For a severe recession that caused a 10 percent decline in the incomes of one-half of the EU, transfers to depressed regions on a scale equivalent to that available in the US would amount to 0.5% of EU GDP. This would entail a massive 50% increase in total spending on EU programmes; Eichengreen (1990). Could monetary union survive if such aid were not forthcoming from a federal EU budget? While political scientists warn that the political fabric does not exist to deliver a significantly larger EU budget, and that “subsidiarity” in any case militates against the transfer of welfare state functions to Brussels, Costa and De Grauwe (1999) have warned recently that the “failure (to create a European government with similar responsibilities to present national ones) creates the risk of the break-up of the monetary union”.

Media blaming the markets is like blaming a wolf-pack for following its instincts.

Does no one remember the market frenzy of 1966-1973 when market-driven panic drove world currencies wild.

A new era of penal laws looms - albeit economic rather than political but all the more destructive and enslaving for that very reason.

We can and must focus on solutions to our enslavement, not just banks’ debt which has been treason has foisted upon us.

That’s not something to joke about and certainly not something to sing about.

Lenihan guarantees Anglo derivatives, again!
http://www.irishtimes.com/newspaper/finance/2010/1129/1224284371238.html

Having had some experience in the financial services ‘communications’ area myself, I can confirm that’s a pretty normal approach. The golden rule there is only ever drip feed bad news. Drip, drip, drip. Oops, I appear to have a big puddle here now.

Pat Rabbit is no idiot. If I get the chance I will ask him about this but it might not be this side of Christmas.

20 mins into RTE nees and a passing reference to the dervitaves nuke. RTE plays it down as nuffin’ new. Was our furry little rabit duped?

That has been a repeated pattern in the banking catastrophe.
Claim made of big losses.
Government angrily denies then reveals “small” losses
These losses then grow and grow and grow.

Rabbitte once said he knew of a file that would rock the state regarding government collusion with the catholic church, during the 1994 Brendan Smyth extradition that brought down the government. He was widely mocked when
it didn’t turn up. But with the publication of reports of the abuse tribunals we can see that that the collusion he alleged was going on to a massively greater extent than anyone would have believed. The wiki on Albert Reynolds alledges that a CH4 documentary revealed the affair - I can’t remember- embarassing an Irish media who were silent, due to libel laws. Nothing changes.

Morgan Stanley says in the US, there were three main factors in debtflation in the post-war period. First, outlays such as social security were not closely linked to inflation. Second, bondholders were surprised by inflation both after the war and in the 1970s. Third, in the first post-War decade, the average maturity of the debt was - at more than 100 months - exceptionally high.

The largest contribution of inflation to debt reduction came in the decade immediately after World War 2 (1946-1955). Despite a primary surplus of 1.2% of GDP, overall the budget was in deficit by 0.3% of GDP on average. Yet, the debt was reduced by 4.9% of GDP a year, through a nominal growth effect of 5.2% annually, as nominal GDP growth averaged 6.5% over the period. This very large nominal growth effect is mainly due to a substantial inflation effect - inflation averaged 4.2% over the period - which reduced debt to GDP by 3.7% every year, and to a much lesser extent to real GDP growth, which on average contributed 1.5% of GDP to debt reduction.

Over the medium to long term sure but not in the first couple of years when wages are trying to catch up frog-hops in inflation. It would cause cashflow problems as you get 2-3 mortgage hikes before a wage rise kicks in.

At our stage, all courses of action seem to involve unpleasantness. But this is the only way that occurs to me to resolve the mortgages problem at all without what amounts to another massive transfer by the State to those better able to afford it.

Over the medium to long term sure but not in the first couple of years when wages are trying to catch up frog-hops in inflation. It would cause cashflow problems as you get 2-3 mortgage hikes before a wage rise kicks in.

I assume that any inflating away of debt would also entail rising interest rates and even more people in Ireland being unable to afford to pay their mortgages?

My understanding of the conventional view of inflation is that it would help ease the private debt burden (including mortgages). The problem I guess for the likes of Gurdgiev in advocating this would be that it would “attack” capital in their eyes, so ist verboten.

With the recent downgrade to junk of some, I imagine the Irish banks are all facing cash calls on their collateral.

erratum humanum est

http://www.rte.ie/news/av/2010/1128/thisweek.html#&autoplay=true