Olli Rehn: There is Light At the End of the Tunnel

Olli Rehn marks the one-year anniversary by writing in the Irish Examiner today  – his article is here.

111 replies on “Olli Rehn: There is Light At the End of the Tunnel”

Maith an buachaill Olli! Your Finnish optimism on dark days is appreciated.

Minor point: “Let me also note that the cost to Irish taxpayers of restoring the healthy functioning of the financial sector has been substantially reduced thanks to burden-sharing with subordinated debt holders and a sizeable injection of private equity into one of the pillar banks.”

An odious debt load of ~45-50% of GDP would require much, much, much more reduction (write-off, restructure, etc) to qualify for the qualifier ‘substantially’ … of course, you know this well, but you are much too diplomatic to say so …. and certain constraints are understood around here.

Anyone know why Olli Rehn is writing an article for the Irish Examiner? Just happened to pen something over the weekend in between taking the kids swimming and having his Sunday lunch did he?

The content of these articles is irrelevant, it’s the reason for writing it that matters. No doubt this is part of a larger ‘stay the course’ media strategy cooked up by the boss men. It would be interesting to see the ‘brief’ given to the minion who was asked to write the article. I’m the sure the word ‘encouragement’ appears many times.

Light at the end of the tunnel or is it an oncoming train?

Markets going up today. We all know the old saying: buy the rumour and sell on the news but it all seems to be rumour this morning. Where are the facts?

Johhny Foreigner is right. The real story behind this bit of propaganda would be interesting. My guess is the original draft came from some combination of apparatchiks in the DoF and DoTaoiseach. Orwell would have enjoyed dissecting it.

“Secondly, the programme leaves considerable policy discretion to the Government in terms of how to meet its key objectives. It is the Government, and not the so-called “troika”, that is responsible for taking the key decisions that matter to the lives of Irish people.”

This might be a useful quote in the weeks to come.

Like Greece and Portugal, beggers can’t be choosers!

It’s high time, tribal politics is brought to an end. Irish are great nation.
Great rugby nation. There is no reason to cry over spill milk – afterall the Troika rescue is on-going and looks very much like a case study, for Rehn.

Sweet are the uses of adversity!

Sheltered sectors of the economy, such as the legal and medical professions, are to be opened up with the recent publication of landmark reform bills. The aim is to reduce costs in these sectors, and so bring prices down for Irish consumers and businesses. To boost job creation, the Government is working with the social partners to modernise the framework of sectoral wage-setting arrangements, which cover areas where unemployment tends to be highest. Steps are also being taken to raise the caps on the size of retail premises and to strengthen the enforcement of competition law.

LOL…Out loud I tell Ya………

Comes just in time for the T-Shock’s Television address.

It is the Government, and not the so-called “troika”, that is responsible for taking the key decisions that matter to the lives of Irish people.

“Finally, continued, strong implementation of the programme is the best way for the Government to repair the damage that has been done to the economy due to the excesses of the past and to lay the foundation for sustainable, job-rich growth in the future”

The Rosary is just as likely as the bailout to generate jobs. Or even more so with a bit of holy water.

Perfectly reasonable and helpful article, though the primary stated bailout aims weren’t achieved:
1) Agressive deleveraging of Irl banks to reverse capital inflow(the primary,and only ECB demand)
2) Irl to return to market
3) Contagion to stop

Ireland shudda been a much more ‘useful’ bailout to hold up as example, but principles of bailout were neither extensible nor scaleable. Not surprising given that localised aetiology of bailout lay largely in histrionics of Trichet, another duff ‘leader’.

It is important that the Irish people understand that, despite the severe difficulties which the country has experienced over the last few years, there is now light at the end of the tunnel.

No, Olli, there is less light at the end of the tunnel. In fact it is not clear if there is a tunnel any more.

Another century dawns and once again Europe is resembles Yeat’s uncouth beast,
‘slouching towards Betleham’.
And once again Germany has all the answers for everybody but no solution for anybody other than mayhem.

Any crisis or currency consultants out there? Do I change my Euros into Swedish (as all the Greeks appear to be doing), Swiss or US? Or should I spread my risk and distribute evenly across all three? Which bank in Dublin could facilitate this? It’s all looking far too hairy out there for my liking.

The fact that Ollie is penning articles for a little known provincial paper on the periphery of Europe says it all. It is nothing more than deluded propaganda from a commission that has been reduced to political eunuchs.
Just look at the treatment Barrosso got with his grand proposal. It was shot down in flames before he even published it.
Take Barnier and his proposals. It is little wonder that Angela Merkel doesn’t listen to them. Her relationship with Barrosso has been described as being “in tatters”

Dr. Merkel will decide this…with or without Sarkozy.

@PR Guy
Don’t bother. Merrill Lynch says the puntnua will appreciate against everyone.
Maybe try yuan. (smiley)

Interesting short report in Irish times today 28/11 -“Germany mulls over joint bonds”. Apparently Germany is proposing to join with France, Austria, Finland, NL,Luxembourg, in selling bonds jointly. Some of the money raised may be loaned to OMS such as Spain and Italy presumably with a premium and subject to strict conditions. Could this be the start of a breakaway by the AAA rated countries, and of a two tier Eurozone consisting of the good six in the highest tier and the rest in a lower subservient tier? if so France would need to hurry up n’est ce pas.

Ollie is a bit of a jack in the box.

At critical junctures during the evolution of our crisis, he pops up to make sure we won’t upset the apple cart.

Last time he was here was when Noonan had a little case of the hairy nerves with Geithner and Noonan came back empty handed as usual.

No way were we to renege unguaranteed bondholders, now Noonan has junior bondholders in mind for a 100% haircut, http://www.irishtimes.com/newspaper/finance/2011/1124/1224308056058.html

According to Ollie everything is great in the Irish garden. Emigration, unemployment, 150,000 facing negative equity; a vile austerity budget that will only worsen our situation ahead, a dead commercial and residential property market, a worsening external situation and a deepening crisis for our deflating and disappearing GNP.

But consider this, folks, the only thing that matters to Ollie, our Pied Piper of Hamlyn debt collector and arch confidence trickster who extorted the terms of our 5.8% immoral bailout, is that we are meeting his bondholder maturity and repayment deadlines…..:)

He’s one of the bellyfeelgood confidence trickster brigade:) He may also be one of Orwell’s blackwhites, one who has even persuaded themselves that ‘black is white’. Rather than lecturing on on our ‘house on fire’ perhaps he should return to deal with a bigger fire in the EMU fire station burning out of control right now!

Interesting weeks ahead!

Sorry if I come across all negative there. I’m actually a very positive person with great belief in this great island post euro. There’s a lot to be gained for us outside the euro is my point. But it will have to be fought for with determination and hope in a better future. To me the cassandra’s are the Ollie boys taking us all to the scrap yard:)

“Klaus Regling, head of the eurozone rescue fund EFSF says market conditions have hobbled the ‘big bazooka’ deal. The hope was to leverage the depleted fund up four or five times to around €1,000bn before firing it into Club Med’s black hole of debt, plugging the crisis. But as bank lending dries up and the debt crisis escalates that’s no longer possible”

IMF denies talking with Italy.

OECD downgrades growth prospects everywhere.

And all the stock markets rise dramatically.

Make you wonder.

IT reporting at 15.32 on their live blog that Ecofin Ministers are meeting tomorrow to scale up the EFSF fund….and the boss of the Fund says the big bazooka deal is hobbled….see above post which is a quote from the telegraph live blog. Wtf is going on.


The tunnel is 20 years long…. Thanks you had me spill my afternoon coffee for laughter. What a mess…. LOL

@Paul Hunt

“Johhny Foreigner is right. The real story behind this bit of propaganda would be interesting. My guess is the original draft came from some combination of apparatchiks in the DoF and DoTaoiseach. Orwell would have enjoyed dissecting it.”

“IMHO the real story” is contained within the article in the following words by Mr Rehn:

“I do understand, the perspective of Irelandś history and also from that of may native, why sovereignyty is so important.”

Actually unlike Finland Ireland has a close relationships with itś former colonial power whereas Finland does not enjoy the same relationship with its former colonial power.

Fiinlandś situation is even more complex because in addition to Russia Sweden (also a previous colonial power of Finland) is not in the Euro and very concerned about the emergence of the “True Finn” political party.

Mr Rehn, like every other Finn, is also acutely aware that the rest of Europe left them “out in the cold” during WWII .

I would guess that the last thing the Finns want to see is a core Euro Zone of 8-10 countries which Ireland declines to be part of and which Finland and Estonia remain part of like some sort of “Teutonic outpost.”

In such a scenario Austria would not be a “natural ally” of Finland and Estonia would be expecting Finland to shelter it if a “new Euro Zone” also turned out to be unworkable.

Then again perhaps he should have been thinking about that one year ago when Ireland was being stitched up. sorry I mean “bailed out”. 🙂


“Wtf is going on”

If you find out please let me know…

Maybe prices are being driven up ahead of the short sells they are going to place tonight, knowing the big crash is just around the corner and making sure it falls as far as it can to maximise the opportunity? 🙂

FTSE was over 5300 the last time I looked. Imagine if all this bad news that’s been going on today (bond yields achieved this morning horrific, IMF may be bailing out Italy/Spain with €600m, OECD says it’s all going to hell in a hand cart, EFSF head admits big bazooka is a damp squib, Europe probably already in recession, Moody’s thinks it’s going to get worse and more downgrades are needed, etc.) had been really bad? It would be over 5500 by now!!

I had a look at placing a spreadbet on the FTSE rising today and ‘computer said no’ so I left it … Oh well. Such is life.

That tunnel of Ollie’s could be one of those wormholes. We could end up coming out in a completely different space and time. A parallel universe where there is no debt, Irish property crash never happened and ‘the markets’ really are meerkats…

Next stop – “The Emergency”

… which should, of course, have been declared in mid 2008. Back to the future …

I think the banks must be putting pressure on to get positive . I see another bit of positive spin in da paper. Bosses consider everything to be hunky dory.

@ Ceterisparibus

That’s not a comment on the poll! I will volunteer one myself.

There is nearly a 50% level of support for “sticking to the programme”, a large number of don’t knows and some 30% opposed. However, a much larger number disapprove of the government’s handling of the crisis.

None of this comes as no surprise to me.

Does it surprise other contributors to this blog?

Anyone care to comment on the opinion poll by the Cork Examiner?

Totally unsurprising. Half the country voted for Fine Gael and I suspect have done quite well out of them.

Not sure which thread to drop this into, but…

Has any contributor here got any idea what in reality – you know, in the real world – what a “financial receiver” would actually be, and how in would function in terms of interacting with the people, politicians and institutions of the COUNTRY it er, ‘took over’?

Here is a link to the ECB’s paper on presumably what the Bundeslobby is seeking, along with extracts of the relevant bits.

I have to say, if a draft looking like this was presented to me for feed-back before publication, I would be asking for this idea to be expanded or dropped because otherwise it looks a bit like it hasn’t been thought through – and it would be reasonable to expect it to be thought through properly, given the way it might be interpreted.

Does ‘receiver’ equal ‘government’?…for example, might be a reasonable question.

See below.


3) The ESM

• A country requiring assistance under the
ESM is placed in financial receivership if
its adjustment programme fails to remain
on track, with the planning and execution
of budgets requiring the agreement of the
appointed fi nancial receiver.

As regards the third element, fi nancial
receivership is necessary where countries have
no political consensus in support of reforms.
Without such a provision, the moral hazard
emanating from support programmes and the risk
of countries failing to comply and/or defaulting
would not be suffi ciently mitigated. This is the
ultimate step in a graduated process of increased
monitoring and control over national budgetary


“None of this comes as no surprise to me.

Does it surprise other contributors to this blog?”

I am very surprised by that. Usually you display a natural and fluent precision in your writing. I can only imagine it was a liquid lunch or something that caused this gaffe.

On the poll, I guess a lot of people think they should ‘stick with the programme’ (ie not default or leave the Euro etc), but that they think the government should have used its ‘mandate to renegotiate the bailout deal’ and therefore they think the programme should be a different one.

“Has any contributor here got any idea what in reality – you know, in the real world – what a “financial receiver” would actually be, and how in would function in terms of interacting with the people, politicians and institutions of the COUNTRY it er, ‘took over’?”

I don’t believe there is any such position in the real world. This is Barrosso et al gone completely and utterly insane. Do they really think that various countries ( excepting the docile Irish) in Europe will accept what effectively amounts to a dictatorship being imposed on them for the sole purpose of retrieving monies advanced…much the same as a company receivership in the real world where the receiver effectively only owes a duty to the bank that
appointed him.
No wonder Angela laughed at barosso’s effort.

As regards the third element, fi nancial
receivership is necessary where countries have
no political consensus in support of reforms.

The key word here is reforms. What is a ‘reform’.
Suppose Ireland gets a consensus on one reform. Refusal to pay private banks debts. That would be a reform to me. In the sense of putting a wrong to right.

What is being proposed of course is not reform. It is the implementation of formal regulations, rules and laws with severe penalties for non compliance. These regulations, rules and laws have only one purpose. The collection of debts.
The reason is simple. The fraud perpetrated on Ireland is now exposed and other countries are more forewarned and unlikely to be as submissive as Ireland.
It is now in Ireland’s interest to plan for exit from the euro. Under no circumstances should Ireland concede any more powers to the Banking Junta. We have seen what they did without any formal powers.
It is time to take the country back from the Banking Junta.

@ Grumpy

You must be able to do better than that!

Herewith another extract from the report of the Cork Examiner with which I happen to agree.

“Part of the reason for the high number of people in favour of continuing with the bailout may be a lack of faith in the Government’s own economic performance”.


re: However, a much larger number disapprove of the government’s handling of the crisis.

Certainly no surprise to me.
The situation on the ground has imho deteriorated rapidly in the past two months. The situation is particularly bad in small owner manager businesses. Usually several of these would attempt to make it to Christmas in the hope of survival or a miracle. This year they are closing in Oct and Nov and Dec.
Bank of Scotland, now Certus, is reported to be taking two months to respond to people looking for interest only mortgages due to volume of cases.


Berlin denies the split – lot of denial goin on at the mo

Closing the AAA Ranks?
Berlin Denies Rumors of Plans for Joint ‘Elite Bond’

The move would divide Europe — according to a press report, Germany and the five other strongest euro member nations are considering the issue of so-called “elite bonds.” A German government official has denied the report, but there is mounting speculation that the six nations plan to spearhead closer fiscal coordination.


Rumour that Kohl and Habermas forming a joint militia of angry old men – bout time …. this is getting really dangerous … MerKozy deserves a P45 – 70 years dedicated hard work and it could be destroyed in a week due to this procrastinating dark duet ….

”Apparently Germany is proposing to join with France, Austria, Finland, NL,Luxembourg, in selling bonds jointly. Some of the money raised may be loaned to OMS such as Spain and Italy presumably with a premium and subject to strict conditions. Could this be the start of a breakaway by the AAA rated countries, and of a two tier Eurozone consisting of the good six in the highest tier and the rest in a lower subservient tier? if so France would need to hurry up n’est ce pas.” – Fitz.

But don’t they still bear – via their banks – the greater part of the debts owed by those countries not included ?
If they consolidate into a collective nation or whatever, what leverage could they apply to prevent the outsider National parliaments (the ones they haven’t already taken control of) from defaulting ?
We’d certainly be better off if, even now, the various strands of our debt were seperated into a sovereign and a private thread, and burn the latter.
Borrowing even if with relatively hight interest would be less than the liabilities that exist under the current ‘arrangement’ the ECB foisted on us with the bank guarantee.

As for –
“Part of the reason for the high number of people in favour of continuing with the bailout may be a lack of faith in the Government’s own economic performance”
– I think it is slowly but increasingly becoming apparent to people that Ireland was the victim of the european banking system, operating under the aegis of the ECB who were well aware of the lobbying that Cowen succumbed to to go lightly on regulation (with respect to euro-owned subsidiaries in the IFSC but also money from the larger banks on the continent using the likes of Anglo as a mask for their own speculation), (the lobbying on regulation was revealed by Kathleen Barrington in articles months ago & is still online.)

And as for lobbying, I think at the moment there’s a fair amount of the surreptitious online type that seeks to work on public opinion via articles, interviews polls and (even) forums that is seeking to advance the cause of ‘fiscal integration’ even as the pathology of the groups behind it become increasingly apparent.

contd Der Spiegel International

Euro Zone on the Brink
A Continent Stares into the Abyss

Fear is spreading through the financial markets as investors pull their money out of the crisis-stricken euro-zone countries. With Chancellor Angela Merkel opposed to using the ECB’s firepower to solve the crisis, the monetary union appears increasingly in danger of breaking apart. Some economists are even arguing for Germany to reintroduce the deutsche mark. By SPIEGEL Staff



Tuff ol times to be in The Commission. Remember Walter Hallstein?


Ah, I see now. There is no problem after all with ‘common’ bonds being issued.
Just as long as they are issued to royalty.

Egalité, fraternité, und so weiter.

Paddy Ashdown a couple of weeks ago : ”The difficulty is in achieving reform without recourse to war”.
There does seem to be a real intensification of the problems by those (the Barrosso lobby but surely others too) attempting to use the situation to advance this long-dreamed-of project (which our own politicians still deny exists) of centralised governance, for the realisation of which they’d grown impatient.

And continuingly, they speak of budgetary oversight without mention of the real cause of certainly the Irish portion of the debt and a substantial part of the rest of it – the lending practices of the banks that holds the sovereign (just) nations of europe in a full-nelson of liabilities equivalent to four times the gdp of the entire eurozone.
Anybody still think Germany and the ECB are more competant than our own lot ?
Don’t give up the right to choose and sack our own leadership just yet, folks.

“World peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it.

from the declaration of Robert Schuman

The contribution which an organised and living Europe can bring to civilisation is indispensable to the maintenance of peaceful relations. In taking upon herself for more than 20 years the role of champion of a united Europe, France has always had as her essential aim the service of peace. A united Europe was not achieved and we had war.

Europe will not be made all at once or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity. The coming together of the nations of Europe requires the elimination of the age-old opposition of France and Germany. Any action which must be taken in the first place must concern these two countries…..”

“which first create a de facto solidarity”

Where is the solidarity today?

There was always the unspoken supposition in all of that of the primacy of France & Germany, to which all the neighbouring nations would be as subordinates.
After the Napoleons, Bisarck, and the two WWs they’d drawn a stalemate, so a new long-term track was taken, but still had the same ultimate destination in mind.
Surely the wars were merely the symptom, and it is the destination that is the problem.
The sad little irony is that the intermediate stage of the EEC exhibited far more solidarity than the ultimate goal whose proponents still resist abandoning, & which can only overcome conflict with blackmail & destruction .

@Joseph Ryan

Wars have started for less!


solidarity is as scarce as a certain pea_cock’s tooth …

It seems some of the little guys are not happy ….
“Finland’s prime minister, Jyrki Katainen, made it clear Monday that he did not favor a solution outside the current system, a view echoed by the prime minister of Luxembourg, Jean-Claude Juncker, who is also chairman of the Eurogroup, a forum for the finance ministers of the euro zone.

“I don’t think we would be best advised to look for instruments outside the treaty,” Mr. Juncker said, according to Reuters. “Trying to divide even the 17 member states of the euro area and having them organized in two different groupings seems to me to be a very bad idea.” ….from NYT

it seems the IMF only have 390b dollars available and would have to get out the begging bowl…wonder where that La Stampa story about 600b being made available to Italy emanated from?


Poland (I think their Finance Minister; I missed the start of the quote on the RTE 9 news) stating that they intend to still join the euro in two or three years, and that this was the scariest moment of his ministerial career, for Poland’s greatest threat is ”not German Tanks, or Russian missiles, but the collapse of the euro”.
And then went on to say that Germany must provide leadership….


I think the mechanism by which the “receiver” would dictate the policies would just be “here’s the (bailout loan) money, but there are strings attached – you can choose whether you want the money or not”. The dictated policies would thus be “voluntary”. Some related info from the leaked German FinMin stability union paper below.

The decision to intervene in the budget of another eurozone member state would be taken by other eurozone states following a recommendation made by the ESM. Since a possibility of intervention depends on the fulfilment of a specific ESM programme, the ESM should play a decisive role here. In each case however, the Commission should be included in the process, and there should also be close cooperation between the ESM and a potential “stability Commissioner” (if such a position was desired).

When the exact rights of intervention in national budgets of programme countries are being designed, the constitutional provisions on the budgetary autonomy of the Bundestag must be observed in every case. The important thing is: it is about choices – with no financial obligations – for the other euro countries. Interventions in the budget of the affected member state will only take place following its application. The decision on the underlying ESM program will continue to require unanimity in every case.

@Ceteris et al

Re Finnish PM

Wow the Finns really have been busy reaching out to the Irish over the last few days:

Alex Stubb meeting Lucinda, Olli writing in the Irish Examiner, Jyrkki in the New York Times echoing Endaś recent sentiments in Germany.:)

@Brian G, docm et al.

Let me pretend to be imaginative. Think about this wording:

” financial receivership is necessary where countries have no political consensus in support of reforms.”

Ok, if you have a country in a ‘programme’, say the ESM, and the programme requires certain actions, targets, reforms etc to be met, but no political consensus can be arrived at in that country then usually you would expect the money to stop and a default to take place. Is the implication of the line above that this would not be allowed – foreign states would send in ‘receivers’ to take over the government to force the ‘reforms’ to be enacted regardless of what the people decided?


“Without such a provision, the moral hazard emanating from support programmes and the risk of countries failing to comply and/or defaulting would not be sufficiently mitigated. This is the ultimate step…..”

Does this confirm that the provision ensures that once a country enters the ‘programme’ its previously sovereign right to have its people and their political representatives decide at any subsequent point that the programme is not in its national interest, is badly designed or whatever and effectively decide to withdraw, will no longer exist?

“Will the receivers demand the army hand in their tanks or something when they arrive? Will they be wearing balaclavas?

How many words have been written to describe the receivers’ purpose and modus operandi – is it just a couple of paragraphs, has as much work gone into it as that?

I presume we could still have legions of well paid public servants not delivering public services. But we would have to do it on our own dime.


“Poland (I think their Finance Minister”

Sikorski. It’s a very interesting speech a lot more than that was said. How Germany has been the big beneficiary of the Euro and owes everyone else.

Unfortunately I can only find a Polish text to speech of it.


A little known historical fact within the Anglo/Celtic/American world is that many of the third class passengers, in addition to Irish, on the Titanic were Finns.

l’agence de notation Standard & Poor’s pourrait préparer la France à la perte de son “triple A”.”

Quelle immense saloperie !
Quelle rosbifferie !

Everyone to get downgrade? from an article by Ambrose in the Telegraph

“Moody’s warned that the crisis has already dragged on so long that it will have “very negative rating implications” for European states even if the euro holds together. The agency does not expect any decisive action by the EU until the region is hit by a “series of shocks” that first make matters even worse.

It is unclear which states are first in the firing line for a downgrade but France, Britain, and Austria may all struggle to hold on to their AAA ratings, especially if Europe slides into a deep recession that pushes debt dynamics closer to the edge. “

No takers?

What is proposed here – is it a troika inspection team re-named ‘receivers’ so nothing changes really and Germany and the ECB don’t get cover to play ball? Or is it a real handover of sovereignty on receipt of the first ESM tranche – in which case national parliaments would potentially make themselves redundant and agreement is unlikely to be swift (to say the least)?

Either way…

Progressive Democrats downgraded to Junk!

Seriously – following Moore McDowell performance on Patronising Pat – Special Issue on TV1 roight now ….

Sisu Sisu Sisu; Kipis Olli – you’re aw-roight as they say in Dublin. At least you’r not a bleed1n PeeDee.

Nite now …. futher downgrades tmro. Meanwhile in Berlin, the rule book continues to be rewritten, and rewritten, and rewritten as they try to figure of Nietsczhe’s continuous recurring recurring recurring krisis …. without success …..

“Germany’s past behaviour has been characterised by insularity and self-service
Its actions during the current crisis are consistent with this
Therefore its likely that its actions in the future will also be consistent with this.”

From a post I made one year ago -and I was shot down for it.


The poll I think may have an element of TINA to it and that indeed may well be the case – I think the fairness of the burden sharing is worthy of it’s own poll…would you agree?

It is hard to believe he could be so deluded but then again he is part and parcel of the incompetence that brought us here. I could put a thousand phrases in to my computer select them at random and come up with better analysis. These people cannot see the truth when it is staring them in the face.

Maybe they are showing a element of honour that the cretins in Wall Street never showed when they shat all over Detroit & Buffalo in the pursuit of the ” bottom line”
Maybe the are just more normal people with a residual connection to the homeland – although they pursued a policey of reverse wage arbitrage that was a mirror image of Anglo policey.
The world is a confusing place again with different loylaties – fragmentation is happening as we speak……………. the energy density is simply not high enough to sustain the consumption brought forward from the future…………. so we will entertain different narratives………. same as it ever was.

PS – if they do indeed go down the Teutonic Knights Sacrifice thingy the Dollar boys will destroy their dreams.
The Dollar camp is winning anyhow — exporting slurry to semi viable economies is good business these days given the stupidity and avarice of these Knights of austerity.
Their egos are writing cheques their economies can’t cash.

You gotta love this bit

‘It is the Government, and not the so called ‘troika’ that is responsible for taking the key decisions that matter to the lives of Irish people’.

The guy cant even fess up to whose really screwing us.


There are two separate proposals, one from the ECB, and one from the German Finance Ministry, and the point you raise highlights a key difference between the two. The ECB one will not countenance any default, so that if a country fails to meet its target there is a problem, and the plan in incoherent, since the mechanism by which the receiver imposes policies is just hand-waving. This is just one of a long line of ECB papers and speeches rambling on about what is in effect a grand vision of a federal Europe. Trichet was proposing an EZ-wide finance minister for example. These ECB papers are unhindered by any concepts such as the need for democratic legitimacy.

The German Finance Ministry one on the other hand explicitly calls for the possibility of default – “The ESM must also be capable of executing an orderly default of a eurozone member state.” Germany would thus be quite prepared to allow a default if a country rejected the ESM money and policies, and would recap German banks if necessary, after bank shareholders were hit and bondholders had taken a haircut. The German plan is thus coherent in this regard, if somewhat imperialist in both tone and content.

Enda Kenny will likely be presented with proposals similar to the German FinMin ones next week. The ECB one can be safely added to the pile of LBS and Trichet proposals, marked “elitist authoritarian federalist nonsense”.

I’m afraid you are right. The last word in your post aptly describes what is going on.

I had not seen the article by Derek Sally in the IT …it contains some gems from Schauble……

“Like every country, Ireland has to manage its own affairs. Ireland has made great progress but it would be wrong to draw from this the conclusion that the structure of European solidarity can change,” said Mr Schäuble to foreign correspondents in Berlin. “The European solidarity construct is about helping countries find time to solve their problems. We are buying time on the market, sometimes it a very expensive way but it’s the only way to ensure that the the euro remains a secure currency.” Ahead of next month’s EU summit, Mr
Schäuble said discussion should focus now on the nature of an agreement and
ignore “distractions” such as demands to pool euro zone debt into so-called

“Pooling debt now would, quite simply, leave Germany swamped,” he said. “It’s quite likely that, after we did that, we’d have no country left in the euro zone with a triple-A rating.” He dismissed reports that euro zone triple-A rated countries, including Germany, were proposing common “elite” bonds.

“If you’ll forgive me for saying so, that is completely made-up – and not even well made-up,” he said.


Mr Schäuble said he understood anger towards Germany in the current crisis, but said many countries facing into a decade of reform had already enjoyed a decade of the benefits of euro zone membership – at the cost of their competitiveness.

“Sometimes I feel like a fireman being bad-mouthed by the arsonists for not yet putting out the fire,” he said. “It shouldn’t be the case that I have to send thank-you notes to countries that meet rules to which they themselves agreed.”

He insisted Berlin was not demanding austerity and budgetary reforms to “dominate” or homogenise Europe along German lines.

“We know that we are strong but we don’t overestimate ourselves any more. In the last century we thought we could do everything alone, that wasn’t a good thing,” he said. “We want to solve things within the treaties.”

At last, a bit of straight talk from a senior politician…..

Will our guys cop on???????

@ Ceteris
The “arsonists” were the German banks.
Germans never did like putting out fires.
Not much has changed in 70 years.


Moore McDowell was incorrect in his designation of a €100,000 pay cap as being a 100% tax at 100,000..

It is not. It is simply saying that is the new price for the job that you are currently doing. Take it or leave it. It is a rewriting of the job conditions based on a new economic reality.
It has nothing whatever to do with tax.

just to link Grumpys post on receivership and Josephs on the 100k

One thing which I would expect a receiver to do is void all contracts whether with foreign creditors, domestic creditors, workers or whoever.

If its in receivership; employment contracts would be fair game just like any other, but the couple of sentences on it dont tell us much about what the idea is

That “arsonist” analogy by Schaeuble is patently absurd. Does he think that the modern banking system is the same as Mick O’Reily lending some money to his nephew while telling him to get a steady job? It’s a criminal simplification.

The problem is that it’s those same people that still refuse to acknowledge that there is an underlying problem called a banking crisis, and the sovereign debt crisis is merely a symptom. Did everyone forget that many of those European banks were right in the middle of the sub-prime mortgage implosion in America? Their balance sheets were severely severely damaged even before this whole mess seriously surfaced. So much of the discourse seems to have been designed to divert our attention from that undeniable fact.

The Greek situation really distorted everything. It seems as if everybody forgot that Ireland had a budget surplus before the banking crisis, so did Spain, and even Italy has a small primary surplus.

The whole narrative is severely distorted, and no one seems to be able to speak up against that. If we in the “Periphery” don’t do it, who else would?

Wow, you’ve all been busy into the small hours and on the case again now. This thread seems to be getting closer to the heart of the matter than most. The fundamantal divide in the EU is between the more well-governed countries in the north (even if they did succumb to some of the Neo-con economic and financial market nonsense emanating from the US – either directly or via the UK) and the badly governed countries in the south and periphery (with the French and the Belgians being their own characteristically inimitable selves).

The principal reason for better governance in the north is the balance (albeit ever-changing) they have secured between the absolute authority of the people delegated to and expressed by national parliaments and the executive authority of national governments.

In the south and periphery, once governments had secured a comfortable parliamentary majority they were elected dictatorships until the next election – and their monopoly of power and patronage often meant they could secure re-election relatively easily. Such governments, virtually untethered from national parliaments, are prey to powerful and infuential vested interests. The decline of mass popular membership of the larger parties makes them more and more reliant on corporate donations. And the politics of these less well-governed states has increasingly resembled the US presidential style of politics. (The irony, of course, is that a US President is constrained in all sorts of ways by the judiciary and the legislature, whereas as the prime minister of a badly governed EU parliamentary democracy is monarch of all he or she surveys.)

Even a cursory review of the governance and politics of the southern and peripheral EU states over the last 10 to 15 years should provide ample support for these contentions.

However, even for the northern states the pursuit of ‘grand projects’ – the EU Constitution, the Euro, energy and climate change policies, etc – the Commission and national governments in the Council exercised their powers and authority without securing the necessary political legitimacy and the latter relied on their executive dominance over their national parliaments to impleement these policies. (Governments in the northern states were as culpable in this regard as the more reflexively and temporarily dictatorial governments in the south and periphery.)

We are now seeing the ‘revenge of national parliaments’ in the northern states and this is what is making resolution of this crisis so damnably difficult. And increased assertion by nothern parliaments of thier primacy in theses matters is compelling any possible solutions to be crafted using an inter-governmental method rather than the Community method. With governments having abused their executive authority previously in collaboration with the Commission, nothern national parliaments are reluctant to give their governments the necessary authority to craft and implement the necessary measures to resolve this crisis. And, insofar as nothern parliaments are prepared to offer any solidarity to the southern and peripheral states, they require evidence of repentance, remorse and a commitment to better governance.

This unfortunately takes time – and it is time that the capital markets are not prepared to extend. Only the ECB can see off the disaster capitalists and the vultures and provide the necessary assurance to those investing ‘good money’. But northern national parliaments are unwilling to sanction this because their grant of too much authority – without sufficient scrutiny or restraint – to their governments and EU institutions has helped to create this mess and they have heard too many lies and evasions in the past from southern and peripheral governments.

Something will have to give. But whatever is cobbled together must secure genuine democratic legitimacy or there will be very bitter tears before bedtime.

RE: “Sometimes I feel like a fireman being bad-mouthed by the arsonists for not yet putting out the fire,” he said. “It shouldn’t be the case that I have to send thank-you notes to countries that meet rules to which they themselves agreed.”

I would like a thank you for paying a lot of my hard earned money towards paying for the mistakes of german bankers and pensioners in their private dealings to which I was not a party.

I don’t mind contributing in the interets of keeping the european project on the road and because I benefited from their stupidity. However they were their private mistakes and I was not a party to them, so I would like a thank you.

Also, I think this latest statement by Schaeuble reinforces the consistent themes of the core posers to this crisis as follows:

1. Treat the crisis as as a zero-sum game with different nation states as the protagonists.
2. Ignore the law where real politik powers can be used to force compliance or secure consent.
3. Keep your foot on the necks of the peripherary at all times.
4. Pander to your national electorate.
5. Humiliate your counterparts in public.
6. Require others to abide by the requirements of the institutions, particularly the ECB, but act unilaterally or in concert with one or two powerful others yourself without reference to the institutions.

Mr. Schaeuble must be aware that Ireland faces insolvency with the worsening of the eurozone crisis, and that the power and credibility of the core nations weakens all the while. He seems to be readying himself for another critical battle with the Irish State.

After what we saw on TV last night about Schaeuble trying to pressure our very ill Minister for Finance into announcing application for an IMF loan contrary to our democratic and constitutional requirements and contrary to our national interest, I hope Schaeuble gets his comeuppance soon.

Just getting an inkling of Italian bond sales this morning. 10 year went at over 7.5% I heard.

Not much light at the end of their tunnel (unless something catching fire qualifies as light – perhaps they could burn a few bondholders to use as a beacon?).

Two clapinbacks to Grumpy above for his analysis of the ESM paper. It does raise huge sovereignty issues for participating states. I’ve also raised the matter of the directorships within the ESM, ESM will not be a 27 member state representative boby, it will be controlled instead by reps from the inner core and we will not be represented on it, and get this, voting from those participating representative(directors?) will be weighted in terms of those making the bigger contribution on future funding.

So, will any funding issuing from the ESM be contingent on signing up to some international court of settlements document where we sign away sovereignty in the case of a default? Where we give powers to the ESM to liquidate Irish assets?
Where this may be enforceable by some future ‘peace keeping’ army operating with an ESM mandate.

I’m thinking, folks, the noose is tightening on us. Banxters in ECB re worried we will leg it and are out to make sure we don’t get away.

Regarding discussion above on surprise at the Cork Examiner poll support of ‘austerity’. Consider the following, the last thing the eurocrats want is that we leg it, or the population shows signs of civil disobedience at the strong arm tactics of austerity and that we turn into a scarecrow.

So, here’s the deal! Public sector pay will be protected. The large part of the population benefiting from Croke Park will be treated kindly as they are led onto the trains to pay for the ¢80 bn the banks owe over the next 20 years.

This will be done to get them over the hump until the ESM figures out a way to tie up our population so they cannot escape the imposed dictatorship of the European banking sector.

Little do our public servants know what’s in store for them next year, the year after for the next 20 years as this country is plundered and recreated into a new colony administered by the ESM, IrlandSteinNUA

So, welcome to holiday time for the public service protected against tax hikes, salary cutbacks with the nasty VAT taking up the slack? Guess where that train in going, Enda, as you lead Ireland like captain Smith of the Titanic into the jaws of ESM dictatorship!

By the way, salary decreases, more taxes, more unemployment and job losses, more cutbacks to educational/health budgets, but we’ll leave that for next year!

A little post mortem on Primetime bailout: mortifying to see Honahan shaft Lenihan, mortifying to hear Honahan announce at every meeting the interest coupon on the bailout would be raised little by little; mortifying Cardiff, Honahan, Lenihan gave them a blank cheque to apply whatever interest rate or terms they wished on the deal; mortifying they agreed to ‘the pig in a poke’

All that power to simply say no, the terms are not there, not good enough, disastrous negotiating skills and gross incompetence.

Of course echoes there of the night of the guarantee when even worse damage was done to this country by incompetent sheisters.

All we had to do was lift the phone to Trichet and say, you know that money ECB lent to Anglo….its time you sat down with Seanie and had a chat about it. Let’s know what you intend to do about it, because we’re for sure not bailing them out!

Instead of demanding cover protection from the ECB, we insisted on paying the bill.

Strange, isn’t it. Italy, the largest EU country that requires a bailout of its debt, can still sell its bonds, but Germany, which requires no bailout and which is expected to bear a disproportionate cost of Italy’s, Greece’s and Spain’s bailout, could not sell its bonds.

In my opinion, the failed German bond auction was orchestrated by the US Treasury, by the European Central Bank and EU authorities, and by the private banks that own the troubled sovereign debt.

My opinion is based on the following facts. Goldman Sachs and US banks have guaranteed perhaps one trillion dollars or more of European sovereign debt by selling swaps or insurance against which they have not reserved. The fees the US banks received for guaranteeing the values of European sovereign debt instruments simply went into profits and executive bonuses. This, of course, is what ruined the American insurance giant, AIG, leading to the TARP bailout at US taxpayers’ expense and Goldman Sachs’ enormous profits.



h/t The Blind Biddy Hedge Fund; anon. analyst note


Schauble has Europe by the throat. He believes that it is his moral duty not to let go until Europe surrenders.


No takers?

Let me try to read the contributors’ minds. First a step back (and some coatracking of my own). Any money-printing or explicit-fiscal-transfer EZ fix needs two elements. At the same time as the money and/or risk is being transferred between states, there must be some level of fiscal restraint inside states. (How much restraint is a whole other question: all that matters here is that very probably there must be some significant restraint.) There are three ways in which the states’ deficits can possibly be retrained: moral suasion/public shaming, the chicken match in which problem countries threaten to default and the EU threatens to let them, and force – actual military force or police action. Those three are not exclusive, but they are exhaustive: there is no fourth way. As long as Option Three is off the table, that just means that there are two options left, two options which combined are not likely to be sufficiently effective at curtailing member state deficits. How have they been doing so far, after all?

(And of course this assumes that there actually now is some Goldilocks zone where austerity, QE and fiscal transfers combine in proportions which are right to bring medium-term stability to the EZ without big defaults, let alone whether it’s politically possible to get the EZ there.)

So to your question:

Has any contributor here got any idea what in reality – you know, in the real world – what a “financial receiver” would actually be, and how in would function in terms of interacting with the people, politicians and institutions of the COUNTRY it er, ‘took over’?

First, you’re interpreting the “financial receiver” language as promising some kind of power of compulsion over a ‘program country’ which couldn’t actually be achieved without Option Three. The EZ-core public do seem to be getting some false promises (or, more precisely, misleading apparent promises) of that kind in all the hype about ‘intrusive surveillance’ and so on. But in this case I think it’s basically another outing for the idea that countries which flunk ESM will be forced into default: in other words, it’s Option Two again, and more of the old Merkelian practise of ruling out default in the present while threatening it in the future. The fairly opaque choice of words is probably in part a symptom of the fact that this idea is so controversial inside the EU, with Germany firmly in favour and France adamantly opposed. (See also what Bryan G said.)

(There is one respect in which the ‘receivership’ language is likely significant and appropriate, though. The ESM appears to put EZ sov. debt effectively under the legal (and political/bureaucratic) control of the EU rather than the issuing sovereign. This could have ominous implications for a country which decided to default at a time or in a manner not to the EU’s pleasure: presumably it would become much easier to retaliate with EU expulsion, for example. But again, this is is all academic if the country is politicially powerful or well-favoured enough to escape retaliation, or if its debt is large and menacing enough that the No More Lehmans principle demands no default. Then we’re back to the world of Options One and Two.)

So what are the contributors thinking? Maybe some are really sold on the promise of ‘intrusive surveillance’. More likely some are fairly aware of the weakness of compulsion-without-compulsion but are still hopeful that, this time, everything will somehow be mostly all right on the night. Others are rather cynically calculating that since (in their judgement) the EU now needs more monetary easing than Germany would ever agree to, the failure of Germany’s chosen fiscal-restraint mechanisms is not only likely but desirable. They ought to be careful what they wish for, partly because the inherent beggar-thy-neighbour nature of EZ deficit-financing means that EZ “fiscal dominance” could end up looking very different to US, UK or Japanese “fiscal dominance”. Then there are, of course, certain people out there who would be beside themselves with glee to see the EU actually embrace Option Three and bring itself to power under conditions of economic turmoil. But the most basic explanation is that, like a man with a gun to his head, many people will say anything and do anything, however dubious, to ward off financial collapse for another year. Right now signing on to the latest German proposal looks like the only possible way to kick the can one more time. If you want to know what virtue people are suddenly finding in it, there’s your answer.

Trouble at t’mill? Is it ‘alternative’ QE for the ECB or just a shot over Germany’s bows as a little reminder after last weeks bond sale ‘slip up’ (of course it wasn’t orchestrated – what a dastardly suggestion @David O’Donnell) ?


It’s not the first time it’s happened so probably nothing… yet. Unless… Did someone say GS was in charge of the ECB these days?

On which subject (GS), I see the Greek head of public statistics (or whatever his job title is) may be facing criminal charges after the fiasco of mis-reported figures prior to it all blowing up over there. A fine scapegoat I’m sure and not much light at the end of his little tunnel. Will GS get off then?


Re “(And of course this assumes that there actually now is some Goldilocks zone where austerity, QE and fiscal transfers combine in proportions which are right to bring medium-term stability to the EZ without big defaults, let alone whether it’s politically possible to get the EZ there.)”

The bottomline on this is not whether the banks of Germany and France get back eg their ¢80 bn lent so fr to Ireland. That’s one definition of stability! That’s Goldilocks.

The bottomline is not a false stability which plunders the peripherals creating wrack and ruin. That’s Goldilocks.

Stability should have a moral component where losses are shared. It may even have the added dimension of handing the Irish banks back to the ECB in a debt for equity swap. It may mean a quick exit from the euro for us.

That’s not Goldilocks.


That was a very powerful article.
The source was a former editor of WSJ

I have to admit, while removing my tinfoil hat to scratch my head, that was the first impression I had when Germany’s auction failed.
This is orchestrated.
I mean How else could you explain it?

It size and scale of US exposure explains why Tim Guithner vetoed Ireland’s efforts to default as well.

So basicly its Germany versus the rest of the western world in a showdown of good and Evil, and Germany are the good guys.
Its a turn up for the books if ever I heard one.

@Eamonn Moran

to follow the ‘hidden money’ the best available proxy is to follow any tentactle of the matrixsquid; this is the best avenue i have found in trying to figure out where the non_dealt cds cards lay and herr geithner is ensuring that the little boys and girls get no chance to play ….

and yes – the ‘source’ is reliable.


Re the Olli Rehn piece

This was one of three [ troika ] in yesterday’s Examiner – the others were by Peter Matthews, Fine Gael, arguing for Banking System write-offs from the ECB and the other by Pearse Doherty, Sinn Fein, arguing for a better deal for the nether citizen serfs in the upcoming budget and a few bob from the upper-echelons …. don’t have the links roight now but will get them later ….

Wow what an interesting and revealing thread.

I wonder if Olli is still happy he spent his weekend writing that article. 🙂


If Olli spent his weekend writing that article, them I’m a Finn.

However, Olli and his compatriots are very well aware that small countries must do their best to keep out of the space where the elephants dance. Ireland is finding out the hard way. But there is very little evidence that the lesson is being learned. Ireland puffed out its chest, thumbed its nose at those who counselled caution, declared it could play with the big boys – and now cries foul (and demands conspensation) when it got trampled.


Voib olla meie koik oleme Soomlased praegu!

Or as an Estonian might say (and a Finn would understand):

Maybe we are all Fiinns now! 🙂


“I wonder if Olli is still happy he spent his weekend writing that article. ”

He didn’t. His poor PR Guy had his weekend ruined.

A number of my American counterparts are telling me that the latest ‘upsurge’ is rubbishing the CDS markets. I wonder where that came from. Is someone trying to set expectations that it shouldn’t be called on to pay up?

@PR Guy

Nothing would please me more than CDSs, particularly, being defaulted on.
Long before bondholders these casino players need to be shown the door.

@Joseph Ryan

“Nothing would please me more than CDSs, particularly, being defaulted on.”

I’ve no axe to grind either way other than perhaps naked CDS should be outlawed. A properly regulated risk/insurance market provides a valuable service…. but therein lies the problem I guess. The downside with widespread default is it benefits the big US banks who were keen to write them and take all the money. It would also tie the courts up for a decade or more when they will need to focus on what to do with all those contracts that were written in that old €uro currency 😉

The d€ad parrot sketch comes to mind. Look, matey, I know a d€ad currency when I see one, and I’m looking at one right now. R€P

@PR Guy

Two smileys.
Beat me how you keep a straight face doing the day job.
A good sense of humour is always a great support but not always appeciated particularly as you go up the ladder. Or maybe that should be down the ladder!

@Joseph Ryan

“Beat me how you keep a straight face doing the day job”

I don’t. Which is why it’s such great fun. And what’s not to like about a job that involves asking people questions, writing stories and drawing pictures (other than sometimes I have to do it really really quickly and that’s less fun)?

I find it (finding the right frame for lies, making the unpalatable palatable, etc.) all just hilarious and am constantly taking the mick of out my clients but they seem to have mistaken all that joshing of them for ‘charisma’ and ‘flair’. And some of the people I have to deal with in the financial services business defy description…

I’m being unfair. I work with some pretty smart people in that business too and I do of course maintain a degree of gravitas with the C-levels… as they sign the cheques.

The one thing that amazes me most about this business though is the way journalists are so effin lazy and just lift copy straight into their article no questions asked and then people believe everything they read/hear/see in the various meeja. Don’t believe 80% of what you read in the paper (I might exclude the FT from that as they tend to be reasonably straight in their factual reporting) I keep telling my friends and relatives. It’s nearly all cooked up and manipulated.

Things are hotting up out there anyway. Pan-European companies are getting tres worried. Bad news is constantly being drip-fed. Deadlines come and go. To keep Olli happy we should perhaps have a countdown clock – ‘nn days to save the Euro’. I think his new number is 10.

It’s a pity you can’t buy financial crisis figurines of the main players. Some entrepreneur should be able to come up with the goods. There would be Olli and Sarko and Angela and Trichet and Draghi and the man from the IMF for starters and they could be collected with tokens from the Irish Independent. A marvellous heirloom. Maybe the Olli one could speak raimeis.

It’s a pity you can’t buy financial crisis figurines of the main players. Some entrepreneur should be able to come up with the goods. There would be Olli and Sarko and Angela and Trichet and Draghi and the man from the IMF for starters and they could be collected with tokens from the Irish Independent. A marvellous heirloom. Maybe the Olli one could speak raimeis.

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