Colm McCarthy on the summit

Bottom line is that the Incompetent Deauville Duet has failed abysmally – time to vote it out of the X-EU-factors equation.

Super-fudge won’t last the coming week … Sarkozy and Merkel have to GO … and soon. I’m sick to the teeth of both of them …. and closer to the .. er .. Tory .. David Cameron on use of the VETO. This summit, basically, solves nothing of any real substance.

Let’s just filly-buster away until reality dawns …

Well written article. But I see deeper and more serious troubles, with a need for a broader view.
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“monetary union was derailed, we are to believe, by a few small members pursuing irresponsible budgetary policies.”

Colm’s paper tiger. But the crises we are seeing today have much broader and deeper causes. I can remember reading reports almost some 10 years warning that budget deficits in the major OECD economies would reach several hundred percent of GDP over the coming decades, on the basis of demographics alone, if policies were to remain unchanged. And of course, the structural problems now facing the OECD area are far numerous than just that.
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“there would still be a serious banking crisis in Europe today”

The causes of the banking crises are much more global and broader than just euro area governance. For example, the weak and performance and outlook for US housing continues to weigh heavily, and not just in the US.

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“judged against one simple criterion. Would the present crisis have been avoided, or at least substantially moderated and easier to resolve, had the new measures been in place since the euro’s launch”

Yes this is a good litmus test. And yes, reasonable limits on budget deficits, along with peer appraisal and control over budget policies, would have largely prevented the euro-wide budget crises, even in Greece. Ireland was advised in Sep/Oct 2008 by the ECB, EU and large EU governments not to guarantee its failing banks. Hopefully stronger euro area controls (of the kind in the Troika MoU at present), along with the kind of bank resolution laws we saw being introduced at present in some countries, would prevent a repeat (too late for Ireland, I’m afraid, given that it has socialised most bad banking debts).

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“The French and German leaders have created instead a damaging rift with Britain”

I don’t see why two countries are blamed for the UK’s decision. And remember the UK has a history of saying No initially, but rowing along later when It appreciates the cul de sac it finds itself in. To be appreciated over years, not on the spur.

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“If you believe that the problems are all caused by budgetary excess, there is no need to contemplate .. clear procedures for bank resolution”.

I don’t know why one precludes the other. Some countries are introducing clear procedures for bank resolution at present. Why not Ireland too? Doubtless the euro area authorities will get around to ensuring all members sing from one sheet on this score in due time, even the laggards.

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“the measures announced is a souped-up budget pact”

Another paper tiger. No one is claiming this is the miracle cure. The head of Eurogroup (Mr Juncker) clearly indicated more tough decision will be needed. But the euro area is on the whole taking decisions in the right direction.

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“The phrase ‘fiscal union’ .. a conscious and deliberate abuse of language”

Yet another paper tiger. ‘Fiscal union’ here clearly means a currency union of members that adopt modest budget deficits. It is for Ireland and other member states to decide whether this idea of a union is for them. The term does not – and probably never will – mean a ‘fiscal transfer union’, given the obvious risk of moral hazard (Ireland stands out with a public deficit of some 10% to GNP in 2012 as current planning seems to indicate, and despite fully respecting the Troika MoU).

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“a roll-back in the design of the European Stability Mechanism”

It is maybe not such a change as Colm makes out (and we still don’t have the texts). Any official buying / intervention would inevitably crowd out / subordinate existing debt holders in any case, as we already saw, not least in Ireland.

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“Markets will be disappointed that .. the modest additional resources to be routed through the IMF cannot be used to support bond markets.”

Disappointed or relieved? This dissipates the threat of subordination of existing bondholders, plus the risks from crowding out and moral hazard. Check out what a rating agency like Moody’s has to say (e.g. in its 28 Nov. report) on the implications if more countries are in receipt of a loans package. Remember the impact in Ireland. See here for a bit more. http://www.tcd.ie/iiis/assets/doc/ciaranohagan-oct252011.pdf
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In sum, the eurozone’s travails will not be solved at all by some of the trite solutions that we see pundits marching out (three among them, … wider ECB objectives, more official bond buying, and transfers of cash from the thrifty to the spendthrift).
To repose Colm’s question, would the present crisis have been avoided by stricter fiscal controls ? No of course not, and we see the UK, the US and some CEE countries also facing considerable challenges, which governments are only just starting to address, and have yet to largely play out.
But by hell or high water, you can be sure that either of two roads lies ahead: serious deficit reduction, or substantial financial volatility. Both roads are very painful, with the latter giving rise to hard to predict consequences, and probably very dramatic and unjust shifts of burden.
Taking the pain on the chin now is probably in the long run the easier road. And particularly for an SOE like Ireland. Not only would less of its budget stimulus flow abroad, but it would give it more bargaining power within the euro area. Like we mentioned yesterday, Greece now has a near zero primary deficit, giving it clout. Ireland is still very far from that position.

Commentators seem to think any referendum would necessarily be on the Euro, not so:
1) There is no mechanism to expel a country from the Eurozone
2) Even if somehow we were, we would still be free to use the Euro,all we’d lose would be LOLR

Anyone who presents a referendum as:
A) What Merkozy wants vs
B) Exit Ez (or EU)

is presenting an unhelpful false dichotomy

@ Ciaran O’Hagan

There most certainly is a need for a broader view.

‘The causes of the banking crises are much more global and broader than just euro area governance. For example, the weak and performance and outlook for US housing continues to weigh heavily, and not just in the US’

While you are at it, why not mention the activities of the shadow banking sector. Here is what the staff of the New York Fed have to say.

‘Over the past decade, the shadow banking system provided sources of inexpensive funding for credit by converting opaque, risky, long-term assets into money-like and seemingly riskless short-term liabilities. Maturity and credit transformation in the shadow banking system thus contributed significantly to asset bubbles in residential and commercial real estate markets prior to the financial crisis’

http://www.ny.frb.org/research/staff_reports/sr458.pdf

‘Ireland was advised in Sep/Oct 2008 by the ECB, EU and large EU governments not to guarantee its failing banks’

Can you remind us of the evidence for that assertion ?

‘Taking the pain on the chin now is probably in the long run the easier road. And particularly for an SOE like Ireland’

I am tempted to alter that acronym, but I don’t want to be rude.

“The French and German leaders have created instead a damaging rift with Britain without delivering any worthwhile advance at all”

Th authentic judgement of West Britain. Cameron reduced British national interests to protecting the City of London- and failed even to acheve that.

He was not arguing against the highly damaging and irresponsible content of the proposed Treaty amendments but against Britiain having to sign up to them- because he cannot hold his own party together on any changes at all. Many of them call explicity for the disorderly break-up of both the Euro and the EU.

Why anyone in Ireland should adopt the outlook of the nutters of the Tory Right is a mystery.

Nice summary Daniel:

….It is purely a merkozian matrixsquidesque construction, with Geithner and Largarde, to buy more time for the Vichy_Financial System … with qualified majority costs (>85%) socialized for a generation on European Citizenry.

I think that the ESM has to be opposed on all account and I would think that the public at large in Ireland and other countries are not getting the full picture.

The very nature of the ESM is totalitarian and it is designed exclusively to implement an unaccountable and unlimited Instrument for the existing and future financial oligarchy.

Did anyone see Dalia Grybauskaitė, President of Lithuania, lecturing the Press on
the unity of the European states? This is a small taste of the European future they have on their mind.

Under the cover of the permanent smoke screen, this so called crisis, undemocratic forces are implementing political longterm changes.

The public at large is misinformed.

If a referendum in Ireland should be brought forward, which I seriously doubt, it would require the open discourse and much better information of the public than the deliberately flawed and targeted approach of Lisbon 2.0

@Desmond Brennan

“Commentators seem to think any referendum would necessarily be on the Euro, not so:

1) There is no mechanism to expel a country from the Eurozone”

a) Don’t you think it would send out the wrong kind of message if a member through a referendum decided it wanted out, that a mechanism to enable this would not be created?

b) Implicit in proposed Treaty changes are ‘punishment clauses’. Its perfectly conceivable an ultimate sanction would be ejection.

c) Does it not make sense that changes will be made to facilitate countries like the UK and Ireland to leave; in the case of Ireland, as part of negotiated and structured IMF aided default?

d) In the fact of a) + b) and absence of c) should you not be worried?

@MH
The Congress will make alot of noise but at the end of the day both democrats and republicans get alot of their funding from these companies, wasnt Google one of the largest Obama donors

At the end of the day thats all it will remain, noise.

And yes there will always remain tax havens of all sorts for as long as sovereign states and territories exist (about 200 on last count).

Anyways now that we seen how UK was “dealt with” and this crisis is not being dealt with but made worse every time Merkozy open their mouths it has become very obvious that Europe as we know it and envisaged is dead.

RIP Europe

aside: aren’t like half of all tax havens UK overseas territories

just saying….

The EU has 27 members. One member, the United Kingdom, could not persuade the others to grant it even greater exceptions, so it vetoed the preferred outcome of the 95% majority. Yet, this piece presents the ‘rift’ as something imposed on the UK. Is this really credible? Browsing the UK media this morning online left me with the impression that Cameron has little support for a stunt that even at her most colonial Thatcher avoided.

The more important and worrying outcome, I believe, is that yet again there is another initiative to promote more layers of complexity as a ‘solution’. Part of the sickness in Europe, and Smart economy Ireland is a poster child par excellence, is that the over layering of complexity has produced too many non-market institutions, consolidated powerful marginally accountable bureaucracies and distributed decision making so broadly as to denature its fundamental character, a locus of responsibility.

If the European project is ultimately reduced to spendthrift management, major components of its political rationale will have disappeared. Schumpeter’s worried that bureaucaracy would kill entrepreneurship and ultimately capitalism. In the case of European capitalism, his views may appear exaggerated but they have an unpleasant ring of truth.

The euro has become a Frankenstein, its time to go. The summit has failed to deal with the key issue of debt. We needed a debt resolution mechanism that would work for europe. Instead we had the promise of more debt handouts piled upon austerity that can only bring recession and deflation.

The euro itself is not even working for the core. France is complaining of lack of competitiveness brought about by the high euro. Lack of competitiveness, lack of growth, deflation, austerity and impossible debt burdens make the Euro project a liability for growth in Europe.

The summiteers have capitulated to the bankers and the money lenders whose needs have expropriated the rights of taxpayers in their countries.

There is a crisis in leadership, ‘the center cannot hold’, we don’t even have a decision on whether we will have a referendum, never mind what the language for it will be, its a mess.

The markets wont buy any of this rubbish.

Our own GDP will not enable even our own commitments be kept to the falling house of cards.

@David O’Donnell

@Michael Hennigan

ON the local, as distinct from the European, much that I agree with on your 1.06. To take just one of your points …

That post has ceased to be, it has gone to meet its maker, it is an ex-post.

Did Michael Hennigan reconsider his language and delete his own 1.06 or was it done for him?

@ paul quigley
We’ve talked about this several times before … see e.g. http://www.irisheconomy.ie/index.php/2011/09/05/september-2008-the-european-option/#comment-166840
So while it is fashionable to blame others for the fateful 2008 bank guarantee, Ireland alone must bear responsibility. And not just the government at the time, but everyone who facilitated the decision. And not just on the night, but over several weeks.. right up until the bank guarantee law was signed into law (26 Oct.). So there were some weeks for reflection. That point is often missed.
While foreign governments, the ECB and ECB were all opposed (if only on fears of “beggar thy neighbour”protectionism of domestic banks by the Irish authorities), you could argue that it was just lukewarm, and they should have taken a more affirmative stance in support of EU principles and law.
Still, it was the Irish government that finally signed the guarantee in, leading to the socialisation of most Irish banking debt.
I’ve yet to see a good write-up.. I suppose it is still too recent an event for the parties involved.

@ All

An absolutely brilliant article by Philip Lemaitre of Le Monde which goes to the very heart of the problem confronting Europe and the euro.

http://www.lemonde.fr/economie/article/2011/12/11/l-allemagne-vraie-reussite-et-faux-modele_1616160_3234.html#ens_id=1557745

Notably;

“Mais ce modèle est-il reproductible à d’autres, notamment à la France, premier client de l’Allemagne ? Peter Bofinger est convaincu du contraire. “Si l’on écoute les discours des décideurs politiques allemands, on serait tenté de croire que le bilan du pays est proche de la perfection. Permettez-moi d’émettre quelques doutes. Au cours de la dernière décennie, la demande intérieure n’a pratiquement pas évolué en termes réels, alors que les exportations ont augmenté de plus de 70 %.

“Cette évolution doit-elle réellement former la loi fondamentale pour l’ensemble de la zone euro ? N’est-il pas surprenant (…) que les décideurs politiques restent incapables de comprendre que le modèle allemand ne doit sa réussite qu’au fait que les autres pays prenaient une direction totalement opposée ? La modération salariale telle que pratiquée en Allemagne ne pouvait porter ses fruits qu’en tant que stratégie isolée. Si tous les autres pays lui avaient emboîté le pas, la zone euro aurait immanquablement fini par affronter une spirale déflationniste”, expliquait-il en avril lors d’un colloque de la fondation Notre Europe”.

Peter Bofinger is one of Merkel’s most reputable economic advisers, nominally, as member of her economic advisory council.

A country in which domestic demand is stagnant for a decade and which increases its exports by 70% in the same period cannot, by definition, export its model of economic management to other countries. The introduction of the euro has simply compounded the problem. Either it is addressed or Europe will fall apart.

Colm: Which officials in the French or German finance ministries came up with this now-abandoned wheeze? Has anybody been sanctioned for screwing up the sovereign bond markets of several European countries to no useful purpose?

Said officials are likely being prepared for nomination to an EU body or perhaps to a senior executive position at a European SIFI.

The IMF’s Olivier Blanchard has described the EU summit as “progress” whilst pointedly not describing it as a solution

http://www.bbc.co.uk/news/business-16132177

And Ken Rogoff speaking on Sky News today gave his view that certain EU countries including “probably” Ireland should be outside the EuroZone.

Anyone for a bet that Spain’s 10-year bond will be 7%-plus at the end of this week?

@ DOCM
Thanks for an excellent link.
It looks like another fault line is developing – right down the middle of the Franco-German axis.
The French are due to implement austerity measures soon too. It will be interesting to see how that goes down.

There’s another school of thought which says when a project is failing and is unsalvagable the political thing to do is to walk away. David Cameron’s move was a statement of no-confidence in the Euro. The path Britain will ultimately ckhose will come down to this:
Will the City of London lose more through disorderly break up than it gains. My calculation is short term mega losses but if the Euro goes Frankfurts position as a rival is greatly weakened. They’ve done the contingency planning

@ All

Correction. The Le Monde article is by Frederic Lemaitre.

All the French cabinet “heavyweights” , i.e. those that are intimates of Sarkozy, have been out on the airwaves puffing the outcome of the summit. They are, in all likelihood, whistling past a triple AAA graveyard. A one notch reduction is viewed as possibly tolerable (an additional annual budgetary cost estimated at €5 billion) but anything more is likely to be catastrophic both for Sarkozy’s electoral prospects and the French economy.

Antenne 2, one of the main TV channels, on the evening before the summit, took a 100 euro bill and, stacking the equivalent of the French national debt on pallets, came to a structure the equivalent of the size of the Arc de Triomphe (including filling in the space under the arch). To paraphrase Wellington, I do not know what this illustration did to French viewers but it certainly impressed me. Á suivre!

“He also acknowledged that the EU’s policy during the crisis in Greece of making private investors assume losses of their holdings of Greek debt was flawed and had been scrapped.

This policy, which he admitted had had «a very negative effect on the debt markets» was «officially over,» he declared.” ?..Von Rompuy as quoted here…
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_7_09/12/2011_417932

curious…are they still going to scalp Greek sovereign bondholders in the knowledge that it a flawed policy. I see you can buy them for 22 euro and
change.

Ciaran O’Hagen above….” Like we mentioned yesterday, Greece now has a near zero primary deficit, giving it clout. Ireland is still very far from that position”

It may be technically correct but a deficit is a deficit whether it is structural or primary and the fact is Greece is in dire straits with an increasing deficit month on month and yoy.

What clout has Greece got other than to default…which in the view of most commentators is inevitable.
We have the same clout if we choose to exercise it.
We have the same

@Michael Hennigan,

We should seriously examine a return to sterling. Total madness the Newry sterling/euro exposure. agree with all your points re unions and deficit reduction.

WE are mainly responsible for this terrible situation

Actually, I think the WE can be narrowed down to a small group of bankers, developers, FF politicians, Dept of Fin officials, NTMA and regulator.

The rest of the population if they benefited indirectly in any way from it, they sure as hell get to pay for it now!

@DOCM

Good link. Thanks. It is good to know that there is at least one view beyond the haus frau mantle of austerity doctrine. But she still wears the apron even though I suspect Schauble decides what is on the menu.

Lest we forget some simple home truths, this guy needs to improve his language…

@ Michael Hennigan 4.14

@ Paddy M

I deleted a reference to Kevin O’Rourke’s point on austerity and violence, assuming that this was the offending point; deleting a full post from a named individual merits at least a brief advice for the reason. If the secret censor deletes again without explanation, I won’t bother returning. That would of course be welcome by some.

At best, your original comment involved a careless use of the word “should”; at worst it could have been construed as incitement to violence against certain groups. I suspect if you’d made the comments about any group in Malaysian society, you’d be in rather hotter water.

I have mixed feelings about it in that I think people should be allowed to show themselves in their truecolours on comment boards if they wish to; it at least gives the rest of us a clearer idea of where they’re coming from.

Colm, after decades of slowly but surely building your economy up, with the help of the EU, you propose to jump ship after the first (ok, desastrous) setback? Imho this apparent lack of toughness is quite disappointing…

@ Gray, Germany

Colm, after decades of slowly but surely building your economy up, with the help of the EU, you propose to jump ship after the first (ok, desastrous) setback? Imho this apparent lack of toughness is quite disappointing…

Yes, it could seem like that, see link below for an enjoyable take on ‘toughness’ and ‘weakness’. However, I’m a capitalist pragmatist. Examining the patient, ECB, and the EMU, my conclusion is, its terminally ill. If we stay, it will drown us as well.

Plus I don’t think it edifying to see Ireland treated as an outcast by the ECB and set to the wolves by penal and unforgiving and repayment obligations. Also, I view it as a signal of weakness, rather than strength by political leaders in the EMU.

I’m hugely disappointed the ECB and banks have wielded a death blow against the EU whose political aspirations and democratic lights I believe cherish as well.

Au contraire, I ramble on about it here as well, http://wp.me/pBbF3-gp

You will enjoy the following 🙂

@Jagdip

“Anyone for a bet that Spain’s 10-year bond will be 7%-plus at the end of this week?”

Closed friday at 5.68% so I think you are wrong. How about a pint of D&N best?

@Desmond Brennan

‘Ireland has always subscribed to the Anglo-Saxon model of ‘open markets’ …

The Limerick Soviet objects to such flagrant ‘abuse of language’.

The Oirish branch of the Squid weighs in in today’s Observer…
“Adding a tone of scepticism regarding the treaty’s chances of success, Jim O’Neill, chairman of Goldman Sachs Asset Management, said the most important thing that happened this week is not “this bungled European deal”, but the release of data that showed a slowing trend of growth in China, the world’s number two economy.
“The problem in Europe, this isn’t really a debt crisis, it’s a crisis about the structure of leadership … Europe needs to organise itself properly and show proper leadership,” he said.
“Everything around the world is being driven by some idiotic statement from some policymaker in the EU.”
But he added that now might be the best time in 20 years to invest in Europe, saying, “Never let a good crisis go to waste.”

To be fair, the banking/financial industry itself requiring accountability/transparency and massive overhaul especially the period 1971 – 2008, shares far more of the blame than any individual or group of politicians.

On that note, though it may sound contradictory always been a huge fan of Merkel, even though sadly in the ‘compact’ the bankers have stitched her up with a solution unworthy of her stature.

Act of Desperation?

BERLIN (Reuters) – Higher involvement by the International Monetary Fund (IMF) in the euro zone’s efforts to stem its debt crisis would be an act of desperation, outgoing European Central Bank chief economist Juergen Stark said, calling for a quantum leap by the currency bloc.
“It would be an act of desperation,” he was quoted as saying by Sueddeutsche Zeitung due for publication on Monday.
Stark said he envisaged an informal panel of experts to check on member states’ budgets. “That would be the nucleus for a future European finance ministry,” he said.
(Reporting by Annika Breidthardt)

PS. competition in this monetory envoirment………. if the M1 was on the CBs books we would not be in this mess today and banks could compete to see who the F$£K lost the most term loans.
What a mess this sorry western world is in.
Hedge funds me hole ………. I can’t get to create legal credit in my town why can these guys get a credit licence ?

”The French and German leaders have created instead a damaging rift with Britain without delivering any worthwhile advance at all…”

Nonsense! They’ve saved the ATMs. No price is too high!

@ Gray, Germany

Unfortunately, as you say, Germany “over-compensated” and the resulting statistics do not lie. This over-compensation has given rise to a level of trade imbalances which the euro system is incapable of dealing with. Martin Wolf, almost alone among economists, who generally have an unerring talent for missing the wood for the trees, has dealt with this conundrum on numerous occasions, and quite recently.

http://www.ft.com/intl/cms/s/0/396ff020-1ffd-11e1-8662-00144feabdc0.html#axzz1fZKVUZ2D

As to Hartz IV, your view of it is hardly likely to be shared by those who are affected by the reforms. cf. second article by Frederic Lemaitre.

http://www.lemonde.fr/economie/article/2011/12/11/le-cout-social-des-reformes-outre-rhin_1616162_3234.html#ens_id=1557745

The result is a widening social divide in Germany and increasing levels of poverty. The explanation for the phenomenon is the same as in Ireland; an unholy alliance between government, business and organised labour.

@ All

FYI

http://www.ft.com/intl/cms/s/0/d1366672-241d-11e1-bbe6-00144feabdc0.html#axzz1gFfO21oR

Notably;

“He [Clegg] has also warned Mr Cameron that Britain must not try to stop the eurozone countries from using EU institutions – such as the European Commission and European Court of Justice – to ensure that the new eurozone “fiscal compact” has teeth”.

In other words, message from Deputy PM to PM; stop digging!

@DOCM

Re Martin Wolf ->saw him on BBC’s Newsnight recently confess that in his view it was a good thing UK hadn’t joined the euro. But here he’s worried about EU breakdown and hyper nationalism, but believes democracy is the way sophisticated economies should be run:

Listen here:
http://www.bbc.co.uk/programmes/b017lt51

“Greece and Italy are now being run, not by democratically elected leaders, but by appointed technocrats. The Financial Times’ chief economics commentator, Martin Wolf, argues that at times of such financial turbulence, it’s competence, not charisma, that’s needed. But he warns that the job they have to do is potentially unachievable, and the biggest threat to the survival of the Eurozone is that they
fail and hyper-popular, nationalistic regimes come to power.”

Discussion on europe approx 28 mins in above, MW believes in the superstate/federalist Europe model, but Italy was a democratic plutocracy which failed democracy, Greece has a history including ‘the generals’.

He believes in the importance of sophisticated democracies but wants them under a federal flag, doesn’t say how this can come about, and, worth repeating, I did hear him, on another occasion, put the view that he was glad the UK not part of the euro!

@ Colm Brazel

“Financial Transaction Tax (FTT) would make IFSC less competitive and its ¢1.25 bn CT tax plus 30,000 jobs in financial services suffer a huge exit with proposals to gather CT at point of sale rather than at source. Expect all those jobs and loot to head for CoL City of London.”

I have heard this point made a number of times over the weekend and I have to say it does not reflect the reality of the vast majority of IFSC entities.

The IFSC is not the city of London. London houses the front office booking desks of much of the major banks, hedge funds and insurance companies operating in Europe … i.e. each trade / investment is booked in that jurisdiction and is taxed per that location.

While, it is true to say that at the height of the ABS boom Dublin (’03-’07) was a major direct trade origination / profit centre, the vast majority of these desks are now either closed or effectively closed in zombie non active portfolios. Where the IFSC is especially strong today is in a distinct niche in fund management and middle and back office services. The introduction of the proposed Financial Transaction Tax would not impact many IFSC operations as those trades Dublin administers are, in the main, booked elsewhere.

Looking at Fridays events and in particular the actions of the UK, my immediate reaction was that there is a real opportunity for the IFSC here to continue to grow as a niche financial centre within the EU.

@ Seafoid
They let Britain walk.
They wouldn’t think twice about letting Ireland go too.
Wouldn’t bother them. An inferior nation being let go – big deal!

@Gavin
Excellent article from Michael Hudson. Just what the No campaign need for the upcoming referendum. I see Gilmore hedging his bets…if we need a referendum we will get on.
But Leo is the star performer…
“Earlier, Minister for Transport Leo Varadkar said fiscal coordination among European Union countries alone will not be enough to solve the sovereign debt crisis.

“What will probably happen is that events will overtake us,” Mr Varadkar told RTÉ’s Marian Finucane  programme.

While fiscal coordination is a good idea, “it is not going to be enough to solve the problem we have”, he said.

The European Central Bank must adopt a different role in the crisis, he added.

Mr Varadkar warned that increased power within intergovernmental institutions in the European Union is not in Ireland’s interests.

“We are increasingly moving towards an intergovernmental union, which is particularly always what France wanted, and that is not in our interests as a country,” he said. “We need to get the [European] commission back at the centre.

“What has emerged since Lisbon really hasn’t worked out very well, where the commission has been downgraded if you like; the commission was there to represent Europe as a whole and all the member states,” he said.”

In other words..it was a mistake to vote for Lisbon second time round.

And. ” what will probably happen is that events will overtake us” such as a big European bank going down?????

Meanwhile … Pearse Doherty Live at The Oireachtas

The Cicero Prize reloaded … well worth the effort …

http://www.youtube.com/watch?feature=player_embedded&v=BQBaf8L16kk

@Gavin
Hudson is sound.

@ceteris
2 to 1 on DeutscheBanke … 7 to 1 on ECB suffering nervous breakDown due to chronic indecisiveness, in from 9 to 1 on friday.

contd. Robert concluded:

The Irish Taoiseach, Enda Kenny, solemnly informed his people this week that they were not responsible for the crisis in which they found themselves. They already knew that, of course. What he did not tell them was who was to blame. Isn’t it time he and his fellow EU prime ministers did tell us? And our reporters, too?

This BANKING crisis is always described as a sovereign crisis. I suppose that by shifting the focus from the BANKS makes the correcting actions more easily directed towards the sovereigns.

Strange twist in history, earlier it was that sovereigns didn’t disappear if they overborrowed but instead the lending banks disappeared. Now the proposal from the eurocrats is to remove the sovereigns by merging sovereigns into an unwanted superstate (run by eurocrats) & while the banks are to be untouched. I suppose that could explain why eurocrats and heads of governments are at odds 😉
I suppose that it could be interpreted as that the banks interests and the eurocrats interests are very well aligned. Coincidentally, I do believe it is easier to sell european integration than a bail-out of banks run by overpaid incompetents 🙂

On the matter of topics for summits: What seems to be lacking appears to be a process for dealing with big banks that are in default. I hope that a process for dealing with big banks has been worked on for the last couple of years. Should be easier to agree to a bank resolution regime than to agree to a new treaty, or?

The Tobin-tax: Will it be taken out of bank-profits or will it be a situation similar to VAT (banks collecting the tax from consumers on behalf of revenue)?

Also, some of the solutions that have been offered to resolve the banking crisis in the euro area has been tried in the dollar area.

Centralised bank supervision – did it work?
Printing money – has it worked?
Transfer-union – is it working?

And a question: The Swedish word for ‘tax’ is the same word as is used for ‘treasure’ (skatt). How would the people that believe that the fact that the word for debt & guilt (schuld) is the same in German implies something about the German psyche interpret that fact? Swedes treasure their taxes? Or is that fact irrelevant?

@Joseph
I’m coming to the conclusion that this “Compact” may die an unnatural death. Manchu says much the same in an FT article tonight.
CNN have this
“It remains to be seen whether national parliaments will fully swallow this loss of sovereignty. If credible this fiscal compact should lead to a massive improvement in the rating of sovereign debt in the euro area. A first test might come soon, when the ratings agencies have to decide whether to follow through on downgrade warnings issued before the summit.”

It’s falling apart already…
“Andreas Dombret, a Bundesbank board member, said Germany’s central bank cannot take part in any form of covert funding for EMU states in trouble through the bank-door of the IMF, saying further money can be used only to support the normal operations of the Fund.
“The money cannot migrate into some sort of special pot that is used exclusively for Europe. That would be a clear breach of the prohibition of monetary financing of states. The German Bundesbank has explicitly ruled this out,” he told the Handelsblatt newspaper.
Mr Dombret said the Bundesbank’s share of any such IMF package would be €45bn and is “inherently risky”. It would require an indemnity of some kind from the German parliament. This in turn would breach the €211bn ceiling already set by the Bundestag on EU bail-outs.”…. From an article by AEP in the Telegraph.

“Triple-A Germany is an illusion: German abandonment of the euro is a default, if Germany does nothing it is also a default because the others will abandon the euro leaving Germany holding the bag. The first rule of Ponzi schemes is to be the first out the door. The Germans are caught in an ‘instant morality’ trap they have set for themselves! Germans represent themselves as virtuous and the ‘best of Europe’. They dare not be the first out the door, so they are set to be the fool in the market(s).

The crisis emerges from a false narrative: that economic problems are the consequence of too-high labor costs rather than too-high energy costs. The heavily-promoted solution has been outsourcing and wage arbitrage, the breaking of labor unions, the use of child labor, unrestricted immigration, ‘right to work’ laws, reducing employee benefits along with neo-liberal ‘banks first’ policies and automation. These policies intend to shift the earning capacity of labor to the leverage provided by petroleum amplified by credit. High wages and skilled labor are exchanged for sweat labor wages plus the cost of international shipping with the skill taking residence within the machines.

Unfortunately, the narrative is wrong: the proposed cure is the disease. Output demands are made of human workers that are never made of the machines.

Nobody demands that automobiles or other ‘marvels’ pay for themselves. Diminished labor is required not only to pay for itself but also pay for everything else as well including the profits of the bosses. Labor must buy the cars, the fuel that is burned up in them, pay the interest on the loans that are taken out by everyone in the chain of manufacture and support that are needed to put them into service. The managers have to be paid for, the governments and the banks that lend to the governments. No wonder the credit system is broken, it’s too stupid to survive.

That so much is demanded of labor and so little is required of machines that are set to replace the labor is one of the absurdities of modernity. Now it’s going, gone, blah, blah blah. ”

Steve from Virgina on fine form.
Unfortunetly now one is listening to the Dorks of the world.
Such is life.

NYTimes article on Bank of Intl. Settlements quarterly review.
This does not augur well for countries contemplating launching new currencies.

http://dealbook.nytimes.com/2011/12/11/european-banks-hunt-for-ways-to-increase-capital/?hpw

@Micheal
Analyse this
Energy inputs 2010
Oil : 7373 KTOE
NG : 4704 KTOE
Coal : 1167 KTOE

I suppose we have got some turf to counterbalance these imports :791 KTOE
and don’t forget the mainly cold but occasionally hot air that passes those monuments erected to the memory of Don Quixote : 242 KTOE
Disappointed ? don’t be………. Ardnacrusha and its sisters – the symbols of Independence will save us : 52 KToe
Merde.
Guys like you promoted the open to the 4 winds economy – the liberal trade economy.
The extreme export to afford imports model.
The must remain competitive model.
When the Imperium breaks It will lead to a mass famine.

The Anglo countries led by GB and USA are in favour of casino capitalism. Private Equity has been the flavour of the past few years with its buy, strip, sell, enter receivership and bankruptcy cycle. In GB and the USA with their highly financialised economies this is looked at as creative destruction Schumpeterian style. In the non Anglo countries it is looked upon as immoral, destructive, lacking social conscience and must be outlawed.

If GB wants to proceed along the road of continued financialisation of its economy while pushing out manufacturing, increasing unemployment and further indebting the population at large then it is opting out of the EU of its own accord. The privatisation of profits and socialisation of losses so valued by the Americans and British has hit the rocks in Germany and is losing favour in other EU countries. Over the next few years left wing gov’ts are likely to be elected in Germany, France and other countries. This will lead to a change of emphasis from austerity favouring the banks and bondholders to stimulus favouring workers and more productive endeavours.

The EU and EZ are living organisms driven by politics which always adapts to accommodate the needs of the majority. People will say that change is occurring too slowly for Ireland and they are correct.

In GB the gov’t could fall within a year and in Ireland at some point in the near future Labour will have to reconsider it prospects. Life goes on.

France and Germany did not “create a rift” with the UK. The UK’s isolation was entirely self-inflicted. If you look for the financial services section in the Fiscal Compact you won’t find it, because it isn’t there. Cameron tried to reopen and change the Lisbon Treaty itself, and to change the voting procedure for some issues away from QMV back to unanimity. This was opposed by almost everybody, since nobody wants to go back and renegotiate Lisbon, and if you allow one country to roll back some things they don’t want, 26 others are sure to follow.

Also all the provisions in the Fiscal Compact apply only to the Euro Area states – the UK would not have been obliged to run a balanced budget or to submit to new Commission oversight. Notwithstanding this Cameron blocked both the Protocol 12 route, and the full treaty route, since both required unanimity. This left the option that was taken. However Cameron has gained nothing, since Lisbon is exactly the same this week as it was last week, and the new treaty simply doesn’t address any aspect of financial services legislation. This has got to be the biggest diplomatic EU blunder in years, and quite frankly I don’t think Cameron will recover from this. He didn’t protect anything since the old rules are the same as they were and the new rules don’t address the area of financial services.

What I think would have been in Ireland’s and the UK’s best interests was that high-level teams from both countries spent the week before, in Belfast, say, carefully working out a co-ordinated strategy that would have seen both adopt a Protocol 12 baseline position, and then allowed Germany to offer sweeteners to bring them both over to the full treaty side. Before the summit this would have allowed Ireland to bring some realism to the UK’s insane negotiating position, and at the summit the UK (maybe) could have shown some solidarity with the Irish government’s demand for debt reduction. It appears that Mr. Kenny’s negotiating position was “We want some debt reduction, but if we don’t get it we’re not going to block anything or cause any trouble”. I’m sure Van Rompuy replied “Thank you very much for your comments, Enda, your position has been noted”. There was really nothing to loose with this approach, and both countries might have gained something.

Munchau calling it as he sees it… and I tend to agree with him. Shouting the odds about the UK is just a smokescreen and it is not fixing the problems.

http://www.ft.com/intl/cms/s/0/0ed916a0-225c-11e1-923d-00144feabdc0.html#axzz1gIKRVDBX

@DoC: “The crisis emerges from a false narrative: that economic problems are the consequence of too-high labor costs rather than too-high energy cost.”

Not to worry. Folk only ‘hear what the want to hear’.

Later, these same dorks (the faux sort) loudly proclaim, “But no one saw this coming”. Correct, ’cause it was a verbal warning, not a visible one.

Brian

As I understand it the proposal by Germany, France and others was for PSI in Greek gov’t bonds in return for an agreement by the bond holders that it was a voluntary arrangement and they would take a 21% Net Present Value cut. The 21% NPV cut would have been absorbed largely by German, French, British and other banks. Private Equity firms ( largely US owned) who had bought their bonds on the after market at reduced rates sued to make it an involuntary arrangement in order to rope in CDS default compensation. Since the structure of the PSI deal was crafted to avoid bankrupting US banks who held the CDS liability the deal fell through.

My interpretation is that PSI is alive and well but it cannot be structured to force bondholders into relatively small voluntary haircuts if they have bought CDS (largely issued by US banks). This eliminates voluntary haircuts on bondholders who bought CDS, presumably the vast majority. The outcome is that the PIIGS can still formally default individually or collectively and that is the implosion that will send shock waves through banking systems world wide.

The whole focus is to protect banks in the US and EU as a whole from contagion. Thinking in the EU/EZ has to be that involvement with Anglo (US, GB) institutions including gov’t is toxic as they are an impediment to progress. Germany is on record as being opposed to the sale of CDS, insisting that they are weapons of financial destruction and risk should be compensated for by yield not by buying CDS from institutions which are highly likely to default on their obligations. Geithner’s visit to Europe to jawbone Europeans out of voluntary or involuntary haircuts on bond holders because it would lead to major bank failures in the US, lends credence to the idea that CDS are useless.

The foregoing is the austere protect banks at all costs scenario. As political pressure mounts in EZ democracies the focus will shift from protect the banks at all cost to protect the workers at all cost. Instead of throwing workers under the bus, gov’ts will be forced to throw banks under the bus. I am assuming that unemployment will continue to increase and social supports will continue to erode and this will cause repercussions at the ballot box and possibly before.

The world is frighteningly close to a world wide epidemic of bank, brokerages and Private Equity collapses. I heard the President to Iceland on the radio yesterday describe how only the Chinese had an expert grasp of the problems facing Iceland at the time of its banking failures. He said the country’s so called friends the British and Americans were more than willing to throw the Icelandic people under the bus and only the Chinese worked on a realistic plan and offered material assistance. Maybe Kenny and Noonan should be taking Mandarin/Cantonese language lessons. The pay back should be better than the Goldman Sachs consulting fees.

This is a link to the Canadian Broadcasting Corporation Podcast
Sunday Edition, Monday Dec 11th 2011 with Michael Enright.
Contains the interview with the President of Iceland on their banking issues.

http://podcast.cbc.ca/mp3/podcasts/sundayedition_20111211_46127.mp3

@thrifty, a cheap shot.

@Mickey Hickey +1 I believe CDS to be worse than useless… they provide an illusion which is dangerous…

Some time ago, I floated the idea of an alternative to the tobin tax…. CVAT… a contract value added tax… basically should be calculated as a very small % of total contract value and it gives the paying party the right to sue the other in the juristiction they pay the tax in.

No CVAT pre paid, contract is worthless….. I know there are major implications of this, major difficulties and serious work to make it real but I believe it would be better than trying to simply tax transactions. Introducing the possibility that a contract is worthless unless the CVAT is paid should provide incentive to paying and not trying to come up with ways to avoid it.

@ Colm Brazel

“Its fair to say ‘tax harmonisation’ proposals would close the attractive loopholes being exploited by those banks taking advantage of ‘fund management’”

Eh, thats not ‘fund management’ that you’re referring to, you have completely misunderstoof the term. Depfa was not a fund manager, it was a public sector financing vehicle. Hypo was a property financing bank. ‘Fund management’ is the likes of State Street, BNY, some of the Italian asset management companies based here, JP Morgan, Invesco etc etc. They’re real companies employing Irish accountants, lawyers, administration staff etc.

@ Bond

Eh, thats not ‘fund management’ that you’re referring to, you have completely misunderstoof the term.

Actually, you’ve narrowed its meaning to suit your own particular definition. I use it in the wider meaning defined here:

“Funds management can also refer to the management of fund assets.”

So I use it in the more generic form of managing and routing a companies profits through clearing house mechanisms as described by Kathleen Barrington and Bloomberg links.

Read more: http://www.investopedia.com/terms/f/funds-management.asp#ixzz1gJfDLUYm

http://www.investopedia.com/terms/f/funds-management.asp#axzz1gJe9zM64

Never said Depfa or Hypo were not real companies employing Irish accountants, lawyers, administration etc. I did infer mailbox entities and certain other companies taking advantage of these loopholes have limited footprints. Its worthy of investigation.

I welcome corrections if I’m wrong, but not if i’m right!

@ All

With regard to the blame game, the honours are equally shared between Cameron, Merkel and Sarkozy. Quentin Peel has a particularly good assessment from Berlin. However, he obviously has not paid sufficient attention to the speech made by Merkel in Bruges.

http://www.ft.com/intl/cms/s/0/9a546334-2409-11e1-bbe6-00144feabdc0.html

That from Paris is more colourful

http://www.ft.com/intl/cms/s/0/6f8b6a78-2416-11e1-a4b7-00144feabdc0.html#axzz1fZKVUZ2D

What unites the three leaders is the fact that they put domestic, and notably electoral, considerations ahead of the broader interests of their peoples in a European context. In short, they are national politicians, and very mediocre ones at that, but not the statesmen needed at this critical juncture.

Id be interested to know why people are so sure that ECB involvment could resolve the Eurozone crisis. Wev had a lot of these ‘potential solutions’ that have turned out entirely underwhelming when implemented. Or by not being implemented, (burning the bondholders, no bank gaurantee, taking an apocolyptic position with the EU in negotiations), have become the solution that never was.
Also the idea of following Dave Camerons political ineptitude strikes me as bordering on insanity. We have to deal with reality as it is, not as wed like it to be. Perhaps a better policy in the future would be to actually have some foresight and prevent ourselves, as much as is reasonably possible, from getting into such situations. (Ie lets not join another monetary union anytime soon, agreed?)

@Amac yet Gmail managed to virtually eliminate spam entering peoples inboxes without charging for it and are making a profit out of their service.

There is a moral in that story for you and how free markets operate.

Oh and if any email operator started charging even 1cent per email, then everybody would move to those that dont (as would happen when this financial tax comes in)

BTW textmessages are expensive to send yet doesn’t stop some companies sending out text message spam…

Now think again about the stupidity of financial transaction tax.

@Michael H

What is avoided is how a small economy that is facing a decade of high unemployment and that is dependent on American firms for most of its tradeable goods and services exports, should be doing?

It is essential to avoid this question. The purvey of all commentary is entirely dependent upon its avoidance.

The latest CSO figures today show unsurprisingly that employment is falling and unemployment rising. The rise in young adult unemployment should raise hackles but instead the signs are that the airports will be busier than ever in the New Year.

The government has no radical workfare plans. I suggested here in the past that a scheme involving work in exchange for the dole and mortgage paid, or interest only should be explored. Instead, the latest bout of talk at some distant convention of trenchermen has captivated the literate.

An observer looking in might ask why a small country with so many pressing social problems is still tossing about in the rainements of complex policies and responses, from the Smart economy, Croke Park Agreement, bank guarantees, credit guarantees, etc., that have gone nowhere near achieving their targets.

But rather than face the up to the consequences of major policy failures, the entire focus, almost, is directed at how the Continental trenchermen are doing. The house is burning down but the main preoccupation is guessing from which direction the fire brigade might come and how much bunting to have on hand when it does.

@DOCM

Let’s start the week on a positive note …

‘What unites the three leaders is the fact that they put domestic, and notably electoral, considerations ahead of the broader interests of their peoples in a European context. In short, they are national politicians, and very mediocre ones at that, but not the statesmen needed at this critical juncture.’

Fully agree.

@Kevin Walsh

Rock and Hard_Place … not great choices, are they?

@EIS

‘… a moral in that story for you and how free markets operate.’

free markets???? morals???? I love dark humour on a bleak afternoon in financial_system occupied EZ. Thank you for sharing such a deeply penetrating insight … much depreciated.

@All

Winston informs me that he is delighted that the Treaty Negotiations with West Oceania and General Geithner went so “swimmingly”; and chuffed that the beer ration has been increased and that every third blue soma pill will be exempt from the 2% increase in VAT.

The poor eejit – and there are probably a lot more of them around.

Well? IsItSortedYet? IsItSortedYet? IsItSortedYet?

Didn’t expect so …

@Alchemist

From a capitalist viewpoint, this socialism for the banks experiment is a disaster for us. Austerity is not working. Unemployment and emigration and debt that cannot be repaid plus democracy itself and a future technical government seem to be the future mapped out for us.

The government drive against unemployment touted in pre election promises has been a fail. We need to deal with our competitiveness and debt problems.

As Olafur Grimsson points out in the mp3 link above democracy itself is at stake here.

Plus very interested to hear how well he got on with the Chinese. Perhaps Olafur The Great 🙂 could send on some connections to us to help some smart people in government, if there are any, open up a dialogue. Our fishing/agri industry could benefit as well.

Though gordon Browne was no friend of Iceland, I’m certain George Osbourne and Cameron could be our friends, a medium term link to sterling?

Euro is finished and band aid compact rubberstamping to try to hide/avoid debt wont work and is unworthy of Merkozy who’ve been codded by the banks.

Long term the G20 need to come up with a currency solution that works.

FYI

Blind Biddy is taking up a “short” term position as ‘visiting scholar’ at the IMF .. Ajai, apparently, is a fan … Christine, apparently, is not amused.

[quote=prguy]
They would just be shooting themselves in the foot if it wasn’t brought in worldwide
[/quote]

Exactly it faces the same problems as carbon taxes (China and US not giving a damn) not working until implemented world wide

And for that matter same problem as communism not working 😀 unless implemented worldwide

Which tells us that its a stupid idea 🙂 in a long list of stupid ideas
Oh and Irelands low corporation tax didnt get us here either, I dont understand Merkozy’s fascination with it, while they are barking on about it Europe continues to burn.

DoD please do paint to us how millisecond trading has caused any of the issues that led to the current crisis, and if a financial tax on transactions would have prevented this mess from occurring,

Do I need to remind you that here in Ireland large stamp duty did nothing to prevent the housing bubble if anything it made it worse by filling the government coffers with once of revenue which they then proceeded to piss into the public/welfare blackholes in return for votes.

Do you disagree with my assessment? or did you live in a different country for the last few years.

@EIS
“There is a moral in that story for you and how free markets operate”

I appreciate as much as anybody the success of gmail in the elimination of spam. I don’t think that it proves anything about markets other than that there are numerous ways to skin a rabbit.
I’m not sure that DOD or anyone was suggesting that high frequency trading was the cause of the current crisis. Neither is the current EU compact adressing FTT as MickeyHicley points out – but rather that Cameron rather clumsily tried horse trading his support for the compact for the rolling back of part of Lisbon.

@Amac

Its not ok for Cameroon to be “trading” and “banging on” key issues important to his electorate he represents

Yet its ok for Merkelozy (TM to moi!) to pander to their electorates fears of inflation or PIIGS doing them the Greek style and not compromise or negotiate on their positions.

Colm McCarthy on the summit

What can he see from there?

@EIS

For most people the clear implication of the global financial crisis and its European component was that the level of market regulation and transparency has been insufficient. Transaction taxes are only a partial cure for this but they would serve to make the financial market more fit for purpose.

It might help you to think about the financial market situation if you think of a Tobin tax as like a speed limit on a motorway. Car crashes will of course still happen without speed limits, and they mean that that expert drivers sometimes get home more slowly – but they make the road network useful and safer for everyone, and they reduce the cost of cleaning up huge crashes…..

Now obviously quants and Austrian Schoolers feel differently but they are composed of the overlapping sets of dangerous amoral tools and market religious fundamentalists.

@ Colm Brazel

1. “Funds management can also refer to the management of fund assets.”

Great. Depfa didn’t manage a ‘fund’. It managed its own portfolio of assets for the benefit of its shareholders. No one else. It was either a bank or a public sector financing vehicle or just simply a highly leveraged ABS vehicle.

2. The link to investopedia does say it all. If nothing else you’ve added an extra ‘s’ onto fund, and therefore gotten ‘funds mgt’, which is a different term to fund management. Here’s what a fund manager does.

http://www.investopedia.com/terms/f/fundmanager.asp#axzz1gKTfQFxg

Fund management refers to the management (whether by investing or just administering) of other peoples funds. As EP noted, it is now what most of the jobs in the IFSC are involved in. There is nothing dodgy or risky or immoral about it, it is a triving industry that can in almost no way be compared to Depfa or Hypo, nor are these companies based here just because of cheap taxation. As i said, you have to have a complete misunderstanding of the term to do this.

To add if the proceeds from this tax were channelled into a fund for a “bad day” then maybe it would be useful, since this fund could be tapped if (no when!) there is another boom and bust. But that is not being proposed either.

@Bryan G
On that IMF deal requiring more scrutiny….look what Sarkozy is saying today..
“In the Le Monde interview, Sarkozy said that actions announced by the European Central Bank last week to support banks will help keep credit flowing and avoid a “depression.” The ECB plan should also help ease tensions in sovereign debt markets, Sarkozy said.

“I’m confident that the ECB, in the future, will set the right strength of intervention,” he said.

Sarkozy said “not a cent” of state support will be needed by French banks.”

And all the markets go south!

@EIS

And since when is taxation == regulation? A dozen people actually doing what they were paid for in our CB would have caused less issues if they actually “regulated” the likes of Anglo than any stamp duties of property taxes would have done.

A financial transaction tax is a way of better regulating financial markets. One of its beauties of such a regime is that, in its own way, it is light touch. Introducing a regulation that trades had to be restricted to a certain frequency would be a huge technical and legal burden, charging .25% tax per trade is a trivial accounting exercise.

I understand your worry that capital mobility might make the regulations useless but there are strategies that would encourage the regime to spread (something like the proposed CCTB) by making the governments in other markets profit from a proportion of the trades. The behemoths of the financial industry are powerful, on the other hand governments globally are growing tired of the power. The time is ripe.

Lloyd Blankfein might cry, but he would get over it.

@EIS some lite readin

Bailout: Response to CriticsL. Randall Wray | December 10, 2011

most of that $9 trillion cumulative borrowing can be attributed to just five “drunk” banks, as shown in the following table from Felkerson’s paper:

Five Largest PDCF borrowers, in billions

Source: Federal Reserve

Borrower Total
Merrill Lynch $2,081.4
Citigroup 2,020,.2
Morgan Stanley 1,912.6
Bear Stearns 960.1
Bank of America 638.9

Clearly, these were troubled institutions—two (Merrill and Bear) disappeared as independent banks, Citi came perilously close to the cliff, and Morgan and Bank of America remain in some distress. Doesn’t the cumulative lending by the Fed contribute to our understanding of the depths of their problems?

http://www.multiplier-effect.org/?p=2955

Minor update: The Shannon Front Row has been stood down; General Geithner did not re-fuel in Shannon – probably wise; the U Owe US €30 billion stands – peanuts really ….

@ Amac

In 2005, the chameleon/spoofer President Grimsson was serenading the buccaneers who later brought his country to the brink of ruin:

With this unique track record, it is no wonder that young entrepreneurial Vikings have arrived in London full of confidence and ready to take on the world!

Of course, many factors have contributed to the success of this voyage, but I am convinced that our business culture, our approach, our way of thinking and our behaviour patterns, rooted in our traditions and national identity, have played a crucial role. All of these are elements that challenge the prevailing theories taught in respected business schools and observed in practice by many of the big American and British corporations.

We are succeeding because we are different, and our track record should inspire the business establishment in other countries to re-examine their previous beliefs and the norms that they think will guarantee results. The range of Icelandic success cases provides a fertile ground for a productive dialogue on how the modern business world is indeed changing.

http://bit.ly/u1eoaV

This list gives us 7th place, but I’ve seen another giving us number 3, can’t find it right now. http://www.businessinsider.com/best-corporate-tax-havens-2010-11

EURASIAN CARTOON OF THE DAY

http://www.presseurop.eu/en/content/cartoon/1278631-slippery-slope

@Micheal
Its been my experience that most of these Guys & Dolls would gladly work in Fruit of the loom type enterprises but they have been a victim of the credit / oil labour arbitrage / pump & dump model
See the Steve from Virgina quote from above which gets to the heart of the matter in my opinion.
There is something wrong with global accounting I am afraid – blaming slightly vulnerable damaged goods for this mess is out of order although there are clearly scumbags in any community.

Can agree with all of that article. Although a proper enforcement mechanism for the Stability and Growth pact is desirable -it is scarcely worth establishing a new organisation without the UK. It definitely won’t do anything to prevent future crises. Indeed, I have already written elsewhere how I believe it will actually make future crises worse.

However, I do not see a way to reform the Euro without a full fiscal (read transfer) union. Anyone that does not want to see that (including myself) must either come up with an alternative (I certainly can’t), or else advocate a break up of the Euro.

Therefore, right now, against all my instincts, I feel that a break up of the Euro is the best long term solution. Of course, it’s impossible to do anything like that immediately as it would effectively end our attempts to forestall the present, looming disaster, but long term, it’s either break up or cough up. I say we should be looking at how to achieve eventual break up of the Euro. The EU will survive such a change, contrary to dire warnings from interested parties that an end to the Euro will be an end to the EU.

@Eureka
There was a element of final payment under the original Bretton woods system but it was pretty diffuse.
A SDR reserve currency fills me with dread because it would give ultimate power to a group of people completly divorced from nations executives.

There is a definite division between the US treasuary / NYFR system and the symbiotic European Treasury / CB continental culture
With the Washington FED & ECB forming a sort of higher echelon under the BIS system (remember the FED was refused official membership of the BIS by the US treasury in the 1950s)
But they are all highly corrupted by the power of the debt money system.

To get a feel for how the “Americans” view us and the rest this is a good example.
Google
IRA Analyst – The Fed as the New Global Aristocracy: Walker Todd

Its on this website :
Institutional Risk Analytics
Creative Risk Management Solutions

Anyhow the Anglos are fighting a good game this week but I suspect the Sterling rise against the Euro today was orchestrated.
But if the Euro boys want a full credit based system with not enough money either Goverment or private to pay down debt then they are surely doomed and the $ will rise again.
But as for Ireland – I cannot but not see us in the Anglo sphere of influence , the deal has already been sealed with the French I imagine.

@Mickey Hickey

That interview with the Icelandic President was superb – oh to have leadership like that.For those who did not tune in it really is worthwhile – posted 9.41 AM today. Agree absolutely that there should be a thread devoted to Iceland’s response – while they were not spancilled as we are by the euro, their position in relation to bank debt and their respect for democracy contrast with our reaction.