Methinks the subdued anger and frustration of voters may not be captured by any opinion polls – you decide on the answer that is needed, then frame your questions appropriately. We’ll see when Red C appears. A low turnout may decide the outcome.
Are there Oscars for Bullshit?
@Paul Hunt
My predcition came true almost in real time!
I laughed (well grunted amusement) when I saw your prediction had come true.
Philip Lane could of course be playing with us, for some senses of “with us” only.
I’m sure there’s a perfectly valid reason for the timing of this post. Prof. Lane is a busy man and this might have been the first opportunity he had to post. And, BW Snr, I’m there are plenty people who wouldn’t mind having me burned at the stake – and would have no need to call on the Witchfinder General to prove grounds for it.
It’s just a bit annoying, because it’s like having a conversation interrupted just when it might be getting interesting – and then one loses the thread, the interlocutors depart, etc.
But the key point is that Official Ireland is worried. The contortions being performed are both wondrous and disgusting to behold.
Why is so much effort put into attempting to suspend disbelief and to project these optical illusions, when it would require probably one-tenth of the effort to level with people – and, particularly, when most of the people know it is an optical illusion and that it will be shattered eventually (and usually to their cost)?
I do detect a silent variable emerging in the consensus regarding ‘Compact’. Its a feeling of slight unease, uncertainty, worrisome ambiguity on the part of Government regarding their support for the measures outlined in “Compact’…
Just a feeling I got at the moment….that maybe they are turkeys for Xmas. Slapping down by Olli Rehn didn’t help.
We’ll see how strongly they come out in support over the coming weeks.
Posted below on the IT comments section this morning [for IT readers online] – appears their moderator has taken the weekend off already – wouldn’t happen on this blog!
‘Although it is impossible to be certain what effect the compact underlying the treaty will have on Ireland’s economic fortunes, decisions should be made on the best estimation of Ireland’s prospects with and without ratification.’ (John McHale)
Let’s broaden it out a little – and acknowledging the underlying nonsensical nature of much of its economics – Presidential candidate Hollande in France is not happy with the ‘Fiscal Corset’ (as der Spiegel puts it), the German SPD and Greens have yet to agree to ratify it in the Bundestag, The Spanish are very worrried that it will make their recovery impossible, the Dutch are having second thoughts, the British are having none of it ….. and so on.
Further, the ESM Treaty has yet to be ratified in the Dail. Surely this vote might be postponed until after the Referendum … which should be postponed to much later in the year …
And returning locally, this Fiscal ‘Corset’ does nothing to relieve the burden of Odious Financial System Debt from the backs of the Irish Citizenry – or indeed of the European Citizenry.
The question of whether the Irish Citizenry should wear a ‘Fiscal Corset’ (whatever about placing its dubious validity in the Irish Constitution) while shouldering a ‘Burden of Odious Debt’ remains very much an open one.
There’s an awful lot of nonsense being spouted by those who are opposed to this fiscal compact. They think it will be possible for Ireland to keep dancing and throwing shapes at the edge of the fiscal cliff. This is total madness. The reality is that, in future, Ireland will have to make sure it is much further back from the fiscal cliff than the compact would require it to be – mainly becasue the cliff edge has been eroded and needs to be eroded even more to keep bond market participants in their place.
If the Government were honest – did I really say that? – we’d have sight of the Fiscal Responsibility Bill by now and it would set out fiscal restraints much more severe than any of those in the fiscal compact. But this delay looks like the usual trick of blaming the EU for making them do something that they should do, but haven’t the guts or gumption to do themselves.
We all should have had enough of this nonsense by now.
And all of this should put this half-arsed privatisation programme in context. This and future governments need to shrink the stock of sovereign debt in issue to make it almost rsikless and to have bond market participants gagging for it. They should re-structure, re-finance and privatise state holdings right, left and centre for purchase by bond market participants overweight in risky sovereign debt, but who would welcome opportunities for more equity and bond financing of tightly regulated utility and infrastructure businesses.
Can we think up some devious reason why IE’s ‘About John McHale’ page implies he works at Queen’s University, Kingston, Ontario?
“Although it is impossible to be certain what effect the compact underlying the treaty will have on Ireland’s economic fortunes…”
That’s probably enough reason to vote “no” – err on the side of caution.
And if that’s not enough, we are in violation of the criteria in the treaty. Fines and/or accelerated austerity are hardly ingredients for recovery/growth.
Further, it’s hard to see how is signing up for an un-manned (and unprecendented) straight-jacket in our interests – even if we were fully compliant.
To state the obvious; fiscal independence (from reckless government agenda) is a good idea, and EU-wide oversight was needed from 2002 – if not a fiscal transfer union to correct the distortionary flows of the Euro.
***
It’s not nice to see economics and politics mixed and served to us. The economic guidance the government chooses to take and promote is always interesting.
Hindsight (“on mature reflection”) is the politician’s enemy. An independent economist should have less to worry about.
Let Fine Gael worry about “the politics of the treaty”. They’ll be gone in a few years but our children won’t be.
I find it difficult to read John Mchales stuff – I really do – he probally comes from that old Home rule tradition of cuddling up to whatever power is in ascendancy.
Save ourselfs by saving Belgium and all that.
But this is not quite 1914 , but its not quite 1939 either – Germany is the creditor and opposed to the debtor of the world or at least Europe.
So the dynamics are somewhat different(+military conflict is perhaps a obsolete method of extraction now at least in the formely first world) – never the less History Rhymes .
Why must we travel this road to Bangladesh via Maoist like exporting drives ? – merely to save bank assets ?
The assets are worthless but that does not mean there is no wealth in Europe.
Bank Assets & wealth are not the same – the first is merely a accounting entry & at the moment a flawed one.
The Euro is a currency desgined around Bank assets …….Mortgages and stuff – it has no mission to create wealth , its mission is to maintain those assets through its credit hyperinflation methods – but that has hit a brick wall of natural resourse constraints as under the Euros monetory envoirment most of the stuff manufactured was high quality German Grot and did not add to core wealth creation……i.e. increase our energy density
New money spent wisely can increase Europes wealth through lets say Frances new light rail programme , but under current circumstances France and especially other countries cannot get enough fiscal money to make much of a difference and add real wealth…….because of the euro.
Its time to leave.
neweconomicperspectives.org/tag/mmt
PS
Where is the France of Vauban ?
en.wikipedia.org/wiki/Sébastien_Le_Prestre_de_Vauban
Has it vanished under Merkels fake Swabian Skirt ?
The ability to combine engineering & monetory understanding in one single unit appears to be almost lost ?
It must be very discomforting to Messrs McHale, Lane, McCarthy, Whelan, etc. that they are aligned with Noonan The Intellectual. Embarassing…..St. Patrick’s Day grog spin…..Do they really think that “positive advertising” will turn the economy? Hold onto the “rocket”, although “it is impossible to be certain what effect”……
Agree that our discussion has been interrupted…..Ressurecting Morgan Kelly clearly caused a spike in discomforture. It’s interesting though how Morgan’s article is still so relevant one year on…..I wonder whether we will be able to say the same about John McHale’s by the end of this year.
I expect Morgan to wait for an effective time to update his analysis….At least I hope he will……The People WILL listen to him.
Since my comment on the IT website has not or could not be posted, I will add it here:
If there is one thing we should learn from past European treaties is that the consequences of those treaties were dismissed by the Establishment and unforeseen by the public who voted for them.
How many people who voted for the Nice Treaty realised that it would lead to a huge influx of immigrants from the East? I happen to think this was a good thing, but it was not talked about much at the time.
Worse, the impact of the Lisbon treaty on the role of the Commission was completely unforeseen, even by supposed experts. Did anyone who voted for or supported the Lisbon treaty realise that it would mean our interests would be systematically sidelined in favour of an intergovernmental approach, typified by the awful Merkozy double act.
This treaty may not be a bad idea in the economics classroom, Prof. McHale, but back in the real world it will mean endless bailouts, the repayment of every cent of the bankers’ debt foisted on the Irish electorate and the relentless drift of control over our own affairs to Berlin and Frankfurt (not Brussels).
@Paul W.
A bit embarrassing all right. I got the impression that Mickey Noonan is hoping that inflation will ” take off like a rocket” with his musing about nominal GDP growth and his view on how it works. Remind me what he did in private life.
@Paul W
Messrs McHale, Lane, McCarthy, Whelan, etc. ….
… are intelligent men, perhaps a touch mis-guided at times, yet I have learned from all of them …
.. most centrally, they all have ‘balls’ and are willing to engage ….
…. which is more, much much more, than can be said for 99% of the supine academics sitting silenty and saying sweet feck all of any consequence whatsoever ….
Finally, they are not anonymous …
@bazza
ditto. The IT appears to have lost all sense of moderation … and did you read Johnny Waters spouting Any_een Rand tut tut … Sinead is more me style of philosopher any day and she can really sing – all Rand ever did was Rant at the mob and R1de her disciples …
Twenty years later, when Feynman was mortally ill with cancer, he served on the NASA commission investigating the Challenger disaster of 1986. He undertook this job reluctantly, knowing that it would use up most of the time and strength that he had left. He undertook it because he felt an obligation to find the root causes of the disaster and to speak plainly to the public about his findings. He went to Washington and found what he had expected at the heart of the tragedy: a bureaucratic hierarchy with two groups of people, the engineers and the managers, who lived in separate worlds and did not communicate with each other. The engineers lived in the world of technical facts; the managers lived in the world of political dogmas.
He asked members of both groups to tell him their estimates of the risk of disastrous failure in each Space Shuttle mission. The engineers estimated the risk to be of the order of one disaster in a hundred missions. The managers estimated the risk to be of the order of one disaster in a hundred thousand missions. The difference, a factor of a thousand between the two estimates, was never reconciled and never openly discussed. The managers were in charge of the operations and made the decisions to fly or not to fly, based on their own estimates of the risk. But the technical facts that Feynman uncovered proved that the managers were wrong and the engineers were right.
Feynman had two opportunities to educate the public about the causes of the disaster. The first opportunity concerned the technical facts. An open meeting of the commission was held with newspaper and television reporters present. Feynman was prepared with a glass of ice water and a sample of a rubber O-ring seal from a shuttle solid-fuel booster rocket. He dipped the piece of rubber into the ice water, pulled it out, and demonstrated the fact that the cold rubber was stiff. The cold rubber would not function as a gas-tight seal to keep the hot rocket exhaust away from the structure. Since the Challenger launch had occurred on January 28 in unusually cold weather, Feynman’s little demonstration pointed to the stiffening of the O-ring seal as a probable technical cause of the disaster.
The second opportunity to educate the public concerned the culture of NASA. Feynman wrote an account of the cultural situation as he saw it, with the fatal division of the NASA administration into two noncommunicating cultures, engineers and managers. The political dogma of the managers, declaring risks to be a thousand times smaller than the technical facts would indicate, was the cultural cause of the disaster. The political dogma arose from a long history of public statements by political leaders that the Shuttle was safe and reliable. Feynman ended his account with the famous declaration: “For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.”
Feynman fought hard to have his statement of conclusions incorporated in the official report of the commission. The chairman of the commission, William Rogers, was a professional politician with long experience in government. Rogers wished the public to believe that the Challenger disaster was a highly unlikely accident for which NASA was not to blame. He fought hard to exclude Feynman’s statement from the report. In the end a compromise was reached. Feynman’s statement was not included in the report but was added as an appendix at the end, with a note saying that it was Feynman’s personal statement and not agreed to by the commission. This compromise worked to Feynman’s advantage. As he remarked at the time, the appendix standing at the end got much more public attention than it would have if it had been part of the official report.
Sadly, what John’s article comes down to in the end is a scaremongering misstatement of fact:
“While it is possible that other sources of official support would still be available, not having access to the ESM could lead to a “sudden stop” of market and official funding at the end of the current EU/IMF programme.”
A Yes vote recommendation base on “the best estimation of Ireland” prospects. Has anyone seen a quantification of that estimation?
Patricia the Irish Sovereign_in_Exile says … Hi! No ministers please!
Blind Biddy is in Teheran … think she is borrowing something or other in exchange for the loan of her Higgs-bosun generator; and thinking of opening her own embassy.
Seven_of_9 says Hi to 2_of_Seven
@ Paul Hunt 1:04
Re “…They should re-structure, re-finance and privatise state holdings right, left and centre for purchase by bond market participants overweight in risky sovereign debt…”
Nope, that’s exactly wrong thing to do as Argentina found out to its cost:
“The Convertibility Plan’s ……Over the next decade the plan would produce a profound transformation on the Argentine economy and society that would definitively dismantle what was left of the Import Substitution Industrialization (ISI) era Welfare State. In other words, state enterprises, utilities, and social security were all to be privatized, state intervention in the economy was to be drastically reduced, and health and education were to be decentralized. The success of the Convertibility Plan hinged upon attracting foreign capital inflows. The hope was that foreign capital flows would set off a “virtuous cycle” of economic growth and general welfare improvements for the population (through “trickle down” effects), which would then lead to further investment flows and so on. Solving the public debt problem was seen as key to attracting foreign capital.Therefore, a “once-and-for-all solution” to the debt problem was devised. Official faith in this strategy was such that Minister Cavallo stated in 1993 that “the public debt will be insignificant by the end of the century.” The “once-and-for-all solution” consisted of two main parts. The first component of the solution to the debt problem consisted of allowing privatization of state enterprises to be purchased partly with Argentine public debt bonds. This was the case for the national telephone company, Entel, and the national airline, Aerolíneas Argentinas. This operation greatly favored holders of Argentine debt, since they were given full credit for bonds that were trading at 15–20 percent of their nominal value on the open market.The second component of the solution to Argentina’s debt problem came with the Brady Agreement, signed in December of 1992. According to this agreement, Argentina would swap its $21 billion debt to commercial banks, plus $8.3 billion in late payments, for 30-year Brady bonds with lower interest rates and an average capital reduction of 35 percent. The main result of this swap, illustrated in Table 1 below, was the atomization of Argentina’s creditors from a few Northern commercial banks to hundreds of thousands or millions of bondholders around the world. How permanent was this solution to Argentina’s debt problem? The data in Table 1 shows that Argentina’s public debt continued to grow at an alarming rate throughout the 1990s, reaching explosive levels toward the end of the decade when the much publicized default occurred. the main result of the Brady bond swap was that Argentina was able to regain access to financial markets.22 Renewed access to these markets enabled the debt accumulation process that eventually resulted in the largest sovereign default in history.
If you look at the Table 1 data above, plus the prognosis re privatisation and compare them to similar EMU prescriptions eg euro bonds vs Brady bonds, selling of state assets, you’ll see we mirror quite closely the scenario build up to the crisis that led to Argentina debt meltdown. We have a grossly increasing debt burden also.
Privatizations in Argentina led to lack of revenue for the state from utilities that were through privatization run into the ground turning them into loss makers for the state.
Our coming default will be shaped by blind subservience to an exchange rate we can’t afford in our current meltdown situation. Leaving the euro and devaluing would also discourage imports and help with import substitution. Selling off of state assets to the lowest bidder will lead to a higher cost in job losses and extra restructuring costs.
Above all, we should resist the moves currently being made by the Troika to convert our debt into state assets or government bonds based from more intangible assets than Promissory notes.
Argentina’s ‘Convertibility Plan’ is very similar to the ‘Fiscal Compact’. CP brought about the total collapse of the Argentinian economy.
The Fiscal Compact will bring about the total collapse of the Irish economy.
@ DO’D Not saying that the Messrs don’t have “balls”, smarts, etc (and these guys can well look after themselves) but thus far we have had three pro yes national newspaper articles in less than two weeks which have not been correct (CMcC), promulgated yes vote behind the guise of neutrality (Mr. Lane), and now a scaremongering piece (JMcH).
From afar, it appears that the no vote debate thus far depends on Fintan O’ Toole ! and so comes across as a Left vs Establishment debate. It is not. That in itself does the debate (and the Irish People) a great disservice.
I’m in the NYSE on Monday. Cringing at the thought of what the next Irish politician will say.
Last year, John Bruton, wasn’t the worst I have to say….
I know the Government can be pretty dumb, but why would they sell off state assets to the lowest bidder?
I’ve being analysing the energy semi-state sector in quite a bit of detail for more than a quarter of a century and, from a fairly patchy record up to 1999 when regulation was first applied to electricity, since 1999 the semi-states have ripped off small business and household consumers more thoroughly than the most rapacious private equity ghoul could even dream of. I haven’t looked at the other energy and utility sectors in the same detail, but what I have seen has horrified me.
There’s a huge amount of equity locked up in most of the semi-states – mainly generated from excessive revenue extraction from users/consumers – which could, and should, be unlocked by the state prior to privatisation.
From ’82-’87 FG had the Labour monkey on its back and – faced, in addition, by an opportunitistic opposition faction – couldn’t pursue in a measured manner the fiscal adjustments that were badly required to address the mad excesses of Jack Lynch/George Colley/Martin O’Donoghue spending their way out of a recovery – adjustments that the opportunistic opposition faction applied when it was returned to power.
Once again FG has the Labour monkey on its back and, while this version of Labour has been forced to swallow some fiscal responsibility (mainly courtesy of the Troika), its baleful impact, combined with FG’s own gutlessness, means that these issues are being addressed in the most half-arsed and counter-productive manner imaginable.
An Inconveniant Truth.
If you looks back to the end of March 2011 on this site, you will see doom porn post after doom porn post from some of the usual suspects on here, foretelling the end of the world. Irish 10 year yields were over 10% at the time and were close to their peak of 14%.
Since then the total return has been of the order of 33%…yes 33%. Yet these poster are still dragging their chains and foretelling doom
I was going to nominate Noonan for excellence in the promotion of rocket design. I only vaguely looked (laughed) at the reporting of his comment but no doubt he qualified it with something like “If xyz happens THEN the Irish economy will take off like a rocket” (if he didn’t, his PR Guy should be shot).
Those who made that total return – and good luck to them – were credit investors who bet against the probability of default built in to the yields at the time. I want to see Ireland get back as quickly as possible to where it is relying on rate investors happy and confident to accept low coupons on long-dated debt. I have no doubt it will happen. My only complaint is that current policies are making the path to that destination longer and harder than it need be – and the hopes and prospects of an entire generation are being blighted unnecessarily and excessively.
@Tull
You see Irish Bond yields and I see North depletion figures – each to his own I suppose.
If guys make money on Bond speculation but economies and societies are shattered is that a good thing ?
Its only about making money from a declining wealth base I am afraid -a sort of Maltusian Masturbation where wealth is hollowed out of systems to insure a continual yield on something completly unsustainable over the long term.
If you find that your course is incorrect it may be rational to reverse your direction don’t you think ?
@Seafoid
A great example of physical reality intruding into the bureaucratic machine.
I find Freemon Dyson words about the futility of Bomber commands mission somewhat similar. http://www.youtube.com/watch?v=jixlPeT-EnE
The private debt/ credit factories dependent on rising oil consumption / core capital destruction – which really accelerated after 1987 have a momentum of their own me thinks.
Paul,
I do not include you amongst the rank of posters who should only be let out on supervised visits at the week end. Most of the time, I agree with what you post. My disagreement is mostly about the quality of governance in your benchmark. Most governments are incompetent and have a propensity to do more harm than good.
@Tull,
All the more reason to have effective processes in place to stop them from doing damage to themselves and us.
Sir Humphrey: Bernard, why so concerned and glum?
Bernard: It’s the Prime Minister. He wants to govern the country.
Sir Humphrey: Then stop him, Bernard. Stop him.
@ Tull Do you think Ireland could actually raise new funds in 2012 from the markets at anything like an acceptable rate (say less than 7% for 10 yr money)?….
@ Dork “If you find that your course is incorrect it may be rational to reverse your direction don’t you think ?”
+1
Now there’s a thought. Thinking. I hope the Govt & snr economists are at least prepared for a no vote…..FC II would appear to be the only fallback at present.
Tull: “I am channelling the long lost soul of JTO.”
Try going back to the wonderful comments he left us instead; gems like this:
“…it is now clear that GDP will rise in 2010. By how much, we don’t yet know. The latest Central Bank forecast is for 0.2% GDP growth in 2010. I personally think it will be a lot more, and that the Central Bank were daft for revising their forecast down to 0.2% from the 0.8% that they were predicting in summer.”
Does anyone foresee any of our esteemed pro yes vote snr economists penning a piece on what the alternative options might be (how the game is likely to be played or need to be played) if there is a no vote?
Bloomberg are saying that Irish ten year bonds declined after Noonan said he was cutting GDP forecast. They don’t mention the Irish Rockets.
Confused.
@ Paul Hunt
re ” I know the Government can be pretty dumb, but why would they sell off state assets to the lowest bidder? ”
2 Points. Firstly, I respect the work you’ve carried out and knowledge you’ve acquired on energy sector. Don’t doubt your analysis is correct. Sell off/privatization is not the answer, deep upgrading and modernisation based on a buck for buck, value for money critique, is the answer.
Secondly, in a recessionary situation such as hours, there is a vast body of academic literature out there that has examined the history of privatisations in the energy sector Elec/water supply that shows taxpayers have come off worse in privatisations involving these utilities. Argentina above is one example, here’s a paper
“Introduction Private-sector involvement in infrastructure was vigorously promoted by development agencies and international institutions in the 1990s and early 2000s. It was expected to inject both investment and efficiency into these sectors in developing countries, replacing traditional public-sector systems suffering from under-investment and inefficiency due to excessive political interference and rent-seeking behaviour by vested interests including bureaucracies and labour. It was assumed that this extension of private-sector involvement would be economically successful and generally welcomed, except among those interests losing out as a result of the reform process. In the water and energy sectors, these expectations have not been fulfilled.”
I could have stated that lowest bidder sentence better. What I meant was there is a danger vultures can pick up for a song public utilities eg, ESB, strip them clean of value through reducing employment numbers at state expense, and having looted them, sell them on for profit. The end result could easily be electricity outages, strikes, obsolete infrastructure.
@Colm
Your last paragraph could describe Eircom. I see the lenders are assuming control and wiping out all shareholders in return for a 15% haircut on senior debt. Still leaves the debt load unsustainable. Maybe a better class of vulture will emerge ( like wilbur?) and not leave the entire infrastructure of the country without any money to invest.
PH,
Great quote. And what did our Satsumahs do. The Principal Officer class of the 1970-80s were so scarred by the corruption of CJH and the bungling of Garret in failing to correct it and so frightened by the near collapse of the State in the mid 1980s that when there turn at the tiller of state they vowed “never again”. So they decided to outsource all policy making -monetary, fiscal and even social to Brussels. Then, convinced that they had done the state some service, they greatfully accepted the highest salaries and pensions on offer in the Western World.
@Dork of Cork…
Sorry if youve explained this already, but what event in 1987 are you referring to?
@Colm Brazel,
If the primary objective of privatisation is not economic efficiency then consumers, small businesse and the economy will be hosed. But your “deep upgrading and modernisation based on a buck for buck, value for money critique” didn’t happen, couldn’t happen, would have been opposed ferociously while the good times rolled, so it doesn’t have a snowball’s chance in hell now. This is the SOB that emerges from trades unions and the left. Most voters have given up buying this. So I can only conclude that that you are perfectly happy for consumers, small businesses and the economy to continue to be hosed to advance the interests of these semi-states.
Good luck. Over and out.
It’s interesting to look back at the posts of 1 year ago.
We’re pretty much where we were then.
Ireland is a great country – no doubt about it. Europe is in dire straits though. I’m not sure we should go down with it. Where’s our Taoiseach spending St Patricks day – not Brussels or Berlin.
Any pact that draws us closer to this version of European Union should be rejected. It’s not Ireland that is failing – it’s Europe
@ Paul Hunt
You’re generally right in what you say but you tend to be very closed in who you apply it to.
All countries, people and sectors have elements in them that suck. Its not just Ireland and not just the public sector. You can’t trust the private sector with lots of things – public sector just has to have a role in them
Around that time 86 /87 / 88 you had the Big Bang in the city / EMU / Greenspan / Basle 1 /The Tallaght strategy / Washington consensus etc etc -almost the whole damn lot – basically a massive increase in leverage (leverage is theft hoping successful investments will cover your counterfeiting tracks)
On a local level just look at central fund services as a % of GNP – this is a true measure of the leverage in the system or in other words the ratio of goverment money relative to bank credit / deposit production. http://www.finance.gov.ie/documents/guidelines/bessept2011.pdf
(go to table 2 )
Those numbers are the animal tracks towards the decapitalisation of the internal monetory system and by implication the real physical economy.
Afterwards businesses were operating in a more and more phoney envoirment becoming more and more vulnerable to leverage shocks.
After 1987 it took off from 8 to 1 to something like 42 to one.
Even if a small amount of those bank investments don’t work out it has a devastating cascade effect on the economy.
We are all victims of the Basle hidden goverment and their tireless efforts to destroy the nation state and replace it with a market state.
@Judge
See above.
@ Dork
Your Freeman Dyson piece is just incredible.
Fine mind you have.
Have one for me in the Long Valley this weekend.
@ Eureka
+1 from me. Ireland is however at a very important (and messy…no, ugly) crossroad. Not much has changed from a year ago in terms of direction, yes….but the metrics, on almost all important levels, are far worse. It doesn’t take a genius to see that “austerity without growth” is bad policy…Praying for growth and kicking the can down the road is one strategy (actually the Govt’s strategy). However, if the timing is wrong (i.e. enough uptick doesn’t happen in time…soon….sooner than people are admitting), it will end up in a very Dark Place (using Dork’s phraseology).
@ Eureka
Hopefully resusication happens before the patient passes:
Happy St. Patrick’s Day to all. May the fine weather be with ye.
Paper Against the Fiscal Compact
The Association for critical social research was established in Germany in 2004. 120 members from social sciences put their brains together and created this paper to make a clear statement against the so called fiscal compact:
….
Democracy instead of the Fiscal Treaty! We need a different approach to tackle the crisis, and a different Europe
Spring 2012. Merkel and Sarkozy rush from summit meeting to summit meeting, in order to save the euro. The yellow press smears the people of Greece. The struggle over a solution to the crisis is intensifying dramatically: by early 2013, an authoritarian-neoliberal alliance of business lobby groups, the financial industry, the EU Commission, the German government, and other exporting countries, hopes to rush the ‛Fiscal Treaty that has just been concluded in Brussels through the national parliaments. The Fiscal Treaty prescribes an antisocial policy of cuts, and includes penalties for countries that oppose this policy. Thus the Fiscal Treaty restricts democratic self-determination even further. It is the momentary climax of an authoritarian trend in Europe.
We are fed up with these unsocial and antidemocratic policies, and with the racist slander campaign against the people of Greece. Instead, we should talk about the inhuman consequences of these policies. We should talk about Europe’s authoritarian turn, and low German wages as a cause of the crisis. We should talk about the untouched fortunes of the few, and the sufferings of the many. We should talk about our admiration for the resistance and solidarity among the Greek people. Let us demand what should go without saying: real democracy and a good life in dignity for everybody – in Europe and elsewhere.
The crisis in Europe is only the tip of an iceberg. Underneath it lies a deep structural crisis of capitalism. Too much capital is chasing profits. But the returns on investment are low: there is too much competition, and wages are too low. Debt- financed growth and speculative bubbles have only delayed the outbreak of the major crisis. Now the authoritarian-neoliberal alliance is advocating a radicalized more-of-the-same: socialize losses from speculation – through permanent debt- servicing by the wage earners. They want to increase returns on investment – by means of precarious employment, cuts in wages and pensions, cutbacks of the welfare state, and privatization. The consequences are drastic, and what is happening in Greece is looming in the rest of Europe: mass unemployment, impoverishment of broad swathes of the population, collapsing health systems, increases in mental illness, and a declining life expectancy.
Measures such as this can only be implemented by authoritarian means. Pinochet’s putsch in Chile in 1973, the IMF’ programmes in African states in the Eighties, and the transformation in eastern Europe in the early Nineties are historical forerunners of the Fiscal Treaty & Co.: “shock therapies”. Social and democratic principles that were won by struggles with many victims will be eliminated at breathless speed by the Fiscal Treaty, in order to ensure that debts are serviced and rates of profit increase. In Italy and Greece, unelected governments of technocrats are using
truncheons, tear-gas, and water cannons to impose the cuts dictated by male- dominated groups of “experts” in Brussels, Frankfurt, and Berlin. The Fiscal Treaty and the set of edicts on “economic governance” give more and more power to bodies such as the EU Commission, the European Court of Justice, and the European Central Bank, which act beyond democratic controls. To prevent democratic decision- making contrary to neoliberal orthodoxy, the Fiscal Treaty perfidiously strengthens the dictatorship of the financial markets by fines to be paid to the EU.
As in the Great Depression of the 1930s, chauvinist and fascist forces are gaining influence, in Hungary, Austria, Finland, and elsewhere. Blind to the lessons of history, the German government, with its uncompromising austerity policy, is making reactionary solutions to the crisis more and more likely.
Throughout the world, people are fighting back against these policies, from the Syntagma Square in Athens, via the Tahrir Square in Cairo and the Puerta del Sol in Madrid, to Zucotti Park in New York. The movements of refugees and migrant workers across Europe’s outer frontiers are part of these struggles for a good life. These struggles must be carried out across borders and in the centres of the authoritarian-neoliberal alliance, in Paris, Brussels, Frankfurt, and Berlin. Therefore, we call on people to join in the coming protests, including the European Day of Action on March 31st, the Global Day of Action on May 12th, and the international mobilization to Frankfurt am Main on May 17th to 19th. We are relying on an alternative solution to the crisis:
• no ratification of the Fiscal Treaty, and dropping the set of EU laws on “Economic Governance”;
• cancelling public debts, introducing controls on capital flows, and converting banks into public service providers;
• redistributing social wealth from the top downwards by a new tax system; • expanding the social infrastructure and starting to transform the economy with
a programme of social and environmental investment;
• shortening working hours;
• democratizing politics and the economy radically at all levels;
• ending the racist policy of Fortress Europe – residence permits and legal status for all.
To the authoritarian-neoliberal EU of the few, we oppose a democratic, social and ecological EU of the many!
Assoziation für kritische Gesellschaftsforschung (AkG), March 2012 http://www.demokratie-statt-fiskalpakt.org / http://www.akg-online.org
This last sentence appears to be a wrong translation: Gegen die autoritär-neoliberale EU der Wenigen setzen wir ein demokratisches und sozial-ökologisches Europa der Vielen!
it should read: We oppose the authoritarian neo liberal EU of the few, in favor of a democratic, social and ecological EU of the many
@Dork of Cork.
Thanks for that. excellent posts as always.
@ Georg Wow. “Thus the Fiscal Treaty restricts democratic self-determination even further. It is the momentary climax of an authoritarian trend in Europe.”
The Frankfurt School isn’t dead yet! It hasn’t gone away you know!
@ Paul Hunt
‘ I want to see Ireland get back as quickly as possible to where it is relying on rate investors happy and confident to accept low coupons on long-dated debt’
Humpty Dumpty is broken, and not just in Ireland. We have entered a maelstrom of speculation, and no one knows where the exit lies. The Dork is correct in his perception that the nation state itself has been eroded.
‘This week’s LTRO provides an exclamation point on the latest round of unprecedented global policy market interventions. As I explained last week, policymakers were, once again, able to incite the reversal of bearish positions and risk hedges. And as much as this creates the perception that central banks have things all under control, a strong case can be made that such actions only ensure that unwieldy markets just move further from their control.
The interventions have become monstrous, increasing the odds of unintended consequences: speculative equities and global risk markets; surging oil prices; and only more dangerous global imbalances – quickly come to mind. And, if they’re not careful, one of these days policymakers may even unknowingly pierce the U.S. bond Bubble’
@ Paul W
Thanks for that link – great video.
A little wake up call to all the Daddies out there.
Imagine a German operator – first question – is your Dad Greek? Ok then…bye…
Seriously though. Merkel’s Europe stinks. To hell with it.
If she wants to fight banking elites and eliminate sovereign debt gangsters she’s going the wrong way about it.
Let it fall apart. Let the bondsters take the hit and let it be rebuilt again.
@Paul Q.
Did you catch our Petroleum & gas imports for 2011 on the CSO today ?
There must be a thread on this – something needs to be done , the production of public transport tokens would be a good idea for example.
Our petroleum imports alone was 5.168 Billion ! with much less activity on the roads.
Gas imports : 1.353 Billion
It beats the record Year of 2008 & we all know what happened after that – demand destruction
2008 Irish Fuel Imports
Petroleum :4.913 Billion
Gas : 1.378 Billion
@ Dork
Energy is our weak link – no point in denying it
It weakens our hand considerably
@Eureka
Food & Fuel is the guts of the economy – the trade surplus is not being taxed….. chemicals and all that.
The Domestic economy is getting smashed.
When fossil fuel imports exceeded food imports in 2005 there should have been danger signs everywhere , then in 2008 oil product imports alone exceeded food imports – a reversal in 2009……..
Then fossil fuel imports exceeded food in 2010 , now in 2011 oil again exceeded food imports.
Also a continual decline of beverage imports for 2011 is a very bad sign for discretionary domestic demand unless everybody in Ireland is Drinking Beamish & stuff.
Noticed a increase in demand during Feb /early March using my Saturday night Cork test but that is a tad unreliable.
Anyway Scotrail is doing something http://www.rail.co/2012/03/15/scottish-jobless-to-get-half-price-rail-fares
although a 50% drop in all rail fares would be better and acheive something beyond making money for one little enterprise with a large utility function.
PS
Look at Y2003s Import figures…….
Coal : 122Million
Gas : 225 Million
Oil : 1.593 Billion
@ Dork
Seriously? What the hell is going on? Despite rise in oil & gas wholesale prices internationally, the numbers you allude to below are intuitively difficult to square…….
“Did you catch…..our Petroleum & gas imports for 2011 on the CSO today ? There must be a thread on this – something needs to be done……Our petroleum imports alone was 5.168 Billion ! with much less activity on the roads. Gas imports : 1.353 Billion
…….It beats the record Year of 2008 & we all know what happened after that – demand destruction
….Look at Y2003s Import figures…….
Coal : 122Million
Gas : 225 Million
Oil : 1.593 Billion”
Seriously? Contextualises /emphasises some of your comments over the last week (sorry, don’t have a consistent history of reviewing this website before that).
@Paul W
massive rise in Brent
Decline of Euro against $
Continual very high use of oil in Ireland in a non productive inefficient manner -despite huge declines (empty buses / single occupant cars) because of non optimal currency…….
= energy / food use swamping all other discretionary demand = collapse of internal domestic economy.
Check out http://www.cso.ie go to latest releases – goods exports and imports jan 2012.
Also look below at special topics – statistical yearbook external trade section for recent historical numbers by goods type… shoe leather imports etc etc .
@ Dork/Paul W
Dual economy. FDI sector financialised and domestic sector relatively unproductive and driven by state spending. Sovereign being decommissioned while local stakehoolders continue to exrtract. Death spiral.
Paul W: I don’t wish to cross keyboards with Dork, but the energy issue is a deep and complex issue (I am sure he is well aware of this). However, in attempting to get traction on the energy issue, you have to split it up into bite-sized chunks. Clearly this is not ideal, but when you understand the components, and how they connect up – then you can re-assemble them. Then you have to figure out the outcomes!
The energy predicament we face is truly awful. Unless it is ‘fixed’ this country (and I mean the entire Island here) – will go into a severe and prolongued economic regression. This of course is controversial and subject to all sorts of opinions, views, whatever. But what is not in question is our economic reliance on liquid hydrocarbon fuels (and now gas as well) is so massive, that any restriction in supply will trigger very unwelcome social, hence political disruption. Many will poo-poo this, but just remember what went on in the UK a few years back when the Tanker-drivers blockaded fuel depots … …
We’ll be back at this. I completely endorse Dork’s call for a meaningful debate on this energy issue. It was urgent a decade ago!
@ Paul Hunt 8:06
Re “So I can only conclude that that you are perfectly happy for consumers, small businesses and the economy to continue to be hosed to advance the interests of these semi-states.”
Well if I say black and you conclude I say white, what can I say. I’m anti privatisation of the ESB but agree it should be run more efficiently at less cost.
Perhaps a declaration of interest is required at this point. I am assuming you don’t have skin in the game re providing services if moves to privatise the ESB were to come about ?
Price increases yes, but crude was expensive also in 2008. However, filling a car at the pump is approx. 50% of the cost there ($10 pg in Paris apparently). So taxation must be another big feature. $ /Euro has been relatively stable (LT average basis), so one can overstate that. That leaves consumption…..Don’t know what’s happening there.
Plenty of oil in the world (….much of it just not tapped). Hopefully Providence and others find more off the Cork /Irish coast…
Sorry gas at pump at least 50% cheaper in the US.
Enda Kenny in the Dáil responding to Shane Ross points that the big players Greece, Spain were able to get a la carte choose their own menu whereas we get table d’hote take it or leave it, was responded to by Enda Kenny with the “binn béal ina thost’ gaelic idiom, a silent mouth is sweet, meaning re Compact PN’s etc I guess he was implying nod, nod, wink, wink, negotiations favorable to us being attended to in the background.
That’s one interpretation, another is, the gombeens have allowed themselves to be silenced by ECB calls to ‘commercial sensitivity’ compliance the LB/FG glove puppets seize upon to cover up failure of these negotiations.
I notice this St Patrick’s Day no announcement re date for Compact referendum nor any concessionary relief given on PN’s other than vague hints the PN’s are not sufficient as collateral.
Perhaps they want something more substantive such as ESB, Coillte, airports, ports…
Do we not have the worst political leadership in Europe ?
@Paul W
These are raw import figures – taxation is not a part of those figures.
The central problem in Ireland is that we don’t have a CB or treasury directly Monetizing the fuel savings from lets say half the cars switching over to A class that can then no longer be taxed because less fuel is burned and therefore less tax is collected……..
So we don’t get effective Good or service substitution – the money becomes a sort of dead air creating havoc in the domestic economy.
Essentially Public transport should be very cheap for wage earners / benefit recipients in Ireland while car / oil expenditure very expensive.
In a debt based system the money supply must always rise – you can’t hope to tax a declining money / credit system for very long.
“Extinguishing debt by way of fiat runs against the rules instituted by bankers which allow them to rake in the easy cash. This is why the bankers are so quick to sanctify money. It is precious: it is an outrage for anyone cheapen it or use it in ways outside of making bankers richer than they already are. It is far too simple a thing for a country to create currency in order to extinguish its own debt, too damned easy, it has that ‘deux ex machina’ quality! It’s cheating.
Q: How is ALL debt created? [ … dead silence … ]
Creating currency to extinguish debt is absolutely no different from the creating of the debt in the first place! “DUH!” as Homer Simpson would say. It is far easier to create €100bn or €500bn in debt out of thin air with a pencil and a piece of scrap paper than it is to raise that same amount in taxes! It’s just as easy to extinguish that debt but the governments of the world are run for and by bankers who need the debt to remain for their own selfish purposes.”
Steve from Virgina
Hi Colm,
….Do we not have the worst political leadership in Europe ?….
Naw Colm, this is no political leadership at all. These are no politicians, they are people without any sense of responsibility or moral integrity.
They are the bitches of bankers, rich and super rich.
We live in aan age where senior civil servants and technocrats are making politics, politicians, none are left.
@Paul W: “Plenty of oil in the world (….much of it just not tapped). Hopefully Providence and others find more off the Cork /Irish coast”
Yes, and No. Its how much (in barrel terms) it takes to extract, process and deliver to the pump. News is v-bad here. But you won’t hear much about this from the ‘oil’ shills. We (IRL) use about 7 liters, per person, per day. Brazil uses 2 l/p/d. That’s where we are headed. Make friends with farm folk, or those that have allotments.
re-Colm Brazel:’a feeling of slight unease, uncertainty, worrisome ambiguity on the part of Government regarding their support for the measures outlined in “Compact’…’
Just what struck me about recent footage of Enda from his relegation-welcome in Chicago today – he’d lost that schoolmaster confidence and bluster that he’s been gliding on of late, and instead seemed distracted, unsure and compromised.
The ‘please come to Ireland’ message touted befits the man, but it is hardly a dignified role for Taoiseach.
But I’ve always thought we should abolish that office anyway – tends to make men uppitty…
Elsewhere, Brendan Howlin in the financial times said that the Irish were ‘confused’ by the ‘misinformation’ they believed about the bank guarantee; setting the official course for the enquiry into same that he was referring to at the time, no doubt.
By ‘misinformation’ I guess he’s talking about Trichet’s communiqué in the days leading up to it, and trying to sever any inference we may care to draw from that particular fact.
@George Baumann,
Thats quite a paper. The call for an end to the so called Fortress Europe policy will be a welcome boost to Europe in this time of economic crisis.
In Greece with 50% youth unemployment and in Spain with same above 40% there may be some push back against a policy recommendation to open Europe’s borders to anyone who wants to come to live here but those objections will surely only come from the usual extremists. They can and will be defeated.
There is a need though to sell the benefits of opening Europe’s borders at this point in time.
Positive benefits are – the new arrivals would work for less, for longer, and with less fringe benefits.
– Europe could continue to ignore the need for scandinavian scale child care policies (in the full) and use a quick fix which would be allow low tax environments to be maintained,
– trade unions would be weakened which would help ensure a positive business environment.
– Europe will become more diverse and varied.
There are benefits but they need to be sold, especially to the Greeks, and Spanish.
– trade unions weakened further
John McHale while being seen as an academic is not infallible, I remember him trying to convince that a fiscal contractionary policy would stimulate our economy.
Are you being sarcastic jean?
Because what you are describing sounds like it would be absolute hell for 99% of the population.
Is this the future we have to look forward to?
No, there is no sarcasm. This is Europe today. George is trying to sell a policy for opening Europe’s borders to anyone without taking the time to put in the arguments to justify it. There are arguments to justify such a policy. I have made a few here. Peter Sutherland has made a few etc. But if George thinks that the Greeks and Spanish will be as quickly persuaded about the broader macro-economic upsides of such a policy then I think he underestimates the hold of petty nationalism in Europe, especially in a time of financial crisis.
So there is no sarcasm.
You actually want
1) lower wages
2) longer working hours
3) less benefits (such as healthcare, etc)
4) “quick fix” childcare policies
5) the destruction of trade unions
Further consequences of what you want are
6) total collapse of the welfare state
7) higher unemployment among native Europeans
At least you’re aware that most of the 99% (which I’m sure you are not a part of) will not want what you want.
So how do you propose to drive it through?
My God – sorry if the following adds little to the overall discussion, but I really can’t believe the blatant evil underlying Jean’s list of ‘positives’ above; I’m almost inclined to believe that some sort of joke or pretense is there that is just too subtle for me to recognise.
If not, I’d like to point out that people who hold these sort of views often do add something like ‘ Europe will become more diverse and varied’ as a suger coating to a wholly perverse set of ambitions, and the ‘diversity’ intended is more typically just a new guise of the same sort of thinking that underlies the more common (historically) route of obliterating societies and communities by the enforced overlaying of an alien monoculture – ie; an imperialist invasion.
I’d also suggest that this sort of thinking is far closer to the cause of racism, etc., than ”the usual extremists” – as it makes the potential negatives of immigration (job-displacement, wage erosion, disregard/corrosion of indigeneous culture/laws/society – none of which are de-facto certainties & which need never become manifest !! ) a certainty. Indeed, their express purpose !
It is, in short, Nazism-minus the single-reace/culture ideology.
I’m sorry to go off on this here – but these sort of opinions demand unmasking for what they are.
Democracy instead of the Fiscal Treaty!
We need a different approach to tackle the crisis, and a different Europe
Spring 2012. Merkel and Sarkozy rush from summit meeting to summit meeting, in order to save the euro. The yellow press smears the people of Greece. The struggle over a solution to the crisis is intensifying dramatically: by early 2013, an authoritarian-neoliberal alliance of business lobby groups, the financial industry, the EU Commission, the German government, and other exporting countries, hopes to rush the ‛Fiscal Treaty that has just been concluded in Brussels through the national parliaments. The Fiscal Treaty prescribes an antisocial policy of cuts, and includes penalties for countries that oppose this policy. Thus the Fiscal Treaty restricts democratic self-determination even further. It is the momentary climax of an authoritarian trend in Europe.
We are fed up with these unsocial and antidemocratic policies, and with the racist slander campaign against the people of Greece. Instead, we should talk about the inhuman consequences of these policies. We should talk about Europe’s authoritarian turn, and low German wages as a cause of the crisis. We should talk about the untouched fortunes of the few, and the sufferings of the many. We should talk about our admiration for the resistance and solidarity among the Greek people.
Let us demand what should go without saying: real democracy and a good life in dignity for everybody – in Europe and elsewhere.
The crisis in Europe is only the tip of an iceberg. Underneath it lies a deep structural crisis of capitalism. Too much capital is chasing profits. But the returns on investment are low: there is too much competition, and wages are too low. Debtfinanced growth and speculative bubbles have only delayed the outbreak of the major crisis. Now the authoritarian-neoliberal alliance is advocating a radicalized more-of-the-same: socialize losses from speculation – through permanent debtservicing by the wage earners. They want to increase returns on investment – by means of precarious employment, cuts in wages and pensions, cutbacks of the welfare state, and privatization. The consequences are drastic, and what is happening in Greece is looming in the rest of Europe: mass unemployment, impoverishment of broad swathes of the population, collapsing health systems, increases in mental illness, and a declining life expectancy.
Measures such as this can only be implemented by authoritarian means. Pinochet’s putsch in Chile in 1973, the IMF’ programmes in African states in the Eighties, and the transformation in eastern Europe in the early Nineties are historical forerunners of the Fiscal Treaty & Co.: “shock therapies”. Social and democratic principles that were won by struggles with many victims will be eliminated at breathless speed by the Fiscal Treaty, in order to ensure that debts are serviced and rates of profit increase. In Italy and Greece, unelected governments of technocrats are using truncheons, tear-gas, and water cannons to impose the cuts dictated by maledominated groups of “experts” in Brussels, Frankfurt, and Berlin. The Fiscal Treaty and the set of edicts on “economic governance” give more and more power to bodies such as the EU Commission, the European Court of Justice, and the European Central Bank, which act beyond democratic controls. To prevent democratic decisionmaking contrary to neoliberal orthodoxy, the Fiscal Treaty perfidiously strengthens
the dictatorship of the financial markets by fines to be paid to the EU.
As in the Great Depression of the 1930s, chauvinist and fascist forces are gaining influence, in Hungary, Austria, Finland, and elsewhere. Blind to the lessons of history, the German government, with its uncompromising austerity policy, is making reactionary solutions to the crisis more and more likely.
Throughout the world, people are fighting back against these policies, from the Syntagma Square in Athens, via the Tahrir Square in Cairo and the Puerta del Sol in Madrid, to Zucotti Park in New York. The movements of refugees and migrant workers across Europe’s outer frontiers are part of these struggles for a good life.
These struggles must be carried out across borders and in the centres of the authoritarian-neoliberal alliance, in Paris, Brussels, Frankfurt, and Berlin. Therefore, we call on people to join in the coming protests, including the European Day of Action on March 31st, the Global Day of Action on May 12th, and the international mobilization to Frankfurt am Main on May 17th to 19th. We are relying on an alternative solution to the crisis:
no ratification of the Fiscal Treaty, and dropping the set of EU laws on “Economic Governance”;
cancelling public debts, introducing controls on capital flows, and converting banks into public service providers;
redistributing social wealth from the top downwards by a new tax system;
expanding the social infrastructure and starting to transform the economy with a programme of social and environmental investment;
shortening working hours;
democratizing politics and the economy radically at all levels;
ending the racist policy of Fortress Europe – residence permits and legal status for all.
To the authoritarian-neoliberal EU of the few, we oppose a democratic, social and ecological EU of the many!
75 replies on “State interests best served by ratifying fiscal treaty”
My predcition came true almost in real time!
http://www.irisheconomy.ie/index.php/2012/03/15/compact-explanations-of-the-fiscal-compact-and-cyclical-adjustment-of-the-budget-balance/#comment-253497
Paul, you will be ‘branded’ as a witch!
Methinks the subdued anger and frustration of voters may not be captured by any opinion polls – you decide on the answer that is needed, then frame your questions appropriately. We’ll see when Red C appears. A low turnout may decide the outcome.
Are there Oscars for Bullshit?
@Paul Hunt
My predcition came true almost in real time!
I laughed (well grunted amusement) when I saw your prediction had come true.
Philip Lane could of course be playing with us, for some senses of “with us” only.
I’m sure there’s a perfectly valid reason for the timing of this post. Prof. Lane is a busy man and this might have been the first opportunity he had to post. And, BW Snr, I’m there are plenty people who wouldn’t mind having me burned at the stake – and would have no need to call on the Witchfinder General to prove grounds for it.
It’s just a bit annoying, because it’s like having a conversation interrupted just when it might be getting interesting – and then one loses the thread, the interlocutors depart, etc.
But the key point is that Official Ireland is worried. The contortions being performed are both wondrous and disgusting to behold.
Why is so much effort put into attempting to suspend disbelief and to project these optical illusions, when it would require probably one-tenth of the effort to level with people – and, particularly, when most of the people know it is an optical illusion and that it will be shattered eventually (and usually to their cost)?
Topic above debated quite a bit here as well:
http://www.irisheconomy.ie/index.php/2012/03/15/giving-up-a-tracker/#comment-253525
I do detect a silent variable emerging in the consensus regarding ‘Compact’. Its a feeling of slight unease, uncertainty, worrisome ambiguity on the part of Government regarding their support for the measures outlined in “Compact’…
Just a feeling I got at the moment….that maybe they are turkeys for Xmas. Slapping down by Olli Rehn didn’t help.
We’ll see how strongly they come out in support over the coming weeks.
Posted below on the IT comments section this morning [for IT readers online] – appears their moderator has taken the weekend off already – wouldn’t happen on this blog!
‘Although it is impossible to be certain what effect the compact underlying the treaty will have on Ireland’s economic fortunes, decisions should be made on the best estimation of Ireland’s prospects with and without ratification.’ (John McHale)
Let’s broaden it out a little – and acknowledging the underlying nonsensical nature of much of its economics – Presidential candidate Hollande in France is not happy with the ‘Fiscal Corset’ (as der Spiegel puts it), the German SPD and Greens have yet to agree to ratify it in the Bundestag, The Spanish are very worrried that it will make their recovery impossible, the Dutch are having second thoughts, the British are having none of it ….. and so on.
Further, the ESM Treaty has yet to be ratified in the Dail. Surely this vote might be postponed until after the Referendum … which should be postponed to much later in the year …
And returning locally, this Fiscal ‘Corset’ does nothing to relieve the burden of Odious Financial System Debt from the backs of the Irish Citizenry – or indeed of the European Citizenry.
The question of whether the Irish Citizenry should wear a ‘Fiscal Corset’ (whatever about placing its dubious validity in the Irish Constitution) while shouldering a ‘Burden of Odious Debt’ remains very much an open one.
There’s an awful lot of nonsense being spouted by those who are opposed to this fiscal compact. They think it will be possible for Ireland to keep dancing and throwing shapes at the edge of the fiscal cliff. This is total madness. The reality is that, in future, Ireland will have to make sure it is much further back from the fiscal cliff than the compact would require it to be – mainly becasue the cliff edge has been eroded and needs to be eroded even more to keep bond market participants in their place.
If the Government were honest – did I really say that? – we’d have sight of the Fiscal Responsibility Bill by now and it would set out fiscal restraints much more severe than any of those in the fiscal compact. But this delay looks like the usual trick of blaming the EU for making them do something that they should do, but haven’t the guts or gumption to do themselves.
We all should have had enough of this nonsense by now.
And all of this should put this half-arsed privatisation programme in context. This and future governments need to shrink the stock of sovereign debt in issue to make it almost rsikless and to have bond market participants gagging for it. They should re-structure, re-finance and privatise state holdings right, left and centre for purchase by bond market participants overweight in risky sovereign debt, but who would welcome opportunities for more equity and bond financing of tightly regulated utility and infrastructure businesses.
Can we think up some devious reason why IE’s ‘About John McHale’ page implies he works at Queen’s University, Kingston, Ontario?
http://www.irisheconomy.ie/index.php/author/jmchale/
“Although it is impossible to be certain what effect the compact underlying the treaty will have on Ireland’s economic fortunes…”
That’s probably enough reason to vote “no” – err on the side of caution.
And if that’s not enough, we are in violation of the criteria in the treaty. Fines and/or accelerated austerity are hardly ingredients for recovery/growth.
Further, it’s hard to see how is signing up for an un-manned (and unprecendented) straight-jacket in our interests – even if we were fully compliant.
To state the obvious; fiscal independence (from reckless government agenda) is a good idea, and EU-wide oversight was needed from 2002 – if not a fiscal transfer union to correct the distortionary flows of the Euro.
***
It’s not nice to see economics and politics mixed and served to us. The economic guidance the government chooses to take and promote is always interesting.
Hindsight (“on mature reflection”) is the politician’s enemy. An independent economist should have less to worry about.
Let Fine Gael worry about “the politics of the treaty”. They’ll be gone in a few years but our children won’t be.
I find it difficult to read John Mchales stuff – I really do – he probally comes from that old Home rule tradition of cuddling up to whatever power is in ascendancy.
Save ourselfs by saving Belgium and all that.
But this is not quite 1914 , but its not quite 1939 either – Germany is the creditor and opposed to the debtor of the world or at least Europe.
So the dynamics are somewhat different(+military conflict is perhaps a obsolete method of extraction now at least in the formely first world) – never the less History Rhymes .
Why must we travel this road to Bangladesh via Maoist like exporting drives ? – merely to save bank assets ?
The assets are worthless but that does not mean there is no wealth in Europe.
Bank Assets & wealth are not the same – the first is merely a accounting entry & at the moment a flawed one.
The Euro is a currency desgined around Bank assets …….Mortgages and stuff – it has no mission to create wealth , its mission is to maintain those assets through its credit hyperinflation methods – but that has hit a brick wall of natural resourse constraints as under the Euros monetory envoirment most of the stuff manufactured was high quality German Grot and did not add to core wealth creation……i.e. increase our energy density
New money spent wisely can increase Europes wealth through lets say Frances new light rail programme , but under current circumstances France and especially other countries cannot get enough fiscal money to make much of a difference and add real wealth…….because of the euro.
Its time to leave.
neweconomicperspectives.org/tag/mmt
PS
Where is the France of Vauban ?
en.wikipedia.org/wiki/Sébastien_Le_Prestre_de_Vauban
Has it vanished under Merkels fake Swabian Skirt ?
The ability to combine engineering & monetory understanding in one single unit appears to be almost lost ?
@ All Presumably you have seen this:
http://www.bloomberg.com/news/2012-03-16/irish-economy-may-take-off-like-a-rocket-noonan-says-1-.html
It must be very discomforting to Messrs McHale, Lane, McCarthy, Whelan, etc. that they are aligned with Noonan The Intellectual. Embarassing…..St. Patrick’s Day grog spin…..Do they really think that “positive advertising” will turn the economy? Hold onto the “rocket”, although “it is impossible to be certain what effect”……
Agree that our discussion has been interrupted…..Ressurecting Morgan Kelly clearly caused a spike in discomforture. It’s interesting though how Morgan’s article is still so relevant one year on…..I wonder whether we will be able to say the same about John McHale’s by the end of this year.
I expect Morgan to wait for an effective time to update his analysis….At least I hope he will……The People WILL listen to him.
Since my comment on the IT website has not or could not be posted, I will add it here:
If there is one thing we should learn from past European treaties is that the consequences of those treaties were dismissed by the Establishment and unforeseen by the public who voted for them.
How many people who voted for the Nice Treaty realised that it would lead to a huge influx of immigrants from the East? I happen to think this was a good thing, but it was not talked about much at the time.
Worse, the impact of the Lisbon treaty on the role of the Commission was completely unforeseen, even by supposed experts. Did anyone who voted for or supported the Lisbon treaty realise that it would mean our interests would be systematically sidelined in favour of an intergovernmental approach, typified by the awful Merkozy double act.
This treaty may not be a bad idea in the economics classroom, Prof. McHale, but back in the real world it will mean endless bailouts, the repayment of every cent of the bankers’ debt foisted on the Irish electorate and the relentless drift of control over our own affairs to Berlin and Frankfurt (not Brussels).
@Paul W.
A bit embarrassing all right. I got the impression that Mickey Noonan is hoping that inflation will ” take off like a rocket” with his musing about nominal GDP growth and his view on how it works. Remind me what he did in private life.
@Paul W
Messrs McHale, Lane, McCarthy, Whelan, etc. ….
… are intelligent men, perhaps a touch mis-guided at times, yet I have learned from all of them …
.. most centrally, they all have ‘balls’ and are willing to engage ….
…. which is more, much much more, than can be said for 99% of the supine academics sitting silenty and saying sweet feck all of any consequence whatsoever ….
Finally, they are not anonymous …
@bazza
ditto. The IT appears to have lost all sense of moderation … and did you read Johnny Waters spouting Any_een Rand tut tut … Sinead is more me style of philosopher any day and she can really sing – all Rand ever did was Rant at the mob and R1de her disciples …
Re Noonan and rocket science
http://www.nybooks.com/articles/archives/2011/jul/14/dramatic-picture-richard-feynman/
Twenty years later, when Feynman was mortally ill with cancer, he served on the NASA commission investigating the Challenger disaster of 1986. He undertook this job reluctantly, knowing that it would use up most of the time and strength that he had left. He undertook it because he felt an obligation to find the root causes of the disaster and to speak plainly to the public about his findings. He went to Washington and found what he had expected at the heart of the tragedy: a bureaucratic hierarchy with two groups of people, the engineers and the managers, who lived in separate worlds and did not communicate with each other. The engineers lived in the world of technical facts; the managers lived in the world of political dogmas.
He asked members of both groups to tell him their estimates of the risk of disastrous failure in each Space Shuttle mission. The engineers estimated the risk to be of the order of one disaster in a hundred missions. The managers estimated the risk to be of the order of one disaster in a hundred thousand missions. The difference, a factor of a thousand between the two estimates, was never reconciled and never openly discussed. The managers were in charge of the operations and made the decisions to fly or not to fly, based on their own estimates of the risk. But the technical facts that Feynman uncovered proved that the managers were wrong and the engineers were right.
Feynman had two opportunities to educate the public about the causes of the disaster. The first opportunity concerned the technical facts. An open meeting of the commission was held with newspaper and television reporters present. Feynman was prepared with a glass of ice water and a sample of a rubber O-ring seal from a shuttle solid-fuel booster rocket. He dipped the piece of rubber into the ice water, pulled it out, and demonstrated the fact that the cold rubber was stiff. The cold rubber would not function as a gas-tight seal to keep the hot rocket exhaust away from the structure. Since the Challenger launch had occurred on January 28 in unusually cold weather, Feynman’s little demonstration pointed to the stiffening of the O-ring seal as a probable technical cause of the disaster.
The second opportunity to educate the public concerned the culture of NASA. Feynman wrote an account of the cultural situation as he saw it, with the fatal division of the NASA administration into two noncommunicating cultures, engineers and managers. The political dogma of the managers, declaring risks to be a thousand times smaller than the technical facts would indicate, was the cultural cause of the disaster. The political dogma arose from a long history of public statements by political leaders that the Shuttle was safe and reliable. Feynman ended his account with the famous declaration: “For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.”
Feynman fought hard to have his statement of conclusions incorporated in the official report of the commission. The chairman of the commission, William Rogers, was a professional politician with long experience in government. Rogers wished the public to believe that the Challenger disaster was a highly unlikely accident for which NASA was not to blame. He fought hard to exclude Feynman’s statement from the report. In the end a compromise was reached. Feynman’s statement was not included in the report but was added as an appendix at the end, with a note saying that it was Feynman’s personal statement and not agreed to by the commission. This compromise worked to Feynman’s advantage. As he remarked at the time, the appendix standing at the end got much more public attention than it would have if it had been part of the official report.
Sadly, what John’s article comes down to in the end is a scaremongering misstatement of fact:
“While it is possible that other sources of official support would still be available, not having access to the ESM could lead to a “sudden stop” of market and official funding at the end of the current EU/IMF programme.”
A Yes vote recommendation base on “the best estimation of Ireland” prospects. Has anyone seen a quantification of that estimation?
Even handedness? Definitely not.
I need a break … and a kit-kat …
Tune of the Month – released on the Ides of March
THE VAMPIRE SQUID BLUES
http://www.youtube.com/watch?v=Fhvku1GkfEo
matrixsQuidesque
@ALL
Patricia the Irish Sovereign_in_Exile says … Hi! No ministers please!
Blind Biddy is in Teheran … think she is borrowing something or other in exchange for the loan of her Higgs-bosun generator; and thinking of opening her own embassy.
Seven_of_9 says Hi to 2_of_Seven
@ Paul Hunt 1:04
Re “…They should re-structure, re-finance and privatise state holdings right, left and centre for purchase by bond market participants overweight in risky sovereign debt…”
Nope, that’s exactly wrong thing to do as Argentina found out to its cost:
“The Convertibility Plan’s ……Over the next decade the plan would produce a profound transformation on the Argentine economy and society that would definitively dismantle what was left of the Import Substitution Industrialization (ISI) era Welfare State. In other words, state enterprises, utilities, and social security were all to be privatized, state intervention in the economy was to be drastically reduced, and health and education were to be decentralized. The success of the Convertibility Plan hinged upon attracting foreign capital inflows. The hope was that foreign capital flows would set off a “virtuous cycle” of economic growth and general welfare improvements for the population (through “trickle down” effects), which would then lead to further investment flows and so on. Solving the public debt problem was seen as key to attracting foreign capital.Therefore, a “once-and-for-all solution” to the debt problem was devised. Official faith in this strategy was such that Minister Cavallo stated in 1993 that “the public debt will be insignificant by the end of the century.” The “once-and-for-all solution” consisted of two main parts. The first component of the solution to the debt problem consisted of allowing privatization of state enterprises to be purchased partly with Argentine public debt bonds. This was the case for the national telephone company, Entel, and the national airline, Aerolíneas Argentinas. This operation greatly favored holders of Argentine debt, since they were given full credit for bonds that were trading at 15–20 percent of their nominal value on the open market.The second component of the solution to Argentina’s debt problem came with the Brady Agreement, signed in December of 1992. According to this agreement, Argentina would swap its $21 billion debt to commercial banks, plus $8.3 billion in late payments, for 30-year Brady bonds with lower interest rates and an average capital reduction of 35 percent. The main result of this swap, illustrated in Table 1 below, was the atomization of Argentina’s creditors from a few Northern commercial banks to hundreds of thousands or millions of bondholders around the world. How permanent was this solution to Argentina’s debt problem? The data in Table 1 shows that Argentina’s public debt continued to grow at an alarming rate throughout the 1990s, reaching explosive levels toward the end of the decade when the much publicized default occurred. the main result of the Brady bond swap was that Argentina was able to regain access to financial markets.22 Renewed access to these markets enabled the debt accumulation process that eventually resulted in the largest sovereign default in history.
http://greekleftreview.wordpress.com/2010/07/14/at-debt%E2%80%99s-door/
If you look at the Table 1 data above, plus the prognosis re privatisation and compare them to similar EMU prescriptions eg euro bonds vs Brady bonds, selling of state assets, you’ll see we mirror quite closely the scenario build up to the crisis that led to Argentina debt meltdown. We have a grossly increasing debt burden also.
Privatizations in Argentina led to lack of revenue for the state from utilities that were through privatization run into the ground turning them into loss makers for the state.
Our coming default will be shaped by blind subservience to an exchange rate we can’t afford in our current meltdown situation. Leaving the euro and devaluing would also discourage imports and help with import substitution. Selling off of state assets to the lowest bidder will lead to a higher cost in job losses and extra restructuring costs.
Above all, we should resist the moves currently being made by the Troika to convert our debt into state assets or government bonds based from more intangible assets than Promissory notes.
Argentina’s ‘Convertibility Plan’ is very similar to the ‘Fiscal Compact’. CP brought about the total collapse of the Argentinian economy.
The Fiscal Compact will bring about the total collapse of the Irish economy.
@ DO’D Not saying that the Messrs don’t have “balls”, smarts, etc (and these guys can well look after themselves) but thus far we have had three pro yes national newspaper articles in less than two weeks which have not been correct (CMcC), promulgated yes vote behind the guise of neutrality (Mr. Lane), and now a scaremongering piece (JMcH).
From afar, it appears that the no vote debate thus far depends on Fintan O’ Toole ! and so comes across as a Left vs Establishment debate. It is not. That in itself does the debate (and the Irish People) a great disservice.
I’m in the NYSE on Monday. Cringing at the thought of what the next Irish politician will say.
Last year, John Bruton, wasn’t the worst I have to say….
http://www.independent.ie/business/irish/bruton-tells-us-corporate-tax-rate-will-remain-untouched-2579318.html
@Colm Brazel,
I know the Government can be pretty dumb, but why would they sell off state assets to the lowest bidder?
I’ve being analysing the energy semi-state sector in quite a bit of detail for more than a quarter of a century and, from a fairly patchy record up to 1999 when regulation was first applied to electricity, since 1999 the semi-states have ripped off small business and household consumers more thoroughly than the most rapacious private equity ghoul could even dream of. I haven’t looked at the other energy and utility sectors in the same detail, but what I have seen has horrified me.
There’s a huge amount of equity locked up in most of the semi-states – mainly generated from excessive revenue extraction from users/consumers – which could, and should, be unlocked by the state prior to privatisation.
From ’82-’87 FG had the Labour monkey on its back and – faced, in addition, by an opportunitistic opposition faction – couldn’t pursue in a measured manner the fiscal adjustments that were badly required to address the mad excesses of Jack Lynch/George Colley/Martin O’Donoghue spending their way out of a recovery – adjustments that the opportunistic opposition faction applied when it was returned to power.
Once again FG has the Labour monkey on its back and, while this version of Labour has been forced to swallow some fiscal responsibility (mainly courtesy of the Troika), its baleful impact, combined with FG’s own gutlessness, means that these issues are being addressed in the most half-arsed and counter-productive manner imaginable.
An Inconveniant Truth.
If you looks back to the end of March 2011 on this site, you will see doom porn post after doom porn post from some of the usual suspects on here, foretelling the end of the world. Irish 10 year yields were over 10% at the time and were close to their peak of 14%.
Since then the total return has been of the order of 33%…yes 33%. Yet these poster are still dragging their chains and foretelling doom
I am channelling the long lost soul of JTO.
@Brian Woods Snr
“Are there Oscars for Bullshit?”
http://prca.ie/article.aspx?cat=7
I was going to nominate Noonan for excellence in the promotion of rocket design. I only vaguely looked (laughed) at the reporting of his comment but no doubt he qualified it with something like “If xyz happens THEN the Irish economy will take off like a rocket” (if he didn’t, his PR Guy should be shot).
@ tullmcadoo
Record trade surplus too.
‘Trade surplus reaches record high’
Farmers playing a blinder.
Usual caveats apply.
Can’t be gloomy all the time.
http://www.irishtimes.com/newspaper/breaking/2012/0316/breaking33.html
@Tull,
Those who made that total return – and good luck to them – were credit investors who bet against the probability of default built in to the yields at the time. I want to see Ireland get back as quickly as possible to where it is relying on rate investors happy and confident to accept low coupons on long-dated debt. I have no doubt it will happen. My only complaint is that current policies are making the path to that destination longer and harder than it need be – and the hopes and prospects of an entire generation are being blighted unnecessarily and excessively.
@Tull
You see Irish Bond yields and I see North depletion figures – each to his own I suppose.
If guys make money on Bond speculation but economies and societies are shattered is that a good thing ?
Its only about making money from a declining wealth base I am afraid -a sort of Maltusian Masturbation where wealth is hollowed out of systems to insure a continual yield on something completly unsustainable over the long term.
If you find that your course is incorrect it may be rational to reverse your direction don’t you think ?
@Seafoid
A great example of physical reality intruding into the bureaucratic machine.
I find Freemon Dyson words about the futility of Bomber commands mission somewhat similar.
http://www.youtube.com/watch?v=jixlPeT-EnE
The private debt/ credit factories dependent on rising oil consumption / core capital destruction – which really accelerated after 1987 have a momentum of their own me thinks.
Paul,
I do not include you amongst the rank of posters who should only be let out on supervised visits at the week end. Most of the time, I agree with what you post. My disagreement is mostly about the quality of governance in your benchmark. Most governments are incompetent and have a propensity to do more harm than good.
@Tull,
All the more reason to have effective processes in place to stop them from doing damage to themselves and us.
Sir Humphrey: Bernard, why so concerned and glum?
Bernard: It’s the Prime Minister. He wants to govern the country.
Sir Humphrey: Then stop him, Bernard. Stop him.
@ Tull Do you think Ireland could actually raise new funds in 2012 from the markets at anything like an acceptable rate (say less than 7% for 10 yr money)?….
@ Dork “If you find that your course is incorrect it may be rational to reverse your direction don’t you think ?”
+1
Now there’s a thought. Thinking. I hope the Govt & snr economists are at least prepared for a no vote…..FC II would appear to be the only fallback at present.
Tull: “I am channelling the long lost soul of JTO.”
Try going back to the wonderful comments he left us instead; gems like this:
“…it is now clear that GDP will rise in 2010. By how much, we don’t yet know. The latest Central Bank forecast is for 0.2% GDP growth in 2010. I personally think it will be a lot more, and that the Central Bank were daft for revising their forecast down to 0.2% from the 0.8% that they were predicting in summer.”
http://www.irisheconomy.ie/index.php/2010/10/19/no-planned-revision-to-2010-gdp/#comment-84938
Does anyone foresee any of our esteemed pro yes vote snr economists penning a piece on what the alternative options might be (how the game is likely to be played or need to be played) if there is a no vote?
Bloomberg are saying that Irish ten year bonds declined after Noonan said he was cutting GDP forecast. They don’t mention the Irish Rockets.
Confused.
@ Paul Hunt
re ” I know the Government can be pretty dumb, but why would they sell off state assets to the lowest bidder? ”
2 Points. Firstly, I respect the work you’ve carried out and knowledge you’ve acquired on energy sector. Don’t doubt your analysis is correct. Sell off/privatization is not the answer, deep upgrading and modernisation based on a buck for buck, value for money critique, is the answer.
Secondly, in a recessionary situation such as hours, there is a vast body of academic literature out there that has examined the history of privatisations in the energy sector Elec/water supply that shows taxpayers have come off worse in privatisations involving these utilities. Argentina above is one example, here’s a paper
“Introduction Private-sector involvement in infrastructure was vigorously promoted by development agencies and international institutions in the 1990s and early 2000s. It was expected to inject both investment and efficiency into these sectors in developing countries, replacing traditional public-sector systems suffering from under-investment and inefficiency due to excessive political interference and rent-seeking behaviour by vested interests including bureaucracies and labour. It was assumed that this extension of private-sector involvement would be economically successful and generally welcomed, except among those interests losing out as a result of the reform process. In the water and energy sectors, these expectations have not been fulfilled.”
I could have stated that lowest bidder sentence better. What I meant was there is a danger vultures can pick up for a song public utilities eg, ESB, strip them clean of value through reducing employment numbers at state expense, and having looted them, sell them on for profit. The end result could easily be electricity outages, strikes, obsolete infrastructure.
http://meteopolitique.com/Plan/Fiches/environnement/eau/privatisation/Thematique/privatisation/Analyse/2005/a08.pdf
@Colm
Your last paragraph could describe Eircom. I see the lenders are assuming control and wiping out all shareholders in return for a 15% haircut on senior debt. Still leaves the debt load unsustainable. Maybe a better class of vulture will emerge ( like wilbur?) and not leave the entire infrastructure of the country without any money to invest.
PH,
Great quote. And what did our Satsumahs do. The Principal Officer class of the 1970-80s were so scarred by the corruption of CJH and the bungling of Garret in failing to correct it and so frightened by the near collapse of the State in the mid 1980s that when there turn at the tiller of state they vowed “never again”. So they decided to outsource all policy making -monetary, fiscal and even social to Brussels. Then, convinced that they had done the state some service, they greatfully accepted the highest salaries and pensions on offer in the Western World.
@Dork of Cork…
Sorry if youve explained this already, but what event in 1987 are you referring to?
@Colm Brazel,
If the primary objective of privatisation is not economic efficiency then consumers, small businesse and the economy will be hosed. But your “deep upgrading and modernisation based on a buck for buck, value for money critique” didn’t happen, couldn’t happen, would have been opposed ferociously while the good times rolled, so it doesn’t have a snowball’s chance in hell now. This is the SOB that emerges from trades unions and the left. Most voters have given up buying this. So I can only conclude that that you are perfectly happy for consumers, small businesses and the economy to continue to be hosed to advance the interests of these semi-states.
Good luck. Over and out.
It’s interesting to look back at the posts of 1 year ago.
We’re pretty much where we were then.
Ireland is a great country – no doubt about it. Europe is in dire straits though. I’m not sure we should go down with it. Where’s our Taoiseach spending St Patricks day – not Brussels or Berlin.
Any pact that draws us closer to this version of European Union should be rejected. It’s not Ireland that is failing – it’s Europe
@ Paul Hunt
You’re generally right in what you say but you tend to be very closed in who you apply it to.
All countries, people and sectors have elements in them that suck. Its not just Ireland and not just the public sector. You can’t trust the private sector with lots of things – public sector just has to have a role in them
Around that time 86 /87 / 88 you had the Big Bang in the city / EMU / Greenspan / Basle 1 /The Tallaght strategy / Washington consensus etc etc -almost the whole damn lot – basically a massive increase in leverage (leverage is theft hoping successful investments will cover your counterfeiting tracks)
On a local level just look at central fund services as a % of GNP – this is a true measure of the leverage in the system or in other words the ratio of goverment money relative to bank credit / deposit production.
http://www.finance.gov.ie/documents/guidelines/bessept2011.pdf
(go to table 2 )
Those numbers are the animal tracks towards the decapitalisation of the internal monetory system and by implication the real physical economy.
Afterwards businesses were operating in a more and more phoney envoirment becoming more and more vulnerable to leverage shocks.
After 1987 it took off from 8 to 1 to something like 42 to one.
Even if a small amount of those bank investments don’t work out it has a devastating cascade effect on the economy.
We are all victims of the Basle hidden goverment and their tireless efforts to destroy the nation state and replace it with a market state.
@Judge
See above.
@ Dork
Your Freeman Dyson piece is just incredible.
Fine mind you have.
Have one for me in the Long Valley this weekend.
@ Eureka
+1 from me. Ireland is however at a very important (and messy…no, ugly) crossroad. Not much has changed from a year ago in terms of direction, yes….but the metrics, on almost all important levels, are far worse. It doesn’t take a genius to see that “austerity without growth” is bad policy…Praying for growth and kicking the can down the road is one strategy (actually the Govt’s strategy). However, if the timing is wrong (i.e. enough uptick doesn’t happen in time…soon….sooner than people are admitting), it will end up in a very Dark Place (using Dork’s phraseology).
@ Eureka
Hopefully resusication happens before the patient passes:
http://www.maniacworld.com/stay-calm-dad.html
It allseems to have worked out here…!
The alternative to waiting for the ambulance:
http://www.maniacworld.com/truck-driver-saves-himself.html
Happy St. Patrick’s Day to all. May the fine weather be with ye.
Paper Against the Fiscal Compact
The Association for critical social research was established in Germany in 2004. 120 members from social sciences put their brains together and created this paper to make a clear statement against the so called fiscal compact:
….
Democracy instead of the Fiscal Treaty! We need a different approach to tackle the crisis, and a different Europe
Spring 2012. Merkel and Sarkozy rush from summit meeting to summit meeting, in order to save the euro. The yellow press smears the people of Greece. The struggle over a solution to the crisis is intensifying dramatically: by early 2013, an authoritarian-neoliberal alliance of business lobby groups, the financial industry, the EU Commission, the German government, and other exporting countries, hopes to rush the ‛Fiscal Treaty that has just been concluded in Brussels through the national parliaments. The Fiscal Treaty prescribes an antisocial policy of cuts, and includes penalties for countries that oppose this policy. Thus the Fiscal Treaty restricts democratic self-determination even further. It is the momentary climax of an authoritarian trend in Europe.
We are fed up with these unsocial and antidemocratic policies, and with the racist slander campaign against the people of Greece. Instead, we should talk about the inhuman consequences of these policies. We should talk about Europe’s authoritarian turn, and low German wages as a cause of the crisis. We should talk about the untouched fortunes of the few, and the sufferings of the many. We should talk about our admiration for the resistance and solidarity among the Greek people. Let us demand what should go without saying: real democracy and a good life in dignity for everybody – in Europe and elsewhere.
The crisis in Europe is only the tip of an iceberg. Underneath it lies a deep structural crisis of capitalism. Too much capital is chasing profits. But the returns on investment are low: there is too much competition, and wages are too low. Debt- financed growth and speculative bubbles have only delayed the outbreak of the major crisis. Now the authoritarian-neoliberal alliance is advocating a radicalized more-of-the-same: socialize losses from speculation – through permanent debt- servicing by the wage earners. They want to increase returns on investment – by means of precarious employment, cuts in wages and pensions, cutbacks of the welfare state, and privatization. The consequences are drastic, and what is happening in Greece is looming in the rest of Europe: mass unemployment, impoverishment of broad swathes of the population, collapsing health systems, increases in mental illness, and a declining life expectancy.
Measures such as this can only be implemented by authoritarian means. Pinochet’s putsch in Chile in 1973, the IMF’ programmes in African states in the Eighties, and the transformation in eastern Europe in the early Nineties are historical forerunners of the Fiscal Treaty & Co.: “shock therapies”. Social and democratic principles that were won by struggles with many victims will be eliminated at breathless speed by the Fiscal Treaty, in order to ensure that debts are serviced and rates of profit increase. In Italy and Greece, unelected governments of technocrats are using
truncheons, tear-gas, and water cannons to impose the cuts dictated by male- dominated groups of “experts” in Brussels, Frankfurt, and Berlin. The Fiscal Treaty and the set of edicts on “economic governance” give more and more power to bodies such as the EU Commission, the European Court of Justice, and the European Central Bank, which act beyond democratic controls. To prevent democratic decision- making contrary to neoliberal orthodoxy, the Fiscal Treaty perfidiously strengthens the dictatorship of the financial markets by fines to be paid to the EU.
As in the Great Depression of the 1930s, chauvinist and fascist forces are gaining influence, in Hungary, Austria, Finland, and elsewhere. Blind to the lessons of history, the German government, with its uncompromising austerity policy, is making reactionary solutions to the crisis more and more likely.
Throughout the world, people are fighting back against these policies, from the Syntagma Square in Athens, via the Tahrir Square in Cairo and the Puerta del Sol in Madrid, to Zucotti Park in New York. The movements of refugees and migrant workers across Europe’s outer frontiers are part of these struggles for a good life. These struggles must be carried out across borders and in the centres of the authoritarian-neoliberal alliance, in Paris, Brussels, Frankfurt, and Berlin. Therefore, we call on people to join in the coming protests, including the European Day of Action on March 31st, the Global Day of Action on May 12th, and the international mobilization to Frankfurt am Main on May 17th to 19th. We are relying on an alternative solution to the crisis:
• no ratification of the Fiscal Treaty, and dropping the set of EU laws on “Economic Governance”;
• cancelling public debts, introducing controls on capital flows, and converting banks into public service providers;
• redistributing social wealth from the top downwards by a new tax system; • expanding the social infrastructure and starting to transform the economy with
a programme of social and environmental investment;
• shortening working hours;
• democratizing politics and the economy radically at all levels;
• ending the racist policy of Fortress Europe – residence permits and legal status for all.
To the authoritarian-neoliberal EU of the few, we oppose a democratic, social and ecological EU of the many!
Assoziation für kritische Gesellschaftsforschung (AkG), March 2012 http://www.demokratie-statt-fiskalpakt.org / http://www.akg-online.org
This last sentence appears to be a wrong translation: Gegen die autoritär-neoliberale EU der Wenigen setzen wir ein demokratisches und sozial-ökologisches Europa der Vielen!
it should read: We oppose the authoritarian neo liberal EU of the few, in favor of a democratic, social and ecological EU of the many
@Dork of Cork.
Thanks for that. excellent posts as always.
@ Georg Wow. “Thus the Fiscal Treaty restricts democratic self-determination even further. It is the momentary climax of an authoritarian trend in Europe.”
Yes it is.
@Georg R Baumann
English version in PDF format here:
http://www.demokratie-statt-fiskalpakt.org/d/democracy_instead_of_the_fiscal_treaty.pdf
The Frankfurt School isn’t dead yet! It hasn’t gone away you know!
@ Paul Hunt
‘ I want to see Ireland get back as quickly as possible to where it is relying on rate investors happy and confident to accept low coupons on long-dated debt’
Humpty Dumpty is broken, and not just in Ireland. We have entered a maelstrom of speculation, and no one knows where the exit lies. The Dork is correct in his perception that the nation state itself has been eroded.
‘This week’s LTRO provides an exclamation point on the latest round of unprecedented global policy market interventions. As I explained last week, policymakers were, once again, able to incite the reversal of bearish positions and risk hedges. And as much as this creates the perception that central banks have things all under control, a strong case can be made that such actions only ensure that unwieldy markets just move further from their control.
The interventions have become monstrous, increasing the odds of unintended consequences: speculative equities and global risk markets; surging oil prices; and only more dangerous global imbalances – quickly come to mind. And, if they’re not careful, one of these days policymakers may even unknowingly pierce the U.S. bond Bubble’
http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10637
@ Paul W
Thanks for that link – great video.
A little wake up call to all the Daddies out there.
Imagine a German operator – first question – is your Dad Greek? Ok then…bye…
Seriously though. Merkel’s Europe stinks. To hell with it.
If she wants to fight banking elites and eliminate sovereign debt gangsters she’s going the wrong way about it.
Let it fall apart. Let the bondsters take the hit and let it be rebuilt again.
@Paul Q.
Did you catch our Petroleum & gas imports for 2011 on the CSO today ?
There must be a thread on this – something needs to be done , the production of public transport tokens would be a good idea for example.
Our petroleum imports alone was 5.168 Billion ! with much less activity on the roads.
Gas imports : 1.353 Billion
It beats the record Year of 2008 & we all know what happened after that – demand destruction
2008 Irish Fuel Imports
Petroleum :4.913 Billion
Gas : 1.378 Billion
@ Dork
Energy is our weak link – no point in denying it
It weakens our hand considerably
@Eureka
Food & Fuel is the guts of the economy – the trade surplus is not being taxed….. chemicals and all that.
The Domestic economy is getting smashed.
When fossil fuel imports exceeded food imports in 2005 there should have been danger signs everywhere , then in 2008 oil product imports alone exceeded food imports – a reversal in 2009……..
Then fossil fuel imports exceeded food in 2010 , now in 2011 oil again exceeded food imports.
Also a continual decline of beverage imports for 2011 is a very bad sign for discretionary domestic demand unless everybody in Ireland is Drinking Beamish & stuff.
Noticed a increase in demand during Feb /early March using my Saturday night Cork test but that is a tad unreliable.
Anyway Scotrail is doing something
http://www.rail.co/2012/03/15/scottish-jobless-to-get-half-price-rail-fares
although a 50% drop in all rail fares would be better and acheive something beyond making money for one little enterprise with a large utility function.
PS
Look at Y2003s Import figures…….
Coal : 122Million
Gas : 225 Million
Oil : 1.593 Billion
@ Dork
Seriously? What the hell is going on? Despite rise in oil & gas wholesale prices internationally, the numbers you allude to below are intuitively difficult to square…….
“Did you catch…..our Petroleum & gas imports for 2011 on the CSO today ? There must be a thread on this – something needs to be done……Our petroleum imports alone was 5.168 Billion ! with much less activity on the roads. Gas imports : 1.353 Billion
…….It beats the record Year of 2008 & we all know what happened after that – demand destruction
2008 Irish Fuel Imports
Petroleum :4.913 Billion
Gas : 1.378 Billion
….Look at Y2003s Import figures…….
Coal : 122Million
Gas : 225 Million
Oil : 1.593 Billion”
Seriously? Contextualises /emphasises some of your comments over the last week (sorry, don’t have a consistent history of reviewing this website before that).
@Paul W
massive rise in Brent
Decline of Euro against $
Continual very high use of oil in Ireland in a non productive inefficient manner -despite huge declines (empty buses / single occupant cars) because of non optimal currency…….
= energy / food use swamping all other discretionary demand = collapse of internal domestic economy.
Check out http://www.cso.ie go to latest releases – goods exports and imports jan 2012.
Also look below at special topics – statistical yearbook external trade section for recent historical numbers by goods type… shoe leather imports etc etc .
@ Dork/Paul W
Dual economy. FDI sector financialised and domestic sector relatively unproductive and driven by state spending. Sovereign being decommissioned while local stakehoolders continue to exrtract. Death spiral.
Paul W: I don’t wish to cross keyboards with Dork, but the energy issue is a deep and complex issue (I am sure he is well aware of this). However, in attempting to get traction on the energy issue, you have to split it up into bite-sized chunks. Clearly this is not ideal, but when you understand the components, and how they connect up – then you can re-assemble them. Then you have to figure out the outcomes!
The energy predicament we face is truly awful. Unless it is ‘fixed’ this country (and I mean the entire Island here) – will go into a severe and prolongued economic regression. This of course is controversial and subject to all sorts of opinions, views, whatever. But what is not in question is our economic reliance on liquid hydrocarbon fuels (and now gas as well) is so massive, that any restriction in supply will trigger very unwelcome social, hence political disruption. Many will poo-poo this, but just remember what went on in the UK a few years back when the Tanker-drivers blockaded fuel depots … …
We’ll be back at this. I completely endorse Dork’s call for a meaningful debate on this energy issue. It was urgent a decade ago!
@ Paul Hunt 8:06
Re “So I can only conclude that that you are perfectly happy for consumers, small businesses and the economy to continue to be hosed to advance the interests of these semi-states.”
Well if I say black and you conclude I say white, what can I say. I’m anti privatisation of the ESB but agree it should be run more efficiently at less cost.
Perhaps a declaration of interest is required at this point. I am assuming you don’t have skin in the game re providing services if moves to privatise the ESB were to come about ?
Price increases yes, but crude was expensive also in 2008. However, filling a car at the pump is approx. 50% of the cost there ($10 pg in Paris apparently). So taxation must be another big feature. $ /Euro has been relatively stable (LT average basis), so one can overstate that. That leaves consumption…..Don’t know what’s happening there.
Plenty of oil in the world (….much of it just not tapped). Hopefully Providence and others find more off the Cork /Irish coast…
Sorry gas at pump at least 50% cheaper in the US.
Enda Kenny in the Dáil responding to Shane Ross points that the big players Greece, Spain were able to get a la carte choose their own menu whereas we get table d’hote take it or leave it, was responded to by Enda Kenny with the “binn béal ina thost’ gaelic idiom, a silent mouth is sweet, meaning re Compact PN’s etc I guess he was implying nod, nod, wink, wink, negotiations favorable to us being attended to in the background.
That’s one interpretation, another is, the gombeens have allowed themselves to be silenced by ECB calls to ‘commercial sensitivity’ compliance the LB/FG glove puppets seize upon to cover up failure of these negotiations.
I notice this St Patrick’s Day no announcement re date for Compact referendum nor any concessionary relief given on PN’s other than vague hints the PN’s are not sufficient as collateral.
Perhaps they want something more substantive such as ESB, Coillte, airports, ports…
Do we not have the worst political leadership in Europe ?
@Paul W
These are raw import figures – taxation is not a part of those figures.
The central problem in Ireland is that we don’t have a CB or treasury directly Monetizing the fuel savings from lets say half the cars switching over to A class that can then no longer be taxed because less fuel is burned and therefore less tax is collected……..
So we don’t get effective Good or service substitution – the money becomes a sort of dead air creating havoc in the domestic economy.
Essentially Public transport should be very cheap for wage earners / benefit recipients in Ireland while car / oil expenditure very expensive.
In a debt based system the money supply must always rise – you can’t hope to tax a declining money / credit system for very long.
“Extinguishing debt by way of fiat runs against the rules instituted by bankers which allow them to rake in the easy cash. This is why the bankers are so quick to sanctify money. It is precious: it is an outrage for anyone cheapen it or use it in ways outside of making bankers richer than they already are. It is far too simple a thing for a country to create currency in order to extinguish its own debt, too damned easy, it has that ‘deux ex machina’ quality! It’s cheating.
Q: How is ALL debt created? [ … dead silence … ]
Creating currency to extinguish debt is absolutely no different from the creating of the debt in the first place! “DUH!” as Homer Simpson would say. It is far easier to create €100bn or €500bn in debt out of thin air with a pencil and a piece of scrap paper than it is to raise that same amount in taxes! It’s just as easy to extinguish that debt but the governments of the world are run for and by bankers who need the debt to remain for their own selfish purposes.”
Steve from Virgina
Hi Colm,
….Do we not have the worst political leadership in Europe ?….
Naw Colm, this is no political leadership at all. These are no politicians, they are people without any sense of responsibility or moral integrity.
They are the bitches of bankers, rich and super rich.
We live in aan age where senior civil servants and technocrats are making politics, politicians, none are left.
@Paul W: “Plenty of oil in the world (….much of it just not tapped). Hopefully Providence and others find more off the Cork /Irish coast”
Yes, and No. Its how much (in barrel terms) it takes to extract, process and deliver to the pump. News is v-bad here. But you won’t hear much about this from the ‘oil’ shills. We (IRL) use about 7 liters, per person, per day. Brazil uses 2 l/p/d. That’s where we are headed. Make friends with farm folk, or those that have allotments.
re-Colm Brazel:’a feeling of slight unease, uncertainty, worrisome ambiguity on the part of Government regarding their support for the measures outlined in “Compact’…’
Just what struck me about recent footage of Enda from his relegation-welcome in Chicago today – he’d lost that schoolmaster confidence and bluster that he’s been gliding on of late, and instead seemed distracted, unsure and compromised.
The ‘please come to Ireland’ message touted befits the man, but it is hardly a dignified role for Taoiseach.
But I’ve always thought we should abolish that office anyway – tends to make men uppitty…
Elsewhere, Brendan Howlin in the financial times said that the Irish were ‘confused’ by the ‘misinformation’ they believed about the bank guarantee; setting the official course for the enquiry into same that he was referring to at the time, no doubt.
By ‘misinformation’ I guess he’s talking about Trichet’s communiqué in the days leading up to it, and trying to sever any inference we may care to draw from that particular fact.
@George Baumann,
Thats quite a paper. The call for an end to the so called Fortress Europe policy will be a welcome boost to Europe in this time of economic crisis.
In Greece with 50% youth unemployment and in Spain with same above 40% there may be some push back against a policy recommendation to open Europe’s borders to anyone who wants to come to live here but those objections will surely only come from the usual extremists. They can and will be defeated.
There is a need though to sell the benefits of opening Europe’s borders at this point in time.
Positive benefits are – the new arrivals would work for less, for longer, and with less fringe benefits.
– Europe could continue to ignore the need for scandinavian scale child care policies (in the full) and use a quick fix which would be allow low tax environments to be maintained,
– trade unions would be weakened which would help ensure a positive business environment.
– Europe will become more diverse and varied.
There are benefits but they need to be sold, especially to the Greeks, and Spanish.
– trade unions weakened further
John McHale while being seen as an academic is not infallible, I remember him trying to convince that a fiscal contractionary policy would stimulate our economy.
Are you being sarcastic jean?
Because what you are describing sounds like it would be absolute hell for 99% of the population.
Is this the future we have to look forward to?
No, there is no sarcasm. This is Europe today. George is trying to sell a policy for opening Europe’s borders to anyone without taking the time to put in the arguments to justify it. There are arguments to justify such a policy. I have made a few here. Peter Sutherland has made a few etc. But if George thinks that the Greeks and Spanish will be as quickly persuaded about the broader macro-economic upsides of such a policy then I think he underestimates the hold of petty nationalism in Europe, especially in a time of financial crisis.
So there is no sarcasm.
You actually want
1) lower wages
2) longer working hours
3) less benefits (such as healthcare, etc)
4) “quick fix” childcare policies
5) the destruction of trade unions
Further consequences of what you want are
6) total collapse of the welfare state
7) higher unemployment among native Europeans
At least you’re aware that most of the 99% (which I’m sure you are not a part of) will not want what you want.
So how do you propose to drive it through?
My God – sorry if the following adds little to the overall discussion, but I really can’t believe the blatant evil underlying Jean’s list of ‘positives’ above; I’m almost inclined to believe that some sort of joke or pretense is there that is just too subtle for me to recognise.
If not, I’d like to point out that people who hold these sort of views often do add something like ‘ Europe will become more diverse and varied’ as a suger coating to a wholly perverse set of ambitions, and the ‘diversity’ intended is more typically just a new guise of the same sort of thinking that underlies the more common (historically) route of obliterating societies and communities by the enforced overlaying of an alien monoculture – ie; an imperialist invasion.
I’d also suggest that this sort of thinking is far closer to the cause of racism, etc., than ”the usual extremists” – as it makes the potential negatives of immigration (job-displacement, wage erosion, disregard/corrosion of indigeneous culture/laws/society – none of which are de-facto certainties & which need never become manifest !! ) a certainty. Indeed, their express purpose !
It is, in short, Nazism-minus the single-reace/culture ideology.
I’m sorry to go off on this here – but these sort of opinions demand unmasking for what they are.
Democracy instead of the Fiscal Treaty!
We need a different approach to tackle the crisis, and a different Europe
Spring 2012. Merkel and Sarkozy rush from summit meeting to summit meeting, in order to save the euro. The yellow press smears the people of Greece. The struggle over a solution to the crisis is intensifying dramatically: by early 2013, an authoritarian-neoliberal alliance of business lobby groups, the financial industry, the EU Commission, the German government, and other exporting countries, hopes to rush the ‛Fiscal Treaty that has just been concluded in Brussels through the national parliaments. The Fiscal Treaty prescribes an antisocial policy of cuts, and includes penalties for countries that oppose this policy. Thus the Fiscal Treaty restricts democratic self-determination even further. It is the momentary climax of an authoritarian trend in Europe.
We are fed up with these unsocial and antidemocratic policies, and with the racist slander campaign against the people of Greece. Instead, we should talk about the inhuman consequences of these policies. We should talk about Europe’s authoritarian turn, and low German wages as a cause of the crisis. We should talk about the untouched fortunes of the few, and the sufferings of the many. We should talk about our admiration for the resistance and solidarity among the Greek people.
Let us demand what should go without saying: real democracy and a good life in dignity for everybody – in Europe and elsewhere.
The crisis in Europe is only the tip of an iceberg. Underneath it lies a deep structural crisis of capitalism. Too much capital is chasing profits. But the returns on investment are low: there is too much competition, and wages are too low. Debtfinanced growth and speculative bubbles have only delayed the outbreak of the major crisis. Now the authoritarian-neoliberal alliance is advocating a radicalized more-of-the-same: socialize losses from speculation – through permanent debtservicing by the wage earners. They want to increase returns on investment – by means of precarious employment, cuts in wages and pensions, cutbacks of the welfare state, and privatization. The consequences are drastic, and what is happening in Greece is looming in the rest of Europe: mass unemployment, impoverishment of broad swathes of the population, collapsing health systems, increases in mental illness, and a declining life expectancy.
Measures such as this can only be implemented by authoritarian means. Pinochet’s putsch in Chile in 1973, the IMF’ programmes in African states in the Eighties, and the transformation in eastern Europe in the early Nineties are historical forerunners of the Fiscal Treaty & Co.: “shock therapies”. Social and democratic principles that were won by struggles with many victims will be eliminated at breathless speed by the Fiscal Treaty, in order to ensure that debts are serviced and rates of profit increase. In Italy and Greece, unelected governments of technocrats are using truncheons, tear-gas, and water cannons to impose the cuts dictated by maledominated groups of “experts” in Brussels, Frankfurt, and Berlin. The Fiscal Treaty and the set of edicts on “economic governance” give more and more power to bodies such as the EU Commission, the European Court of Justice, and the European Central Bank, which act beyond democratic controls. To prevent democratic decisionmaking contrary to neoliberal orthodoxy, the Fiscal Treaty perfidiously strengthens
the dictatorship of the financial markets by fines to be paid to the EU.
As in the Great Depression of the 1930s, chauvinist and fascist forces are gaining influence, in Hungary, Austria, Finland, and elsewhere. Blind to the lessons of history, the German government, with its uncompromising austerity policy, is making reactionary solutions to the crisis more and more likely.
Throughout the world, people are fighting back against these policies, from the Syntagma Square in Athens, via the Tahrir Square in Cairo and the Puerta del Sol in Madrid, to Zucotti Park in New York. The movements of refugees and migrant workers across Europe’s outer frontiers are part of these struggles for a good life.
These struggles must be carried out across borders and in the centres of the authoritarian-neoliberal alliance, in Paris, Brussels, Frankfurt, and Berlin. Therefore, we call on people to join in the coming protests, including the European Day of Action on March 31st, the Global Day of Action on May 12th, and the international mobilization to Frankfurt am Main on May 17th to 19th. We are relying on an alternative solution to the crisis:
no ratification of the Fiscal Treaty, and dropping the set of EU laws on “Economic Governance”;
cancelling public debts, introducing controls on capital flows, and converting banks into public service providers;
redistributing social wealth from the top downwards by a new tax system;
expanding the social infrastructure and starting to transform the economy with a programme of social and environmental investment;
shortening working hours;
democratizing politics and the economy radically at all levels;
ending the racist policy of Fortress Europe – residence permits and legal status for all.
To the authoritarian-neoliberal EU of the few, we oppose a democratic, social and ecological EU of the many!
Assoziation für kritische Gesellschaftsforschung (AkG), March 2012
http://www.demokratie-statt-fiskalpakt.org / http://www.akg-online.org