, as our Greek friends will happily confirm will boost exports with this move even further. Undoubtedly, the lobby of arms manufacturers is strong.

The G20 jabber in Seoul produced no big surprise, traditionally they come forward with luke warm fish mac, claiming to serve a 5 star dinner. Same counts for the so called Basel installments, they simply do not fit the bill.

Conveniently, Joseph Ackermann of Deutsche Bank was asked to be the special advisor to the G20 meeting.

I would think anyone should be forgiven if he concludes that the world is run by a clique of Banksters/Investors and compliant politicians and to an extend there is some truth in it.

To not burn bondholders, this has turned into a religious like dogma, and is preached in Ireland by the officials since day one, hence it is only fair to conclude, that they do not represent the interest of the Irish people, but those of bondholders.

A few months ago, Fintan O’Tool made some remarks, and if I recall this correct, he saw us slipping back into a state of feudalism, Lords and Vassals. I do not think he was far of the mark with that idea.

While Germany has low unemployment figures, the reality is that they implemented a second labor market, a slave labor market that allows them to keep unemployed of the statistics. According to a lengthy analysis by the confederation of trade unions, over 90% of people who hit this second labor market never made it back to the first. 1-Euro jobs and other fascinating obscenities are high on the agenda of Irish Ministers to do what they do best, copy and paste policies from other countries.

The debt driven financial markets are based on one paradigm only, growth! As long as there is growth, debts are no problem, on the contrary, they are the means to create more wealth from nothing, but the equation does not work anymore, with declining energy resources and a generally flawed system that is based on exponential growth assuming sustainability at the same time, it comes to no surprise that it collapses.

While protectionism is gaining strength and a trade/currency war drives the system further down the drain, there are some winners, very wealthy winners how made gains beyond our wildest dreams, I would say incomprehensible gains for most of the average citizens. Follow the money certainly helps to better understand this, but it offers no solution to the problem.

What I miss in all those discussion is a strong advocacy for a truly radical reform movement on a global scale. Governments are blackmailed with ‘the total collapse’ by market makers and white collar criminals who’s interests are well protected by hawkish law firms around the globe. They abused the system to the maximum intend and got away with it. – Was this the perfect crime? I think so!-

In Ireland, as a small example, no radical shift towards a reform movement is emerging, whereby this reform movement would throw over board the nepotic cancer that has this small country in it’s grip since decades. While some people in the economics department are somewhat outspoken, and I really appreciate their cojones on these matters, there is not strong movement on the horizon that allow for some hope towards a paradigm shift. The country is paralysed by constant propaganda wars driven by comical Leni and his FF Mischpoke. The political opposition in this country literally does not exist.

May be after Kilkenomics, some people come forward and step up to the plate, and as things stand in Ireland, I’d rather give my vote to a comedian than any of the existing politicians, at least they provide a healthy laugh.

Without the people of this country standing up for themselves, we will allow Ireland to be turned into a slave labor market in no time at all.

Best wishes

How about a thread entitled?: Is America’s number up?

There are more grounds for a thread with that title than this one.

US debt figures are given in their debt clock, available below.

This is a brilliant idea. I suggest that a similar one be set up for Ireland.

Then we could compare.

Some comparisons:

The US debt clock gives figures for both the the total US national debt and debt per capita. They are:

US National Debt: $13,722,565,947,169 (a few minutes ago)

US National Debt per capita: $44,166

As Ireland doesn’t have a debt clock, I use the figures given by Gurgdiev in the Irish Examiner article. He doesn’t give a per capita figure, but easily calculated:

Irish National Debt: 91,276,000,000 euros according to Gurgdiev

divide by 4,470,000 (Ireland’s current population) gives:

Irish National Debt per capita: 20,420 euros

The exchange rate has varied recently from around 1 euro = $1.30 to $1.40.

Let’s say 1 euro = $1.35.

That gives:

Irish National Debt per capita in dollars: $27,567

So, bottom line:

US National Debt per capita in dollars: $44,166
Irish National Debt per capita in dollars: $27,567

Surely, this can’t possibly be true? I must have calculated wrong. I must have left a few zeroes off the Ireland figure somewhere along the line. I will go back abd redo my calculations and come up with a figure that, even if not more statistically correct, is at least more politically correct. If anyone can assist me by pointing out where I went wrong in my calculations, I’d be most grateful.

Poor ole USA. Now if only they could persuade the rest of the world to give them cash in exchange for, oh I dunno, pictures of dead presidents or something like that.


I do not think you are mistaken but you fail to see the reality behind the stats i.e. one is a superpower – the other is a backwater dependent on FDI from said superpower (and others).

As a non economist, I wonder since long…. why is it not possible to disembowel the forces at play by a simple move?

It is all nothing but bits and bytes in computer systems. Reboot, cancel global debts, fuck the system of debt and start from scratch.

You have carved out a brilliant, if not terribly lucrative, career, in painting statistical landscapes. But few of your paintings will sell for very much; they don’t even pass the ‘so what?’ test.
So the US has more debt per capita than Ireland. So what? The other statistical landscape, which does not suit your narrative, is that the US could easily borrow a trillion dollars tomorrow, should it so wish, from global debt markets, at an interest rate well below 3%. Ireland could not borrow a cent at any price. Now, JtO, you will undoubtedly see a Marxist/D4/Unionist conspiracy in this. But it is the way the world is. Get over it.


“As for the populace, I think it could take a while – possibly as long as a generation for them to cop on”

I’m not so sure. GAA followers are already talking aboutn how many county players are going to emigrate. The Pope’s Children are in deep negative equity. Everyone knows a builder who is out of work.

If things get really bad you could see a switch like the 1918 election where the Irish Parliamentary party got wiped out.

When FF loses the election there needs to be a concerted effort to blacken the name of FF economics management. It may need crucifixes and garlic. Donal O’Mahony could lead it. Get the FT alphaville crowd around to the idea. So FF = disaster in the minds of investors.

Using the NCB figures, I make it that GDP will be, in 2014, 170,620 million.
National debt of 130.4% = debt of 222,829 million
Population (at growth rate of 2.1%) near enough to 5 million.
Debt per capita: 44,565…

Which bit about looking forward do you object to?
You are happy to talk about export growth, but not debt growth?

If the current track we are on will result in us going bust, do you not think we should change track?

You seem to very good at the stats. So you are probably correct. The difference is that in the final analysis the US can tell its creditors to take a hike and survive. Ireland can’t.

To all
As the budget €6 billion does not seem to have improved bond rates, would €10 billion or for that matter €20 billion?

As both authors have pointed out, it seems to be a lack of belief that our political system is capable of implementing a solution that is the central problem. There are solutions. It is the inability to focus on them and implement them that is in serious doubt.

This is amazing. They want to give us a bailout. This is Brian Cowens last chance to redeem himself. If he turns this down or cannot negotiate it properly it will be his ultimate act of folly.
For the love of God man cop on. Take the bailout and if you get it at 4% it will be the most masterful political stroke executed by anybody ever!


Was it the same taxi driver who told you all that about the borrowing?


But few of your paintings will sell for very much.

JTO again:

I don’t need to sell paintings. I sell maps, or at least software to generate maps. And very lucrative it is. Much better than paintings. I’m off to Chicago this week to sell a few more and rake in some more lovely lolly for my old age. While there, I shall sympathise with them on the size of their national debt. What do you sell, just out of interest?

@Michael Hennigan.

Thank you for posting the link to the Irish debt clock. I wasn’t aware of it. I didn’t realise we were that far advanced technologically. Was it Finfacts set it up? If so, congratulations.

However, please inform the people who set the clock up that their figures are wrong and to politically correct them when they get time. They must be wrong because they are almost identical to mine. What more proof of their wrongness is needed? And they also say that their figures include NAMA, which can’t possibly be correct because, as we all know, NAMA has totally bankrupt us, and not left us with a per capita debt about 40 per cent less than that in the US


“But Ireland is experiencing by far the greatest skepticism from would-be lenders, who look with horror at Ireland’s projected deficit of 32 percent of GDP, a modern European record.”
“Traders said a widely read article in the Irish Times by University College Dublin economics Professor Morgan Kelly – known in Ireland as “Dr. Doom” because of his accurate forecasts of the death of the Celtic Tiger economy – added to the gloom.”

From Michael Shedlock!

Georg R. Baumann Says:
November 14th, 2010 at 10:11 am

Agreed. However you neglect the bribery dimension? Bankers amd politicians together can create massive amounts of money, obviously. Some of this goes to ensuring that their status remains and that they retain power. They hire agents of influence, often paid by the state as agents for democracy! Shills and then newspaper proprietors complete the picture? Their message: Banking is good!

Banking means that the slaves save with banks that are then looted! Applies to pension funds too. All demanded by consumers as their right in a democracy: easy credit!

@Brian Lucey

Poor ole USA. Now if only they could persuade the rest of the world to give them cash in exchange for, oh I dunno, pictures of dead presidents or something like that.

JTO again:

Your idea of exchanging old rope for export revenue is inspirational.

Did the BBC pay you for the interview you did last night? If so, congratulations. More export revenue for Ireland. Allready heading for a record in 2010, but what you earned from Auntie Beeb last night will confirm it.

But, despite your best efforts, your comment highlights the fact that we are not exploiting to the full the potential export revenue-earning capacity of Ireland’s doom economists. The world is crying out for sob stories from Ireland. They will pay anything to hear an Irish economist give graphic descriptions of how collapsed the economy is, how the only people still working are taxi drivers driving people to the emigrant ships, how most people are on starvation diets, and how former greats Kerry keep getting thrashed by Northern teams because emigration has left only six people under 35 remaining in The Kingdom. The potential is enormous. Think of Angela’s Ashes and how much that raked in. A task force should be set up to exploit the potential. While you are playing your part, doommonger-in-chief, Morgan Kelly, is not. He hardly ever gives interviews, only about one every 3 months, and only to the Irish Times. Not good enough. If he, you, the Quiffed one, the Russian one, and the others all went on Bloomberg, CNN, MSNBC, BBC, more or less full-time, and charged premium rates, Ireland’s GDP would double and all problems would be solved.

@Pat Donnelly.

“Traders said a widely read article in the Irish Times by University College Dublin economics Professor Morgan Kelly – known in Ireland as “Dr. Doom” because of his accurate forecasts of the death of the Celtic Tiger economy – added to the gloom.”

JTO again:

How dare you post such smears about Morgan Kelly?

Have we not been told a million times on here that Morgan Kelly’s IT article was neither intended to add to the gloom nor did add to the gloom. It is outrageous that you should post here that his article did add to the gloom. If I was Morgan Kelly, I would sue.

I’m interested in the differences between a bailout from the EFSF and the IMF. I gather that the IMF interest rate would be lower. What are the trade-offs and would we have a choice where to go?

@Sarah Carey. Whatever about the interest rate difference try this from the Sunday Business Post.
Following IMF discussions, Hungarian austerity measures proposed included a 98% tax on public sector severence pay over €7300.
It seems to me me that Ireland should try get its own house in order! If only for the sake public sector employees or those depending on them.


Regarding USA, suggest google a few things like:
independent central bank
monetise he debt
hyperinflation in germany in the thirties
reserve currency
japan, yen
yen carry trade
treasury yields
ben bernanke speaches
french economy in the thirties
gold standard
tic data

oh, and Irish Central Bank role on at the ECB

correct application of statistical techniques can then be used to add two and two and come up with something approximating four.

Mish’s posting in full:

IMF Ready to “Help” Ireland; Can the IMF “Help” Anyone?

Mish’s recommendation:

Reject Phony Offer of Help
Irish voters, if they have a chance, should reject this phony offer of “help” from the IMF, the EU or whoever. Merkel has it ALMOST correct when she said “any future EU bailouts to come with new rules requiring bondholders to absorb some losses.”

I say “almost” because the future is now. In addition, I say “almost” because “some of the losses” is inadequate. Bondholders should suffer losses down to the last penny. If they are wiped out, so be it.

The citizens of Ireland should not be responsible for those losses. In short, they should tell the IMF to “Go to Hell”. The simple way to do that is default.

To get its economy functioning again, Ireland will still need austerity measures, public sector reforms, bank reforms and other initiatives, but it certainly does not need any anchors from the IMF. Ireland has enough problems already.

@ seafoid

Bush’s biography is out this week and it goes in detail into the whole mess around the TARP which was strongly against most of what remained as the principles of his Republican party (and probably ultimately lost a lot of centrist Republican votes to the Tea Party) but was central to saving the US economy in 2008.

At the time, the GOP was in favour of TARP and then rat-f*cked the Democrats by turning around and voting against it on the day. And the so-called Tea Party is just an astroturf operation to solve the problem of GOP unpopularity by running GOP candidates ‘against’ the party. Kind of like if FF wanted to run (say) a FF-appointed Ombudsman for the Presidency in the teeth of party unpopularity, they might usefully gin up fictitious conflicts between her and the government.

(That in some cases the Tea Party activists overcame the GOP’s preferred candidate at selection is just a side-effect. They’re already fitting in nicely to the GOP’s Beltway establishment)

“Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend, and step off before it is discredited.” (George Soros)

Economic history is key!!!!!!! This has all happened before!

The EZ want the Euro to fall for a while. They probably like MK saying it! And many others picking it up! Gloom is all part of the plan. We are Europeans now, n’est-ce pas?

What is interesting is that the media has decided to opt for the option that Ireland is going for a traditional bailout akin to Greece. We do not know at this point what discussion are on-going between ECB/EFSF and Ireland. There is a legitimate and sensible argument that with the ECB/EU signing off on the bailout of Anglo (and the other Irish banks) because they do not want to see systemic risk (or contagion) developing, they should underwrite approx €50billion of Irish debt by offering to buy €50b of Irish debt at an average EU bond rate (in particular, this could be ring-fenced) at a rate close to 5.5%. Furthermore, this form of non-standard monetary policy is not a formal bailout and would have the effect of stabilising the Irish sovereign bond market and bring about lower spreads (moving bond yields to c. 6%). A rate that would be sustainable in the short/medium term given a nominal growth rate in excess of 3%. I would think that such a move would be advantages to Ireland (not a loss of sovereignty and separates public finances from bank finances) and the EU (no bailout, no contagion).


In fact Morgan Kelly is worse still:

“During times of universal deceit, telling the truth becomes a revolutionary act.” (George Orwell)

He is a revolutionary. What penalty should he face?

Brian Lucey one week, Morgan Kelly the next, David McWilliams all the time!!!!
Time to stop attacking people.
JTO – you never took the banks into account. We are going to need a bailout not because of our ecnomy but because of them.
All Europe has to do is to tell the ECB to stop bailing out the Irish banks and there you go – we are fubbard.
JTO – start thinking about the banks and you will see where others are coming from.
Its Anglo that dunnit.
BTW most frightenting words ever heard – “The Irish Government will stick to it’s plan of action….”

Is it not just completely and totally dumb to bring in the austerity plan without the cover of the bailout?
But dumb is what our government does best.
Quote from Batt O Keefe “Ireland can stand alone, Ireland will stand alone” – really reassuring Batt. That’s what you do in a time of crisis when help is being offered – you stand alone. Tell the firebrigade to go away – we’ll be grand with your buckets. My god is there no end to the political classes self interest in this country? (A plague on all their houses)

“my son’s soccer team, half the parents are milionaires, cancelled the Easter trip to Europe ‘because of the forthcoming budget’.

Ah ha, have we proof of concept that Ricardian Equivalence exists. I hear the speak of little else in the Borough.

Hope I’m not going off topic by referring back to John McHale’s article in the Irish Examiner.

Some of John McHale’s exhortations seem to me somewhat vague if not to say evasive. Such platitudes as “political leadership is urgently needed”, “a plan …. that is generally viewed as being both adequate and fair”, “a well-articulated plan that spreads the burden broadly and progressively”, “most will have to be asked to make some sacrifices”, “the value of crafting and communicating a “fair” package of measures”, “credible offsetting measures”,”adequate and fair adjustment plans”, “a willingness to do our part in a fair overall plan” sound as though they have been lifted from a random mission statement generator. Or possibly from a prize-winning school essay of the “If I were President” type. But they do not move the ball down the field. They are not specific enough.

So here are my questions on one specific issue, which I address to the author (and to all other readers):

First, do you think that salvation is possible without the government’s repudiation or renegotiation of the Croke Park Agreement? [BTW note that Article 28 thereof actually states that “the implementation of this Agreement is subject to no currently unforeseen budgetary deterioration“, so presumably there are no insuperable formal-legalistic hindrances.]

Second, if not, what kind of cuts do you think public servants (including university staff) will have to accept? [e.g. 5%, 10%, 20% etc.]

Please forget the ‘fairness’ dimension when answering this question.

Finding a path without making cuts

I think we’ve found Ireland’s saviour. Marc Coleman announces that we can eat our cake and have it too:

In the coming week, and on the website, a plan and accompanying forecast to reduce our deficit to 3 per cent of GDP by 2014 and eliminate current borrowing by 2016 will be published. Headline-grabbing policies — cutting welfare or public sector job cuts — will be avoided. Instead thought-out and strategically sequenced measures will be detailed so that if the adjustment really is larger than e12bn, tax hikes and welfare cuts will only occur in 2014 after more deserving savings are made. [boldface mine]

BTW The ‘National Alliance’ woteveritis seems to be as coy as an Irish country girl — at any rate their website won’t open up for me on demand. Seems to require some serious ‘coorting’ first …

@Michael Hickey

I followed the Gonzalo Lira link. Struck by a comment from FT man that has echoed time and again on these forums:

I’m with the journalist Wolfgang Münchau, who very accurately pinpoints the moment when the Irish government decided to fully back its banks—September 30, 2008—as “the most catastrophic political decision taken in post-War Europe.” As Münchau points out, it wasn’t that just the Irish decided to fully back their insolvent banks—their decision obliged all the European governments to back their insolvent banks too.

And there are people that wonder why European bond dealers are jittery…

@Pat Donnelly

“During times of universal deceit, telling the truth becomes a revolutionary act.” (George Orwell)

He is a revolutionary. What penalty should he face?

JTO again:

Pat, to whom are you referring in relation to penalty: Morgan Kelly or George Orwell? But, regardless, congratulations on elevating the tone of the site by quoting George Orwell. One of the few authors I have read. I’ll throw in a few more of his famous quotes to elevate the tone even further. He was very phophetic and clearly had this site in mind when he penned them many decades ago:

his famous reference to Brian Lucey:

“One makes a revolution to establish a dictatorship.” (George Orwell)

his famous reference to Morgan Kelly:

“Irish economists are only happy when miserable.” (George Orwell)

his famous reference to JTO:

“An unfashionable opinion is rarely given a hearing.” (George Orwell)

JTO again:

How dare you post such smears about Morgan Kelly?

Given that most posters here may not be too familiar with the concept, I feel obliged to point out that the poster JohnTheOptimist is almost certainly an Internet Troll. His sole purpose of being here is to rile the rest of you up for amusement.

There’s a wide spectrum of internet trolls, ranging from the obvious to the subtle. However, the mods and posters should be aware that—in my opinion—the poster JohnTheOptimist is in fact a masterful troll. Highly subtle, highly effective, highly persistent and hugely successful. The above blockquoted post is a rare slip up on his (her?/their?) part, which reveals the true underlying motives. He’s here to rile you all up. Even the name is part of the trolling strategy.

This is all my opinion of course; I could be wrong. But I’ll leave on this point. In all my years of posting on newsgroups, web forums, blogs and mailing lists, I have only encountered a troll on JTO’s level perhaps 2-3 times. Mods should be forwarded that posters like this can and have wrecked entire forums.

Take this post however you like; it’s just my (somewhat experienced) opinion.

@ Sarah Carey

The IMF is a minority contributor in the EFSF; it is for members of the Eurozone and I don’t believe we would have a choice of bailouts.

Last May, there were some critics in the US about the US contribution to the EFSF via the IMF. The opposition would be louder if the IMF was likely to be on the hook for 100% funding for bailouts for Ireland and other eurozone supplicants.

Winston Smith

Good idea. €50bn soft loan to cover the fiasco of guaranteeing Anglo & INBS. I would look for a long term loan, 50 years, and a low interest rate, 2%.

The quid pro quo?

The Bundesbank is given the authority to “deal” with Anglo & INBS. And the EU gets to keep 20% of everything recovered. The remaining 80% pays down the €50bn.

Let’s see who thinks Anglo & INBS are systemic then.

To all, and especially those who recently insisted that we could keep on issuing NAMA bonds….The situation is very clear:

It’s the ECB that wants a bail out!!

THEY, themselves, want to be “bailed out”, of the alleged obligation on them to keep on cashing NAMA bonds (which they most probably never agreed to, but the Irish government has managed to impose on them)
So, ECB wants the Irish government to find some other way to handle the bank liquidity problem..OK?…Even if it means that the EU must extend loans to Dublin.

So, we must unwind the NAMA scheme–at least for not yet nationalised banks- because it is that scheme that has seriously damaged our credibility. (What do you think bond investors think of us when we put our sovereign guarantee on joke bonds..bonds that “mature” in six months when the issuer has no chance of redeeming them for many years, bonds that the issuer pays 1.5% on, when his real risk rate is a large multiple of that, bonds with no firm redemption (for cash) commitment, for any date ?? This is what’s damaged our credibility).

And this is what is extremely difficult to recover from politically. Just look at the damage we have done to our better banks…forcing them, uniquely in the world, to mark €80 bn. to market when loans still have years to run, etc. The European bond investors like schemes wherein governments Support banks, not ruin them; and keep them Private, not nationalise them; and show some Sophistication in handling liquidity problems, in discussion with partners, not landing partners with bag loads of joker bonds worth less than Monopoly money. They must think the people in charge of our banking sector and economic policy are idiots.

So, unwind all that, apologise, fall on swords, etc. In just handing property back to BOI-AIB alone we save perhaps €20bn. of future NAMA (=State perceived) obligations…or c. 15% of the National debt v. GNP ratio… in a few strokes of the pen. Here’s more detail :

After that,. investors will see that a deficit reduction of €6 bn is in fact a very big step towards resolving the structural fiscal problem and should enable us to get back into the bond market at a fair price. If not, THEN we can go to the EFSF.

So, then, what to do about the banks liquidity problem? Maintain the guarantee for a while—it already duplicates the NAMA guarantee anyway…and discuss sensibly with the ECB and partners some resolution of the (short term) problem. The solution is out there and some of the brilliant minds who contribute to this blog will find it, if they start thinking positively and even if MK can’t see it.

And one more very important thing we must do for national credibility in this matter…Someone must advise the Governor that his job is to Defend the national banking sector, not go around offering it for sale abroad !

What a difference a day makes!
Where is Eoin Bond? Was this what he was referring to or is there more coming down the tracks?

JTO a Troll?
At the bridge extractin’ the Tol,
Not the Mickey Hickey?
He could be Tricky Dickie

ObsessiveMathsFreaks sez
not to Sarah Carey
the Brians are in the Far East
things is gettin’ bit hairy

Should I just get my coat?

I disagree on JTO. To me he seems like a government spokeman with a good knowledge of stats and economics. I don’t think it is beyond the capacity of govt to put a person out there to plug every positive statistics even if the stats that matter mean that the “the jig’s up”.

@Carolus Galviensis
I just read that link you posted. Remarkably similar to Jto posts.
Is he the guy that wrote that books a few years ago?

Joseph Ryan

“I don’t think it is beyond the capacity of govt to put a person out there to plug every positive statistics even if the stats that matter mean that the “the jig’s up”.”

JoT has openly stated that he is a 32 county protestant nationalist and supports Fianna Fail.

He uses statistics selectively to derail.

He always refuses to engage on the crippling cost of the bank bailout.

Is he a troll?

No he’s not.

He’s an optimist.


Just for the record, you are factually wrong, obsessivefreak. I am not a troll. But, I am not in the least offended that you call me one. In fact, your list of my supposed qualities as a troll is very flattering. And, if I met you, I would buy you a drink by way of gratitude. I will certainly print it out and take it to the pub tonight, and hope to impress some lady friends with your comments about my trolling capabilities.

Troll is what people accuse you of when they can’t answer the argument. The first one (after 18 months on here) to call me a troll was Richar Tol. That came when, following the publication of the CSO Population and Migration Estimates for the year to April 2010, I persisted for weeks and weeks in trying to pin him down on the inaccuracy of the ESRI migration forecasts. I requested on numerous occasions that someone from ESRI involved in making the forecasts come on here and debate them. Hardly the actions of a troll. At first he claimed that they were not inaccurate as they were for calendar years. I persisted and showed, by quoting direcly from the ESRI bulletins, that they were for the years to April and therefore totally inaccurate. In response, he called me a troll. Prior to that, in summer 2009, by meticulous analysis of passenger movement statistics, I had destroyed the argument he presented in a thread he opened that net emigration was then running at something around 80,000 annually (I can’t remember the exact figure, but it is in the site archive somewhere). He has never ventured into the area of migration since. Afterwards, one of the economists, whose name is given in the site organisers’ list, emailed me and congratulated me on the analysis I had presented in that particular thread. I think also that Brian Lucey called me a troll once and Karl Whelan once, which isn’t too bad a hit rate considering our numerous contretemps, and one or two other posters more recently, one of whom later withdrew it and started calling me a non-troll. Offhand, I can’t think of any others.

If you look at my contribution on this particular thread, what exactly is trolling about it? Some posters have made wild claims about Ireland’s debt levels, as did Gurgdiev in the Irish Examiner debate quoted. In contrast, I cooly and calmly posted a comparison, based on the latest statistics, showing that Ireland’s per capita national debt is 40% less than in the US. That may destroy some people’s arguments, but it isn’t trolling.

I completely respect the right of the site organisers to do as they like. It is their house. They would be totally within their rights to ban me. I assume that, with modern technology, they could make me vanish from the site in an instant. So far, to their credit, they have never indicated that they had that in mind and never censored my posts. I just wish to put that on the record. But, if they did ban me, I would not complain and would hold no grudge. Everyone is perfectly entitled to decide who they will invite or not invite to their house.

But, being called a troll is just water off a duck’s back. If you grow up a nationalist and republican in the 1950s, 1960s and 1970s in a loyalist part of Northern Ireland, spent a fortnight with several broken bones in the Royal Victoria Hospital, Belfast in April 1969, following an RUC baton charge, and been taken in for several long weekends of ‘interrogation’ by the British military in the 1970s, then being called a troll on a site such as this is like being stroked with a feather.

But, if one is going to be called a troll, it is much better to be called a good troll than a bad one. So, dear obsessivefreak, I thank you profusely for your very kind comments, among which I treasure:

“the poster JohnTheOptimist is in fact a masterful troll”

“highly subtle”

“highly effective”

“highly persistent”

“hugely successful”

“I have only encountered a troll on JTO’s level perhaps 2-3 times”

Thank you, dear obsessivefreak. Is it possible you could elaborate on “hugely successful”. I have always assumed that no one pays the slightest attention to anything I post. It would be nice, even if only out of vanity on my part, if you could tell me what you mean by “hugely successful”.

By the way, I will be absent from the site for 50 days from next Saturday, November 20, until Sunday, January 9. Another business tour of good ole U. States. Yes, I know that they have internet there. But, the circumstances are such that, when I go on one of these business tours, I don’t get the space or privacy to post here regularly. I prefer only to post when I can do so regularly and follow up arguments and respond to counter-arguments. Being absent for those 50 days will be a blow, as I will miss the opportunity to come on here and gloat when the Q3 GDP figures are published on 16 December, the date on which the Good Ship Morgan Kelly finally gets torpedoed. But, I will return, after a 50-day absence, on Sunday January 9. I am only mentioning this in case my 50-day absence prompts some people to jump to the conclusion that the site organisers have banned me. That won’t be the case at all.

I see Batt is batting for our Sovereignty and claims ‘ Ireland was well financed up to the middle of next year and also has a pension reserve fund of €25 billion’.

I think someone put a big hole in the pension fund that Batt is unaware of.

ceteris paribus

And he is also making a pitch to confiscate private pensions and post office savings.

@ceteris paribus , @Carolus Galviensis
I just read that link you posted. Remarkably similar to Jto posts.
Is he the guy that wrote that books a few years ago?

JTO again:

Marc Coleman is indeed the guy who wrote that book(s) a few years ago. I think it was called ‘The Best is Yet to Come’. He may have written others.

Trying to puzzle out who JTO is a waste of posters’ time. I am saying that genuinely so that nobody wastes time searching the internet for who I might be. I don’t exist there. I suggest that people concentrate on the arguments in the threads rather than wondering about whether anyone who posts an argument contrary to their’s is some sort of government agent. I can’t understand why some people waste their time wondering if I am paid by some organisation to post. Why should it be surprising if a private individual posts? I just assume that people like Greg, Joseph Ryan, ceteris Paribus, TullMcAdoo, Carolus Galviensis , Al, Noel, Eureka, Simpleton etc are also private individuals with opinions. It is hardly that unusual. I don’t lose sleep trying to figure out if they might be Joan Burton, Kevin Myers, Fintan O’Toole, Roy Keane, or Daniel O’Donnel. I am not Marc Coleman (does he look like he was born up north in 1949?) or Danny McCoy, have never met them, nor ever had contact with them, nor do I have any knowledge or connection whatever with this organisation called nationalalliance. I never heard of it until I read the post above. Nor do I work for the government or Fianna Fail (the proof will be my 50-day absence referred to above: if I worked for the government or Fianna Fail, presumably they’d replace me while I’m gone – they are not that broke). A total waste of posters’ time searching the media or the internet for any references to me. I don’t exist there. I am a nobody. The only time I ever made the media properly was confined to the northern media, was not in relation to economics but in relation to the northern rebellion, was back in the 1970s, long before the internet, and only briefly. Although my photo did make the front page of the old Irish Press in 1954, when I was 5 years old, waving a tricolour at a welcome home celebration in Omagh for a republican prisoner who had just been released from Crumlin Road jail. That was my only 15 minutes of fame.

@ceteris paribus:

You wrote:
@Carolus Galviensis
I just read that link you posted. Remarkably similar to Jto posts.
Is he the guy that wrote that book a few years ago?

Actually I never heard the chap’s name before — but I don’t live in Ireland and I only occasionally read the Irish media (on line). However, I’ll google in his name because he does seem to be an exemplar of the Magical Thinker. Back later I hope.

@ObsessiveMathsFreak et al:
I first thought JTO was a troll too but he definitely isn’t — trolls don’t write long and detailed postings, but short ones. They rate their success on the basis on ‘Energy returned on energy input’ (EROEI). Anything under 10 to 1 EROEI is deemed pretty mediocre by the troll community. Like a pass degree in media studies.

Actually, I think it’s a good thing to experience a bit of provocation — it’s certainly better than wallowing in a mutual admiration society. Besides JTO doesn’t ‘get it wrong’ all the time, and while I am a Morgan Kelly cheerleader myself, it does no harm to read the occasional critique of the great master. Though JTO would be more convincing if he used a more temperate language.

As I said before a few postings ago, the best treatment to give a genuine troll is the silent variety — just ignore him or her. ‘Dynamic silence’ is the most effective method of killing them off.

What would Goldman Sachs view on the bailout be? It would guarantee that they could sell all the bonds they bought – wouldn’t it? Just wondering

@ceteris paribus et al
More about SI correspondent Marc Coleman:
MC has written three books, inter alia ‘The Best is Yet to Come’ (2007)– available used on Amazon for £0,01. Sounds like great value but it isn’t, unless you’re short of loo paper. Three reviewers on Amazon, here’s what one of them (William Henr) writes:

What a strange and unfortunate title to give a book about the Irish economy! Back when it was written, there were clear signs that the Irish House of cards was wobbling, yet Coleman ignores the obvious and reaches some conclusions which looked optimistic in 2007 and are risible now. … Incredibly, despite plenty of analysis, he somehow fails to spot that the economy was already heading towards a massive crash. … Overall, this is a hugely disappointing book from the former Economics editor of “The Irish Times”. For those interested in the modern Irish popular economics genre, this short book contains some useful statistics and has some curiously value but little else.

(boldface mine).

This is fun. More later …

I do love the old style republican rhetoric “the rebellion” and so on. And the total obsessive lack of irony or JtO.
And no John, in the qverwhelmingly vast number of cases the media dont actually pay people they ask to comment on.
Off you pop now to TeaParty land and we will see how things go while your away. After all, its going swimmingly isnt it.

JTO counters with “Wall of Text”! … It’s not very effective.

JoT has openly stated that he is a 32 county protestant nationalist and supports Fianna Fail.

As they say in the contemporary internet slang: “LoL wut!?”. I hereby retract my previous declaration that JTO is almost certainly a troll and can now safely declare that is simply is a troll. The JTO persona is an entirely fictitious facade to wind you all up. There’s some smart-alec behind the mask having a whale of a time derailing comment threads.

This 50 day thing is a stunt no serious person would pull. I predict a new (probably quite distinct) persona and nickname will be created and will emerge in the interim to prod and poke the posters.

I first thought JTO was a troll too but he definitely isn’t — trolls don’t write long and detailed postings, but short ones.

You’re thinking of a very different kind of internet troll. They come in many flavours I assure you. JTO is a very rare and subtle type.

I appreciate that most poster and indeed readers of the blog have little experience with the type of general nonsense that goes on on the internet. It suffices to say that with great anonymity comes great opportunity for mischief. Imagine if you will what stunts Dennis the Menace would pull online if he had a mind to; Now, try to imagine the same for Walter the Softy.

Ok – call me an idiot but the country is faced with the most momentous decision of its independence – to accept or not accept the bailout
It would be great if the pros and cons of this could be debated instead of personalities.
I think that we should accept the bailout but only if it is for at least five years and at 4% interest.
The reason for accepting it would be to allow us to restructure properly. I do not see the point in austerity if every gain you make is countered by a percentage increase in borrowing at the whim of the bond markets. THat is why I think we should accept this.
I cannot fully evaluate the downsides (because I lack the knowledge) and would be delighted if others could.
As I see it the greatest mistake our government could make is to reject the bailout at a time when the EU want us to take it only to have to renegotiate for it when we actually really need it. The terms now will be a lot more favourable than if we leave it untilwe are desperate – i.e. unitl after the next budget really sucks the growth out of the economy.
What’s the view?

Where is Coleman’s mysterious National Alliance?

A call for help

Magician Marc Coleman refers in his SI article to an Irish ‘National Alliance’ but I can find no reference to it anywhere in the press. There is an “Irish National Alliance for Action on Alcohol”, or possibly an “Irish National Alliance on Action for Alcohol” but surely MC must have something else in mind. Admittedly there is a website but it is unaccessible. Can anybody help me?

There was a phone conference today between central banks at noon where others ‘urged the Irish central bank to accept the offer’?

Anyone got a link to that story? I will see if it’s Bloomberg…

The Who Is JtO is getting a bit tedious. I don’t think he is a troll – he’s just putting the other side of the argument. And he’s generally polite, which trolls aren’t.

I would like more discussion on the mechanics of the IMF and EFSF interaction.


Yes, I know the IMF is a minority funder of EFSF but my understanding was that Merkel insisted they be involved so it didn’t look to German taxpayers like they were funding the whole bill. But I think ECB people did not want them involved?

You say we wouldn’t have a choice but why not? Because the ECB wouldn’t let us go solo to the IMF? Eoin Bond mentioned a solo run last week – I wondered at the time if that’s what he meant. We have a lot of exposure to UK and US debt – if our debt is majority non-EZ would this be a factor?

I think that if officials are in talks about talks, I’d like to know more about the mechanics of this process and what choices we have – if any – and if not – why not.

I thought I remembered some crazy notions that we were going to keep growing ad infinitum.
I was not suggesting that you were MC, merely that he quoted numbers similar to yours.
Anyway, back to the problem. I think Colm McCarthy gets it right (Indo) when he opines that until we fix the banks we are not going grow regardless of the other factors. (or something to that effect)
A properly negotiated funding arrangement for three years can be put in place now while Dr Merkel needs us to achieve her goal to placate her voters. As someone noted it may not be available next week. The national interest requires that the Government stop skirting with insolvency and accept funding negotiated at reasonable rates.
As CmC noted the banks cannot fund themselves and therefore the economy while this crisis persists.
Hope you enjoy your sojourn in the USA-


re: “I will certainly print it out and take it to the pub tonight, and hope to impress some lady friends with your comments about my trolling capabilities.”

For someone who was born 5 years old in 1954, are you not getting a bit old for impressing the ladies!

Actually I like your posts. I don’t agree with them but they do give the opposite view. We have had far too much of not listening to and analysing the opposite view.
Keep it up.
We will be all the wiser in 2011, if not better off.

The only reason not to take it is the mistaken belief that we have any sovereignty left to fight for.
I am gald to see the issues of restructuring and reform coming up, as well as the simple arithmetic of budget austerity. The utterly unfit for purpose Department of Finance has managed to frame the debate in terms of cutting welfare/pensions and raising taxes: the only debate those trolls want to see is a war between the respective vested interests.
Starting with the DoF, simply shut down all those parts of the public sector that have clearly and unequivocaaly demonstrated they are not fit for purpose. This does not need any study or commissions or consultants or tribunals. The menu of policy choices is more a list of ‘must do’s’: just get on with it.
If we play to the Mandarin’s agenda, down goes welfare, down go pensions, up go taxes and that’s about it. It doesn’t have to be this way but the debate needs to be reframed.

@ Joseph
The other option is that the government will bring forward the date of the budget.
That should dampen the bond markets and buy more time.
I still think that they’ll wait until march to access this – when we’re really screwed

Sarah Carey

“You say we wouldn’t have a choice but why not? Because the ECB wouldn’t let us go solo to the IMF? Eoin Bond mentioned a solo run last week”

Not a chance of a solo run unless sanctioned by the EU.

AIB & BofI would suffer immediate cardiac arrest.

Bring the budget forward?

The numbers are already baked in.

Anyway Fianna Fail won’t do it because of the Donegal by-election.

@ Greg
It would be passed even considering Donegal. They have the rebel blueshirts to count on as well. Would be seen as decisive and a good platform (if they reduce bond-spreads) to go into the next general election.
Would also leave Labour snookered – they vote against the budget and they’re seen to be voting for losing sovereignty.
I imagine that somebody somewhere is thinking about it

My suggestion: the Moderator should delete all postings that include the word ‘troll’. Except for this one, of course.

Irish bankster crisis !!! what a joke…..Ireland is in a black hole when it comes to the banks, this is commerical property crisis shoe dropped….Next we are going to have the consumer shoe dropping…,Lenihan is right it is pointless going to ECB for a bailout. If this was in the US it would mean many (16)TRILLIONS OF DOLLARS (36 trillion to blush the banks clean if ireland was the USA)
It looks like Ireland will be leaving the Euro…But staying in the EU. Ireland is in for a world of pain….the worse crisis sense the great famine… This was planned !!! over several years in plain sight…,that what happens when you have dumb,greedy, arrogant, self centered,politician’s

in Ireland.
You the Irish people will be paying for this for years to come….(celtic tiger my arse),
As one irish man said to me “my grandparents went to school bare footed and it looks like my

grandchrildren will be doing the same….” Get ready for a 90% haircut in the standard of living

(third world living)


I don’t disagree that it would be a good idea to bring it forward.

I don’t think it would reduce bond spreads however.

The market (must?) have factored the €6bn into prices already.

Perhaps I should say “most unlikely” rahter than “won’t”.

The attention would be on Fianna Fail. Everything would get very emotional. They would take alot of stick.

Not that I’m against a narrowing of €6bn.

@ Sarah Carey
“You say we wouldn’t have a choice but why not? Because the ECB wouldn’t let us go solo to the IMF? Eoin Bond mentioned a solo run last week – I wondered at the time if that’s what he meant. We have a lot of exposure to UK and US debt – if our debt is majority non-EZ would this be a factor?”

Because we are part of the Euro, and will have to accept whatever the ECB and the EU comission dictates to the two Brian’s on Tuesday.

The EU will survive the PIIGS: What i think that will happen is, the PIIGS will leave the Euro currency.BY the PIGGS leaving the euro they can then PRINT money in their local currencies and pay off their debts (just like the USA with QE1-2-3-4-5…etc…),whatever which way you cut it the debt holders are all going to be taking a 90% plus haircut.The EMU is NOT going to break up like you and many might think, But the way they trade with each other will change.There is one of two ways the Euro will devalue is by consensus or by force…….Germany leaving the Euro.!!!????

@sarah carey

Just bear in mind that the nationalised banks have been used to buy up Irish gilt issues and stuff them straight on the ECB.

There was evidence a few weeks ago they were getting quite cheesed off with this and the repoing of commercial obligations there. They changed the rules to allow refusal if the institution’s risk profile was too closely aligned to that of the collateral.


You write:

As I see it the greatest mistake our government could make is to reject the bailout at a time when the EU want us to take it only to have to renegotiate for it when we actually really need it.

Let’s say that this is a controversial view. Here’s what near-infallible Mike Shedlock said today:

Reject Phony Offer of Help

Irish voters, if they have a chance, should reject this phony offer of “help” from the IMF, the EU or whoever. Merkel has it ALMOST correct when she said “any future EU bailouts to come with new rules requiring bondholders to absorb some losses.”

I say “almost” because the future is now. In addition, I say “almost” because “some of the losses” is inadequate. Bondholders should suffer losses down to the last penny. If they are wiped out, so be it.

The citizens of Ireland should not be responsible for those losses. In short, they should tell the IMF to “Go to Hell”. The simple way to do that is default.

To get its economy functioning again, Ireland will still need austerity measures, public sector reforms, bank reforms and other initiatives, but it certainly does not need any anchors from the IMF. Ireland has enough problems already.

@ Carolus Galviensis
But does getting the aid mean that we cannot default?
Does an option to default need to be quietly negotiated into the EFSF?

@ Greg
But can we not negotiate debt restructuring at the same time we are negotiating this bailout?

Carolus Galviensis

You might enjoy this.

21st century bank run.

“This is what a 21st century bank run looks like. Terms suddenly change in the repo market, where banks get their funding, and the whole system begins to teeter. It’s a structural problem in the so-called shadow banking system for which there’s no remedy.”

Uses the Kelly opinion piece to critique Ireland’s position.

“So, the Irish government could have let the bankers and bondholders suffer the losses, but decided to bail them out and pass the debts along to the taxpayers instead. Sound familiar? Only, in this case, the obligations exceed the country’s ability to pay.Austerity measures alone will not fix the problem. Eventually, the debt will have to be restructured and the losses written down. Here’s another clip from Kelly’s article”

“Ireland will surely need a bailout, although not just yet. For a while the ECB can maintain the illusion of solvency by funneling liquidity to banks via its emergency facilities. That way, bondholders in Germany and France get their pound of flesh before the ship begins to take on water. All the risk-takers and speculators will be “made whole” again before the full-force before the debts are shifted onto Irish workers.”

Eureka Says:

“But can we not negotiate debt restructuring at the same time we are negotiating this bailout?”

Don’t think so.

The whole point, it seems to me, is that there will be no restructuring. If Ireland were allowed negotiate a haircut then what of Spain and Italy (though I think it is, largely, domestically funded).

The whole point is, “Europe is strong. Europe can handle its own problems. No Eurozone member will pay less than all of its debts”.

To allow one member restructure its debt would destroy the Euro.

Who would trust it after that?

This is an existential crisis for the Euro.

It’s sh1t or bust time.

That’s why the short end looks like a one way bet. Money for free.


Italy by and large does not have a problem similar to Ireland’s with private debt. It is an important distinction.

The Alchemist


Read somewhere (no link) that Italy’s sovereign debt was 80% held domestically.

So not as exposed to “the bond market”. Could be wrong.

@ Greg.
That’s a pretty bleak analysis.
However would allowing one member restructure its debt destroy the Euro?
If that debt is restructured “internally” i.e. if the debt is owed to the ECB then it might not have such major repercussions.
It might be no more serious than one state in the States restructuring on its debt. When that happens over there does it have a major impact on the dollar?


“However would allowing one member restructure its debt destroy the Euro?”

In my opinion yes. The Euro and with it a good part of the global economy would be vaporised within a week. The derivatives death star would take aim and fire.

What would be the point of a 1% or 4% haircut? None really.

If we were going to restructure we would have to look at 30% (my guess) of all debt to enable us to deal with the €60bn/€80bn required to establish a functioning banking system.

“If that debt is restructured “internally” i.e. if the debt is owed to the ECB then it might not have such major repercussions.”

The ECB can accept sovereign debt as repo. They can’t buy it directly.

“It might be no more serious than one state in the States restructuring on its debt. When that happens over there does it have a major impact on the dollar?”

Well quite. But the FED is not the ECB. And for sure the ECB is not the FED.

The FED in its latest round of QE will probably expand its balance sheet to include State and Municipal debt. Though they may disguise it.

The ECB has absolutely no power to do this. And they are already stuffed to the gills with Irish sovereign repos (and NAMA “bonds”). They can do the math. They know the promissory notes will be called in. They and the EU want to move on from this crisis.

A restructuring of Irish sovereign debt will get a resounding Nein Nein Nein.

Don’t know if you caught this one earlier on. I think it’s funny (though it seems a little partisan to the GOP).


Thanks for the link to that excellent article written by Mike Whitney at MarketOracle.
Interesting to note that “Mike is a well respected freelance writer living in Washington state, interested in politics and economics from a libertarian perspective.”

If you check out online archives of the leading financial websites, you’ll find that most of the economists who predicted the debt deflation crisis were ‘outliers’ from the much-ignored libertarian-cum-Austrian school end of the spectrum, or were peak oil ‘doomsters’ familiar with the entropy law and aware of the finite nature of the earth’s natural resources (though it must be admitted that most libertarians were slightly wacko Pollyannas a la Ayn Rand). Needless to say, only a handful of neo-Keynesians or monetarists saw the writing on the wall.

@ Greg
Again thanks. It’s a very good video.
So – (Im beginning to sound like one of the animations) – do the Europeans see the consequences of default in the same way as you do?
If so that provides excellent leverage. We have less to lose than they do! A good negotiating position to be in.

I’d hate us to go off with the impression that the US has the biggest per capita debt in the world. Not really. Comparing national debt across countries is tricky, as debt can come in so many ways and be offset by so many assets, revenues etc (see here for the US ). The figure above would be more than halved if just quoted Treasury and Bill debt was measured, and that’d be the right comparator for Constantin Gurdgiev’s number. On that basis, Ireland would have a bit less debt than Greece. But add in banking liabilities, other paper and cash (none of which Greece has much of) and Ireland goes top worldwide (Iceland or San Marino might still be a step ahead though – I don’t have data at hand). Not just top worldwide but top in history too (I alluded to this at the Jan 2009 DEW conference ).
But like I said, comparisons here are a minefield. Indeed that’s why you have ratings. And here Ireland is Aa2 (2nd highest rating) for now. (JTO – ratings ought to be a better number for you to play for a while, although you should really have add in debt for the US states).
@ Sarah Carey
Like Michael Hennigan says, the IMF hand in hand with Europe. You don’t seem to accept you can’t cherry pick your bailer (look up the Q&A on the EFSF website if any doubt). Are you, by the way the Sarah Carey that wrote an article during the week blaming Europe for Ireland’s current troubles, and suggesting giving Europe the finger? Wow. Imagine the questions I get asking if we live on the same planet.
@ Greg you can get easily figures on debt held in the IMF’s latest Fiscal Monitor


Highly entertaining video clip — though they got it wrong on deflation, confusing it with the consumer price index.

Still, good fun.

yes it works, thanks for that. very telling alright, it’ll be one of many factors probably pushing bonds higher tomorrow. unless talks of a bailout become more concrete, although all the denials coming from govt over the weekend will surely have the opposite effect. negotiating best rate possible now should be priority, and length of time.
Brian “cheapest bank bailout ever” Lenihan will see default as an obvious catastrophe for country but bailout as an even bigger catastrophe for himself and the government. the last (and possibly first) service this current administration could do for their country would be to do some serious hard ball negotiating with the EU/IMF over a bailout


Interesting discussion, and times.

Frankfurt is now the centre here. If the board of the ECB retains any semblance of post Enlightenment and post-metaphysical moral authority in the Kantian tradition, which I’m sure it does, then it will recognize the insidious and unjust position that the Irish citizen serfs occupy at the mo. Reminds me of the similar position that the Goths found themselves in stranded and starving on the banks of the Danube following a little run-in with the Huns, and how they were treated by the Empire and Rome. Forced conscription eventually nearly brought down the centre, and the Goths took over the Iberian Peninsula. The Irish Sovereign IS NOT the Irish Banks. We have a bank problem, hence we all have a bank problem. Let’s FIX IT.

@Brian Lucey

So, what would you call the events in the north from 1968 on? A tea-party? I’m not gone until the end of the week. Plenty of time to annoy you before then. It doesn’t take much. For an explanation of your anger, I refer you to the final paragraph below.


You are talking total nonsense. You are a bluffer and a spoofer. I have been absent twice before while on long business trips to the US. Once in 2009. Once from mid-February to end-June this year. On both occasions I said that I wouldn’t be posting while away. It is not compulsory to post on here when it is not easy and convenient to do so regularly. But, on both occasions I said that I’d be back. And I was, on the date that I said that I’d be back. And I’ll be back this time too, assuming the site organisers don’t swallow your false accusations, although I will still be posting for the rest of this week. Lots of other posters have long absences from the site. Stuart Blythman, one of the few sane posters on here, hasn’t been around much recently. But, I don’t conclude from his absence that he is a troll and has popped up under a different name.

Now go and look at the threads between mid-February and end-June this year. You will see that I am absent, having stated in a post in mid-February that I would be, but returning on the date that I said that I would. Now tell me if there is any other poster posting in that period whose posts at all ressemble mine? Let’s have the names of any suspects you think might be me posting under a different name during that time. I think you will find that there isn’t any, and that you won’t be able to come up with the names of any who fit the bill. If you can’t produce the names of any posters posting in that time, who you think might be me, then your accusation is proved false.

I have no objection to people disagreeing with my views. I don’t even object to being called a troll. But, I object strongly to being accused of not being who I say I am and putting on a false persona, as obsessivefreak claims. People who make such accusations should be banned from the site, unless they can produce evidence to support their claim or apologise when unable to produce such evidence. So, although off-topic, I have decided to take obsessivefreak’s false accusations seriously, defend my integrity, and to respond. I know they are off-topic, and I’d rather be posting statistics related to the thread, but it is obsessivefreak who has made false accusations that must be responded to.

If obsessivefreak thinks that I am a troll and not who I say I am, then he is free to ask me any question he likes about a range of topics, and I will call his bluff by answering them. As I doubt that he will respond to the challenge, I have posted the answers to some of them myself. If there are any other posters from the north of my generation on here, I am sure that they will confirm that my answers are correct. Questions are: (a) any question on politics in the north in the 1960s? (b) the year in which the railway lines from Dublin and Belfast to Tyrone were shut down? (answer: 1965) (c) any question on the troubles in the north from 1968 onwards? (d) any question on personalities, politics and any other activities at Queen’s University Belfast from 1966 to 1974? (e) the name of the Professor of Pure Mathematics at Queen’s University, Belfast in 1966/67 and where he was born (answers: Professor Verblunsky, Poland) (f) the nickname of the cheap Italian cafe near Queen’s University in 1966/67 that was diabolcal but was all that students could afford in those days (answer: Smokey Joe’s) (g) the reason for a protest march by Queen’s University students through the centre of Belfast in spring 1967 (answer: to protest at outlawing of Republican Clubs in the university by the Stormont goverment) (h) the name of the Professor of Greek at Queen’s University, Belfast in 1966/67 and what was notable about him (answers: George Huxley, son/grandson of Aldous Huxley, famous UK philosopher) (i) the name of the street in Belfast near the university where an at-the-time-unknown grocer had his shop in 1966/67, his name, the relatively minor political position he achieved many years later, and why he was condemned by Paisley when he did so (answer: Cromwell Road, Dixie Gilmore, Lord Mayor of Belfast, married to Catholic) (j) the name of the Student’s Union President at Queen’s University, Belfast in 1966/67 and what was notable about him? (answers: Ciaran McKeown, first catholic to hold post) (k) the name of the Chairman of the Queen’s University Unionist Party in 1966/67 and what was notable about him? (answers: Louis Boyle, again first catholic to hold post) (l) any questions on the Civil Rights marches in Derry, Armagh and Newry in autumn 1968 and early 1969? (m) any questions on the long march from Belfast to Derry in January 1969? (n) the name of my good protestant republican friend, who lived in the floor below me in a university hall of residence in 1967/69, the name of the hall of residence, the name of the paramilitary outfit he foolishly became a member of, what happened him eventually, who his father associated with, and where his mother worked? (answers: ronnie bunting junior, hamilton, inla, assassinated, paisley, students’ union canteen) (o) the name of the now prominent RTE personality who also lived in the same hall of residence in 1967/1969? (answer: Tom McGurk – go phone him up if you doubt me) (p) the name of the student rag magazine and the student newspaper at Queen’s University, Belfast in 1966/67 (answers: PTQ, Gown) (q) the year in which the new Queen’s University Students Union building, the first purpose-built one in Ireland, opened? (answer 1966) (r) the name of the street in which the old Queen’s University Student’s Union building, it replaced, stood? (answer: University Square) (s) any questions on the mid-Ulster by-election of April 1969? (t) any questions on the RUC riot in the Falls Road on 21 April 1969? (u) any questions on Tyrone GAA in the late 1950s and 1960s? (v) what was distinctive about the Queen’s University library in 1966/67? (answer: it was a converted church) (w) the name of the hall in the basement of the then new Students Union building in Queen’s University, Belfast, where many of the early Civil Rights meetings took place (answer: mcMordie Hall) (x) the route that a large student protest march took on the day after the Bloody Sunday killings in January 1972 and why that route was chosen (answers: up the Malone Road, British Territorial Army building was located there) (y) what the score was and what the weather was like at the first big county GAA match I ever attended? (answers: Ulster Final 1956, Tyrone 3-5, Cavan 0-4, Tyrone scored goal in first minute, and it poured down all day) (z) what the score was at the first match I attended at Croke Park? (answers: Galway 0-8, Tyrone 0-6, Iggy Jones missed goal chance in final minutes) (z)

Well, obsessivefreak, if I am a troll and not who I say I am, you’ll have to admit that I must be the cleverest troll in the world to accumulate that information in an hour or two, given that almost all of it is pre-internet. Go check it out, if you don’t believe it. I think I have successfully called your bluff. Once you have done so, kindly post an apology for claiming that I am not who I say I am. If you do so, I will let the matter drop. If you don’t, you should be banned from the site. As I say, if there are any other posters from the north of my generation on the site, I am sure that they will confirm that my answers are correct.

I’m afraid that the real reason JTO gets so much hostility here is because of repeatedly highlighting how bad many economists in Ireland are at forecasting. It is quite a list: the D of F, Central Bank and ESRI forecasts for inflation in 2009; ESRI’s forecast for net emigration in the year to April 2009; Brian Lucey’s August-2009 forecast for tax revenue in 2009; the D of F, Central Bank and ESRI forecasts for GDP volume growth in 2010; the D of F, Central Bank and ESRI forecasts for export volume growth in 2010; the Central Bank forecasts for manufacturing output growth in 2010; ESRI’s forecast for net emigration in the year to April 2010. In all these cases, I have challenged the forecasts made by economists, and been proved correct in all cases. A couple more, not in the list, are in the pipeline, with the outcome not yet know (example: the D of F forecast for the budget deficit in 2010). This is a site mainly for economists. So, it obviously upsets some of them when an unknown person, who is not a professional economist, comes along and makes better forecasts than those working for the main forecasting organisations. That, and only that, is the reason JTO gets so much flak.

Eureka Says:

“do the Europeans see the consequences of default in the same way as you do?”

Only my opinion but I fail to see how they could not.

“If so that provides excellent leverage. We have less to lose than they do! A good negotiating position to be in.”

It is a position though I’m not sure how good it is.

Our ultimate tactic is to say we will unilaterally default and restructure?

“They” say. No you won’t.

Are we really going to take the nuclear option? I just can’t see it.

The point about negotiating the rate and terms of repayment is of course up for grabs.

However, we cannot be seen to have negotiated a better deal that Greece. That would create more mayhem.

The Greek Premier has offered a loophole. He says Greece is not Ireland. Greece does not have the banking problems that Ireland has.

We should negotiate on a side deal to take the burden of Anglo & INBS off the state. Low rate, long term. ECB or some SPV shares in the recovery proceeds. ECB or SPV to take control of Anglo & INBS. Win Win (well maybe not, but better than nothing).

I’d call it terrorism, state and non state. As for the rest, seems like your a tad rattled…
Oh, btw, the banks….ignoring them as you do is like captain smith showing that, icebergs apart, rms titanic was on course. Technically true, but sfa use to man nor beast.

Carolus Galviensis

“Needless to say, only a handful of neo-Keynesians or monetarists saw the writing on the wall.”

Because they are not trained to see?

Or is it that they are trained not to see? 🙂

@ Sarah, In addition to what I posted earlier, and as reported by RTE etc. cash for Ireland just might come from the structural fund managed by the European Commission, not that EFSF. That’s quicker, and only requires a majority vote of member states. Anyway, the point remains – the recipient country doesn’t get to choose its “bailer”

David O’Donnell

“The Irish Sovereign IS NOT the Irish Banks. We have a bank problem, hence we all have a bank problem. Let’s FIX IT.”

Completely agree. But “we”, having made such a dog’s breakfast of it, are now the problem.

We need to negotiate a burden sharing with the EU. The debts of Anglo & INBS can be negotiated without affecting the sovereign or the EU in a direct way.

Fianna Fail and the Greens will of course fit to the death to stop this


Nice. Definitely trained not to see. For example, despite the fact that the ‘Austrianists’ predicted every economic crisis in the past 50 years, intelligent idiot Paul Krugman recently opined that the Austrian business cycle theory is “about as worthy of serious study as the phlogiston theory of fire.”

That’s the level of intellectual debate one expects from ideologists, not Nobel prize winners.


“In all these cases, I have challenged the forecasts made by economists, and been proved correct in all cases.”


You get to look back at the forecasts of others. Discard those that don’t fit your agenda and completely fail to forecast anything yourself, except for some jingoistic fiction about a 32 United Ireland.

And then you completely ignore the banks because you are not expert. It couldn’t be could it that you ignore the banks because that story doesn’t fit you agenda as well.

no offence, but i do not think it is your accuruate forecasts that annoys people on this site. or your optimistic nature. i think it is more your ability to sound like a government minister answering a simple question about say, irelands inability to continue borrowing, with an incredibly long winded off topic response about some new foreign direct investment in galway, improving car sales, slightly improved unemployment figures, the need to concentrate on our smart economy, PENDING public sector reform…we are where we are….no one’s really to blame persay….those things just happened…lets get on with it…..everything will be fine etc etc. no matter what, they selectively pick those things/statistics that they want to talk about and talk about and talk about and by the time they are done the interviewer has lost the will to live and forgotten what their original question even was. and besides, anyone watching has by then turned over to the soccer or xfactor.
reading one of your posts, i always end up picturing eamon ryan or batt o’keefe or one of the other drones in full flight. thats probably why you end up getting the flak you do.

@ Greg
“Would we take the nuclear option?”. Not so much a choice as an inevitable consequence of a botched bailout. It will happen if this is not done right. David O Donnell’s historical analogy could be apt.

Hope you don’t mind me saying this and I hope it does not annoy you more. I have always enjoyed your posts and found them very enlightening and persuasive. Unfortunately, as you know, if you start firing insults they get fired back. That, as you know, is life.

Perhaps commenters should consider moving up to the latest posting (‘A Bailout Worth Considering’ by John McHale). Poor Sarah Carey is using some kind of primitive iPhone and it takes her ages to scroll down through the thread. There’s nothing like a ‘random act of kindness’ to wind up the weekend.

Eureka Says:

“Not so much a choice as an inevitable consequence of a botched bailout. It will happen if this is not done right. David O Donnell’s historical analogy could be apt.”

To be clear the EFSF is not a bailout.

It is simply the EU with the help of the IMF acting as provider of liquidity of last resort. No restructuring is allowed.

If, though I think it impossible, we were to approach the IMF directly we might be able to restructure.

But the head of the IMF is Dominique Strauss-Kahn. A former Finance Minister of France he has ambitions to the Presidency.

He is, as they say, not going to sh1t on his own doorstep.

The IMF will not act alone.

Yeah wrt DO’D’s analogy I think that’s right. Apply too much pressure to the population and things get ugly.

Maybe that’s why politics is a black art.

Carolus Galviensis

“Poor Sarah Carey is using some kind of primitive iPhone and it takes her ages to scroll down through the thread.”

Well the “boys boys boys” wouldn’t like to inconvenience “poor Sarah”.

That would be lacking in manners.

@ JtO

Do you remember Prof Glass or Prof Eke? I qulaifed with pure maths degree from QUB in 1972. I am the complete polar opposie of you on the national question – a catholic unionist.

I can verify your recollection of the times but why are you not proud to be a troll, I am?

@ Greg
Thanks again for tolerating and correcting my ignorance. If we are unable to pay back the EFSF what happens then?

I am still waiting for you to tell me what GDP base you used for 2009 to predict growth.

As I am tired of pointing out, if you used the original 164 billion figure then growth is unlikely to happen. If you somehow worked out that 2009 GDP was going to be 160 billion before that figure was released, then I am astonished at your ability to accurately measure the statistical discrepancies that it took the Central Bank six months to come up with.

So far you have predicted that there will be growth 2010 over 2009 in percentage terms and that exports would grow. You appear not to know or care about the other components of GDP.

On the move of the BOP to surplus, I suspect that the early exit of the NTMA from the bond market will mean that BOP will not turn positive this year.


You don’t annoy me in the least, Eureka. I find you exceptionally polite. I couldn’t care less how much other people disagree with my opinions. I disagree with their’s and I’m sure that they couldn’t care less about that. As I explained in one of my posts above, brickbats flying here, while they might seem a big deal to middle-class Dubliners, are child’s play compared to the north in the 1950s and 1960s. I don’t even object in the slightest to being called a troll, as is clear from my response above to obsessivefreak’s first post, where I laughed (am still laughing) at his claims and thanked him for his complimentary comments about my (non-existent) trolling abilities. Praise indeed to be called one of the highest-level trollers he has ever come across, even though I’m not actually one and therefore unworthy of the praise he heaped on me. However, I did take objection to his accusation that I was putting on a false persona, and was not actually a 60-something, protestant, nationalist, northerner, implying that I might be some student nerd, sitting in Bray, putting on a false persona. So I decided to call his bluff and prove otherwise. I shall let the matter drop when he apologises.

Regarding the comparison between my forecasts and those of the main economic forecasting organisations, it is not a matter of one-up-manship. I am not trying to make myself out to be a super forecaster. I am not trying to usurp the role of these other organisations. I am simply trying to highlight that they aren’t doing properly the job that taxpayers pay them to do. It isn’t my job to forecast. I am nobody. I work in a completely different area. That is why I am off to the US. It matters nought whether I can forecast. The question is whether or not the organisations paid to carry out macro-economic forecasting in Ireland are doing a good job. I say that they are not, and are damaging the economy in the process. I gave the list above. Whether I am any better or not is irrelevant. Markets don’t respond when I make a forecast. Never heard of JTO’s forecasts being quoted on Bloomberg. But, those of the Dept of Finance, the Central Bank, ESRI are regularly. Therfore, they ought to be getting them correct, but they aren’t. They are are abysmal. Something should be done about it. Why are other economists so silent about it? Is it old-fashioned trade union solidarity? Is it the ‘cosy cartel’ that Brian Lenihan referred to at play? They are always attacking incompetence in other professions like the Gardai, nurses, teaches. Why do they ignore the incompetence in their own profession? Look at all three of the organisations’, Dept of Finance, the Central Bank, ESRI, forecasts for export volume growth in 2010. This time last year they all predicted negative growth. That added to speculation over last winter that Ireland might have to exit the euro, that Ireland couldn’t compete in the euro. McWilliams went on about it week after week. In the event, exports are soaring in 2010, looks like a rise of around 10% is in prospect. How can such incompetence on the part of the organisations paid to forecast these things be defended? That is my point, not whether I, a nobody, can do it better. Even if my own forecast had been a lot worse than their’s, it wouldn’t alter the fact that their’s was atrocious.

@JtO – “But, on both occasions I said that I’d be back. ”

….. and you go to California a fair bit did you once say?

Are you Arnold Alois Schwarzenegger (aka The Terminator)?

Well, judgement day (for Ireland at least) doesn’t seem far away – see you there.

p.s. and I thought you said you were going out to the pub tonight to impress some ladies with your new troll credentials?

You aren’t reading this blog from a pub I hope.


“Thanks again for tolerating and correcting my ignorance. If we are unable to pay back the EFSF what happens then?”

I don’t think you are ignorant at all. Most of what I say is opinion.

“Unable to pay back the EFSF”.

Impossible. Unless the EU collapses for some unforeseen reason.

The EFSF is like the Hotel California. Once in you never leave and all that.

The EU will make sure that we can always service the debt.

It would not be in the interests of the EU to allow any EFSF supplicant not to meet its obligations.

Worth remembering that they will in effect have control of the entire economy and all natural resources.

They will “own” the Irish Parliament.

Ten or fifteen years of that and well have a Taoiseach called O’Merkel.

An interesting defence of trolling — 18th century style — here:

“I ceased in the year 1764 to believe that one can convince one’s opponents with arguments printed in books. It is not to do that, therefore, that I have taken up my pen, but merely so as to annoy them, and to bestow strength and courage on those on our own side, and to make it known to the others that they have not convinced us.”

– Georg Christoph Lichtenberg (hat tip: Mangan’s]

@Brian Woods II

Do you remember Prof Glass or Prof Eke? I qulaifed with pure maths degree from QUB in 1972. I am the complete polar opposie of you on the national question – a catholic unionist.

I can verify your recollection of the times but why are you not proud to be a troll, I am?

JTO again:

As I said, I have no objection at all to being called a troll. I treated his initial accusation of being a troll as a bit of a joke, as my earlier post shows. Water off a duck’s back. I simply objected to his subsequent allegation of having a false persona here.

Thanks for confirming my recollection of those days. The name Glass rings a bell, but not Eke. However, I am sure that you are correct. It is 40 years ago. My memory of those days is fading fast. I graduated in pure maths in 1970. We must have crossed each other’s paths a few times. Apart from Professor Verblunsky, the lecturer I remember best is Dr Burgess, who taught us analytical topology (yawn), and, if I recall, seemed to have some, what seemed to us young people at the time, serious health problem of the nervous system, and a younger lecturer called McCartney. I was still around in 1972 when you graduated. I did my M.Sc. in computer science in that year under Professor Hoare, then worked briefly in the new purpose-built computing building that opened around then down behind the back of the main building, not far from the Presbyterian students centre, where I hung out a lot. There were lots of protestant nationalists at QUB back then. Fred Taggart, who was President of the Students Union in 1968 was another.

I think, despite what you might occasionally reckon, most people on this site enjoy the posts and the stats and the focus on the positive. They have worked in countering the negativity and in instillng hope. At one level people don’t want to take them in but, like it or not they do. And they stick.
Forget about the apology. It’s not worth it.
Whether you’re in the pub or on the trip to the airport enjoy the trip. And if you are in the pub you can impress the ladies with your very long blog posts!!! Mind you – it’s never worked for me. Maybe just not long enough!!


Are you Arnold Alois Schwarzenegger (aka The Terminator)?

JTO agin:

Yes. Rumbled at last.

Yes, California lots, but this time its the cold northern states.


I thought you said you were going out to the pub tonight to impress some ladies with your new troll credentials?

JTO again:

I am going to the pub now. Planned to go 2 hours ago. But, I couldn’t drag myself away from this thread, and my long post above took much longer than I thought. I hope the ladies are still there. However, this is definitely my last post tonight.


‘We need to negotiate a burden sharing with the EU. The debts of Anglo & INBS can be negotiated without affecting the sovereign or the EU in a direct way.’

Yes – not only have they infected us, as their debt is conflated to sovereign(insane), but they are now infecting the e-zone. I have a good bit of time for The Frankfurt School; just hope the ECB is up to the tradition.


1. I accept you can’t choose your bailer – but I am interested in the why’s and mechanics of how it works. It seems to me there is a lot of institutional politicking/negotiating etc to be done. No harm in asking questions as to how that works. Or is there?

2. I am that same Sarah Carey, ( You might remember me from a chat we had on TodayFM after I wrote a column suggesting setting up an EU/IMF joint fund to take the PIIGS of the markets – you thought the suggestion was terrible. A week later the EFSF was created. I think you interpreted from my column that I was suggesting that such a fund would be used to avoid deficit cutting – but I hadn’t suggested that at all – simply to get countries funds without being hammered with higher bond yields and gee whizz, look where we are now).

Anyway, in my most recent column I did not blame Europeans for “all” our current troubles. I specifically acknowledged our considerable contribution to the crisis. But I did point out that specific ECB policies – “Save your banks!” (if not the mechanism we chose to do so) and Strong Euro – are not helpful to us. No bank and no bondholder left behind is costing us dearly. (Of course SG is happy with that no doubt!)

3. I did not suggest giving the finger but rather using what leverage we have left to get us the best deal possible. As I said – the public is being brow beaten into agreeing to anything because “the ECB is writing all the cheques now!”. Well, we do have some negotiating power left. I’d like us to use it. Shoot me.

Off the iPhone and back at the laptop. No scrolling tonight 🙂

oh – just read John McHale’s post above

” I don’t think our European partners could simply expect us to pursue a less nationally advantageous path in the interest of broader euro zone stability. ”



“However, this is definitely my last post tonight.”

Gosh. The ladies will be disappointed

Well, obsessivefreak, if I am a troll and not who I say I am, you’ll have to admit that I must be the cleverest troll in the world to accumulate that information in an hour or two, given that almost all of it is pre-internet.

Or you could have just have opened up someone’s biography.

I stand by my overall assessment. This derailment has gone on long enough, so I’ll leave it at that.


From the FT (not sure if they allow copy and paste snippets under “fair use”. Delete if not)

“Irish officials insisted on Sunday that they did not need fiscal assistance from the European Union, even as pressure mounted on Dublin to accept aid and present plans to restructure its banking system.

This from the FT’s correspondents in Brussels and Frankfurt.

“By Peter Spiegel in Brussels and Ralph Atkins in Frankfurt”

Or as they say “in the hood” … “Who’s your daddy now”.

Oh look. It’s the banks again.

Shame JTO is out impressing the ladies. I’d like his considered optimistic opinion.


I have!! I haven’t tried to find out – but you have to think – in a bunker – not applying for funds. What I’d really like to know is whose with them.

I was thinking today – what we need now are people who’ve done this before. Who in DoF – or consultant at their disposal knows how all this works? That’s why I was asking above about dealing with the ECB and IMF – working out which rates for which loans – other related terms etc. If we are now at WHEN rather than IF I want to start talking to people who know HOW.
Does it end up with DS-K and J-CT in a room (metaphorically) deciding what terms we get?

@ Sarah “If we are now at WHEN rather than IF I want to know HOW.” Again there is a lot of detail on the EFSF website. They have a very good FAQ and the statutes are detailed, etc. Plus Klaus Regling (who many in Ireland know) has been very explicit on the modalities etc. Check through his press interviews.

And that’s right, I don’t like cash being doled out, nor large precautionary cash balances being held. Raises too much moral hazard. I prefer the discipline of the market. That’s what we see / have seen on the whole in the US, and it is far healthier. Europe has bent over backwards to help out, and Ireland has been most favoured. That indulgence has led to more harm than good, I’d argue. I’d have preferred to have seen a championing of the principles behind the creation of the single market.

have you been posting here long enough to determine whether JTO is a troll?
And your postings in this thread aren’t impressive.

( I’ve been lurking here for a long time.)

@JTO at 8:20 pm

Ahh – JtO, you boyo!

PTQ brings me back – Pro Tanto Quid – I visited Queens in ’68 with a bunch of physicists from UCG and I seem to remember that PTQ was pretty risqué for the time. I was very impressed with the huge ICL main frame you guys had.

You’re definitely no troll. Keep up the good work – your posts are spot on.

I was uplifted by your forecast for a 32 county republic though I take issue with your suggestion that we in D4 (I do live there) are in a state of cultural cringeing, pessimism, anti-Irishness, and all-round uselessness. Perhaps we can meet at the GPO in 2016.

PS. How did you get on with the ladies?


@ Greg
Great Link and a great song.
Hope, resilience and optimism have carried generations before us and they will carry us too.
Was up North over the weekend and can you believe – a decade with no bombings or shootings and a good chance at carrying that through. Think of all the people who would have said it wouldn’t happen.
It was guys like JTO that brought it to be. They believed it could be better. They saw the good when everybody else saw the bad.
In a world where we all end up dead pessimism is a sure bet. But where, oh where would we be, if it wasn’t for those who believed it could be better.
And it will be better!


To be fair you are honest.

That “optimism thing”. You do know it is a disease of mind?

And if you don’t understand what that means, I do.

I’m not sure what to say exactly.


God Bless.

One thing the banking/oil crowd do not want is a “hot frog”!

The frof becomes aware of what is going on and jumps from the saucepan!

That is one of the reasons why I want Morgan Kelly’s baby? He is alerting even the shills to how bad things are and this is being confirmed internationally. Perfect knwledge(no such thing of course, parody of economics lecture!) may be able to create a perfect market?

Ireland has masses of resources to be developed. The EU/oil/bankers want that money. Why not, we all do? So how do they go about getting more than their fair share? Debt slavery is a good start. Along comes a white knight with cheaper financing. (Sounds like Lord James of Blackheath???) Massive new agreements with the WK. Lots of money made all round. Just not so much going to the plain people of Ireland, whom JtO presumably cares for? Mopre goes to them that already has…..

Economic war?! Seeing the opportunity presented by Ireland, (pointless saying it was engineered by them?) they naturally want to get their hands on blocks of exploitable resources. But not now, when a glut is threatening their new pricing structure at which they make a lot of money, in a depression, that is no mean feat!

This plan has decades to run guys! Well into the next K wave….


Keep safe, have fun, bring back lots of $$s! Not a troll, but a shill?

. . . . a quick thought . . . . and correct me if I am wrong.

Is not the time for the Irish government to renege on all bank guarantees.

It seems to me that the weekend has indicated that the EU now knows that it has ‘skin’ in the game and would respond quickly to shore up the Irish banks …and that sovereign Ireland could get off this very sharp and self inflicted hook.


(Should read)

. . . . a quick thought . . . . and correct me if I am wrong.

Is ‘it’ not the time for the Irish government to renege on all bank guarantees.

It seems to me that the weekend has indicated that the EU now knows that it has ’skin’ in the game and would respond quickly to shore up the Irish banks …and that sovereign Ireland could get off this very sharp and self inflicted hook.



I vaguely remember those names. Pity that QUB is not what it used to be, unfortunately my tribe being responsible for its decline.

Complex Analysis was my chosen sport but upon qualification came down here in pursuit of Mammon as an actuary. Unfortunately what little Mammon I got was confiscated from me in the shape of 73% taxes. Young folk today don’t understand how bad things can really get.

@Michael NJ USA

Yes – now that ‘skin’ is recognized (as you put it) – it is possible. Guarantee is a proven disaster for this sovereign.

There is an error in the article. The phrase “adjunct lecture in finance” should clearly be “adjunct lecturer in finance”. Does nobody copy-edit the text any more?

Comments are closed.